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RAILWAY MAIL PAY 

PRELIMINARY REPORT 
AND HEARINGS 



OF THE 
JOINT COMMITTEE ON 



POSTAGE- ON SECOND-CLASS 

MAIL MATTER AND COMPENSATION FOR 

THE TRANSPORTATION OF MAIL 

OF THE 

CONGRESS OF THE UNITED STATES 



JANUARY 24, 1913, to APRIL 3, 1914 



Printed for the use of the Joint Committee 






WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1314 



EAILWAY MAIL PAY 

PRELIMINARY REPORT 
AND HEARINGS 

OF THE 
, JOINT COMMITTEE ON 

POSTAGE ON SECOND-CLASS ** 9¥ 
MAIL MATTER AND COMPENSATION FOR 
THE TRANSPORTATION OF MAIL 

OF THE 

CONGRESS OF THE UNITED STATES 



JANUARY 24, 1913, to APRIL 3, 1914 



Printed for the use of the Joint Committee 



WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1914 



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'***- 



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JOINT COMMITTEE ON POSTAGE ON SECOND-CLASS MAIL MATTER 
AND COMPENSATION FOR THE TRANSPORTATION OF MAIL. 

Congress op the United States. 

Senators : Representatives : 

JONATHAN BOURNE, Jr., Chairman. JAMES T. LLOYD. 

HARRY A. RICHARDSON. WILLIAM E. TUTTLE, Jr. 

JOHN H. BANKHEAD. JOHN W. WEEKS. 

Robert H. Turner, Secretary. 

Richard B. Nixon, Disbursing Officer. 



D. OF ft 
JUL 15 I9J4 






TABLE OF CONTENTS. 



Page. 

Preliminary report 3-11 

Adams, Guy, manager mail traffic, Union Pacific 1088 

Albright, P. R., assistant general manager Atlantic Coast Line R. R 251, 635 

Anderson, Alfred W., general manager Charleston & Western Carolina Ry 195 

Baldwin, W. W., vice president Chicago, Burlington & Quincy R. R 131, 

635, 1088, 1117 
Bandel, George E., assistant superintendent division of railwav adjustments, 

Post Office Department "1088, 1112, 1299, 1498 

Baskerville. W. S., general agent mail traffic. Great Northern R. R.. 700-707, 1299, 1319 
Blackwell, M. H.. assistant superintendent Railway Mail Service, Omaha, 

Nebr. 1320 

Blomeyer. E. F., vice president and general manager Tennessee, Alabama & 

Georgia Ry 1235 

Blount, W. M., president Birmingham & Southeastern Ry 1241 

Bowman. John EL, special accountant New York. New Haven & Hartford R. R. . 277 
Bradlev, V. J., general supervisor of mail traffic. Pennsylvania R. R 400, 

449, 529, 635, 1088, 1112, 1299, 1319 
Brown, John W., president American Electric Railway Co.; president Mary- 
land & Pennsylvania R, R. Co 171, 1551 

Buckland, Edward G., vice president New York. New Haven & Hartford 

R. R 257, 298 

Campbell, F. A., agent transportation department. Norfolk & Western Ry 635, 

1088,1111,1299,1319 
Coleman, R. B., chairman committee No. 2. Short Line Railroad Association 
of South Carolina; general manager Georgia, Florida & Alabama R. R. Co. . . 1189 

Connolly, J. P., supervisor of mail traffic. Central Railroad of New Jersey 1111, 

1299, 1319 

Coulter, Hon. R. M., deputy postmaster general of Canada 1523-1524 

Crocker, Joseph N., special mail agent, New York Central lines, Grand Cen- 
tral Terminal 529 

Denham, W. B., general manager Ocala Northern Railroad 1224 

Drake, John N., secretary Short Line Railroad Association. 635, 1088, 1111, 1299, 1319 

Duncan, E. L., manager mail traffic, Chicago & Eastern Illinois Railroad 1088 

Eustis, P. S., traffic manager, Chicago, Burlington & Quincy Railroad 635 

Fairfield, Herbert L., supervisor mail traffic, Illinois Central Railroad Co 529, 

635, 1088, 1111, 1299 

Faulkner, ex-Senator Charles J., counsel 1111, 1299 

Gaines, S. M., superintendent Railway Mail Service, Fort Worth, Tex. . 1320 et seq. 
Ham, W. F. , vice president and comptroller Washington Railway & Electric Co . 169 

Hamilton, F. C, accountant for Chicago Railways 166 

Hardin, George W., vice president East Tennessee & Western North Carolina 

Railway 1200 et seq. 

Hitt, Moultrie, secretary General Managers' Association of the Southeast; gen- 
eral manager of Georgia Railroad 1141, 1178 

Hurst, John, assistant comptroller, Pennsylvania lines west of Pittsburgh . . . 449, 529 

Kindel, Hon. George J., Member of Congress from Colorado 1391 

Lee, Ivy L., executive assistant, Pennsylvania Railroad 635 

Lewis, David J., Member of Congress from Maryland 695, 699 

Lindsay, J. P., manager mail traffic, Atchison, Topeka & Santa Fe Railway 

System „ 449, 529, 635, 1088, 1112, 1299 

Logan, Robert S., vice president Grand Trunk Railroad 529 

Lorenz, M. O., associate statistician, Interstate Commerce Commission 364, 

450, 529, 635, 1088, 1112, 1299, 1320 

Lyons, Henry S., secretary Boston Elevated Railway Co 140 

Mack, H. E., manager mail traffic, Missouri Pacific Railway Co 210, 

301, 608, 635, 1088, 1120, 1299, 1403 
McBride, C. H., Superintendent Division of Railway Adjustments, Post Office 

Department 449, 530, 635, 1088, 1112, 1299, 1491 

McCahan, J. C, supervisor mail traffic, Baltimore & Ohio R. R 1299, 1364 

in 



IV TABLE OF CONTENTS. 

Page. 

McFarland, Frank, superintendent, Railway Mail Service, St. Louis, Mo 1320 

Madden, Martin, B., M. C. from Illinois 1174 

Maddox, Samuel P., counsel 1112 

Mallette, J. E. , representing Union Pacific R. R 635 

Neal, J. Henry, general auditor Boston Elevated R. R. Co 141 

Nichols, L. T., general manager Carolina & Northwestern R. R 1207 

Peabody, James, statistician, Atchison, Topeka & Santa Fe R. R. Co 447, 

635, 1142, 1299, 1347 

Pelletier, Hon. Louis P., postmaster general of Canada 1519 

Peters, Ralph, president Long Island R. R. Co., chairman committee on railway 

mail pay of the American Railway Association 42, 177, 636, 1088, 1112, 1320 

Piper, Alex. B., general freight agent, South Brooklyn R. R 153 

Plant, A. H., comptroller of the Southern Ry 628 

Postlewaite, E. T., assistant to president Pennsylvania R. R 635 

Prentiss, A. N., clerk, Post Office Department... 449,530,635,1088,1112,1299,1320 

Prince, B.C., assistant to vice president Seaboard Air Line 1299 

Robinson, Bird M., president Tennessee R. R. Co 635 

Rowan, A. H., assistant to vice president New York Central Lines 449, 

563, 635, 1088, 1111, 1169, 1299, 1319 

Safford, W. W., general mail and express agent Seaboard Air Line Co 135, 

380, 529, 635, 1088, 1161, 1299, 1319 
Scott, S. C, assistant to first vice president Pennsylvania lines west of Pitts- 
burgh 222, 635, 1088, 1111, 1299, 1319 

Searle, C. A., mail traffic manager Rock Island lines 635, 1088, 1111, 1299 

Snead, Russell H., manager express traffic Chesapeake & Ohio R. R. Co 380, 

529,635,1088,1111,1299,1319 
Stewart, John, superintendent and traffic manager Marcellus & Otisco Lake Ry . 190 
Stewart, Joseph, Second Assistant Postmaster General.. 3,635,1088,1111,1299,1320 
Taylor, Grant W., general superintendent transportation Southern Ry. System 314 

Thompson, W. B., counsel 1111,1299,1319 

Wade, H. M., agent of mail traffic Erie R. R 243, 1111, 1319 

Worthington, W. A., vice president Southern Pacific 325, 1299, 1442 

Wishart, Wm. C, statistician New York Central Lines 449, 600, 635, 1088 

Lorenz, M. O., report of 849-894 

I. General summary of results 849 

II. Description of railway mail transportation service 850 

III. The present law: 

Financial results 852 

Defects of the present law 854 

(1) Failure to consider length of haul 854 

(2) Two rates for the same service 854 

(3) Frequency of service ignored 855 

(4) Otherdefects 856 

IV. Discussion of various plans and suggestions presented at the hearings: 

Cost and space plan 858 

Standard unit suggestion 861 

Percentage method 863 

The plan of Senator John W . Weeks 864 

The plan of the Hon. David J. Lewis 865 

The Peabody plan 8G6 

The Buckland plan 866 

The gross-tonnage principle 866 

The proposals of the railoads 867 

Weight, space, and distance 868 

V. The determination of the rate level 876 

The commercial principle 878 

Cost of service 893 

Comparison of mail service and other passenger-train service 893 

Conclusion as to the level of rates 894 

VI. Miscellaneous notes and comments 894 

Postmaster General transmitting a report and tentative draft of legislation 
relative to railroad mail service and compensation therefor, letter of.. 1051-1062 

Post Office Department, a statement on behalf of 989-1035 



House Document No. 105 and its findings 987 



TABLE OF CONTENTS. V 

II. Page. 

The conclusion as to railroad mail pay .' 989 

The railroads' claim as to underpayment 989 

The department's refutation of claims of underpayment 991 

The railroads' premises 991 

Mail revenue exceeded in 1910 a reasonable rate on commercial basis, 

ascertained from data and ratios of Document No. 105 992 

Operating revenues, and operating expenses, and charges against 

income 994 

What shall be the gauge of railroad mail pay? — shall it be a strictly 

commercial rate? 998 

(1) The certainty, constancy, and homogeneity of traffic 998 

(2) The certainty and regularity of payment 1000 

(3) Railroads are not built primarily to carry mails 1000 

(4) The protection of mail trains 1000 

(5) The prizi ciple of public utility 1001 

Cost of service as a g-uide in determining fairness of rate under com- 
mercial principle 100S 

Comparison between department's estimate of operating expenses, 
excluding taxes, chargeable to mail service, and companies' estimate 

of same chargeable to passenger service 1008 

Method of apportioning unassigned expenses between freight and pas- 
senger services 100$ 

The charge of space to the mail service 1013 

Annual weighings, side and terminal service, and apartment cars. ... 1018 

Annual weighings 101$ 

Side and terminal service 1018 

Apartment cars 1019 

The law of March 2, 1907, and Postmaster General's Order No. 412, of 

June 7, 1907 1020 

III. 

The present plan of adjustment of railroad mail pay 1025 

The suggested plans of adjusting railroad mail pay 1026 

The cost and space basis 1026 

The standard unit suggestion 1031 

Weight, space, and distance; the Lorenz plan 1032 

The percentage method 1033 

The plan of Senator John W. Weeks 1033 

The plan of Hon. David J. Lewis 1033 

The Peabody plan 1034 

The Buckland plan 1034 

The proposals of the railroads 1034 

Exhibit A 1035 

Post Office Department, a statement on behalf of the 1247-1298 

Railroads, a statement on behalf of the 1063-1088 

Turner, R. H., report of 899-964 

Introduction 899 

Historical sketch (early history) 899 

Law of 1873 900 

Document No. 105 901 

Appointment of joint committee 901 

Progress of the work of the joint committee 902 

Hearings 902 

Special services 903 

Postal-service commission ( Wolcott-Loud) 903 

Procedure of the present joint committee contrasted with that followed by 

the Wolcott 905 

The present law (weight basis) 906 

Rates of present law stated and explained 908 

Post Office Department's objections to present law 910 

Railroads' bill 911 

Annual weighings 932 

Side and terminal service 914 

Apartment cars 915 

Law of 1907 and divisor order No. 412 917 

Underpayment to railroads under present law 918 



VI TABLE OF CONTENTS. 

Page. 

Space basis 918 

General remarks 919 

Post Office Department's original plan 919 

Post Office Department's modified plan 921 

(a) Cost 924 

(b) Steel cars (effect on speed and hauling resistance) 926 

Other bases , 929 

Four-unit basis (Lloyd plan) 930 

Percentage basis 936 

Buckland plan 937 

Attitude of the courts with reference to mail transportation 940 

Director of posts 942 

Weeks's plan 942 

The Peabody plan 943 

Lewis plan 945 

Lorenz plan 953 

Electric lines 952 

Government ownership of railway post office cars 947 

Should the United States Government be given preferential treatment in the 

matter of mail transportation? 954 

(a) Rights of individuals and corporations compared 955 

(b) Eminent domain ". 955 

(c) Railroads entitled to a reasonable rate 955 

(d) Railroads should be regulated 956 

Are the railroads underpaid or overpaid? 956 

1. Under the present system 956-959 

2. Divisor order No. 412 958 

3. Railroads' reliance on report of Wolcott-Loud Commission 958 

4. Amount of underpayment stated 959 

5. Mail per ton-mile rate versus express per ton-mile rate 959 

Underpayment, taking document No. 105 itself as a guide 960-962 

Conclusion 962 

Recommendations 964 



A railway mail pay plan stated in the form of a bill and constructed on a space 

basis 911 

"Are our railroads fairly treated," pamphlet entitled 715-719 

Brief of committee on railway mail pay 720-736 

Canada, railway mail pay in 737-738 

Comparison of mail pay for loaded apartment car mile wHb freight earnings per 

car-mile (equivalent space) 739-742 

Comparison of relative rates paid railroads for transportation of express and mail 

matter 743-758 

Costs and profits to the railroad companies in the transportation of mail 759-777 

Electric and cable car routes 952 

Electric and cable car routes, proposed bill to equalize pay for mail service on . . 778-782 

Government owned cars (transportation rates, etc., for) 947 

Letter from Hon. Jonathan Bourne, jr., chairman, to the members of the joint 

committee 847 

Memoranda on relative per ton rate received by the railroad companies for the 

transportation of freight, mail, and express 783-788 

New York, New Haven & Hartford Railroad Co.: Would this company be the 

gainer if relieved from the carriage of United States mail? 789-790 

Pennsylvania Railroad system, United States mail service. November, 1909, 

reduced to one day 's work on ] mile of route 791 

.Railwav mail pay, literature submitted bv Mr. J. Kruttschnitt on the subject 

of " 792-822 

Railway mail pay. theory of 827-829 

Railway post-office car service on Atlantic Coast Line Railroad 823-826 

Short-line railroads in regard to railway mail pay, statements of *.. 830-845 

Side service on Rock Island lines, cost of ' 846 



KAIL WAY MAIL PAY. 



To the Joint Committee on Postage on Second-Glass Mail Matter 
and Compensation for the Transportation of Mail: 
Gentlemen: The Post Office appropriation act approved August 

24, 1912, contained a provision reading as follows : 

Provided, That a joint committee shall be appointed composed of three mem- 
bers of the Senate Comrui tee on Post Offices and Post Roads and three members 
of the House Committee on the Post Office and Post Roads, to be designated 
by the respective chairmen, to make inquiry into the subject of postage on 
second-class mail matter and compensation for the transportation of mail and 
to report at the earliest practicable date, and for this purpose they are au- 
thorized, by subcommittee or otherwise, to sit during the sessions or recess of 
Congress, at such times and places as they may deem advisable, to send for 
persons and papers, to administer oaths, to summon and compel the attend- 
ance of witnesses, and to employ such clerical, expert, and stenographic assist- 
ance as shall be necessary ; and to pay the necessary expenses of such inquiry 
there is hereby appropriated, out of any money in the Treasury not otherwise 
appropriated, the sum of twenty-five thousand dollars, to be paid out upon the 
audit and order of the chairman or acting chairman of said commit ee. 

On August 24, acting under authority of this provision, the Presi- 
dent of the Senate appointed on this joint committee Senators 
Jonathan Bourne, jr., of Oregon; Harry A. Richardson, of Dela- 
ware; and John H. Bankhead, of Alabama. The Speaker of the 
House of Representatives on the same day appointed on the same 
committee James T. Lloyd, of Missouri; William E. Tuttle, jr., of 
New Jersey ; and John W. Weeks, of Massachusetts. 1 

On August 26 Congress adjourned sine die and immediately 
almost all Members of Congress departed for their homes. Owing 
to the press of legislative business on the last two days of the session, 
there was no time for the organization of this joint committee and 
the formulation of a plan of procedure. 

On August 12, 1911, the Postmaster General transmitted a letter 
to the Speaker of the House of Representatives submitting "A report 
giving the results of the inquiry as to the operation, receipts, and 
expenditures of railroad companies transporting the mails and recom- 
mending legislation on the subject," said letter and accompanying 
report being printed as House Document No. 105, Sixty-second Con- 
gress, first session. 

In response to representations made to the Senate Committee on 
Post Offices and Post Roads by the Post Office Department through 
the Second Assistant Postmaster General I was authorized by the 
committee to introduce a bill prepared by the Post Office Depart- 
ment embodying in legislative form the recommendations made in 
the document above referred to, the purpose being to get before 
Congress and the country the views of the department relative to 

1 After Mar. 3, 1913, Hon. Jonathan Bourne, jr., and Hon. Harry A. Richardson ceased 
to be Members of the Senate, and Hon. John W. Weeks, a Member of the House of Rep- 
resentatives, to become a Senator of the United States, but by the Post Office appropria- 
tion act approved Mar. 4, 1913, the personnel of the committee was continued, with the 
same authorities, powers, and provisions for expenses as authorized by the act of Aug. 24, 
1912, Hon. Jonathan Bourne, jr., and Hon. Harry A. Richardson serving without com- 
pensation. 

3 



4 BAIL WAY MAIL PAY. 

this important subject. I accordingly, on July 26, 1912, introduced 
S. 7371, a bill to provide the manner of determining the compensa- 
tion of railroads for the transportation of the mails, in the language 
following, to wit : 

Be it enacted ~by the Senate and House of Representatives of the United 
States of America in Congress assembled, That the Postmaster General shall 
determine the cost to each railroad company of carrying the mails on its re- 
spective road or roads, and shall verify and state the result in such form and 
manner as he shall deem proper. For this purpose he is authorized to credit, 
assign, and apportion the revenues and expenses of railroad companies so re- 
ported in such manner as he shall deem fair and equitable and in his judgment 
necessary to ascertain the cost as near as practicable, a statement of which 
shall be given the company concerned. If any railroad company shall object to 
the method of crediting, assigning, and apportioning the revenues and expenses, 
it may file objection with the Postmaster General within twenty days after such 
statement is made to the company, and the Postmaster General shall thereupon 
certify the method and objection, and such papers as in his judgment may be 
essential to an understanding of the method, to the Interstate Commerce Com- 
mission, who shall review the finding of the Postmaster General and affirm, 
modify, or revise the same, and certify the result to the Postmaster General, 
which action thereon shall be final. 

The Postmaster General is authorized and directed to readjust the pay to 
companies operating railroads for the transportation and handling of the mails 
and furnishing facilities in connection therewith, not less frequently than once 
in each fiscal year, commencing with July first, nineteen hundred and twelve, at 
a rate of compensation per annum not exceeding the cost to the railroad com- 
panies of carrying the mails as ascertained by him, and six per centum of such 
cost: Provided, That when such ascertained cost and six per centum does not 
equal twenty-five dollars per mile per annum, he may, in his discretion, allow 
not exceeding such rate. 

Railroad companies whose railroads were constructed in whole or in part by 
a land grant made by Congress on the condition that the mails should be trans- 
ported over their roads at such price as Congress should by law direct, shall re- 
ceive not exceeding the cost to them of performing the service. 

Information shall be furnished and adjustments made as near as practicable 
by accounting systems or roads, and the cost and the compensation for the term 
shall be stated for all service covered by each system or road. The routes for a 
system or road may be stated for administrative purposes in such manner as the 
Postmaster General may determine. 

The Postmaster General may order new or additional service during a term 
for which an adjustment shall have been made or service authorized on any 
system or road, in any train operated by such system or road over any part of 
the trackage included in the adjustment or authorization, and without additional 
compensation therefor during such term. 

He may order service over new or additional trackage of an adjusted system 
or road during a term and state the amount performed for the remainder of such 
term on statistics obtained for the first thirty days of service. Payment therefor 
may be made at not exceeding the average rate per car-foot mile for the system 
or road ascertained at the regular adjustment. Entire discontinuance of service 
over trackage included in the adjustment or thereafter added shall be deducted 
for at the car-foot mile rate of adjustment or mile rate of authorization. In 
case the operation of service over trackage included in an adjustment or there- 
after added is undertaken by another company during the term, the same may 
be recognized by the Postmaster General, provided the companies in interest 
shall file with him their joint agreement as to the part of the compensation of 
the old operating company to be paid the new operating company ; otherwise 
payment to the company first authorized shall be full payment for all service 
performed for the term. 

The Postmaster General may order service over trackage of a railroad com- 
pany not operating service under an adjustment or authorization after the reg- 
ular adjustment for the remainder of the term, and pay therefor at not exceed- 
ing forty-two dollars and seventy-five cents per mile of trackage per annum. 

Service over property owned or controlled by a terminal company shall be 
considered service of the roads or systems using such property and not that of 
the terminal company. 

Railroad companies carrying the mails shall furnish all necessary facilities 
for caring for and handling them while in their custody. They shall furnish 






KAILWAY MAIL PAY. 5 

all cars or parts of cars used in the transportation and distribution of the 
mails, and place them in stations before the departure of trains when required 
to do so. They shall provide side, terminal, and direct transfer service and all 
station and depot space and rooms for handling, distribution, and transfer of 
mails en route, and for offices and rooms for the employees of the postal service 
engaged in such transportation, when ordered by the Postmaster General. 

Every railroad company carrying the mails shall carry on any train it 
operates and without extra charge therefor the persons in charge of the mails, 
and when on duty and traveling to and from duty, and all duly accredited agents 
and offiers of the Post Office Department and the postal service, while traveling 
on official business, upon the exhibition of their credentials. 

All cars or parts of cars used for the Railway Mail Service shall be of such 
construction, style, length, and character, and furnished in such manner as shall 
be required by the Postmaster General; and shall be constructed, fitted up, 
maintained, heated, lighted, and cleaned by and at the expense of the railroad 
companies. No payment shall be made for service by any railway post-office 
car which is not sound in material and construction, and which is not equipped 
with sanitary drinking-water containers and toilet facilities, nor unless such car 
is regularly and thoroughly cleaned. No pay for service shall be allowed for 
the operation of any wooden railway post-office car unless constructed substan- 
tially in accordance with the most approved plans and specifications of the 
Post Office Department for such type of cars, nor for any wooden railway 
post-office car run in any train between adjoining steel or steel underframe 
cars, or between the engine and steel or steel underframe car adjoining. All 
additional cars accepted for this service shall be of steel or with steel under- 
frame if used in a train in which a majority of the cars are of steel or steel 
underframe. After the first of July, nineteen hundred and sixteen, the Post- 
master General shall not approve or allow to be used or pay for the use of any 
railway post-office car not constructed of steel or with steel underframe, if 
such car is used in a train in which a majority of the cars are of steel or of 
steel underframe construction. The Postmaster General shall make deductions 
from the pay of the railroad companies on the basis of the value of the service 
computed on the car-foot mile basis in all cases where the cars do not comply 
with the provisions of this Act. 

The space in cars devoted to the use of the mails, as ascertained during the 
period fixed by the Postmaster General for the rendition of information by the 
railroad companies, shall be taken as the basis for computing the car-foot 
miles devoted to the mail service for the purpose of readjustment, effective 
from the first of July next following: Provided, That no credit shall be given 
for space in cars devoted to the distribution of the mails unless such space 
shall be authorized by the Postmaster General or unless he shall determine 
that its use is made necessary by a specific authorization. 

If any railroad company shall fail or refuse to provide cars or apartments in 
cars for distribution purposes when required by the Postmaster General, or shall 
fail or refuse to contruct, fit up, maintain, heat, light, and clean such cars and 
provide such appliances for use in case of accident as may be required by the 
Postmaster General, it shall be fined such sum as shall, in the discretion of the 
Postmaster General, be deemed proper. 

The Postmaster General shall in all cases decide upon what trains and in 
what manner the mails shall be conveyed. Every railroad company carrying 
the mails shall carry on any train it operates all mailable matter directed to 
be carried thereon. If any railroad company shall fail or refuse to transport 
the mails when required by the Postmaster General upon any train or trains 
it operates, such company shall be fined such amount as may, in the discretion 
of the Postmaster General, be deemed proper. 

The Postmaster General may make deductions from the pay of railroad com- 
panies carrying the mails under the provisions of this act for reduction in serv- 
ice or frequency of service where, in his judgment, the importance of the 
facilities withdrawn or reduced requires it and impose fines upon them for de- 
linquencies. He may deduct the price of the value of the service in such cases 
where it is not performed, and not exceeding three times its value if the failure 
be occasioned by the fault of the railroad company. 

The Postmaster General is authorized to have such weights of mails and 
measurements of space taken and to collect such other information by sworn 
employees of the Post Office Department as he may deem necessary and to 
have such information stated and verified to him by such employees, under 
such instructions as he may consider just to the Post Office Department and 
the railroad companies, to assist in the ascertainment of the space used for 



6 RAILWAY MAIL PAY. 

the transportation and the handling of the mails on railroads, and to employ 
such special clerical and other assistance as shall be necessary to carry out 
the provisions of this act, and to rent quarters in Washington, District of 
Columbia, if necessary, for the clerical force engaged thereon, and to pay for 
the same out of the appropriation for inland transportation by railroads. 

The provisions of this act shall apply to service operated by railroad compa- 
nies partly by railroad and partly by steamboats. 

The provisions of this act respecting the rate of compensation and the deter- 
mination thereof shall not apply to mails conveyed under special arrangement 
in freight trains, for which a rate not exceediug the usual and just freight rates 
may be paid, in accordance with the classifications and tariffs approved by the 
Interstate Commerce Commission. 

It shall be unlawful for any railroad company to refuse to carry the mails 
at the rates of compensation provided by law when and for the period required 
by the Postmaster General so to do, and for every such offense it shall be fined 
not exceeding $5,000. 

All laws or parts of laws inconsistent herewith are hereby repealed. 

VIEWS OF RAILROADS REQUESTED. 

The bill was referred to the Committee on Post Offices and Post 
Roads on the date of its introduction in the Senate, but owing to the 
fact that the Post Office appropriation bill was already burdened 
with many items of new legislation the committee deemed it unwise, 
as it was impracticable, to undertake to legislate upon a subject of 
such magnitude in the time intervening between the introduction of 
the bill and the near approach to the close of the second session of 
the Sixty-second Congress. It was such consideration as this that 
led to the authorization and appointment of the joint committee. 

Recognizing the importance and the magnitude of the task as- 
signed to the joint committee and desiring as much as possible to ex- 
pedite its work, I, after the adjournment of Congress and before 
leaving Washington, addressed a circular letter to the executive offi- 
cers of all railroads carrying the mails, 795 in number, the purpose 
being to secure an expression of opinion on the plan recommended 
by the Post Office Department and embodied in S. 7371. The letter 
reads as follows: 

Washington, September 11, 1912. 

My Dear Sir: I hand you herewith a copy of Senate bill 7371, introduced 
by me by direction of the Senate Committee on Post Offices and Post Roads, 
embodying a plan recommended by the Post Office Department for determining 
the compensation to be paid to railroad companies for transportation of the 
mails. This general subject has been referred to a joint committee of Congress. 
The committee has not yet organized and probably will not do so for several 
weeks; but as a member of that committee and as chairman of the Senate Com- 
mittee on Post Offices and Post Roads, and under authority of Senate resolution 
56, I desire to secure immediately such information as may be available for 
submission to the committee at its first meeting. I will ask you, therefore, to 
answer the following questions : 

(1) Do you deem the present plan of compensation an equitable one as be- 
tween the Government and the railroads? If not, in what respects and as to 
what classes of railroads is it inequitable? 

(2) Is the underlying principle of the plan embodied in the inclosed bill a 
proper basis for compensation? If not, wherein is it improper, and why? 

(3) What, in your opinion, is a desirable plan for compensating railroad com- 
panies for transporting the mails? 

I desire an early reply to these inquiries relating to the general plan, and 
if you are not ready to do so now shall be glad to have you submit later a 
detailed discussion of this bill and of House Document No. 105, Sixty-second 
Congress, first session, with which, I assume, you are familiar. 
Yours, very truly, 

Jonathan Bourne, Jr., 
Chairman Senate Committee on Post Offices and Post Roads. 



RAILWAY MAIL 'PAY. ( 

REPLY BY COMMITTEE ON RAILWAY MAIL PAY. 

In a letter dated October 3, Mr. Ralph Peters, acting chairman, 
committee on railway mail pay, representing 268 railroads operating 
over 214,275 miles of railroad, responded to the questions propounded 
in the circular letter referred to as follows : 

New York, October 3, 1912. 
Hon. Jonathan Bourne, Jr., 

Chairman Senate Committee on Post Offices and Post Roads, 

Washington. D. C. 

My Dear Sir: The committee on railway mail pay. representing 2G8 roads 
operating over 214,275 miles of railroad, has been investigating the subject of 
mail compensation for about three years, or since the Post Office Department, 
in 1909, sent out a series of questions regarding the space furnished for mails 
in passenger trains, and the cost to railroad companies of the service which 
they perform for the Government in the carriage of the mails. Therefore the 
committee has thought it would be of interest to you to receive from it an 
answer to the questions propounded by your letter of September 11, 1912, 
addressed to the officers of railroads throughout the country. 

A response to House Document No. 105 is now in course of preparation, and 
will be submitted at an early date. In the meantime, our committee desires to 
submit the following replies to your inquiries : 

Question 1. Do you deem the present plan of compensation an equitable one 
as between the Government and the railroads? If not, in what respects and as 
to what classes of railroads is it inequitable? 

Answer. The existing law has never worked to the disadvantage of the Gov- 
ernment, but has failed to do justice to the railways, by reason of infrequent 
weighing; absence of pay for nearly 40 per cent of the space occupied as travel- 
ing post offices ; the performance, without pay, of side and terminal messenger 
service; and the unjustifiable reduction in pay by the act of Congress dated 
March 2, 1907, supplemented by Order No. 412 of the Postmaster General, 
changing the divisor. 

The present law is based upon correct principles, but should be so amended 
as to provide — 

(a) For the repeal of the act of March 2, 1907. 

Notwithstanding the large increase in every other item connected with the 
administration of the Post Office Department, the railroads' pay has been 
singled out as the one element in these operations for concentration of econo- 
mies. This, too, in the face of the fact that the operating expenses of the rail- 
roads have been greatly augmented by the requirements of the law with refer- 
ence to steel equipment, and a general increase in cost characteristic of all 
business operations. 

(6) For annual weighings, and a definite and just method for ascertaining 
daily average weights. 

Under the quadrennial weighing, all increased weight of mail during the next 
succeeding four years is carried by the railroads without any compensation 
whatever, which is manifestly unfair. 

The railroads must provide car space and facilities for the maximum weight 
offered at any time, yet they are paid only for the average weight carried. The 
Postmaster General's order covering the divisor has unfairly reduced this 
average. 

This provision is essentially necessary in view of the bill establishing the 
parcel post, effective January 1, 1913, which will result in taking from the 
express service traffic for which the railroad companies now receive compensa- 
tion and transferring it to the mail service; the bill referred to containing no 
provision for payment to the railroad companies for the increased tonnage to be 
handled in mail cars, although such provision was made for the star routes and 
the city wagon service. 

(c) For pay for apartment cars on some basis that will compensate for the 
service. 

That the Postmaster General has himself recognized the justice of such a 
change is indicated in the following quotation from page 3 of House Document 
No. 105: "* * * an additional amount may be allowed for railway post- 
office cars when the space for distribution purposes occupies 40 feet or more of 
the car length. No additional compensation is allowed for space for distribution 



8 



KAILWAY MAIL PAT. 



purposes occupying less than 40 feet of the car length. This distinction is a 
purely arbitrary one and without any logical reason for its existence." 

(d) For a fair allowance to the railroads for the side and terminal messenger 
service which they perform for the Post Office Department, according to the 
value of this service to the Post Office Department. 

The necessity for this is also emphasized by the establishment of the parcel 
post, which will undoubtedly add greatly to the expense of the service. 

(e) That all rates of pay should be definite and not subject to the discretion 
of the officers of the Post Office Department. 

Other inequities exist under the present law, but are due to the administra- 
tive methods rather than to the law itself. 

Question 2. Is the underlying principle of the plan embodied in the inclosed 
bill a proper basis for compensation? If not, wherein is it improper, and why? 

Answer. The underlying principle of the plan embodied in Senate bill 7371 is 
not correct. Any plan of compensation based upon operating cost and taxes, 
plus 6 per cent for profit, is fundamentally wrong, because it makes no allow- 
ance for return upon the property employed. 

Furthermore, such plan is not correct because it involves paying the highest 
rates to the railroad that by reason of physical disabilities or inefficient methods 
is most expensively operated and the lowest rates to the railroad whose opera- 
tions are most efficient and whose service is most satisfactory and valuable to 
the Post Office Department. Under the plan proposed a railroad would be 
penalized for all the capital expenditures made by it for the purpose of decreas- 
ing its operating cost, because the more it decreased its operating cost the more 
it would decrease its mail pay, although by making this improvement in operat- 
ing cost it would have incurred an additional capital charge upon which it 
would have to pay dividends or interest. 

The ascertainment of the cost to a railroad of conducting the mail service 
is necessarily very largely a matter of judgment and opinion, because a large 
proportion of the total operating expenses are expenses common to the freight 
and passenger traffic and can only be approximately apportioned, and there are 
various formulas existing for such apportionment. It would not be right or 
proper to intrust to the Post Office Department the discretion of selecting the 
formulas by which to ascertain these costs because the Post Office Department 
has an obvious interest at stake, its object always being to reduce the railroad 
pay to a minimum. 

The estimated cost of a specific service is not a proper basis for fixing rates 
for transportation of any commodity. The railroads are entitled to receive a 
full and fair return for the value of the service performed, and the ascertain- 
ment of cost of such service is principally of value as a protection against the 
establishment of confiscatory rates. 

Question 3. What, in your opinion, is a desirable plan for compensating rail- 
road companies for transporting the mails? 

Answer. The existing law has been in effect for nearly 40 years and those who 
have worked under it are more or less familiar with its operations. If it were 
amended to correct serious inequities, as suggested in the answer to question 1, 
and fairly and impartially administered by the Post Office Department, it 
would be preferable to any untried or theoretical plan that could be proposed. 
Very respectfully, yours, 

Committee on Railway Mail Pay, 
By Ralph Peters, Acti?ig Chairman. 

To present more fully the points of objection raised in its letter of 
October 3, the committee on railway mail pay has submitted a 
pamphlet entitled "Mail Carying Eailways Underpaid," which is 
m the language following, to wit: 

Mail Carrying Railways Underpaid. 

i. scope of this pamphlet. 

The committee on railway mail pay, representing railways whose lines include 
92 per cent of the aggregate length of all railway mail routes in the United 
States, believes that the payments to the railways for the services and facilities 
furnished by them to the Post Office Department are, and for a long time have 
been, unjustly low. This pamphlet contains a concise statement of the facts 



RAILWAY MAIL PAY. 9 

wliicli prove that this belief is warranted and, incidentally, a refutation of the 
estimates made by the Postmaster General and reported to the Congress (H. Doc. 
No. 105, 62d Cong., 1st sess.), which led him to conclude that the basis of pay- 
ment could now properly be changed so as to accomplish a present reduction of 
about 20 per cent. It will be shown that although the insufficient data and the 
erroneous methods employed by the Postmaster General resulted in his making 
estimates of cost to the railways that are far below the real cost, his own figures 
and calculations, when properly analyzed and supplemented, demonstrate that 
the mail service has not been fairly remunerative to the railways. 

Before proceeding to this demonstration it should, however, be noted that — 

II. RAILWAY MAIL PAY IS ABOUT TO BE FORCED STILL FURTHER BELOW THE LEVEL 
OF JUST COMPENSATION, UNLESS PAYMENTS ARE PROMPTLY READJUSTED, ON 
ACCOUNT OF THE ADDITIONAL VOLUME OF MAIL THAT WILL RESULT FROM THE 
INAUGURATION, ON JANUARY 1, 1013, OF THE PARCEL POST. 

Congress has provided for a vast and incalculable extension of mail traffic by 
creating a " parcel post," to be inaugurated on January 1, 1913, which, by 
opening the mails to many articles not previously accepted at the post offices 
and by materially reducing the rates on mailed merchandise, is expected enor- 
mously to increase the volume of the shipments which it covers. The Govern- 
ment seems to have assumed that under existing contracts, which were made 
before the meaning of the word " mail " was thus extended, the railways can be 
compelled, until these contracts expire, to carry this great additional volume of 
mail traffic without any compensation whatever. If the former practice of the 
Post Office Department is followed, no new contracts will be made until after 
the next quadrennial weighings in each of the four weighing sections, so that 
the position of the Government amounts to an assertion that the whole added 
volume of the parcel-post mails will have to be carried without any compensa- 
tion by the railways of New England for four years and six months (these 
railways are in the first weighing section, but the weighing for the adjustment 
to be made on July i, 1913, has begun and will be completed before the parcel 
post is inaugurated), by those of the second weighing section for three years 
and six months, by those of the third weighing section for two years and six 
months, by those of the fourth weighing section for one year and six months, 
and by those of the first weighing section not located in New England for six 
months. No presentation of the injustice of the mail pay received in former 
years suggests even the approximate extent of the losses which the railways 
will thus incur in the next four and one-half years unless readjustments are 
promptly made on account of the parcel post. 

III. THE POSTMASTER GENERAL'S ERRONEOUS ASSERTION THAT THE RAILWAYS WERE 
OVERPAID "ABOUT $9,000,000" IN THE YEAR 1909 RESTS PRIMARILY UPON HIS 
ADOPTING AN UNPRECEDENTED THEORY WHICH ALLOWS NOTHING FOR A RETURN 
UPON THE CAPITAL INVESTED IN RAILWAY PROPERTY. 

The Postmaster General assumed that the railways would be properly com- 
pensated if they received a sum equal to the operating expenses and taxes 
attributable to the carriage of the mails plus 6 per cent of the sum of those ex- 
penses and taxes. The calculation by which he obtained the sum which he 
assumed would have been proper compensation for the single month covered by 
his investigation was as follows: 

His estimate of operating expenses and taxes on account of mail 

service (Doc. No. 105, p. 280) for 1 month $2,676,503.75 

6 per cent of above 1G0, 590. 22 



Total, assumed to represent just compensation for 1 month- 2, 837, 093. 97 

The railways having been paid, for the , month selected, $770,679.16 in excess 
of the sum resulting from the above calculation, the Postmaster General as- 
sumed that this excess over expenses and taxes plus 6 per cent constituted ex- 
cessive profit for that month. He multiplied this assumed excess by 12 to get 
his estimate of annual excess and stated the result, in round figures, as "about 
$9,000,000." 

The mere statement of this method discloses the fact that it makes no allow- 
ance for any return upon the fair value of the railway property employed in 
the service of the public. This omission is, of itself, sufficient wholly to destroy 



10 BAILWAY MAIL PAY. 

the Postmaster General's conclusion. Everyone recognizes that a railway is 
entitled to at least a reasonable return upon the value of its property devoted 
to the public service. The Postmaster General ignored this universally accepted 
principle and adopted a theory which, if applied to the general business of the 
companies, would render substantially every mile of railway in the United 
States immediately and hopelessly bankrupt. The recently published report of 
the Interstate Commerce Commission on the railway statistics of the year that 
ended with June 30, 1910, contains data by which this statement is easily 
demonstrated, as follows: 

Operating expenses of all United States railways for the year__ $1, 822, 630, 433 
Taxes of all United States railways for the j^ear 103,795,701 

Total 1, 926, 426, 134 

6 per cent of above total 115, 585,568 

Total gross receipts permitted by Postmaster General's 

plan 2, 042, 011, 702 

But if this plan had been in force the railways would have had, for interest 
on mortgage bonds, a reasonable surplus as a margin of safety, dividends on 
stocks, unprofitable but necessary permanent improvements, 1 rents of leased 
properties, etc., only the 6 per cent, or $115,585,568. This figure may be com- 
pared with the following among others: 

Interest obligations (on funded debt only) of all United States 
railways for the same year $370, 092, 222 

Rentals of leased properties all United States railways for the 
same year 133, 881, 409 

Plainly, the Postmaster General's proposal is equivalent to an assertion that 
the railways would make a fair profit if they were enabled to collect the sum 
of $115,585,568 in addition to their operating expenses and 'taxes, but the figures 
given by the Interstate Commerce Commission show that this would be less 
than one-third of the sum necessary to meet interest charges, which must be 
paid in order to prevent foreclosures of mortgages, and, if bond interest could 
be ignored, is much less than the rentals that must be paid if the existing sys- 
tems are not to be broken up. And, of course, it would allow nothing what- 
ever for legitimate demands upon income for dividends, permanent improve- 
ments, or surplus. 

It is unnecessary to dwell upon the consequences of such a theory of " com- 
pensation " to railroad credit and to the public interest in efficient transporta- 
tion service, to say nothing of the consequences to owners of railroad stock and 
bonds. Such a theory is not a theory of compensation — it is a theory of oppres- 
sion and of destruction. 

The fact that the Postmaster General has found it necessary to justify his 
attack upon the present basis of railway mail pay by a theory so unprecedented 
and so unwarranted in principle and in law raises a strong presumption against 
all his opinions and conclusions upon this subject. 

IV. THE MAIL SERVICE SUPPLIED BY THE RAILWAYS COSTS THEM MORE IN OPERATING 
EXPENSES AND TAXES THAN THEY ARE PAID FOR IT, AND LEAVES NOTHING FOR 
RETURN ON THE PROPERTY. 

It can not be too strongly emphasized that the railway mail pay at present is 
insufficient to pay even its proper share of operating cost and taxes and does 
not produce any letnrn upon the property. This will be demonstrated by any 
fair inquiry., as will now be shown. Reports submitted to the Postmaster 
General by railways operating 2,411 mail routes, with a total length of 178,710 



1 The necessity for providing, out of income, fox- some kinds of improvements is com- 
monly admitted. The public constantly demands greater comfort and convenience, which 
can be supplied only by improvements in property and equipment that bring in no addi- 
tional income. A present example in the mail service itself is the great expense which 
the railway? are now undergoing in substituting stool mail cars for those formerly in 
use. The old cars, which thus become a total loss were fully up to the most advanced 
standards of construction when built, and they could continue for a long time to serve 
the purposes of the service except for the public demand for stronger cars. 



RAILWAY MAIL PAY. 11 

miles, showed that their gross receipts, per car-foot mile, 3 from services rendered 
on passenger trains during November. 1909. were as follows: 

Mills. 

From mail 3. 23 

From other services 4.35 

Thus, it appears that the space on passenger trains required for the mails is 
proportionately less than three-quarters as productive as that devoted to pas- 
sengers, express, milk, excess baggage, etc. As it is the general belief of railway 
managers, whose conclusion in this respect has rarely if ever been challenged, 
that the passenger-train services, as a whole, do not produce revenues sufficient 
to meet their fair proportion of the operating costs and the necessary return 
upon invstment, and therefore are not reasonably compensatory, it is evident 
that the mail service, the pay for which is more than 25 per cent below the 
average for the other services rendered on the same trains, must bring in much 
less than reasonable compensation. Certainly railroad revenues as a whole 
could not be reduced 25 per cent without destroying all return upon the property. 
If so, it must be true that there can be no compensation in a rate of mail pay 
that is 25 per cent less than the rate of pay for passenger raffic which, as above 
shown, is relatively unprofitable. 

No merely statistical comparison can, however, reveal the whole story, for the 
railways are required to furnish many incidental facilities and to perform many 
additional services for the Post Office Department, which render the mail serv- 
ice exceptionally arduous and costly. These extra services include calling for 
and delivering mails at a large proportion of the post offices located at railway 
towns; supplying rooms, with light, heat, and water in railway stations for the 
use of the mail clerks; placing cars, duly lighted and heated, on station tracks 
for advance distribution, often many hours before the departure of trains; 
carrying officers and agents of the Post Office Department as passengers but 
without compensation to the extent of more than 50,000,000 passenger miles 
annually (this being, of course, in addition to the railway mail clerks on 
duty), etc. Extracts from the Postal Laws and Regulations defining and de- 
manding these services are given in Appendix A. No one can examine this 
appendix and not be convinced that the mail service is the most exacting 
among all those rendered by American railways. 

The fairness of railway mail pay can also be tested by apportioning operating 
expenses between passenger and freight traffic, and then making a secondary 
apportionment of the passenger expenses between mail and other kinds of 
traffic carried on passenger trains. This method involves charging directly to 
each kind of traffic all expenses pertaining exclusively thereto, and the appor- 
tionment, on some fair basis, of those expenses which are common to more 
than one kind of traffic. 

In accordance with the request of the Postmaster General, the railways 
estimated the cost of conducting the mail service in the manner just explained 
and reported the results to the Postmaster General. After first charging to 
each service the expenses wholly due to it they apportioned the common ex- 
penses between the passenger and freight services, following (with incon- 
sequential exceptions) the method most generally employed for that purpose, 
namely the apportionment of these expenses in the proportions of the revenue 
train mileage of each service. Having estimated, in this way, the operating 
expenses attributable to passenger trains, the railways assigned to the mails the 
portion of this aggregate indicated by the proportion of the total passenger 
train space required for the mails. Using this method, 186 railways, operating 
2.370 mail routes, with a total length of 178,716 miles, ascertained and reported 
that for November, 1909, the operating expenses (not including taxes) for 
conducting the mail service were $4,009,184. The Postmaster General states 
(Doc. No. 105, p. 281) that all the i ail ways represented in the foregoing, and 
enough others to increase the mileage represented to 194,978 miles, were paid for 
the same month only $3,607,773.13. It thus appears that the pay was far below 
the operating expenses, without making any allowance for taxes or for a return 
upon the fair value of the property employed. 

While different methods are in use for ascertaining the cost of passenger- 
train service and the results produced by such methods may show considerable 

1 A car-foot mile is a unit equal to moving 1 foot in car length (regardless of width 
cr height) 1 mile. Thus to move a car 60 feet lonjr 1 mile results in 60 car-foot miles; 
to Liove the same car 3 miles results in 180 car-foot miles, etc. 



12 RAILWAY MAIL PAY. 

variation, yet the mail pay is so far below reasonable compensation, from the 
standpoint of the cost of the service and a return upon the value of the prop 
erty, that no method can be reasonably urged which would not demonstrate 
the noncompensatory character of the present mail pay. This is illustrated by 
the method which the Postmaster General himself employed, as the character 
of that method is such that it necessarily produces the very lowest estimate of 
cost for the passenger-train service. 
The Postmaster General by his method of apportionment arrived 

at a cost of $2,676,503.75 

But this must be increased, as will be shown below, on account 

of his erroneous apportionment of car space (p. 10), by 800,802.00 

And also on account of his refusal to assign expenses directly 

incurred in the mail service (p. 12) 1 401, 126. 00 

Total, according to the Postmaster General's method of appor- 
tioning costs between passenger and freight traffic 3, 878, 431. 75 

Thus even the Postmaster General's method of apportioning costs between 
freight and passenger traffic produces an operating cost in excess of the total 
pay received by the railways, leaving nothing whatever for return upon the 
fair value of the property or necessary but nonincome-producing improvements.' 
There is no allowance in any of these estimates of cost for the large volume 
■of free transportation supplied to officers and agents of the Post Office Depart- 
ment when not in charge of mail, although this amounts to over 50,000,000 
passenger miles annually, and, at the low average rate of 2 cents per mile, 
would cost the Post Office Department more than $1,000,000 per year. 

Moreover, as will presently be shown (pp. 13-14) all the figures here dis- 
cussed are for the month of November, a month which, because of the abnor- 
mally low ratio of passenger traffic to freight traffic, substantially understates 
the cost of the passenger-train services, when figures derived from it are 
applied to an entire year. 

It thus becomes evident that any inquiry which takes into consideration the 
necessary elements of the situation will demonstrate that railway-mail pay is 
too low. It is only by ignoring essential elements of the service and of ex- 
pense and the fundamental element of a return on the value of the property 
that any argument to the contrary can be constructed. 

Thus the mail traffic does not pay its operating cost. That traffic is a sub- 
stantial percentage of the total public service performed by the railroads. It 
should contribute a substantial proportion to the taxes which the railroads 
have to pay and to the return on railroad property which its owners are en- 
titled to receive. Clearly no fair method can be devised which will fail to 
show that the existing mail pay is far below a fairly compensatory basis. Cer- 
tainly this condition ought not to be intensified by adding the injustice of still 
further reductions. On the contrary, the unjust reductions of recent years 
should be corrected for the future, and the railroads should be relieved from 
the strikingly unjust methods by which they are at present deprived of any- 
thing approaching fair compensation. 

V. THE POSTMASTER GENERAL'S APPORTIONMENT OF SPACE BETWEEN THE MAIL 
SERVICE AND THE OTHER SERVICES RENDERED ON PASSENGER TRAINS DID NOT 
ALLOW TO THE MAILS THE SPACE WHICH THEY ACTUALLY REQUIRE AND USE, AND 
THIS HAD THE RESULT OF UNDULY REDUCING HIS ESTIMATES OF THE COST TO THE 
RAILWAYS OF THE MAIL SERVICE. 

Detailed reference will now be made to the methods and controlling effect of 
the Postmaster General's apportionment of passenger-train space between the 
mails and the other services rendered on passenger trains. Such an appor- 
tionment was a necessary step in the calculations reported in Document No. 
105. Having obtained certain estimates of the cost of the passenger-train serv- 
ices considered together by methods producing the lowest results, the next 
step shown in Document No. 105 was to apportion a part of this cost to the 
mail service. The accepted method for such an apportionment is to distribute 
the total cost in proportion to the train space required by each of the respective 
services. The Postmaster General obtained from the railways statements which 

i There may be some duplication in this item, but to eliminate it would require an 
elaborate 6 computation which, in view of the broad margin o -expenses over re^pt* ia 
wholly superfluous. Whatever duplication exists must be small in comparison with 
(his margin. 



RAILWAY MAIL PAY. 13 

be might have used in applying this method, and these statements showed that 
9.32 per cent of the total space in passenger trains was required by the mails; 
but instead of using the data showing this fact, he substituted figures of his 
own which reduced the space credited to the mail service to 7.16 per cent of 
the total. The total of passenger-train costs which the Postmaster General 
estimated should be apportioned among passengers, express, and mail, on the 
basis of space occupied, was $37,074.172. 1 He therefore assigned to the mail 
service 7.16 per cent of the last-named sum, or $2,654,510.69. If, however, he 
had used the proportion of space, 9.32 per cent, resulting from the reports he 
had obtained from the railways, the amount apportioned as cost of the mail 
service for the month would have been $S00,802 greater. Multiplying this by 
12 gives an increase in the estimated annual cost of over $9,600,000. 

Thus the Postmaster General arrived at his declaration that the railways 
were getting an excess profit of $9,000,000 by means of two fundamental errors, 
omitting for the present reference to any other errors. He understated the 
annual mail expenses and taxes of the railways by at least $9,600,000, and ho 
ignored entirely the necessary return on the value of railroad property. 

This examination of his methods shows that the determination of space was 
of primary and controlling importance and that the changes in space allotment 
have destroyed the value of his deductions. These changes were due to his 
refusal to assign to the mail service the working space and temporarily un- 
occupied space on trains, which were necessary to the mail service, and to his 
actually assigning much of this space to the passenger service rendered on the 
same trains. 

It is scarcely necessary to note that all kinds of traffic require " working 
space " in addition to the space actually occupied by the traffic itself, and that 
this is especially true of the mail traffic, or that where there is a preponderating 
movement of a certain traffic in one direction there must be some empty space 
on account of that traffic, sometimes called " dead " space, in trains moving in 
the direction of lighter traffic. Thus passenger cars must have aisles, vestibules, 
and platforms, and postal cars must have a great deal of space in which to 
sort the mails while, for mail carried in baggage cars, there must be space in 
which to reach the pouches and to receive and deliver them through the doors. 
A through train must also have the full capacity required for the maximum 
traffic of any kind likely to seek accommodation on any part of its journey, 
although during much of each trip the actual traffic may be considerably below 
this limit. The Postmaster General, however, refused to credit the mail service 
with much of the space thus required by the department, although his figures 
for the other passenger-train services allowed fully for all such space required 
by them. In fact, in many cases such space actually required by the mails and 
so reported by the railways, was taken from the total mail space and, without 
reason, assigned to the passenger service. These modifications of the data 
correctly reported, not susceptible of justification upon any sound transportation 
principle, were carried so far that the tabulations of the Post Office Depart- 
ment, which are stated for railway mail routes having a total length of 
194.977.55 miles 2 show only 926,164,459 "car-foot miles" made in the mail 
service, although certain railways, included therein and having railway mail 
routes aggregating only 178,709.96 miles, had correctly reported mail space 
equivalent to 1,153,110,245 " car-foot miles." Thus, although the department's 
figures cover 8.3 per cent more mileage, its reductions of space resulted in 
assigning to this greater mileage about one-quarter (24.5 per cent) less mail 
space. At the same time the department actually increased the space assigned 
to the other passenger-train services, its figures showing 12,014,065.506 car-foot 
miles in these services for 194,977.55 miles of mail routes, which must be com- 
pared with 11,222,478,739 car-foot miles reported by the railways for 178,709.96 
mail-route miles. 

This treatment of the controlling figures as to space, supplementing the other 
errors of method and omissions of fact, which have been or will be cited, was 
amply sufficient to turn a real loss into an apparent profit. 

1 This is the sum which was apportioned by the Postmaster General on the basis of 
train space occupied. He estimated $40,121,294.83 (Doc. No. 105, p. 280) as the total 
operating expenses and taxes of the passenger-train services for the month. Of this 
total. $21,093.06 was charged directly to the mails and $3,025:129.77 directly to the 
other passenger-train services, leaving the sum stated in the text to be apportioned on 
the space basis. 

2 Doc. No. 105, p. 53. 

49396—14 2 



14 RAILWAY MAIL PAY. 

VI. THE POSTMASTER GENERAL IGNORED DATA WHICH HE HAD OBTAINED SHOWING 
EXPENDITURES ON ACCOUNT OF THE MAILS LARGELY IN EXCESS OF THE DIRECT 
EXPENSES FOR THAT SERVICE WHICH HE REPORTED. 

As a part of the investigation reported in Document No. 105 the Postmaster 
General obtained from the railways statements showing the amounts expended 
by them for the station and terminal services required by his department and 
the amount of free transportation furnished on his requisition for officers and 
agents of the postal service when not in charge of mail. These data were not 
used (Doc. No. 105, p. 6), and, as no adequate allowance was made in any other 
way for these expenses, the omission unjustly reduced the estimates of the cost 
to the railways of their postal service. The Postmaster General's explanation 
of this omission implies that it was partially offset by the assignment as cost of 
mail service of its proportion, on the space basis, of all the station and terminal 
expenses of the passenger- train services, but these special mail expenses are 
disproportionately heavy and the amount so assigned was far too low. The 
expenses for station and terminal services especially incurred for the mails 
during November, 1909, and reported to the Postmaster General for 92 per 
cent of the mileage covered by Document No. 105, aggregated $401,136, as 
follows : 

Amount of wages paid to messengers and porters employed ex- 
clusively in handling mails $79, 980. 84 

Portion properly chargeable to mail service, prorated on basis of 
actual time employed, of wages paid to station employees a part 
of whose time is employed in handling mails 198, 927. 01 

Amount expended for maintenance of horses and wagons and for 

ferriage, etc., in connection with mail service 5, 640. 98 

Rental value, plus average monthly cost of light and heat, of room 

or rooms set apart for the exclusive use of the mail service 37, 258. 93 

Rental value of tracks occupied daily for advance distribution of 
the mail 47, 029. 12 

Average monthly cost of light and heat for postal cars placed daily 

for advance distribution of mail 18. 400. 57 

Interest at the legal rate upon the value of cranes, catchers, and 
trucks required for mail service 3,895.36 

Total * 401, 126. 00 

All the foregoing data were reported to the Postmaster General in response 
to his request, but he made no use of these items, an omission manifestly to the 
serious disadvantage of the railways and having the effect of unduly reducing 
his estimates of the cost of the mail service. 

Similarly, the Postmaster General omitted to use the data he had obtained 
from the railways showing the volume of free-passenger transportation, already 
referred to, supplied to the officers and agents of the Post Office Department, 
and his estimates contain no recognition of the cost of this service, although its 
extent should be a matter of record in the department, as it is furnished only 
on its requisition. The space in passenger coaches occupied by these repre- 
sentatives of the Post Office Department, traveling free, was not assigned to 
the mail service, but was treated as passenger space. 

VII. THE MONTH OF NOVEMBER IS NOT A FAIR AVERAGE 1IONT3 IN ANY RAILWAY 
YEAR OR ONE THAT IS TYPICAL OF A YEAR'S BUSINESS AND ITS LTSE AS THE SOLE 
BASIS OF THE POSTMASTER GENERAL'S CALCULATIONS WAS SO UNFAVORABLE TO 
THE RAILWAYS AS TO DEPRIVE THE RESULTS OF ANY VALUE EVEN IF IN ALL OTHER 
RESPECTS HIS METHODS WERE BEYOND CRITICISM. 

All the Postmaster General's calculations, reported in Document No. 105, 
and by him relied upon therein, and elsewhere, to substantiate his attack upon 
existing railway mail pay, depend solely upon data for the single month of 
November, in the year 1909. It is obvious, therefore, that the validity of his 
conclusions, if all the rest of his processes were accurate and his deductions 
otherwise sound, would depend upon whether November is sufficiently typical 
of the railway year to be safely used as the sole basis for conclusions applicable 

1 This total includes $9,993.19 reported by four companies which gave totals for these 
items, but did not report the items separately. 



RAILWAY MAIL PAY. 15 

to a whole year. The truth is, however, that November is not a typical or 
average month and that all of its deviations from the averages of the year 
are such as greatly to favor the result which the Postmaster General was 
seeking. 

It may well be doubted whether the railway year contains any month that 
can properly be regarded as typical of the whole period, but if it does, the 
month of November, with 4 Sundays, 2 holidays, and only 24 working days, 
is certainly not such a month. The Interstate Commerce Commission publishel 
the monthly aggregates of railway receipts and these official data conclusively 
prove that November, 1909, was the one month for which the data were most 
strongly favorable to finding, by the Postmaster General's method, an abnor- 
mally low apparent cost for the passenger train services and, consequently, 
for the mail service. 

It is a month in which substantially winter conditions prevail in a large 
part of the country and, on this account, one during which much of the ordinary 
work of maintenance of way and structures must be suspended. Such work 
occasions a large fraction of the yearly expeuses of all railways and these ex- 
penses pertain in a relatively large proportion to the passenger services becaure 
the higher speed of passenger trains results in greater relative wear and tear upon 
roadbed and structures than that caused by the slower trains of the freight 
service and the requirements of safety to passengers carried at high speed 
impose more costly standards of maintenance than would otherwise be neces- 
sary. Consequently a month in which these maintenance expenses are neces- 
sarily below the yearly average ean not typify the full annual cost of the 
passenger train services. Figures showing the facts are contained in Appendix B. 

It is, of course, understood that the respective expenses of the passenger and 
freight services must move upward and downward with the fluctuations in the 
volume of each sort of traffic. No month can furnish a reliable basis for esti- 
mating the proportion of the total expenses that is caused by the passenger 
service unless during that month the volume of passenger traffic bears a normal 
relation to the volume of freight traffic. But in November, 1909, as will ap- 
pear from official figures for each month in the year contained in Appendix C, 
passenger traffic, as measured by receipts therefrom, was much below the 
average month of the year, while' freight traffic was far above the average. 
The November .receipts from passengers amounted to only 21.5 per cent of 
total receipts, the lowest relation shown for any month in the year. Of course, 
under these conditions passenger expenses were curtailed and freight expenses 
relatively enhanced. Certainly the use of data resulting from these abnormal 
relations could not possibly produce results fairly typical of a normal period — 
that is, of a whole year. The results so obtained must have diminished the 
apparent cost of the passenger-train services below the true cost by just as 
much as the figures for November were below the average figures of the year. - 

These considerations fully establish the truth that, if every other feature of 
Document No. 105 were absolutely beyond criticism, the fact that it rests 
wholly upon estimates based upon data for the single month of November 
would render its conclusions illusory, misleading, and seriously prejudicial t» 
the railways. 

VIII. A COMMISSION OF SENATOKS AND MEMBERS OF CONGRESS WHICH, BETWEEN 
1898 AND 1901, MOST FULLY AND CAREFULLY INVESTIGATED THE SUBJECT ASCER- 
TAINED AND DECLARED THAT RAILWAY MAIL PAY WAS NOT THEN EXCESSIVE; 
SINCE THEN THERE HAVE BEEN MANY AND EXTENSIVE REDUCTIONS IN PAY, AC- 
COMPANIED BY SUBSTANTIAL INCREASES IN THE COST AND VALUE OF THE SERVICES 
RENDERED BY THE RAILWAYS. 

The Congressional Joint Commission to Investigate the Postal Service, which 
reported on January 14, 1901, is authority for the fact that, at that time, rail- 
way-mail pay was not excessive. Senator William B. Allison, of Iowa ; Senator 
Edward S. Wolcott, of Colorado ; Senator Thomas S. Martin, of Virginia ; Rep- 
resentative Eugene F. Loud, of California; Representative W. H. Moody, of 
Massachusetts; and Representative T. C. Catchings, of Mississippi, six of the 
eight members of the commission, then united in the following : 

" Upon a careful consideration of all the evidence and the statements and 
arguments submitted, and in view of all the services rendered by the rail- 
ways, we are of the opinion that ' the prices now paid to the railroad compa- 
nies for the transportation of the mails' are not excessive, and recommend 
that no reduction thereof be made at this time." (S. Doc. No. 89, pp. 19, 22, 25, 
29, 52d Cong., 2d sess.) 



16 



RAILWAY MAIL PAY. 



Since the commission reported, the volume of the American mails, the revenue 
of the American postal service and its demands upon the railways for services 
and facilities have greatly increased. The costs of supplying railway trans- 
portation have also greatly increased. The necessary cost of railway property 
per unit of service has increased, and in consequence the amount required as 
a reasonable return thereon, on account of higher wages and prices, the higher 
standards of service demanded and the higher value of the real estate required 
for extended and necessary terminal plants. Operating expenses have grown by 
reason of repeated advances in rates of wages paid to employees of every grade 
and increased prices of materials and supplies. Taxes have increased with 
the rapidly augmenting exactions of State and local governments and the impo- 
sition of an entirely new Federal corporation tax. 1 Yet during this period of 
rapidly advancing railway expenses, and in spite of the fact that at its com- 
mencement the railway mail pay was not excessive, the rates of payment for 
railway mail services have been subjected to repeated and drastic decreases 
accomplished both by legislative action and by administrative orders. These 
reductions have so much more than offset the rather doubtful advantages which 
the railways might be assumed to have obtained from the increased volume 
of mail traffic that in 1912 they find their mail service more unprofitable than 
ever before. The following table shows the facts : 



Fiscal year. 


Total rail- 
way mail 
pay. 


Average 

railway 

mail pay 

per $100 of 

postal 
receipts 


1901 


$38,158,969 
43,971,848 
49, 758, 071 
49,405,311 
50,583,123 


$34.18 


1904 


30.62 


1907 


27.10 


1910 


22.04 


1911 


21.26 







The foregoing shows that the Post Office Department expended for railway 
transportation, in 1901, $34.18 in order to earn $100 in gross, and that by 1911 
this expenditure had been reduced 37.8 per cent to $21.26. 

This notable reduction was the consequence (first) of the operation of the 
law fixing mail pay under which the average payment per unit of service 
decreases as the volume of mail increases; (second) of the acts of Congress 
of March 2, 1907, and May 12, 1910; and (third) of administrative changes 
effected by the Post Office Department which, without decreasing the services 
required of the railways or enabling those services to be rendered at any lower 
cost, greatly reduced the payment therefor. Chief among these administrative 
changes was the Postmaster General's order known as the "divisor" order 
(No. 412 of June 7, 1907, superseding Order No. 165 of Mar. 2, 1907), radi- 
cally lowering the basis for calculating the annual payments for transportation. 
No official estimate of the reduction in the aggregate annual payment produced 
by the operation of the law fixing the scheme of payment has been made, but 
from time to time the department has published estimates of the reductions 
otherwise effected. None of these estimates is now up to date, and to make 
them comparable with the present volume of mail subs' antial increases would 
be necessary, but they are given below as representing an amount substantially 
less than the lowest possible statement of the total present annual reduction. 

Amount of 
Cause of reduction : annual reduction. 

Natural operation of the law No estimate. 

Acts of Mar. 2, 1907, and May 12, 1910 $2,723,658.90 

Withdrawal of pay for special facilities 167, 005. 00 

Postmaster General's divisor order 4, 941, 940. 34 

Other administrative changes 699, 544. 51 



Total (with no allowance for the first item above) 8,532,148.75 



1 Data indicating some of the increases in wages and taxes are given in Appendixes 
D and E. 



RAILWAY MAIL PAY. 17 

No one will contend for a moment that there has been any net reduction in 
the cost of supplying railway mail services and facilities since 1901, the year 
in which the report of the Joint Commission to investigate the Postal Service 
was made. In fact, all changes in railway operating costs, except those due 
to increased efficiency of organization and management, which can have little, 
if any, effect in connection with mail traffic, have been in the opposite direction. 
During the years characterized by these reductions the railways have been 
called upon continually to improve the character of their postal service and 
the Post Office Department will not deny that the railways are now rendering 
better, more frequent, and more expeditious postal service than in 1901, or any 
intermediate year, and are doing so at greatly increased cost to themselves. 

In view of these thoroughly substantiated facts the drastic reductions of 
recent years afford unanswerable proof that railway mail pay is now too low. 

IX. THE ADMINISTRATION OF THE POST OFFICE DEPARTMENT HAS NOT, IN THE 
LAST 12 YEARS, EFFECTED ANY REDUCTION IN THE ANNUAL TOTAL OF ITS EX- 
PENSES FOR OTHER PURPOSES THAN RAILWAY TRANSPORTATION OR IN THE PRO- 
PORTION OF ITS REVENUES REQUIRED FOR SLCH OTHER EXPENSES, BUT THE WHOLE 
SAVING WHICH HAS NEARLY ELIMINATED THE ANNUAL DEFICIT OF THE DEPART- 
MENT IS REPRESENTED BY THE REDUCED PAYMENTS, PER UNIT OF SERVICE, TO 
THE RAILWAYS. 

That the recent savings of the postal service have been wholly at the expense 
of the railways is shown by the following : 



1901 1911 



Postal gross receipts 8111, 631, 193 8237, 879, 823 

Postal expenses, all purposes: 

Total , 8115,554,921 8238,507,669 

Per cent of gross receipts 103.5 < 100.3i 

Railway mail pay: 

Total 838,158,969 850,583,123 

Per cent of gross receipts 34. 2 21. 3 

Postal expenses other than railway mail pay: 

Total 877,395,952 i 8187,924,546 

Per cent of gross receipts 69. 3 j 79. 

This table shows that in the 10 years from 1901 to 1911 the Post Office 
Department reduced its operating ratio between its total expenses and its gross 
receipts from 103.5 per cent to 100.3 per cent, being a reduction of 3.2 points; 
but it also shows that this improvement was due solely to the fact that the 
ratio of railway mail pay expenses to gross receipts was reduced from 34.2 
per cent to 21.3 per cent, a reduction of 12.9 points, while the ratio of all other 
expeuses to gross receipts increased from 69.3 per cent to 79 per cent, an in- 
crease of 9.7 points. Thus the improvement of 3.2 points in the ratio for all 
expenses was due entirely to the greatly reduced ratio of railway mail pay, 
the heavy reduction in that respect exceeding by 3.2 points the very substantial 
increase in the ratio of all other expenses. 

During the 10 years from 1901 to 1911 the department took up an enormous 
increase in business at a greatly decreased cost for railway transportation aad 
at a largely increased cost for other purposes. It cost the department, for 
purposes other than railway transportation, nearly nine-tenths of $126,248,630 
to add that amount to its gross receipts (although for these other purposes it 
had previously spent less than seven-tenths of its gross receipts), while it re- 
quired less than one-tenth of the same sum to pay for the added railway 
transportation that the new business required (although at the beginning of 
the period railway transportation had cost more than one-third of the gross 
receipts). This startling comparison fully warrants the conclusion that the 
power of Congress and the department has been exercised to force upon the 
railways, by reducing the payments for their services, the burden not only of 
the effort to eliminate the annual postal deficit but of considerable increases 
in other forms of postal expenditure. No reference to rural free delivery will 
serve to explain away the conclusion suggested by this comparison, especially 
since only a fraction of the cost of that service represents really an additional 
net outlay. This service has permitted a reduction of one- third in the number 
of post offices and has been in many cases substituted for star route service 
and Hie savings thus permitted ought to be credited to it before determining 
its cost. 



18 RAILWAY MAIL PAY. 

That increases in postal expenditures were necessary between 1901 and 1911 
is not denied. The period was one in which steady and extensive increases in 
the cost of living made necessary considerable increases in the salaries of postal 
employees and in the cost of postal supplies, precisely as the railways were im- 
pelled to increase the salaries and wages of their employees and were obliged 
to pay higher prices for their supplies. In other words, the purchasing power 
of the American dollar, and of standard money everywhere, greatly decreased 
and this decrease affected the Post Office Department as it has affected every 
business undertaking. But the purchasing power of the railway dollar de- 
creased exactly as that of all other dollars and it was unreasonable and unjust 
that while this change was in progress the losses which it entailed in the postal 
service of the Government should be shifted, as it has been shown that they 
were, to the railways which were, at the same time, suffering far greater 
losses from the same cause. 

X. THE CONTINUOUS KEFUSAL OF THE POST OFFICE DEPARTMENT TO ORDER REWEIGH- 
INGS OF THE MAILS EXCEPT AFTER THE MAXIMUM INTERVAL OF FOUR YEARS, 
WHICH THE LAW ALLOWS, THE DEMANDS FOR STATION AND TERMINAL SERVICES 
THAT ARE RENDERED WITHOUT ANY OR WITHOUT ADEQUATE COMPENSATION, AND 
THE UNJUST DISCRIMINATION AGAINST COMPARTMENT CARS USED AS RAILWAY 
POST OFFICES ARE ALL ABUSES, SERIOUSLY INJURIOUS TO THE RAILWAYS, WHICH 
HAVE GROWN UP UNDER THE PRESENT SYSTEM OF PAYMENT AND OUGHT AT ONCE 
TO BE REMEDIED. 

In addition to the inadequacies in the rates of pay provided under the present 
law, which result in payments that do not leave any balance for taxes or 
return upon property and, indeed, do not even meet operating expenses, there 
are certain conditions which have grown up in the application of the existing 
basis of pay that ought to be rectified. This is especially necessary in view of 
the tendency, herein shown, of the Post Office Department to apply the system 
so as to reduce its expense for railway transportation, and to look to this item 
as the chief or sole source of economies. 

The transportation pay received for each railway route is determined, under 
the practice of the department, for a period of four years on the basis of the 
average daily weight carried during a period of about three months' duration 
prior to the beginning of the period for which it is fixed. Thus, by the terms 
of the law, the Government upholds the principle that weight should be the 
basis of payment, but, by an inconsistent practice, denies that principle and 
creates a condition under which it is practically certain that the weight actually 
carried will differ materially from the weight paid for. Congress, surely, never 
intended this result, for the provision of law is, merely, that the mail shall be 
weighed " not less frequently " than once in four years and clearly implies an 
intention that it should be weighed whenever a substantial change in volume 
lias taken place. But the Post Office Department controls, subject to the pro- 
vision of law, the frequency of the weighings, and naturally seeks those reduc- 
tions in its expenses which can be effected without loss anywhere except in 
railway revenues. Consequently, it long ago ceased to order new. weighings, 
except when compelled to do so by the expiration of the statutory limit. It 
thus happens that while the railways are paid on the basis of a certain average 
daily weight they are frequently carrying a much greater weight and with no 
compensation whatever for the increase in the weight. In other instances the 
change is in the opposite direction, but with increasing national population and 
wealth it is obvious that most of these changes must be to the injury of the 
railways. However, the element of uncertainty thus introduced into each con- 
tract is unbusinesslike and in fairness to both parties ought to be removed. No 
railway would make a four years' contract to carry, for a definite sum, the 
unlimited output of any manufacturing plant, and if it attempted to do so the 
contract would be void under the interstate-commerce law. The terms of the 
mail contracts are substantially dictated by the Postmaster General and by 
Congress, and the latter ought, in justice both to the railways and to the Gov- 
ernment, to require the former to make annual weighings in order that the 
scheme of payment provided in the law may be fairly and accurately applied. 

Railways are required to transfer the mails between their stations and all 
post offices not more than a quarter of a mile distant from the former and, at 
the election of the Post Office Department, to make similar transfers at ter- 
minals. For the former no compensation is accorded, and for the latter the 
allowances are inadequate. There are numerous instances in which these extra 
services require expenditures, on the part of the railways concerned, that ex- 



RAILWAY MAIL PAY. 19 

ceed tlie total compensation of the mail routes on which they occur. The extent 
of these requirements in particular cases is largely subject to the will of the 
department and this produces unreasonable uncertainties as to what may be 
demanded during the life of any contract. The basis of payment plainly does 
not contemplate such service; they are a survival from the period when the 
mails were carried by stagecoaches, which could readily deviate these dis- 
tances from their ordinary routes, and it is clear that the Government ought 
to perform these services itself or reasonably compensate the railways therefor. 
Much of tbe mail moved by the railways is carried in cars especially equipped 
as traveling post offices in order that it may be accompanied by postal clerks 
who perform, on the journey, precisely the labor which they would otherwise 
perform in local post offices. Cars so used can be but lightly loaded and are 
costly to supply, to equip, to maintain and to move. Their use has greatly 
increased the efficiency of the postal service and vastly expedited the handling 
of the mails. In the infancy of this service Congress provided for additional 
payments for the full cars so required, but when the practice of requiring por- 
tions of cars for the same identical purpose was inaugurated no provision for 
paying for them was made and this condition never has been corrected. Even 
in Document No. 105, the injustice of this situation is recognized (p. 3) and 
the Postmaster General asserts that it is a purely arbitrary discrimination and 
without logical basis. Obviously a reasonable allowance for apartment cars 
ought to be made. 

XI. THE POSTMASTER GENERAL'S PROPOSED PLAN OF PAYMENT BASED UPON OPER- 
ATING COST AND TAXES, TO BE ASCERTAINED BY THE POST OFFICE DEPARTMENT, 
PLUS 6 PER CENT, IS SERIOUSLY WRONG IN PRINCIPLE AND WOULD ENCOURAGE 
AND PERPETUATE INJUSTICE. 

The foregoing discussion makes plain the error and injustice in the Post- 
master General's proposal to pay the railways for carrying the mail upon the 
basis of returning to them the operating expenses and taxes, as ascertained by 
the Post Office Department, attributable to the carriage of the mails, plus G 
per cent of the sum of these expenses and taxes. 

The discussion under heading III above demonstrates that the plan leaves out 
of consideration any allowance for return upon the property and would be de- 
structive of the universally recognized rights of the railroad companies. 

Furthermore, such a plan is fundamentally erroneous because it involves pay- 
ing the highest rates to the railroad that by reason of physical disabilities or 
inefficient methods is most expensively operated and the lowest rates to the 
railroad which, by reason of the highest efficiency, operates at the lowest cost. 
A railroad's superior operating efficiency is frequently due to exceptionally 
heavy capital expenditures to obtain low grades, two, three, or four main tracks, 
and to improve in other respects the roadbed and tracks to the end that trains 
may be hauled at the lowest expense. Such a railroad needs and is entitled to 
sufficient net earnings to enable it to pay a proper return upon the increased 
value which is due to such expenditures. But under the Postmaster General's 
plan a railroad would be penalized for all the capital expenditures made by it 
for the purpose of decreasing its operating cost, because the more it decreased 
its operating cost the more it would decrease its mail pay. 

The ascertainment of the cost to a railroad of conducting mail service is 
necessarily very largely a matter of judgment and opinion, because a large 
proportion of the total operating expenses are common to the freight and pas- 
senger traffic and can only be approximately apportioned. There is room for a 
very wide discretion in the making of such apportionments. It would not be 
right or proper to intrust the Post Office Department with the discretion of 
making such apportionment, because the Post Office Department has an obvious 
interest at stake, its object always being to reduce the railroad pay to a mini- 
mum. 

The last preceding statement is fully justified by the facts disclosed by the 
foregoing pages, which show how consistently tbe Post Office Department has 
relied upon reductions in railway mail pay as the ever available source of de- 
sired curtailments of expenses, and how unsuccessfully the railways have re- 
sisted this persistent pressure. They show that successive Postmasters General 
have taken advantage of every legal possibility, such as taking the longest time 
between mail weighings which the law permits and the strained interpretation 
of the statute fixing the basis of payment (p. 10), in order to effect reductions 
in railway mail pay. Consequently, the facts point irresistibly to one conclu- 
sion, namely, that the Post Office Department is a bureaucratic entity with an 



I 



20 RAILWAY MAIL PAY. 

interest in the reduction of the amounts paid to the railways that is incompati- 
ble with an impartial ascertainment of what is fair compensation. This inter- 
est, coupled with the brief tenure of the responsible officers of the department, 
must always incline the latter to support insufficient standards of mail pay and 
prevent their recognizing the ultimate necessity of paying fairly for efficient 
service. It would, therefore, be clearly inexpedient and strikingly unjust to 
place railway mail revenues wholly at the mercy of the department by enacting 
a law which would authorize each Postmaster General to fix railway mail pay 
on the basis of his own inquiries and opinions in a field in which so much must 
be left to estimate and approximation as that of the relative or actual cost of 
the different kinds of railway service. 

It is conceded that every railway mail contract is between the Government, 
which is the sovereign, and a citizen, and that the nature and terms of the con- 
tract are always substantially to be dictated by the former. But this very 
condition invokes the principle of primary justice, that the sovereign shall take 
care to exercise its power without oppression. To this end the determination 
of the terms on which the Post Office Department may have the essential 
services of the railways ought to be reserved, as at least partially in the past, 
to the Congress, or if delegated at all, they should be intrusted to some bureau 
or agency of Government not directly and immediately interested in reducing 
railway mail pay below a just and reasonable compensation. 

Appendix A. 

EXTRACTS FROM THE POSTAL LAWS AND REGULATIONS. 

Railroad companies, at stations where transfer clerks are employed, will 
provide suitable and sufficient rooms for handling and storing the mails, and 
without specific charge therefor. These rooms will be lighted, heated, furnished, 
supplied with ice water, and kept in order by the railroad company. (Sec. 
1186, par. 2.) 

The specific requirements of the service as to * * * space required * * * 
at stations, fixtures, furniture, etc., will at all times be determined by the Post 
Office Department and made known through the General Superintendent of 
Railway Mail Service. (Sec. 1186, par. 3.) 

Railroad companies will require their employees who handle the mails to keep 
a record of all pouches due to be received or dispatched by them, and to check 
the pouches at the time they are received or dispatched, except that no record 
need be kept of a single pouch from a train or station to the post office or from 
the post office to a train or station which, in regular course, is the only pouch 
in the custody of the company's employees at that point while it is being 
handled by them. This is not to be construed as relieving railroad companies 
from having employees on trains keep and properly check a record of all closed 
pouches handled by them, without exception. (Sec. 1187, par. 1.) 

In case of failure to receive any pouch due, a shortage slip should be made 
out, explaining cause of failure, and forwarded in lieu of the missing pouch. 
Specific instructions in regard to the use of shortage slips will be given by the 
General Superintendent of Railway Mail Service. (Sec. 1187, par. 2.) 

Every irregularity in the receipt and dispatch of mail should be reported by 
the employee to his superintendent promptly, and if a probable loss of or damage 
to mail is involved, or if the cause of failure to receive a pouch is not known, 
the report should be made by wire, and the superintendent will notify the divi- 
sion superintendent of Railway Mail Service without delay. A copy of the 
employee's report should be attached to and become a part of the permanent 
pouch record. (Sec. 1187, par. 3.) 

Train pouch records will be kept on file at the headquarters of division 
superintendents of railroad companies for at least one year immediately fol- 
lowing the date the mail covered by them was handled, and shall be accessible 
there to post-office inspectors and other agents of the Post Office Department. 
Station pouch records will be kept on file at the station to which they apply 
for at least one year immediately following the date the mail covered by them 
was handled, and shall be accessible there to post-office inspectors and other 
agents of the Post Office Department. ( Sec. 1187, par. 4. ) 

Railroad companies will require their employees to submit pouch records for 
examination to post-office inspectors and other duly accredited agents of the 
Post Office Department upon their request and exhibition of credentials to such 
employees. (Sec. 1187, par. 5.) 

Every railroad company is required to take the mails from and deliver them 
into all terminal post offices, whatever may be the distance between the station 



RAILWAY MAIL PAY. 21 

and post office, except in cities where other provision for such service is made 
by the Post Office Department. In all cases where the department has not made 
other provision, the distance between terminal post office and nearest station 
is computed in and paid for as part of the route. (Sec. 1191, par. 1.) 

The railroad company must also take the mails from and deliver them into 
all intermediate post offices and postal stations located not more than 80 rods 
from the nearest railroad station at which the company has an agent or other 
representative employed, and the company shall not be relieved of such duty on 
account of the discontinuance of an agency without 30 days' notice to the 
department. (Sec. 1191, par. 2.) 

At connecting points where railroad stations are not over 80 rods apart, a 
company having mails on its train to be forwarded by the connecting train will 
be required to transfer such mails and deliver them into the connecting train, 
or, if the connection is not immediate, to deliver them to the agent of the com- 
pany to be properly dispatched by the trains of said company. (Sec. 1192.) 

At places where railroad companies are required to take the mails from and 
deliver them into post offices or postal stations or to transfer them to connect- 
ing railroads, the persons employed to perform such service are agents of the 
companies and not employees of the postal service and need not be sworn; 
but such persons must be more than 16 years old and of suitable intelligence 
and character. Postmasters will promptly report any violation of this require- 
ment. (Sec. 1193.) 

Where it is desirable to have mails taken from the post office or postal station 
to train at a terminal point where the terminal service devolves upon the com- 
pany, in advance of the regular time of closing mails, the company will be 
lequired to make such advance delivery as becomes necessary by the require- 
ments of the service. (Sec. 1194.) 

When a messenger employed by the Post Office Department can not wait for 
a delayed train without missing other mails, the railroad company will be 
required to take charge of and dispatch the mails for the delayed train, and will 
be responsible for the inward mail until delivered to the messenger or other 
authorized representative of the department. (Sec. 1195.) 

Whenever the mail on any railroad route arrives at a late hour of the night 
the railroad company must retain custody thereof by placing the same in a 
secure and safe room or apartment of the depot or station until the following 
morning, when it must be delivered at the post office, or to the mail messenger 
employed by the Post Office Department, at as early an hour as the necessities 
of the post office may require. (Sec. 1196.) 

When a train departs from a railroad station in the nighttime later than 
9 o'clock, and it is deemed necessary to have the mail dispatched by such train, 
the division superintendent of Railway Mail Service will, where mail is taken 
from and delivered into the post office by the railroad company, request the 
company, or where a mail messenger or carrier is employed by the Post Office 
Department, will direct him, to take the mail to the railroad station at such 
time as will best serve the interest of the mail service. Such mail will be taken 
charge of by the agent or other representative of the railroad company, who 
will be required to keep it in some secure place until the train arrives, and 
then see that it is properly dispatched. (Sec. 1197, par. 1.) 

The division superintendent of Railway Mail Service will give reasonable 
advance notice to the proper officer of the railroad company, in order that the 
agent or representatives of the company may be properly instructed. (Sec. 1197, 
par. 2.) 

Railroad companies will be expected to place their mail cars at points acces- 
sible to mail messengers or contractors for wagon service. If cars are not so 
placed the companies will be required to receive the mails from and deliver them 
to the messengers or contractors at points accessible to the wagon of the mes- 
senger or contractor. (Sec. 1198.) 

A mail train must not pull out and leave mails which are in process of being 
loaded on the car or which the conductor or trainman has information are be- 
ing trucked from wagons or some part of the station to the cars. (Sec. 1199.) 

At all points at which trains do not stop where the Post Office Department 
deems the exchange of mails necessary, a device for the receipt and delivery 
of mails satisfactory to the department must be erected and maintained ; and, 
pending the erection of such device, the speed of trains must be slackened so as 
to permit the exchange to be made with safety. ( Sec. 1200, par. 1. ) 

In all cases where the department deems it necessary to the safe exchange of 
the mails the railroad company will be required to reduce the speed or stop the 
train. (Sec. 1200, par. 2.) 



22 



RAILWAY MAIL PAY. 



When night mails are caught from a crane the railroad company must fur- 
nish the lantern or light to be attached to the crane and keep the same in 
proper condition, regularly placed and lighted; but if the company has no 
agent or employee at such station, the company must furnish the light, and the 
care and placing of same will devolve upon the department's carrier. (Sec. 
1200, par. 3.) 

The engineer of a train shall give timely notice, by whistle or other signal, 
of its approach to a mail crane. (Sec. 1200, par. 4.) 

Railroad companies are required to convey upon any train, without specific 
charge therefor, all mail bags, post-office blanks, stationery, supplies, and all 
duly accredited agents of the Post Office Department and post-office inspectors 
upon the exhibition of their credentials. ( Sec. 1184. ) 

Appendix B. 

Classification of operating expenses. 
[Data from reports of the Interstate Commerce Commission.] 





Average cost per mile of line. 


Class. 


Fiscal year 1910. 


November, 1909. 


Monthly average 

for the other 11 

months of the fiscal 

year. 




Amount. 


Monthly 
average. 


Amount. 


Per 
cent of 
monthly 
average 
for the 
fiscal 
year. 


Amount. 


Per 
cent of 
monthly 
average 
for the 
fiscal 
year. 


Maintenance of way and structures 


$1,562.88 

1, 746. 00 

220. 61 

2, 893. 71 

287. 71 


$130.24 

145.50 

18.38 

324. 48 

23.98 


$124. 04 
148.44 

18.85 
327. 78 

23.10 


95.24 
102. 02 
102. 56 
101. 02 

96.33 


$130. 80 

145. 23 

18.34 

324. 18 

24.06 


100.43 
99 82 


Traffic expenses 


99.78 


Transportation expenses 


99.91 




100.33 






Total 


7,710.91 


642. 58 


642. 21 


99.94 


642. 61 


100.00 







Appendix C. 

Receipts from passenger and freight traffic, oy months. 

[Data from reports of the Interstate Commerce Commission.] 





Passenger receipts 
of line. 


per mile 


Freight receipts per mile 
of line. 


Per cent of 
passenger 
receipts to 

receipts 
from both 
passengers 
and freight. 


Month. 


Total. 


Daily 

average. 


Per cent 
of daily 
average 
for year. 


Total. 


Daily 

average. 


Per cent 
of daily 
average 
for year. 


1909. 
July 


$251. 66 
269. 70 
254.95 
231.80 
206.69 
211. 55 

187.42 
171.92 
202. 61 
203. 84 
218.47 
233.25 


$8.12 
8.70 
8.50 
7.48 
6.89 
6.82 

6.05 
6.14 
6.54 
6.79 
7.05 
7.78 


112. 15 
120. 17 
117.40 
103.31 
95.17 
94.20 

83.56 
84.81 
90.33 
93.78 
97.38 
107.46 


$608. 67 
653. 97 
704. 51 
781.91 
752. 69 
640.59 

618. 06 
603. 76 
716. 76 
658. 93 
682. 96 
674.97 


$19.63 
21.10 
23.48 
25.22 
25.09 
20.66 

19.94 
21.56 
23.12 
21.96 
22.03 
22.50 


88.46 
95.09 
105. 81 
113.65 
113.07 
93.11 

89.86 
97.16 

104.19 
98.96 
99.28 

101.40 


29.25 


August 


29.20 




26.57 


October 


22.87 




21.54 




24.83 


1910. 
January 


23.27 




22.16 


March 


22.04 




23.63 




24.24 




25.68 








220. 32 


7.24 


100. 00 


674. 81 


22.19 


100.00 


24.61 







KAIL WAY MAIL PAY. 



23 



Appendix D. 



HOW RAILWAY WAGES HAVE INCREASED. 



In the year 1901 the railways reporting to the Interstate Commerce Commis- 
sion received, in gross, from operating sources the sum of $1,588,528,037 and 
expended in wages and salaries the sum of $610,713,701 ; in 1910 the correspond- 
ing totals were $2,750,667,435 and $1,143,725,306. Computations from these 
totals show that in 1901 the railways expended in wages and salaries $38.45 out 
of each $100 of gross operating receipts, while in 1910 the proportion had in- 
creased to $41.58, a difference of $3.13 in each $100 of gross receipts. This 
difference does not seem small, but it is hardly realized, except when the calcu- 
lation is made, that on the basis of the gross receipts of 1910 it would amount, 
as it does, to an additional expense of $86,095,890.72. It is to be borne in mind 
that this largely increased payment to labor is in spite of the fact that a part 
of the increase in wage rates has been offset by higher efficiency in method and 
facilities. Comparisons of rates of wages, from the annual statistical reports 
of the Interstate Commerce Commission, follow : 



Class of employees. 



General office clerks 

Station agents 

Other station men 

Enginemen 

Firemen 

Conductors 

Other trainmen 

Machinists 

Carpenters 

Other shopmen 

Section foremen 

Other trackmen 

Telegraph operators and dispatchers 

Employees, account floating equipment 
All other employees and laborers 



Average wages per day. 



1901 



$2. 19 



77 



78 

16 

17 

00 

32 

06 

75 

1.71 

1.23 

1.98 

1.97 

1.69 



1910 Increase. 



$2.45 
2.14 
1.91 
4.34 
2.57 
3.73 
2.72 
3.03 
2.39 
2.20 
1.99 
1.57 
2.16 
2.10 
1.96 



Per cent. 
11.87 
20.90 
20.13 
14.81 
18.98 
17.67 
36.00 
30.60 
16.02 
25.71 
16.37 
27.64 
9.09 
6.60 
15.98 



Appendix E. 

HOW RAILWAY TAXES HAVE INCREASED. 

[Data from reports of the Interstate Commerce Commission.] 



Year. 


Amount paid. 


Average 
per mile 
operated. 


Per cent 
of net re- 
ceipts. 

■ 


1900 


$48,332,273 
50,944,372 
54,465,437 
57,849,569 
01,696,354 
63,474,679 
74,785,615 
80,312,375 
84,555,146 
90,529,014 

103,795,701 


$251. 00 
260.50 
272. 12 
281.76 
290. 69 
292. 55 
336. 36 
353. 09 
366. 84 
384.57 
430. 99 


8.7 


1901 


8.6 


1902 


8.3 


1903 


8.4 


1904 


9.0 


1905 


8 5 


1906 


8.8 


1907 


8.9 


1908 » 


10.7 


1909 i r 


10.1 


1910 1 


10.3 







1 Not including terminal and switching companies. 
LIST OF RAILROADS EXPRESSLY INDORSING FOREGOING BRIEF. 



The following railroads, represented by the officials indicated, have 
responded to my circular letter of September 11, by referring to and 



24 RAILWAY MAIL PAY. 

giving their indorsement of the response of the committee on rail- 
way mail pay : 

Augusta Southern Railroad Co., A. B. Andrews, president. 

Atchison, Topeka & Santa Fe System, George T. Nicholson, vice president. 

Atlantic Coast Line Railroad Co., T. M. Emerson, president. 

Arizona Eastern Railroad Co., Epes Randolph, president. 

Arkansas, Louisiana & Gulf Railway Co., J. M. Parker, general manager. 

Bellingham Bay & British Columbia Railroad Co., Mott Sawyer, superin- 
tendent. 

Blue Ridge Railway Co., A. B. Andrews, president. 

Chicago & Alton Railroad Co., B. A. Worthington, president. 

Coal & Coke Railway Co., A. M. Smith, general manager. 

Central Vermont Railway Co., G. C. Jones, general manager. 

Cornwall & Lebanon Railroad Co., A. D. Smith, president and general 
manager. 

Chicago & Western Indiana Railroad Co. and The Belt Railway Co., of Chi- 
cago, J. M. Warner, general manager. 

Colorado Midland Railway Co., George M. Vallery, president. 

Central Indiana Railway Co., Joseph Robinson, president. 

Chicago, Indianapolis & Louisville Railway Co., Fairfax Harrison, president. 

Carolina, Clinchfield & Ohio Railway, Mark W. Potter, president. 

Central of Georgia Railway Co., Charles H. Markham, president. 

Chesapeake & Ohio Railway Co., M. J. Caples, fourth vice president. 

Denver, Northwestern & Pacific Railway Co., W. A. Beerbower, general super- 
intendent for receivers. . 

Delaware & Hudson Co., L. L. Loree, president. 

Danville & Western Railway Co., A. B. Andrews, president. 

Delaware & Hudson Co., C. S. Sims, second vice president and general 
manager. 

Delta Southern Railway, R. V. Taylor, president. 

Erie Railroad Co., J. C. Stuart, vice president. 

Great Northern Railway Co., Carl R. Gray, president. 

Georgia Northern Railway Co., C. W. Pidcock, president. 

Georgia Railroad, Thomas K. Scott, general manager. 

Gulf & Ship Island Railroad Co., W. T. Stewart, vice president and general 
manager. 

Georgia & Florida Railway. W. B. Denham, general manager. 

Hartwell Railway Co., A. B. Andrews, president. 

Hocking Valley Railway Co., M. S. Connors, general manager. 

Huntingdon & Broad Top Mountain Railroad & Coal Co., Carl M. Gage, 
president and general manager. 

Illinois Central Railroad Co., C. H. Markham, president. 

Kansas City, Clinton & Springfield Railway Co., E. J. Perry, vice president. 

Kansas City, Mexico & Orient Railway Co., Neal S. Doran, auditor for re- 
ceivers. 

Kansas City Southern Railway Co., J. A. Edson, president. 

Las Vegas & Tonopah Railroad Co., J. Ross Clark, president. 

Lehigh & Hudson River Railway Co., Morris Rutherford, vice president and 
general manager. 

Lehigh & New England Railroad Co., Rollin H. Wilbur, vice president and 
general mannger. 

Lexington Terminal Railroad Co., Thos. K. Scott, vice president. 

Maine Central Railroad Co., Morris McDonald, vice president and general 
manager. 

Macon, Dublin & Savannah Railroad, S. T. Wright, vice president and general 
manager. 

Manistee & Grand Rapids Railroad Co., Chas. H. Morey, vice president. 

Minneapolis, St. Paul & Sault Ste. Marie Railway Co., E. Pennington, presi- 
dent. 

Missouri, Kansas & Texas Railway Co., W. A. Durham, assistant general 
manager. 

Missouri & North Arkansas Railroad, George L. Sands, receiver. 

Missouri, Kansas & Texas Railway Co. ; Missouri, Kansas & Texas Railway 
Co. of Texas; Texas Central Railroad Co.; Wichita Falls Lines; W. A. Webb, 
general manager. 

Montana, Wyoming & Southern Railroad Co., M. W. Maguire, general man- 
ager. 



RAILWAY MAIL PAY. 25 

Mobile & Ohio Railroad Co., R. V. Taylor, vice president and general man- 
ager. 

Nashville, Chattanooga & St. Louis Railway, J. W. Thomas, jr., president and 
general manager. 

New York, Auburn & Lansing Railroad, H. A. Clarke, general manager for 
receivers. 

New York Central Lines, W. C. Brown, president. 

New York, Chicago & St. Louis Railroad Co., A. W. Johnston, general man- 
ager. 

New York, Ontario & Western Railway Co., John B. Kerr, vice president. 

Norfolk Southern Railroad Co., Morris S. Hawkins, secretary. 

Northwestern Pacific Railroad Co., A. H. Payson, president. 

Oregon- Washington Railroad & Navigation Co., J. D. Farrell, president. 

Pacific Railway & Navigation Co., D. W. Campbell, president. 

Pennsylvania Railroad Co. ; Philadelphia, Baltimore & Washington Railroad 
Co. ; Northern Central Railway Co. ; West Jersey & Seashore Railroad Co. ; 
New York, Philadelphia & Norfolk Railroad Co. ; Cape Charles Railroad Co. ; 
Baltimore, Chesapeake & Atlantic Railway Co. ; Maryland, Delaware & Virginia 
Railway Co. ; Pennsylvania Co. ; Pittsburgh, Cincinnati, Chicago & St. Louis 
Railway Co. ; Vandalia Railroad Co. ; Grand Rapids & Indiana Railway Co. ; 
Cincinnati, Lebanon & Northern Railway Co.; Waynesburg & Washington Rail- 
road Co. ; Toledo, Peoria & Western Railway Co. ; E. T. Postlethwaite, assistant 
to president. 

Pere Marquette Railroad Co., S. M. Felton, receiver. 

Ray & Gila Valley Railroad Co., D. C. Jackling, vice president and general 
manager. 

Richmond, Fredericksburg & Potomac R. R. Co., Wm. H. White, president. 

Rock Island Lines, John Sabastian, third vice president. 

Rutland Railroad Co., Geo. T. Jarvis, general manager. 

Salem Falls City & Western Railway, D. W. Campbell, president. 

San Antonio & Aransas Pass Railway Co., J. S. Peter, first vice president and 
general manager. 

San Pedro, Los Angeles & Salt Lake Railroad, H. C. Nutt, general manager. 

Spokane, Portland & Seattle Railway Co., J. H. Young, president. 

Southern Pacific Railroad Co., William Sproule, president. 

Southern Railway Co., A. B. Andrews, first vice president. 

Southern Railway Co., in Mississippi, R. V. Taylor, vice president and general 
manager. 

St. Louis, Rocky Mountain & Pacific Railway Co., J. Van Houten, president. 
Tallulah Falls Railway Co., A. B. Andrews, president. 

Tonopah & Goldfield Railroad Co., M. B. Cutter, president. 

Union Pacific Railroad Co., Oregon Short Line Railroad Co., A. L. Mohler, 
president. 

Union Point & White Plains Railroad Co., Thomas K. Scott, general manager. 

Virginia & Carolina Southern Railroad Co., J. P. Russell, general superin- 
tendent. 

Virginia & Southwestern Railway Co., E. H. Coapman, vice president and 
general manager. 

Wadley Southern Railway Co., William A. Winburn, president. 

Wheeling & Lake Erie Railroad Co., W. M. Duncan, receiver. 

Winston-Salem Southbound Railway Co., H. E. Fries, president. 

Yazoo & Mississippi Valley Railroad Co., C. H. Markham, president. 

VIEWS OF SHORT-LINE RAILROAD ASSOCIATION. 

Under date of December 31, 1912, the Short Line Eailroad Asso- 
ciation, by Mr. John N. Drake, its secretary and treasurer, represent- 
ing independent short-line mail-carrying railroads, operating in every 
section of the country, submitted the following letter : 

Short Line Railroad Association. 

New York, December 31, 1912. 
Committee on Post Offices and Post Roads, 

United States Senate, Washington, D. G. 
Gentlemen : The Short Line Railroad Association, representing independent 
short-line mail-carrying railroads, operating in every section of the country, 
begs to submit for your consideration their plea for fair and equitable treat- 



26 KAILWAY MAIL PAY. 

merit based upon reasonable compensation for the services they render the 
Government. 

Their pay now, notwithstanding the increased facilities they have provided 
and the increased responsibilities they have assumed, with the additional cost 
incident thereto, is less by 10 per cent than it was prior to the act of July 12, 
1876, and 5 per cent additional to that since July, 1878. It has also decreased 
one-seventh since 1907, when the Post Office Department, in .contravention to 
law and established custom, changed the divisor from six days to seven. 

In the early days of railway mail transportation the small quantity of mail 
carried by the few short-line railroads was in mail bags placed in any con- 
venient location in the baggage cars. As the labor and expense of hauling this 
light mail was negligible, no objection was made to its delivery at the post 
offices located at terminals, nor to observing the obsolete English custom 
adopted by the Post Office Department, which obtained in the old stagecoach 
days, of delivering mail at post offices 80 rods or less from the post roads. One 
mail a day was the limit of the service, and the little packages were easily 
handled and delivered by an employee of the road, whose pay then was small 
and who had plenty of time to give the slight service, without interfering with 
his other duties. 

In the great developments which have taken place since those bygone days 
short-line railroads have multiplied a hundredfold, the little mail pouch has 
grown to an apartment car, the small bundle for delivery to a wagonload. The 
march of progress and improvement has permeated every branch of the rail- 
way mail service, and will continue to do so if properly supported by the Gov- 
ernment. The little mail-carrying roads, however, can not meet growing de- 
mands handicapped by obsolete customs and unbusinesslike methods. They 
can not donate in the future, as in the past, their car space, and fit it up at 
their own expense as a post office, carrying mail messengers to perform post- 
office duties without being recompensed in some slight degree for the service. 

In the experimental stage of using apartment-car space in addition to full- 
car space for post-office purposes our roads readily granted the privilege, under 
the assumption that the Government when it had demonstrated the feasibility 
and usefulness of the method they had adopted would unhesitatingly amend 
the law granting pay for a 40 foot or more car in length to cover those of 
lesser extent No provision, however, has been made to do this nor has any 
disposition been displayed on the part of the Government to take such action. 
From a few apartment cars used as auxiliaries to help out full cars, the growth 
has been marvelous and unprecedented — 3,800 apartment cars last year against 
1,464 full cars. Full cars entitled to receive pay under the law will soon cease 
to be used except upon the largest railroad systems, if the present policy of the 
Post Office Department is permitted to continue without suitable regulation by 
law. In order to accomplish this purpose it is only necessary for the depart- 
ment to split hairs and order a 35 or a 38, or even a 39 foot car. 

The short-line railroads are not asking subsidies or special privileges, but 
they do ask that they be treated with the same consideration and accorded the 
.same rights granted to other systems of railroads for a like service. They 
simply want justice and a square, straightforward, honorable business deal. 
Nothing more nor less. They are entitled by every consideration that gov- 
erns a business community to receive their proportion of the pay given for the 
use of any car performing the same character of service they perform, whether 
the space used is 5 feet or 60 feet. 

The claim is made that the short-line railroads are now paid for carrying 
the mails. This is only true as applied to the weight, and is equally true in 
the same regard to any other system of railroads. 

The use of the postal car, no matter what its length, is invaluable in contrib- 
uting to the present requirements of the service in facilitating the prompt de- 
livery of the mail in the city or in the country, and the car fitted up as a post 
office and given over exclusively to the use of the mails is an honest charge 
against the Government and is as much entitled to be paid for as post-office 
space in a city or town. 

A provision covering this entirely satisfactory to the short-line railroads is 
inserted in the amendments to the present law governing railway mail pay as 
introduced by Representative Talbott in H. R. 4044, and reads as follows: 

" That the space used for railroad post-office purposes in apartment cars 
shall be paid for at a pro rata rate of the rate of compensation allowed for postal 
cars 40 feet in length." 

In a recent decision given in a United States district court regarding the 
right of the Post Office Department to enforce its regulations governing the 



KAILWAY MAIL PAY. 27 

use of apartment cars without pay, the court ruled that the road had no 
redress in the matter while working under the contract made with the depart- 
ment, but could refuse to renew the contract and discontinue the service. 

The alternative is here presented of seriously embarrassing the postal service 
and harshly discommoding the people along the railroad lines by terminating 
the service or by penalizing the roads for their efficient service if they continue 
to act as mail carriers. 

Can and will the Government as a just arbitrator consent to perpetuate a 
notoriously glaring injustice at the expense of the short-line railroads, or force 
them to abandon it as an unprofitable service which they are financially unable 
to maintain? 

Again, the mail-carrying compensation on the short-line railroads, in ac- 
cordance with a Post Office Department regulation, is not determined by the 
distance covered by the train service, but is computed to include the distance 
over the public highway to the post office depending upon the railroad service 
for its mail. Some of these post offices are a mile, more or less, from the rail- 
road stations. It can readily be seen that a highway service, however prim- 
itive it may be, if used to carry the mail any distance from the railroad sta- 
tion can not be maintained at the same rate per mile per year that is paid for 
railroad transportation. 

A short-line railroad, 10 miles in length, with a post office half a mile dis- 
tant from its station receives $42.75 per mile per year, or $427.50 for its year's 
work on the train mileage and $21.37 for the highway service, a total of 
$448.87. The little stretch of half a mile on the highway, at a very conserva- 
tive estimate, costs 75 cents a day, or $262.50 per year, thus reducing the rail- 
way mail pay actually received to $226.37, more than one-half. In no instance 
is the railway mail service performed by the short-line railroads without their 
paying a heavy toll out of their meager receipts. 

The passage of the parcel-post act and its introduction on the short lines 
January 1, without making any provision whatever for the service, is a pro- 
ceeding that is open to the most severe criticism. Here we have an entirely 
new class of mail matter not contemplated nor provided for by contract or 
agreement thrust upon the roads with little opportunity to prepare for the 
service and no pay provided to pay for the same. Generous preparations seem 
to have been made for increased postal employees, wagons, automobiles, addi- 
tional post-office rooms, etc. ; in short, everybody and everything is taken into 
account except the railroads, the cornerstone of the entire business combination. 

The competent, reliable, and safe builder in the common everyday walks of 
business life shores up and strengthens the weak parts of the superstructure 
before adding weight upon the foundation. But those in charge of the new and 
sensitive business recently evolved to undertake a great business venture are 
now " window dressing " to attract the crowd to their top-heavy structure with- 
out giving any thought or attention to the foundation. 

It certainly surpasses belief that any unfair bureau regulation in this or 
any other postal direction inflicted upon our short-line railroads will be toler- 
ated by our Representatives in Congress, wben the facts as they exist are 
brought to light and made plain. In the parcel-post matter an immediate 
weighing of all parcel-post mail should be ordered on our railroads, and this 
mail when weighed should be properly classified and paid for in a just and 
equitable way to all concerned from the beginning of the service, January 1. 

Further, the unjust discrimination practiced against the short lines in apart- 
ment-car space, side and terminal deliveries, annual weighings, etc., should 
be promptly remedied by amending the postal law in conformity with H. R. 
4044, introduced by Representative Talbott. 

Overzealous employees of the Government, like overzealous employees of 
corporations, unthinkingly bring into disrepute the very interests they are 
selected to serve under the mistaken idea that the exercise of authority tempo- 
rarily invested in them is to be used in one direction, forgetting that there are 
two interests instead of one to take into account, each of which is entitled 
to equal consideration. 

To guard against the abuse and misuse of power, as a matter of public duty, 
our legislators should hesitate in taking the risk of delegating their power and 
authority as representatives of the people to any department or bureau of the 
Government. 

Respectfully, 

Short Line Railroad Association, 
By John N. Drake, 

Secretary and Treasurer. 



28 RAILWAY MAIL PAY. 

REPLIES OF RAILROADS. 

Below are given the replies received from all railroads, arranged 
in alphabetical order, to the inquiries propounded in my circular 
letter of September 11, with the exception of those railroads already 
indicated indorsing without further comment the reply of the 
committee on railway mail pay : 

The Ann Arbor Railroad Co. and Steamship Lines, 

Toledo, Ohio, October 1, 1912. 
Hon. Jonathan Bourne, 

Washington, D. 0. 
Dear Sir : Your letter of September 11, addressed to Mr. S. Hendrie, president 
of the Manistique & Lake Superior Railroad Co., in regard to Senate bill No. 
7371, has been referred by Mr. Hendrie to me for attention. 

In your letter you ask for an expression of opinion upon the following 
questions : 

(1) Do you deem the present plan of compensation an equitable one as 
between the Government and the railroads? If riot, in what respects and as 
to what classes of railroads is it inequitable? 

(2) Is the underlying principle of the plan embodied in the inclosed bill a 
proper basis for compensation? If not, wherein is it improper, and why? 

(3) What, in your opinion, is a desirable plan for compensating railroad com- 
panies for transporting the mails? 

It is difficult to give offhand an answer to these questions. While the present 
plan of compensation for mail service may be improved upon, it is certainly a 
much more equitable one than the one proposed in Senate bill No. 7371. Under 
the present plan, the mails are weighed once every four years, and the com- 
pensation fixed by that weighing is the compensation to be paid the railroad 
companies during the ensuing four years, and no allowance is made for the in- 
creased service required from year to year, until the quadrennial weighing is 
made. This plan results in the railroads getting a much lower average rate 
per year for the service performed than they would receive if the weighing 
was equalized, or if it was made annually. To illustrate: A rate of pay may 
be fixed by weighing on railroad A for the period of four years, which we will 
say will average $200 per mile. Four years from now the weight is again 
taken, and it is found that the increase in mails carried has raised the rate 
to $300 per mile. As this increase has, in all probability, been gradaul during 
the four years, the average rate per mile during the four years Should have been 
$250, whereas the rate paid has been $200 for the whole four years. This is 
not fair nor equitable to the railroad companies. 

In regard to the second question, the principle of the plan embodied in Senate 
bill 7371 is absolutely wrong and unfair to the railroad companies in. that 
it places within the absolute control of the Postmaster General the power to 
fix the rates of compensation which he shall pay to the railroad companies for 
performing services for the Post Office Department. In other words, the 
principle is that the purchaser of anything should have the right to say what 
he shall pay for it. In no other business, whether transportation, commercial, 
industrial, or professional, is this principle adopted. This plan would permit 
the Postmaster General to fix the price on any railroad and would give him 
the power to favor one line as against another, to reduce the price paid for 
service to an amount less than the actual cost of the service, because he is 
also to fix the cost. Even if the principle of having the Postmaster General 
fix the price to be paid by first ascertaining if the cost were equitable, the 
proposition that the compensation shall be " not exceeding the cost to the 
railroad companies of carrying the mails as ascertained by him and 6 per cent 
of such cost added thereto," would be grossly unfair to the railroad companies. 

The bill reads that " the Postmaster General shall determine the cost to each 
railroad company of carrying the mails on its route or routes." I assume that 
this means the actual cost of performing the service and does not include any 
allowance for use of tracks, trains, stations, and the general plant of the rail- 
road company. The average cost of operating the railroads and performing the 
service necessary for the transportation of freight, passengers, mail, and ex- 
press is about 66 per cent of the gross revenue received. The remaining 34 
per cent is required to pay taxes, interest on bonds, and out of the remainder 
such dividends to the stockholders as the balance may justify. We, therefore, 
estimate that it requires at least 50 per cent of the cost of performing service 



KAIL WAY MAIL PAY. 29 

to pay fixed charges and a reasonable interest on the cost of the property 
and equipment used in performing the service. Therefore, the proposed 6 per 
cent to be added to the cost of performing the service of carrying the mails 
would not be one-fifth of the interest charge on the property used in perform- 
ing such service. The Government would, therefore, be receiving at least 25 
per cent of the actual cost of performing the service without compensation. 

The proposed bill also puts in the power of the Postmaster General the plac- 
ing of fines on the railroad companies for all manner of things, and leaves it 
absolutely in his power, without any right of appeal, to fine as he pleases. 

The whole bill is what is called a " jug-handled arrangement " and the Post- 
master General will hold the handle. 

In answer to the third question, " What is a desirable plan for compensating 
railroad companies for transportation of the mails"? I have only one opinion — 
and that is, that any plan which is fair and equitable and gives a fair consider- 
ation for the service rendered with such a reasonable amount of profit as is 
contemplated by law would be a desirable plan. If the Postmaster General and 
the railroads can not agree on what is fair compensation, then I would suggest 
a commission of fair-minded and disinterested men to decide what would be 
fair compensation. 

Yours, very truly, J. Ramsey, Jr. 



The Baltimore & Ohio Railroad Co., 

Baltimore, Md., October 25, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

My Dear Sir: This will acknowledge receipt of your communication of the 
11th ultimo, with respect to the consideration to be given by a joint committee 
of Congress to the question of compensation to be paid to railroad companies for 
the transportation of the mails. 

Replying to the inquiries you submit : 

Question 1. Do you deem the present plan of compensation an equitable one 
as between the Government and the railroads? 

Answer. By the present plan we assume you refer to the practice of paying 
by weight, plus allowances for cars used in the Railway Postal Service and for 
special terminal and other minor services. Our view is that this plan of com- 
pensation can be applied so as to be equitable alike to the Government and to 
the railroads, and is correct in principle in that it recognizes and compensates 
for special facilities furnished as well as for the quantity of mail carried. 

Under the present application of the plan, however, there appear to be nu- 
merous inequities to the railroads in that : 

(a) Through the practice of quadrennial weighings the railroad companies 
are compensated for carrying the mail on the weight ascertained at the be- 
ginning of a four-year period, and therefore carry the natural growth of mail 
in a given territory during the succeeding four years without compensation; 
consequently they are performing a constantly increasing service without re- 
muneration. 

(b) In ascertaining the daily average weight of mail it is believed that the 
present practice, dating from the act of Congress of March 2, 1907, supple- 
mented by order No. 412 of the Postmaster General changing the divisor, is 
not equitable, in that the railroads giving the greater measure of service for a 
given quantity of mail carried receive the lesser compensation. 

(c) While provision has been made for compensation where full postal cars 
are used, where compartment cars are used the railroads are called upon to 
furnish a large amount of car-foot space for Railway Mail Service without 
compensation therefor. 

(d) As a rule the provision for terminal service is inadequate, while for 
"side messenger service" no compensation is provided. 

With the correction of these details, it is believed that the general provisions 
of the present law will be found to be equitable alike to the Government and to 
the railroads. 

Question 2. Is the underlying principle of the plan embodied in suggested bill 
7371 a proper basis for compensation? 

Answer. We understand that the purport of this bill is to apply a plan of 
compensation based upon operating costs and taxes apportioned on car-foot 
space as occupied by the respective classes of passenger-train traffic. A basis 
of compensation on car-foot space properly apportioned might be equitable, 

49396—14 3 



30 BAIL WAY MAIL PAY. 

provided cost accounting could be developed to a point of sufficient accuracy, and 
provided such accounting recognized and embraced all elements of cost. The 
plan proposed in Senate bill 7371, however, is not based upon an accepted 
basis of cost accounting, and is believed to be fundamentally wrong in that it 
does not recognize and provide a fair return upon the proportion of capital 
employed in the enterprise — in fact, provide for no return whatever upon capital 
account. 

Question 3. What, in your opinion, is a desirable plan for compensating rail- 
road companies for transporting the mails? 

Answer. As indicated above, we feel that with certain modifications the plan 
that has been in operation for a number of years past can be adjusted and 
operated so as to be fair and equitable to the Government and to the carriers 
alike. 

It is recognized, however, that this is a very important subject, bearing on the 
different classes of service and the different sections of the country in various 
ways, and therefore the railways' members of the American Railway Associa- 
tion have appointed a committee on railway mail pay, which for several months 
has been giving consideration to the subject of mail compensation. We have 
noted the communication of the acting chairman of this committee, addressed 
to you under date of October 3, and concur in the position taken by the com- 
mittee in its response to your inquiries. We feel that this committee will be in 
position from time to time to give you further full and accurate information on 
many points bearing on this subject, and to make more valuable suggestions in 
line with your inquiry than a single railroad could possibly do. 

Under recent laws additional burdens have been placed upon the railroad 
companies and particularly in the way of requirements for steel postal cars, 
and through department orders similar requirements have been made to cover 
mail apartment cars, these cars being in substitution for cars previously con- 
structed on plans approved by the postal authorities. We do not criticize the 
general desire under changed conditions for stronger and better cars in railway 
postal service, but such changes do require the abandonment of equipment here- 
tofore considered adequate, and the substitution of new equipment. All of 
these changes involve increased cost to the railroads and the expenditure of 
additional capital. Notwithstanding this, and in the face of an increased 
amount of mail carried, the compensation for railway mail service has been 
seriously decreased, thus encroaching on the net revenues of the companies, 
which should be augmented rather than decreased if the railroad credits are 
to be upheld on a basis to maintain the roads in a position to extend both the 
amount and character of service necessary to meet the growing public require- 
ments. 

We appreciate the evident desire of your committee to determine this question 
on a basis equitable alike to the Government and to the railways, and I am 
sure the railways generally will gladly cooperate with your committee in its 
endeavor to arrive at a conclusion. 

Very respectfully, D. Willard. 



Bangor & Aroostook Railroad Co., 

Bangor, Me., September 25, 1912. 
Hon. Jonathan Bourne, Jr., Washington, D. G. 

Dear Sir : To your inquiries of September 11 I beg to say : 

(1) I do not deem the result obtained for the Bangor & Aroostook Railroad 
Co. under " the present plan of compensation " an equitable one. Its operation 
is, in my opinion, inequitable because Federal procedure is often arbitrary and 
because the practical and the responsible are too much subordinated to the 
opposite. 

(2) In my opinion "the underlying principle" is not "a proper one," in 
that no one person, however able, or however conscientious, can acquire knowledge 
of all of the direct and incidental cost which is imposed upon, and which each 
railroad company imposes upon itself in movng the mails. (Desire to well serve 
patrons often results in contribution of service which costs many times more 
than the governmental allowance in return.) Experience has taught that a 
Federal officer who has been to pains to investigate specific service, and 
inadequacy of compensation, may resign, or be displaced, before an equitable 
adjustment is possible. 



KAILWAY MAIL PAY. 31 

(3) My opinion is that a competent representative of the Post Office Depart- 
ment should join a competent representative of each railroad company in an 
inspection of the service which is performed on every section of road over 
which mail is transported, and that the same standards should be applied be- 
tween Post Office Department and railroads as it is intended to have applied 
between other purchasers of transportation and the railroads per interstate 
commerce and other relevant laws. 

Yours, truly, F. W. Cram, President. 



Bessemer & Lake Erie Railroad Co., 

Pittsburgh, Pa., October 14, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir: I duly received your letter of September 11, with copy of Senate 
bill No. 7371. asking for replies to certain interrogatories. 

The committee on railway-mail pay of the American Railway Association 
has submitted a reply to your letter, a copy of which has been furnished to us, 
which we fully indorse and agree to the position taken by that committee. 

We would further state, however, that as far as the Bessemer & Lake Erie 
Railroad Co. is concerned, the compensation should be on a remunerative basis 
for the investment in especially fitted cars and facilities' provided, and, in 
addition, that the railroad should also receive revenue on a more equitable 
basis for tonnage handled. 

The fact is that the usual weighing period has been in the spring of the 
year, when business is lightest, and no consideration is given for the heavier 
tonnage during the balance of the year, nor are the railroad companies allowed, 
as they should be, compensation based upon the cost of the service and equip- 
ment, with a reasonable profit. 

The bill as presented by you provides that " the Postmaster General shall 
determine the cost to each railroad company of carrying the mails on its re- 
spective road or roads, and shall verify and state the result in such form and 
manner as he shall deem proper." This puts more power in the hands of the 
Postmaster General than heretofore enjoyed by him, and those who have had 
experience know that the power has already been exercised to its limit. 

The further clause that if the railways disagree with the conclusion of the 
Postmaster General, either as to form, significance, or assignment, the matter 
shall be referred on appeal to the Interstate Commerce Commission. The 
Interstate Commerce Commission long ago despaired of applying a rational 
basis of apportionment of operating expenses as between passenger and freight 
traffic. We think the burden imposed upon the Interstate Commerce Commis- 
sion by such appeals would be a source of annoyance not only to the commis- 
sion but to the railroads, as the determination of the appeal would involve a 
study of each road's conditions, varying to a great extent from year to year. 

We have had an experience with the Post Office Department in regard to the 
matter of compensation and have found that the arbitrary methods pursued 
by this department are one-sided to the extreme. There is no chance for reach- 
ing the Postmaster General with an appeal beyond the Second Assistant Post- 
master General, the latter's stereotyped reply being that the matter has been 
passed upon by the Postmaster General, and that seems to be the eud of the 
matter as far as the department is concerned. We took exception to their 
method of computing compensation for the present four years as against the 
previous four years, and showed by facts and figures that our compensation 
was $900 less on the present basis and that we handled on an average for the 
90 days' weighing period 5.392 pounds, as against 4,747 pounds, on which the 
former basis was arrived at. Their method of computation was based on a 
divisor of seven, used arbitrarily for all roads in our class, yet we handled 
no mail on Sunday and were entitled to a divisor of six, which would have 
given us a better revenue and which we were entitled to. This was brushed 
aside with the statement that "their method of ascertaining the average daily 
weight has become an established rule and has been applied to all service 
without exception since the promulgation of the order covering the service of 
nil States except those embraced in the fourth contract section (Western 
States), which would be weighing the following spring, and to which it will 
then be applied.*' That settled the whole proposition as far as the Post Office 



32 RAILWAY MAIL PAY. 

Department was concerned, and there was nothing for us to do but to submit. 
We submitted, but brought suit against the Government of the United States 
for what we felt we were entitled to, and the matter is now pending in the 
Court of Claims (No. 31230). 

Respectfully, E. H. Utley, General Manager. 



Bellefonte Central Railroad Co., 

Philadelphia, October 9, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
My Dear Sir : Your polite favor of September 11, concerning Senate bill 
7371, was duly received. In replying I shall endeavor to give such available 
figures as seem to substantiate my views. 

1. The present system of fixing mail pay, if amended as proposed in House bill 
4044, would be equitable and satisfactory. 

2. Senate bill 7371 appears to me to be crude and indifferent to the rights of 
the railways, as for example : 

€ost plus 6 per cent. — To the casual observer the cost of service plus 6 per 
cents seems to be a sufficient compensation. I shall try to show that this is not 
the case, and that we have just grounds for complaining of the new plan. 

I am, of course, writing from the standpoint of the short lines, which num- 
ber in this State alone, according to the report of the Bureau of Railways of 
Pennsylvania for the year ending June 30, 1911, pages XYII-XX, 132 roads, with 
a total mileage in the State of 3,040 miles. 

Operations for the year were as follows: 

Cross earnings from operation, $12,115,694, or $3,985 per mile; operating 
expenses, $8,332,971, or 88.7 per cent of the gross'; other expenses, taxes, 
interest, and renewals, $3,006,650, or 20.5 per cent of the gross ; total dividends 
paid, $750,978, averaging 1.13 per cent on a stock capital of $21,720 per mile. 

The average ratio of operating expenses to gross earnings from opera- 
tion of all the roads in the State is 70.5 per cent, and 70 per cent is the average 
of all the roads of this country with annual operating revenues of $1,000,000 
or more. 

If we take 70 per cent as a fair estimate of the proper figure, a little thought 
will show that it will require the operating expenses with 40 per cent of the 
operating expenses added to equal the average operating revenue earned at 
present and needed to properly conduct the roads. 

Evidently, since it took the cost of operation with 40 per cent of the cost 
added to enable the short lines of Pennsylvania to pay dividends of li per cent 
upon a reasonable capitalization, the cost plus 6 per cent of the cost is insuffi- 
cient compensation. 

Fair and equitable cost. — We anticipate, from House Document 105, that if 
the Postmaster General be permitted, under the vague provision of this bill, 
to " determine the cost of carrying the mails in such manner as he shall deem 
fair and equitable," we should be much worse off than we are at present. Refer- 
ring to pages 272-273 of Document 105 : 

The department allowed us at the rate of $3,260.92 car-feet miles per annum ; 
we claim $8,100 car-feet miles per annum. 

The department estimated the cost to us at $592.32 per annum ; we claimed 
a cost of $2,469 per annum. 

The department estimated our profit at $575.40 per annum; we asserted a 
loss of $1,521 per annum. 

The roads complain very generally of the way in which their figures have 
been employed in the preparation of the document. The calculations seem to 
be based upon a rule which the department has laid down that 6 linear inches 
shall be allowed for 100 pounds of mail, 10 inches for 200 pounds, and 5 inches 
for each 100 pounds over 200 pounds. 

When a car is filled to the roof with mail matter this may be correct; I do 
not know ; but it is not correct for a closed-pouch service like ours, where the 
amount of mail varies from 1 bag to 40 bags, where the larger amount must 
be provided for, and where this small number can not be compressed into the 
same proportionate space as if the car was full of mail. 

I hold, therefore, that the " car-space-used " basis of estimating for a closed- 
pouch service is inapplicable to conditions, and that neither the amount of the 
compensation proposed nor the manner of ascertaining it is safe or satisfactory. 



RAILWAY MAIL PAY. 33 

For the year ending June 30, 1912, a careful estimate of the cost to us of 
conducting the mail service, counting in operating expenses, depreciation, and 
taxes, is as follows : 

Cost of service $2,474.46 

Mail revenue $1, 167. 67 

Less deliveries 220. 00 

947. 67 

Net loss 1, 526. 79 

Deliveries. — We do not consider the cost of deliveries — $220, as above — to be 
an operating expense. It is not railway service of any sort. We have to let the 
work to outside parties, and the pay they receive is simply a deduction from 
our mail pay.. 

This bill proposes that the roads shall provide side, terminal, and direct 
transfer service. In my opinion it would be better and cheaper, at such small 
places as are usually served -by the short lines, if the duty of collecting and 
delivering the mails were assigned to the local postmasters. They should per- 
form it with little, if any, increase of compensation. The railway employees 
can not do it, as they are fully occupied at the times of arrival or departure of 
trains in selling tickets or handling freight, and for this reason we have to con- 
tract for the work at the rate of $488 per mile, being paid ourselves at the rail- 
way rate of $59.85 per mile. 

House bill 4044 proposes to relieve the railways of side and terminal deliveries. 

The Senate bill provides that the railways must accept the compensation 
offered or suffer heavy penalties, confiscatory penalties. I do not suppose that 
this probably unconstitutional provision will be seriously considered by Congress. 

3. As to offering a suggestion for a desirable plan of compensation, I would 
say that House bill 4044 appears to me to meet the requirements very well. If 
this can not be accepted, I would renew a suggestion that I made some years 
ago to the effect that the mail should be weighed for every train and settled for 
under a tariff proportionate to other tariffs and subject to regulation. I can 
see no objection to this plan. 

In House document 105 I find the names of only about 12 of the 132 short 
lines of this State. Perhaps the short lines did not respond very generally to 
the request to report upon their mail service. If so, it is to be regretted, as 
the framers of the bill seem to be unfamiliar with the conditions existing upon 
the short lines, or have at least not taken them sufficiently into account in draw- 
ing it up. 

It seems to me that in this and in all railway legislaion it would be just and 
conducive to the intended reforms that some classification of the railways 
should be adopted, either according to their mileage or by their gross earnings, 
as already prevails in some of our States. 

The more we study the subject -the more plainly it appears that laws which 
are applicable to trunk lines and proper in their cases may easily be ruinous to 
the short lines. 

Such unintentional and oppressive results ought to be looked out for and 
avoided wherever possible. 

With much respect, I remain, 

Very truly, yours, Robert Frazer, President. 



Boyne City, Gaylord & Alpena Railroad Co., 

Boyne City, Mich., October 2, 1912. 
Jonathan Bourne, Jr., 

Washinyton, D. O. 
Dear Sir : Your letter of September 11 to Mr. W. H. White, inclosing Senate 
bill No. 7371, is received and noted. 

We do not think your bill would be a desirable one to pass. In the first place, 
we think you are figuring on a wrong basis to be fair with the railroad com- 
panies. Second, we think you would get into a very complicated controversy as 
to the compensation that should be paid to the railroad company. There are 
.very many different conditions existing over the country and we think you will 
have to figure out some different plan. On a short road, such as we operate, no 



34 RAILWAY MAIL PAY. 

special equipment is provided for carrying the mails. It is carried along with 
the express and only requires a small amount of space. We think it is not fair 
to railroad construction to hold the actual earnings down to a 6-per cent basis. 
If it were not for the railroads the country would not be what it is, and you 
people in Washington should be figuring to give them a fair deal rather than to 
see how close you can figure all the time. 

Yours, very truly, W. L Martin, Secretary. 



Boston, Revere Beach & Lynn Railroad, 

Boston, September 16, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: Yours of the 11th instant, inclosing Senate bill 7371, has been 
received. 

In reply, I will say that this company carries mail to two small towns adjoin- 
ing Boston. The amount of compensation is so small that I prefer not to 
express an opinion in regard to the matter. 
Yours, very truly, 

John A. Fenno, Superintendent. 



Buffalo, Rochester & Pittsburgh Railway Co., 

Rochester, N. Y., November 1, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir : Replying to your letter of September 11. propounding three ques- 
tions in relation to mail pay : 

Question 1. Do you deem the present plan of compensation an equitable one 
as between the Government and the railroads? 

Answer. We do not deem equitable the plan outlined in Senate bill 7371, but 
do believe that House bill 4044, introduced by Mr. Talbott on April 11, 1911, is 
more equitable to both the United States and this railroad. This bill in short 
provides (a) for a flat rate of $75 per mile per year for carrying mail not to 
exceed 500 pounds in weight per day; (b) annual weighing, thus giving (c) 
relief to railroads from delivering mails at points beyond their stations; (d) 
provides that space in apartment cars used for post-office purposes shall be 
paid for at a pro rata rate of the rate now paid for cars 40 feet in length. 

Question 2. Is the underlying principle of the plan embodied in Senate bill 
7371 a proper basis for compensation? 

Answer. The underlying principle of the plan embodied in Senate bill 7371 is 
not correct. Any plan for compensation based upon operating cost plus 6 per 
cent as a maximum for profit is fundamentally wrong. Furthermore, it gives 
to the Postmaster General the power to ascertain by his own method the cost 
to a railroad of conducting its business, and such arbitrary method, in our 
opinion, is wholly impracticable and would prove disastrous in most, if not all, 
lines of trade. Moreover, this bill does not require the Postmaster General to 
pay to the railroad its cost of conducting mail transportation plus 6 per cent, 
but such authorized payment describes that such cost (ascertained by him) 
plus 6 per cent is a maximum beyond which he may not go, and such amount 
that he shall pay is left wholly to bis discretion. There further appears to be 
no method of appeal by the railroad other than that matters bearing upon the 
question of what the Postmaster General shall and does pay may be referred to 
the commission, but does not give the railroads an opportunity to be heard by 
that commission, and should the railroad feel that the compensation is not just, 
may not refuse to handle mail (at a loss) without committing an unlawful act 
and making itself liable to a fine for so doing. 

Question 3. What, in your opinion, is a desirable plan for compensating rail- 
road companies for transportation of mails? 

Answer. As stated in answer to question No. 1, House bill No. 4044, intro- 
duced by Mr. Talbott, of Maryland, on April 11, 1911, amending the present law, 
seems to meet present-day conditions much more satisfactorily in so far as it 
proposes : Annual weighing of mails, thus giving to the carriers the benefits of 
the natural increase in weight of mail each year; proper payment for space 
used in apartment cars assigned to R. P. O. service, based on the pro rata that 



RAILWAY MAIL PAY. 35 

car space used bears to a car 40 feet in length, as is provided for; relief from 
terminal and side-line delivery ; establishes a minimum of $75 for routes carry- 
ing less than 500 pounds per day. 

Bearing in mind that it is the intent of the United States to deal fairly with 
the carriers, it appears to me that this bill falls into class legislation in so far as 
the United States would assume the position of a favorite shipper. The under- 
lying principle of the interstate-commerce law is equality among shippers and 
to prevent discrimination. The bill as introduced permits of discrimination at 
the discretion of the Postmaster General, in whom is conferred the right to 
decide what the rate of compensation to a carrier shall be, and empowers him 
to arbitrarily order the carrier to perform a service whether it be at a profit or 
at a loss. 

Yours, truly, H. E. Huntington, 

General Passenger Agent. 



Carolina & Northwestern Railway Co., 

Chester, S. C, October 8, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir : I have been furnished with a copy of reply forwarded by the 
committe on railway mail pay, and fully indorse the position taken by that 
committee, with the further expression of views on the subject : 
Question 3. (A) V/eigh 30 days in each year. 

(B) Divide by six days (and not penalize the line that gives seven-day 
service). 

(C) Pay on present basis for hauling. 

(D) Either pay a fair passenger rate per mile for post-office clerks and other 
employees, or relieve the railroads from all personal-injury claims on their 
account. 

(E) Relieve lines of terminal or side-line deliveries, else pay for them. 

(F) In addition tothe rate paid for actual haulage, allow for compensation 
for all car space exclusively used by the Post Qffice Department. 

(G) Would further ask you to consider the fact that the rate basis for 
carrying the mails was established at a time when there were no mail cars, 
clerks, or carriers, and the railroads carried the mail bags in their baggage 
cars and dropped them off, as per tags. The weight basis is the correct basis 
for that service, but when postal clerks were added and post offices on wheels 
demanded and required to be attended to better than the parlor-car service on 
the lines on which they run, it goes without fear of contradiction that the 
roads should have pay for each service separately. 

And further, there is no justification from any business standpoint in only 
considering cost of service and not include fixed charges, which must be incurred 
before the service can be performed. It reminds me of the merchant who pur- 
chased a fine store, put in a large stock of goods and sold them on basis 
of cost of clerk hire, without considering the value of the goods or plant. 
Absurd, you say, and I agree with you, but that is an exact parallel to the 
basis of pay proposed in bill No. 7371. 

Yours, very truly, L. T. Nichols, 

General Manager. 



Central Railway Co. of Arkansas, 
PlainvieiD, Ark., September 11, 1912. 

Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: We have your favor of the 11th, We do not operate extensively 
enough to give you an opinion of what you require. As far as we are personally 
concerned, the present laws are satisfactory to us for handling the mails. If 
we had a more extensive railway it would probably be different. 
We trust this information will answer your purpose. We are, 
Yours, truly, 

Central Railway Co. of Arkansas, 
By C. W. Jones, General Manager. 



36 RAILWAY MAIL PAY. 

Charleston & Western Carolina Railway Co., 

Augusta, Ga., September 25, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, I). C. 

Dear Sir : Replying to your circular letter of September 11 inviting answers 
to certain questions concerning the compensation now paid railroads and pro- 
posed compensation as set forth in Senate bill 7371. 

Answering your first question : I do not regard the present plan of compen- 
sation an equitable one as between the Government and the railroad that I 
represent, for the reason that we are not paid for the apartment cars, while 
full-length cars are paid for, and, further, because the rate paid is far less 
than the actual cost as evidenced by certain statistical information which you 
will find contained in a brief which I submitted to the Committee on the Post 
Office and Post Roads of the House of Representatives, a copy of which brief 
I herewith inclose, since which time, by the way, our mail-car mileage has 
been largely increased, thus reducing our revenues per apartment car-mile to 
about 5 cents. 

Second. I do not think that the plan embodied in the proposed Senate bill 
a proper basis for compensation, but I will not attempt at this time to discuss it. 

Third. I am rather inclined to believe that the present plan as a basis is 
probably about as good a one as we will be able to arrive at, with the additional 
feature that all mail-car space should be paid for and not confine it to full- 
length cars only, and thus discriminating in favor of the heavy mail routes 
when as a matter of fact the weaker lines should be protected in every way 
possible. Further, that the mail should be weighed at least annually or else 
i hat an adjustment be made following the weighing after four years, based 
upon an increase for the average time. 

Yours, very truly, A. W. Anderson, 

General Manager. 



Charleston & Western Carolina Railway Co., 

Augusta, Ga., -December 15, 1910. 
Hon. John W t . Weeks, Washington, D. C. 

My Dear Sir : When we were given a hearing by your committee on June 14 
last you laid down the proposition, by inference if not in words, that if the 
railroads of the country handled any business without profit on passenger 
trains through a voluntary arrangement it was reasonable that we should be 
required to carry -the United States mails at an unprofitable rate whether we 
wished to do so or not. 

It appears, therefore, Mr. Chairman and gentlemen, that we must not only 
show this committee that the rates paid us for carrying the mails are unprofita- 
ble, but we must also show why express rates are as low and in some cases 
possibly lower, and why there can be no comparison between the two, and why, 
even if so alike as to warrant comparison, the pay should not necessarily be 
the same. 

No one thing, possibly, has done more to develop this great country of ours in 
the past than the liberal treatment given the railroads. It may be true that in 
some instances high rates have been charged, but it unquestionably is also true 
that the right to conduct their business in their own w T ay has made possible 
the construction of many roads that, under conditions existing at this time, 
would never have been constructed, among others, the railroad I represent; 
and although some portions of it were completed nearly 40 years ago, and all of 
it over 25, it has not yet reached a point where it could pay even a low rate 
of interest to its owners. All earnings in excess of interest on a low bonded 
indebtedness have been devoted to improving the property in an effort to make 
ir valuable, not alone to its stockholders but also to the section through which 
it runs. 

Some of our rates per ton per mile seem high; others so low as to make it 
questionable whether profitable. The passenger rates are the same as apply 
on other lines. What I have said of our line can be said of many others 
throughout our section. 

No matter what the conditions are or how many tons per train-mile can be 
hauled, no railroad could live and charge on all of its business what it earns 
per ton per mile on its lowest class of traffic. Therefore rates must vary, not 
8"?ne because the articles hauled may differ, nor on account of the care that 



RAILWAY MAIL PAY. 37 

must be exercised in the handling of one as compared to the other, but they 
must differ for still another reason that is recognized as perfectly sound, and 
that is that one class of traffic can afford to pay a higher rate than another, 
though similar in many respects; another thing always considered is volume; 
still another, value. 

To properly develop a business it has been a well-known practice, and one 
that I think is beyond criticism, to charge rates that will enable the business to 
develop. 

Fast service, safe service, and frequent service are of much more importance 
to the individual than the mere question of whether he pays a few cents more 
or less per hundred on freight that he may ship, and nothing is so much 
deplored from a standpoint of progress and development as the attitude dis- 
played, not alone by the public, and largely by them through a real misconception 
of the facts, but by the Government itself, as evidenced by the utterly inade- 
quate pay fixed by Congress for carrying the mails. I say " fixed " advisedly ; 
for while we could no doubt sustain in the courts a refusal to perform the 
service at the rates paid, public sentiment and our wish to do our full duty to 
our patrons has led us to perform the service at such rates as you fix and 
under such regulations as the department has laid down. 

Notwithstanding the fact that we are spending considerably more money in 
the maintenance and operation of our property than we earned 10 years ago, 
we are actually being paid a total of less for carrying the mails now than we 
were paid 10 years ago, though we are handling, of course, more mail and are 
performing 50 per cent more mail car miles. 

Please note the following actual figures : 

Total mail pay, 1900-1901 $23, 489. 73 

Total mail pay, 1909-10 22,930.90 

Decrease 558.83 or 2.38 percent. 

Total mail car miles, 1900-1901 252, 748 

Total mail car miles, 1909-10 378,177 

Increase 125,429 or 49.82 percent. 

Cents. 

Rate paid per mail car mile, 1900-1901 9.3 

liate paid per mail car mile, 1909-10 6. 1 

These figures are exclusive of pouch routes, nor do they take into considera- 
tion the cost of handling to and from post offices, which, if included, would still 
further reduce our earnings per car mile. 

Assuming that there had been no increase in the weight carried and that we 
were being paid only the increase we were entitled to (if there had been no 
change in the rates paid us) on account of increased cost of doing business, we 
would have been paid about 12 cents per mail car mile instead of G.l cents. 

Deducting alone the cost of handling the mails to and from post offices, which 
work we Also do. it would reduce our net earnings for the handling of 378.177 
mail car miles and the pouch routes to $19,795.06, or to 5.2 cents per mail car 
mile. 

TVe have been asked to say what a reasonable compensation would be. To 
answer this question in a word and without giving my reasons and some facts 
and figures would, I believe, be unsatisfactory to your committee. I will 
undertake, therefore, to give you some figures by which you can arrive at what 
I think should be at least our minimum pay per mail car mile. 

We have never regarded our passenger business as a profitable one, as you 
will understand from the following figures : 

During the past year our passenger service revenue per train-mile was 74.18 
cents. Our operating expenses per train-mile amounted to $1.22. Last year 
our average passenger train revenue per car mile, including Pullman cars, 
coaches, baggage cars, mail cars, and express cars, was 26.23 cents per mile, 
and yet our mail, which practically occupies the half of one car, paid us only 
6.1 cents per car mile, or less than one-half, approximately, of what the average 
cor in ous passenger trains earned, and that, too, notwithstanding there was but 
little, if any, profit from our passenger trains. 

Our cheapest service is supposed to be our freight-train service. It is cheap- 
est because of the large volume that can be handled in the most inexpensive 
way. It is because the facilities and men engaged cost less jiei* dollar earned 



38 RAILWAY MAIL PAY. 

than in the passenger service. It is because the original cost of freight cars, 
and, as well, the maintenance, is hardly one-tenth the cost of passenger cars, 
and it is also because we do not have to furnish, in many other respects, the 
same expensive service that is required by passengers. 

r am sure it will be admitted by this committee that if the vast majority of 
our railroads failed to make something on their freight business they would 
fail to pay expenses, and that if we use our cheapest service as a comparison 
we go very much further than we ought to go in demonstrating the inade- 
quate pay allowed us for handling the United States mails. 

We averaged last year earning 17 cents per car mile for every freight car, 
whether loaded or empty, handled on our line, and yet we only earned 6.1 cents 
per mail car mile, not including, mind you, the handling of mail to and from 
post offices ; nor does this include 72,616 pouch route miles. 

We have very recently, at the request of the department, put on additional 
mail-car service that will add 22,536 miles and reduce our revenue per mile still 
further — from 6.1 cents to 5.7 cents. Please bear in mind that this additional 
service will have to be performed for some two years longer without one dollar's 
additional pay. We have also been asked by the department for other mail-car 
service, which will add 43,800 more miles, without pay, or a total of 66,336 
additional miles. This largely increasing our already nonprofitable work re- 
minds me of the story of the merchant who, when asked how he managed to 
sell his clothing below cost, as he claimed to do, gave as his explanation that he 
sold so much of it. 

Possibly the Post Office Department has this in mind when they add 66,336 
more mail car miles to the service we are already performing at a loss. Could 
anything be less reasonable and more unfair? 

The space set aside in our apartment cars for mail service averages about 
192 square feet per car, while our freight-car average is about 306 square feet 
per car. We therefore find that had our mail-car service paid the same rate 
per square foot per mile that our freight-car service paid, we would have earned 
10.7 cents per mail car mile, instead of 6.1 cents, or $40,484.94 instead of 
$22,930.90, our present mail pay. 

Is this statement of facts alone not sufficient to convince you how inade- 
quately we are paid? 

Compare the character of cars, the character of contents, including the Gov- 
ernment's employee, who is in every sense regarded as a passenger, the fast 
service, the greater risks, and the extra delivery service at stations with the 
ordinary freight service, and surely it can not be questioned that the pay al- 
lowed us is absurdly low. 

We have been asked in what way our mail pay has been reduced and to what 
extent. Need I answer the question other than to refer to the fact that our 
total pay to-day is less than it was 10 years ago, though gross earnings of our 
road per mile have increased during that time fully 100 per cent, and our mail 
car miles have increased 50 per cent, and our gross operating expenses during 
this time have increased practically 100 per cent? 

If our rates had not been reduced and we had been paid in accord with the 
increased cost of doing business, not to mention the increased mail car miles, 
we would get to-day twice as much as we were paid 10 years ago. 

At the hearing before this committee in June last I called attention to the pay 
of the rural delivery carrier as compared with the pay given the railroads. The 
rural carrier is given 12 cents per mile for handling a few pounds of mail. 
The public furnish the highway that he operates over and maintain it. It is 
optional with the carrier whether he rides or walks. If the former, it is 
through no greater necessity than because he prefers the ease rather than the 
saving of the cost involved in riding. The railroads maintain their own high- 
way, at a cost to them of, in many cases, one-fifth of their gross earnings 
They must furnish not only a conveyance for the transportation of the mail, 
but they must furnish an office on wheels for the use of the Government's mes- 
senger, whom they must also transport free and must provide him with all of 
the comforts furnished other passengers. The one is paid 12 cents per mile ; the 
other, at least our road, is paid 6 cents per mile. There must be some cause 
for so great a difference. Is it because the Government can not get its work 
performed by the individual if it paid even as low rates as it pays the railroads 
for 10, yes, 20, times the service? Surely the fact alone that the Government 
may force its regulations upon the one, while it must pay the other reasonable 
rates or else do without the service, is not the reason that we are being paid 
such unjust rates; rather, it should be a reason why the Government should 
see that we are properly paid. 



KAILWAY MAIL PAY. 39 

From the questions asked by your committee regarding our arrangement with 
the express company you seem to have in mind that our express earnings should 
be used as a basis to govern our mail pay. 

For the information of the committee I will s'ate that we have a contract 
with the Southern Express Co. Our contract, I suppose, is very similar to con- 
tracts in effect between other roads and the Southern Express Co. It provides 
that we should get (I haven't the exact figures before me) one-half of the 
express earnings for hauling the express. It also provides that the express 
company assumes all responsibility for personal injury and loss and damage 
claims, except charges on such perishable freight as may not move after having 
been receipted for. The express company must also furnish all employees neces- 
sary to handle the business where it originates, at its destination, and at trans- 
fer points en route. 

The contract also provides for certain responsible services to be performed 
for the railroad in the way of transporting money from the agencies collected 
to such points as may be designated ; in fact, the arrangement, in a few words, 
is that the railroad company agrees simply to haul the business and the express 
company agrees to perform certain free service and to assume all risks and 
expenses, the proceeds to be divided between the two. 

Our experience has been that there was little or no profit in the express 
business to us, but it is so much a part of the railroad business that we do not 
feel that we can get away from it. 

Our express revenues in the past 10 years have varied from as low as 
$6,843.67 in 1900-1901 to $27,561.75 in 1906-7. I don't believe that the 
express company, so far as some of the worst years in the past 10 are con- 
cerned, have made a dollar, any more than we have, out of the business, and I 
have no doubt but that they would be willing, if they could do so, to go out of 
the business on our road just as readily as we would be willing to do so. 

The handling of mail and the handling of express is as different as two propo- 
sitions can be. In carrying the mails we are performing a service without 
having the slightest interest in the revenues derived; the other is an arrange- 
ment in which we participate in the earnings upon an agreed basis that is as 
much to our advantage as it is to the express company, and worth nothing 
directly to either. 

I was asked by a member of this committee in June last why we did not 
make a better arrangement with the express company and get more out of it. 
I believe that the facts stated above will answer that question; that is to say. 
I believe we have made about the best trade we could expect to make, and one 
certainly as good as the express company would make with us in view of the 
very low express earnings. 

Another feature of the agreement with the express company that I failed 
to mention is that the express company agree not to name a lower charge than 
would be agreeable to us. Our reason for this must be plain, and that is that 
we want the express rates maintained at such a standard as not to interfere 
with our freight business. Certainly, we do not want to encourage business 
to move by express that could move by freight when we get all of the revenue 
instead of dividing it with the express company. The theory is that we want 
only such high-class business as will stand much higher rates to be tendered 
the express company. If it is of such a character as can stand freight service, 
we want it to move by freight. 

A member of your committee at the June hearing — Mr. Lowden, I believe it 
was — asked me to be prepared to give this committee our line's proportion of 
the rate from Washington to Augusta, stating that the information would bear 
on the question under discussion, as it would show what we did when we made 
a voluntary agreement with the Atlantic Coast Line Railroad upon freight 
matter under a traffic agreement as compared with the involuntary arrangement 
with the Government* 

We are paid for handling the mail between Robbins and Augusta $59.85 per 
mile per year for 444 pounds of mail matter, and I do not understand that that 
rate is affected in any way by the distance that the mail has been handled or 
whether the mail comes from a point on our line or from Washington, D. C. 

The rate, Washington to Augusta, on first-class freight, is 89 cents per 100 
pounds; this rate is divided, up to Richmond 16 cents, and the balance of 73 
cents, from Richmond to Augusta, is divided, Atlantic Coast Line, 75.2 per cent, 
and Charleston & Western Carolina, 24.8 per cent; that is to say. the Atlantic 
Coast Line, for 430 miles, fifteen-sixteenths of the distance, gets 55 cents, while 
for 30 miles, one-sixteenth of the distance, we get IS cents. The Coast Line gets 



40 EAILWAY MAIL PAY. 

only three times as much for hauling the business 15 times as far. Certainly this 
must evidence our getting a fair share of the revenue when we are permitted to 
exercise our rights. 

At the hearing in June the chairman of your committee asked me if I meant 
to suggest that the Government ought to pay more for the mail service per- 
formed than it cost, or more than the Government got out of it. My reply was : 
" Most assuredly." 

Surely the Government does not expect us to haul mail at a loss because their 
revenue might not cover the cost. We do not share in the profits and, of course, 
should not suffer the losses. 

If the Post Office Department would abolish free delivery, they would show a 
profit of many millions instead of a loss. 

I believe that this committee will readily admit that the money is made for 
the Government by the railroad carriers. Suppose for a moment the Govern- 
ment had to transport its mail entirely through star routes or other like car- 
riers, can it be doubted that instead of tens of millions deficit it would not be 
hundreds of millions? 

If the railroads are making the money for the Post Office Department, how 
much greater the reason that they should be paid at least a reasonable profit for 
the service performed? 

Is it fair, is it legal to require us to work, not only without profit, but at an 
actual loss? 

Again referring to express rates and a comparison of mail pay with our ex- 
press revenues. 

The rate on cotton from Augusta to New York is 40 cents per 100 pounds. 
The rate on dry goods is 96 cents per 100, or considerably over twice as much, 
and yet both are composed entirely of cotton, both are handled in box cars, and 
both handled on freight trains, and yet no one, so far as I have ever heard, has 
taken the position that the rates should be the same. 

Again, if we haul coal as low, in some instances, as 3J mills per ton per mile, is 
that any possible reason why we should haul dry goods and cotton at the same 
rate? We earn per mile twice as much on fertilizers as we do on cotton seed, 
but is that a reason why fertilizers should take the same rate? No; I submit 
that we are entitled to a reasonable profit for handling the United States mails, 
no matter what we get out of the arrangement with the express company, and I 
submit that our arrangement with that company is a reasonable one, even 
though there is no profit to the railroads. Another difference between the two 
propositions is that when the express revenues increase from one month to 
another, we get the benefit of the increase, while no matter what the increased 
tonnage of our mails may be, nor does it matter how much we may have to in- 
crease our mail-car miles, our revenues from the mail service do not increase 
from one mail-weighing period to another; that is, for a period of four years. 
This, I think, should also be changed. Surely the present regulation can not be 
defended. 

For your consideration we submit that no matter what the divisor has been, 
our revenue has been low, and inasmuch as the rates paid us have been based 
upon the divisor heretofore used that divisor has become a basis upon which 
mail pay has been constructed and should not be changed. 

The tendency of mail rates, like all other rates, has been down, and we insist 
that with every expense pertaining to railroad operations going up and all rates 
going down, that it is a serious matter to disturb the very foundation upon 
which our pay was based and has been regulated for years. 

We further submit that if the present divisor is retained that our rates per 
300 pounds should be materially increased. 

We further submit that a minimum mail car (or apartment car) rate per mile 
should be paid of not less than 20 cents, and for the reason that a less rate 
would not compare favorably with freight earnings per freight-car mile (our 
lowest rate profitable business), and for the further reason that any less mini- 
mum would not give us a substantial profit. 

W T e further submit that we should be paid for office and mail-car space, 
whether full-length cars or apartment cars. There can hardly be a reason why 
post offices on wheels should be furnished by the railroads, free of charge, and 
transported over the roads for the convenience of the department, whether they 
are 20 feet in length or 40 feet in length. 

In addition to the foregoing, we submit for your further consideration, an- 
swers to a number of questions bearing upon the mail-car service performed by 
us, the pay received, and a comparison with other passenger-train earnings. 



KAILWAY MAIL PAY. 41 

From every point of view that has occurred to us, all figures point, with abso 
lute conclusiveness, to the claim we make that we are not only badly underpaid, 
but that we are far from being paid the actual cost of the service performed. 
All of which is most respectfully submitted. 

Yours, very truly, A. W. Anderson, 

General Manager. 



Chestnut Ridge Railway Co., 

Palmerton, Pa., September 17, 1912. 

Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir : I gladly avail myself of your kind request to lay before you any 
comments which may occur to me in connection with Senate bill 7371. 

Page 1 and page 2, lines 1 to 12: I heartily commend the curbing of the 
vast power of the Postmaster General by subjecting his methods to the review 
of the Interstate Commerce Commission. I feel, however, that railroads should 
be permitted to raise objection to the results obtained in each case as well as 
to the method employed. 

Page 2, line 23, should be amended to read as follows : " He shall allow such 
rate." 

Page 2, lines 18 to 24: The scheme contemplated seems to me to require 
railroads to handle United States mail without compensation. Your proposition 
is that railroads shall perform this service, shall pay the current cost of doing 
it out of their own pockets, and at the end of the year shall simply receive 
back the money which they have actually spent, together with the customary 
bank interest on same. The railroads only get back the money which they have 
actually expended, with interest, and get nothing for the service rendered. 

Page 3, lines 7 to 12 : The Postmaster General should be required to get his 
information from reports already filed with the Interstate Commerce Commis- 
sion without imposing additional clerical burdens upon the railroads. 

Page 3, lines 13 to 25, and page 4, lines 1 to 18 : The power of the Postmaster 
Oeneral should be subject to the control of the Interstate Commerce Commission 
in these as in all other matters. 

Page 7, lines 9 and 10 : The Postmaster General should not be intrusted with 
the determining of the amount of fines without appeal. 

Page 9, lines 3 to 7 : To deny to railroad companies the fundamental right 
of refusing to enter into an unsatisfactoiy contract without providing adequate 
safeguards in the shape of appeal seems to me to violate the Constitution of 
the United States and the principles which underly all human rights and laws. 
Yours, truly, 

B. F. R. Clark, Auditor. 



Chicago & Illinois Midland Railway Co., 

Chicago, October 18, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 

Dear Sir : Replying to yours of the 11th ultimo, addressed to Mr. J. J. Hart, 
former vice president of this company, to which is attached a copy of proposed 
Senate bill No. 7371. 

We do not consider the present plan of compensation an equitable one as 
between the Government and this company. Under the present system mail 
is weighed quadrennially, and the basis of compensation is fixed by the Gov- 
ernment for that period, based on weight so ascertained, whereas the volume 
of the mail business is constantly increasing, with the result that under the 
existing plan the railroad receives no corresponding increase in revenue, which 
we believe should be conceded by reason of such increase. Under the present 
system the employee of the railroad company is compelled to carry the mails 
between the mail car and post offices in towns served by the railroad where 
the post offices are within SO rods of the railroad's right of way. We are con- 
strained to the opinion that the service of the carrier should properly terminate 
at its passenger stations. We do not consider the plan embodied in the proposed 
bill, which contemplates compensating the railroad companies on basis of actual 



42 RAILWAY MAIL PAY. 

cost of the service, plus 6 per cent, as being remunerative, considering the char- 
acter of the service performed. Furthermore such basis of compensation would 
not admit of the setting up of a reserve with which to purchase mail cars in 
the future, as they could not be purchased of the builders on a 6 per cent basis. 

We believe that the basis of settlement between the Government and the 
railroads should be on practically the same lines as is the express business, i. e., 
at an agreed and remunerative rate per 100 pounds at actual weight, monthly 
settlement to be effected between the Government and the railroads as at 
present. 

Respectfully submitted. 

H. H. Seaverns, Traffic Manager. 



Chicago & Lake Superior Railway Co., 

Cambridge, Wis., September 25, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir: Referring to your letter of September 11, regarding the new bill 
about to be placed before the Committee on Post Offices and Post Roads, 
asking our opinion upon the desirability of said bill, will reply : 

No. 1. We do not deem the present plan of compensation an equitable one. 
for the reason that under the present plan the larger roads are receiving larger 
compensation for the work they are doing in accordance with their mileage, 
while the smaller roads with short mileage are not getting enough to pay the 
trouble of handling the mails ; for instance, this road being a trifle less than 4 
miles, is carrying for the Government eight mails a day, four each way, for 
which we receive the nominal sum of $180 per year, which shows on the face 
of it that it is not enough. 

No. 2. The plan embodied in bill S. 7371 would not remedy this matter for 
the smaller lines. Take, for instance, this line, only having the mileage before 
stated, would not receive proper compensation for services rendered, and there 
should be a clause to protect the smaller lines in order that they may receive 
better compensation for their work. 

No. 3. In our opinion a most desirable plan for compensating railroad com- 
panies for transportation of mail would be to place a sentence in this bill 
making the compensation for all roads with a mileage under 5 miles a special 
rate per mile, which would be enough to cover the expenses of handling the 
mail services. As before stated, this line is carrying eight mails per day and 
receiving compensation, carrying these mails to and from the post office to 
trains. We would be unable to hire a person to carry the mail from the 
Cambridge depot to the post office for the amount we receive for same, let 
alone the handling and responsibility of same while en route on trains and 
delivery of mail at London. I feel if you would look into this matter care- 
fully you will see that we are right in the above statement. 
Yours, truly, 

B. L. Delamater. 



Chicago & Northwestern Railway Co., 

Chicago, III., November 25, 1912. 
Hon. Jonathan Bourne, 

Washington, D. C. 
Dear Sir: Answering yours of September 11, 1912, transmitting bill No. 
7371, introduced by you, and requesting replies to inquiries relative to the 
present and proposed plan as a basis for compensation to railroad companies 
for transportation of the mails, on behalf of the Chicago & North Western 
and Chicago, St. Paul, Minneapolis & Omaha Railway Co's., we respectfully 
submit the following answers to your inquiries: 

First. We deem the present plan of compensation equitable, if modified as 
follows : 

(A) Annual weighing of the mails. 

(B) No reduction in the present rate of pay for transportation. 

(C) Pay for space provided in apartment postal cars upon the basis of pay 
for railway post-office cars 40 feet in length, inside measurement. 



RAILWAY MAIL PAY. 43 

(D) Relief from the performance of side and terminal messenger service 
regardless of distance between the post office and railroad station. 

(E) Readjustment upon the basis of weight within a reasonable time after 
the establishment of parcel post. 

Second. The underlying principal of the plan embodied in Senate bill No. 
7371 is not correct for the following reasons : 

(A) Contrary to all economic principles of business, and the method of 
which, if applied separately to the different classes of business, would ruin 
and bankrupt every railroad at once. 

(B) Objection to granting authority to the Postmaster General to credit, as- 
sign, and apportion the revenues and expenditures of railroad companies. This 
accounting should be made in the usual manner adopted in accounting, or as 
directed by the Interstate Commerce Commission, granting railroad companies 
right to appeal to the courts. 

(C) Objection to nonpayment for service over land-grant railroads or parts 
of railroads covered by land grants, being unfair and unjust. 

(D) Objection to being required to place railway post-office and apartment 
postal cars for the purpose of performing advance distribution without an 
allowance of pay for the time cars are so placed and used. 

(E) Objection to providing depot space for handling and distribution and 
transfer of mails en route, except for transfer clerks' quarters and space for 
use of railway post-office clerks for the purpose of storing their personal and 
official property between runs without a specific rental therefor. 

(F) Objection to failure to specifically provide for rate to be paid for space 
devoted to the distribution of mails in transit in railway post-office and apart- 
ment postal cars. 

(G) Objection to deductions for reduction or frequency of service unless ad- 
ditional pay be allowed for additional service and frequency of service during 
the period for which the adjustment is made. 

Third. The present plan with modifications as stated in answer to inquiry 
No. 1. 

Respectfully, W. A. Goedon, President. 



Chicago, Burlington & Qtjincy Railroad Co., 

Chicago, October 8, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 

Dear Sir : I am in receipt of your communication of September 11, propound- 
ing certain inquiries in reference to the present plan of compensation of the 
railways for handling the mail and requesting an expression of opinion from 
me as to the plan of Senate bill 7371. 

I find that the committee on railway mail pay, upon which this company is 
represented, addressed a communication to you on the 3d instant in reference 
to the same subject. After carefully reading the letter of this committee, I 
beg to say that it fully accords with my own opinion in every particular. 

The unfair administration of the present law gives ground for serious com- 
plaint and imposes serious losses upon the railroads. I feel certain that if the 
conditions are fully investigated and considered by your committee it will reach 
the same conclusion. I have no confidence in the justice of any plan of com- 
pensation based upon cost plus 6 per cent The underlying principle is wrong, 
because is penalizes efficiency, as fully stated by the committee. No other rates 
in the country are so based. In order to ascertain cost many intricate compu- 
tations based upon numerous arbitrary assumptions will be required, and the 
results found in Senate document 105 upon this subject indicate that it would 
be impossible for the railroads to agree with the department upon the methods 
for determining such cost. 

I feel that the remedy is to correct the'wrongs that are being worked under 
the present law rather than to experiment with a wholly new principle as a 
basis for compensation. 

I wish to adopt the answer of the committee on railway mail pay as a part 
of the reply which I submit to your honorable committee in behalf of both the 
Chicago, Burlington & Quincy Railroad Co. and the Colorado & Southern Rail- 
way Co. 

Yours, respectfully, D. Miller, President. 



44 RAILWAY MAIL PAY. 

Chicago, Milwaukee & Puget Sound Railway Co. 

Chicago, November 5, 1912. 
Hon. Jonathan Bouene, Jr., 

Washington, D. C. 
My Deae Sie : In reply to your circular letter of the 11th ultimo, the follow- 
ing is respectfully offered for your consideration: 

(1) The theory of the present plan of compensating railway companies upon 
the basis of weight carried and special car space and equipment provided is, 
in my opinion, equitable. In its practical working out the compensation is in- 
adequate under the Postmaster General's Order No. 412 and the last reduction 
in the rate. 

We believe also that we are entitled to compensation for apartment-car space 
on the basis of a pro rata of the rate allowed for full 40-foot R. P. O. cars. 

(2) Any legislation under which the Government makes the maximum pay- 
ment for service rendered the actual cost plus 6 per cent, such cost to be de- 
termined by the representative of the Government, is not equity, but an arbi- 
trary exercise of governmental power. It gives the purchaser the exclusive 
right to fix the price of that which is purchased. 

(3) Payment on the basis of weight carried and exclusive space furnished at 
compensatory rates. 

I understand that the objections to the proposed bill from the standpoint of 
the carriers, are being formulated in detail and will be presented to you by the 
committee on railway mail pay, together with their comments upon House 
Document No. 105, Sixty-second Congress. 

Yours, very truly, E. D. Sewall, 

Vice President. 



Chicago, Milwaukee & St. Paul Railway Co. 

Chicago, November 18, 1912. 
Hon. Jonathan Bouene, Jr., 

Washington, D. C. 
My Deae Sie : Replying to the questions in your letter, relative to Senate bill 
7371: 

(1) I consider the present plan of compensation as fair as any that could be 
devised as between the Government and the railroads, although, since the Post- 
master General's Order No. 412 and the last reduction in the rate, the compen- 
sation seems inadequate. I also think apartment cars should be paid for at the 
pro rata rate allowed for full 40-foot R. P. O. cars. 

(2) I do not think the underlying principle of the plan embodied in bill S. 
7371 is a proper basis for compensation for the reason that weight is generally 
used as a basis of compensation instead of space, although space is considered, 
to some extent, in the present method; and besides the bill allows too much 
discretion to the Postmaster General. 

(3) As stated in answer to question No. 1, I consider the present method a 
reasonably fair one. 

I understand that what is known as the committee on railway-mail pay, rep- 
resenting a number of the roads of the country, is preparing answers to the 
three questions in your letter, setting forth, in considerable detail, the objec- 
tions to the proposed change in the method of arriving at compensation to the 
railroads for carrying the mails, and also stating the objections of the railways 
to House Document No. 105, Sixty-second Congress. 

Yours, truly, E. W. McKenna, 

Vice President. 



Chicago, Peoeia & St. Louis Railway Co. of Illinois, 

Springfield, III, September 23, 1912. 
Hon. Jonathan Bouene, Jr. 

Washington, D. C. 
Deae Sie: In replying to your esteemed favor of the 11th instant, in which 
you ask for suggestions or criticisms in connection with Senate bill 7371, to 
provide the manner of determining the compensation of railroads -for the trans- 
portation of mails, the only suggestion or criticism which I can offer at this 



KAIL WAY MAIL PAY. 45 

time is contained in the broad statement that, in my estimation, a great waste 
of energy and money has been incurred in the preparation of the bill re- 
ferred to. 

In my opinion a much more satisfactory bill could have been prepared had 
those in charge of the work thought to provide one wherein it was provided 
that the Postmaster General shall have the power to compel any and all rail- 
roads to handle United States mail in any and all trains and cars and fix the 
compensation to be paid for the service rendered. Upon the order of the Post- 
master General all railroads shall furnish free transportation to all employees 
of the Post Office Department and provide special equipment in which said 
employees should be privileged to ride, and, finally, that any laws now on the 
statute books giving to the railroad companies any rights whatever inconsistent 
with the foregoing should be repealed and the passage of any such laws in the 
future prohibited. 

In other words, I think that Senate bill 7371 is as inequitable and unfair to 
the railroads as any such bill could possibly be. It gives absolute and dicta- 
torial powers to the Postmaster General and names as the sole arbitrator to 
be appealed to in case of dispute another department of the Government. So 
far as the transportation of mails is concerned, the relation the Government 
bears to the railroad companies is the same as that of the express companies 
to the railroad companies, and I think the railroad companies, in the handling 
of United States mails, are entitled to contractural rights. The Constitution 
of the United States does not contemplate in any manner the idea of placing 
in the hands of any one man dictatorial powers such as it is proposed to confer 
upon the Postmaster General in Senate bill 7371. 

I am, yours, truly, John P. Ramsey, 

Ghiel Executive Officer. 



Chicago, Terre Haute & Southeastern Railway Co., 

Chicago, October 25, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: In reply to your letter of September 11, inclosing a copy of 
Senate bill 7371: Without giving a detailed discussion of the bill, I shall 
merely point out to your committee that the proposed plan of this bill applied 
to all business in this country would wreck the Nation ; or applied to aDy single 
enterprise — industrial or railway — would destroy that. 

I have seen a copy of a letter addressed to you by the committee on railway 
mail pay, dated October 3, and I am in full accord with the position of the 
committee therein taken. 

Yours, very truly, M. J. Carpenter, President. 



Coal & Coke Railway Co., 
ElUns, W. Va., September 19, 1912. 
Hon. Jonathan Bourne, Jr., Chairman, 

Washington, D. C. 
Dear Sir : Your favor of the 11th instant is received. I am not in a posi- 
tion just at present to reply fully to your inquiries. I have spent considerable 
time during the last two years on this subject and I believe the present plan 
of compensation for railway mail services is entirely unfair to the railroads, 
and especially so to the smaller roads, such as this one. 

I believe the underlying principle of the plan embodied in Senate bill 7371, 
copy of which you inclose, is also unfair. - I am unable at this time, however, 
to prepare a condensed statement of my reasons and of my suggestions as to 
what would be fair, but will be very glad to furnish a statement of this sort 
as soon as we can have the necessary information prepared. 

Unfortunately this road suffered heavily in the recent floods, and we are at 
present necessarily spending all our energy to repairing the damage. 
Very respectfully, 

A. M. Smith, General Manager. 
49390—14 4 



46 RAILWAY MAIL PAY. 

Crosbyton-Southplains Railroad Co., 

Grosbyton, Tex., September 24, 1912. 

Hon. Jonathan Bourne, 

Washington, D. C. 

Dear Sir: Replying to your circular letter of the 11th instant, with which 
was inclosed Senate bill 7371. 

Replying to your first question, I can see no method of fixing compensation 
for postal service on this line which would be more equitable than the one now 
in use. 

To the second question, while it may be possible that the principle of plan 
embodied in the bill is correct, I do not feel that 6 per cent added to the actual 
cost of handling the mail is a sufficient remuneration for this class of mail, 
considering the fact that it requires the highest class of service which we are 
capable of giving and we are subject to heavy fines for any failure to perform 
our duty fully and promptly. On a line such as this, with but a single daily 
train service — handling freight, passengers, mail and express on one train — it 
would be almost impossible to separate the cost of handling mail from the other 
classes of service rendered, and the only way which would occur to me to do 
this would be to fix an arbitrary percentage, which might be correct and would 
more likely be incorrect. 

To the third question, I can see no more just plan for fixing compensation 
than on a pound basis coupled with car-foot basis. 

Yours, very truly, A. B. Spencer, 

Assistant General Manager. 



Cumberland Valley Railroad Co., 

Chamber sburg, Pa., October 24, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

My Dear Sir: Your circular letter of September 11 was duly received, and 
I thank you for the opportunity of explaining the deficiency in the amount 
allowed by law to the Cumberland Valley Railroad Co. for carrying the mails 
and for the expensive facilities needed by the Post Office Department in con- 
nection therewith. 

The questions you ask as to the effect of the present plan of compensation on 
railroads generally and the effect of proposed laws such as Senate bill No. 
7371 can best be answered by those who have made a general study of the sub- 
ject. I have read a copy of the response to you from the committee on rail- 
way-mail pay, representing 268 railroads, and it seems to be a fair and adequate 
summary of the defects and the suitable remedies. 

On behalf of the Cumberland Valley Railroad I request your particular atten- 
tion to the urgent; necessity for a provision of law to pay for mail apartments 
on some bnsis that will compensate for their service. The railroads get no pay 
at all for these mail apartments 30 feet or less in length, although these travel- 
ing post offices perform the same function as full railway post offices and are 
not at all needed by the railroad company in transporting the mail; also for a 
provision of law to pay for side and terminal messenger service at its fair value 
to the Post Office Department. It is further of great importance that a definite 
arrangement be made, so that when a railroad company considers itself under- 
paid or subjected to unduly onerous conditions an appeal from the decision 
of the Postmaster General may be heard by some neutral authority with power 
to determine finally the justice of the case. 

I believe that the United States Supreme Court has held that the railroads 
(other than land-grant roads) are not obliged to carry the mails, and it is there- 
fore assumed by many that the railroads are free agents, and if they continue to 
carry the mails it must be because they consider the rates of pay remunerative 
regardless of their protestations. If they have the theoretical right of refusing 
the mail service, they can not exercise the right without ignoring the fact that 
the communities dependent upon them must have communication by letters, etc., 
and as the law gives the monopoly of first-class mail to the Post Office Depart- 
ment a refusal by the railroad to accept mail service would cause very 
great inconvenience and loss to the people. Hence Congress should protect the 
railroad companies in the performance of this public duty by guaranteeing a fair 
return both by a positive enactment prescribing adequate and definite rates and 



RAILWAY MAIL PAY. 47 

also by providing for some arbitral tribunal for adjusting differences between 
the Post Office Department and the railroad company. 

In the test of November, 1909 (H. Doc. No. 105), the Postmaster General 
found that the mail pay for the Cumberland Valley Railroad fell short by 23 
per cent of covering the operating cost and taxes chargeable to the mail service. 
Our own calculation at that time showed a shortage of about 35 per cent, and 
we still believe that our own computation was more correct than that of the 
Post Office Department. The deficiency in either case is really much greater, 
because both calculations contain no allowance for fixed charges. 

The annual pay of the company for all the mail service covering 160 miles 
of railroad and including double daily, and in one part triple daily, mail apart- 
ment service occupying 25 or 30 feet of the car, is only a little over $21,000, 
To obtain a fair return, including 6 per cent dividend, it can readily be esti- 
mated that the amount should be at least $37,000 per annum, or an increase of 
$16,000, or about SO per cent. 

This would require an allowance for a daily round trip of a mail apartment 
car (in addition to the pay for weight of mail carried) on about the following 
scale : 

Per mile per annum. 

30-foot apartment $63. 50 

25-foot apartment 53.00 

20-foot apartment 42.50 

It is trusted that your committee will succeed in securing legislation to correct 
this long-standing injustice. 

Very truly, yours, M. C. Kennedy, 

Vice President and General Superintendent. 



Deering Southwestern Railway, 

Chicago, September 26, 1912. 
Hon. Jonathan Bourne, 

Washington, D. C. 

Dear Sir : I have your very courteous letter of the 11th instant, together with 
copy of Senate bill 7371. 

The service this railway now performs in handling United States mail sim- 
ply in sack form, without any collection or distribution, warrants me in saying 
we are reasonably well satisfied with our present compensation. This, however, 
refers only to this railway. We do not believe the plan proposed by the bill 
would be a reasonable compensation of the service an ordinary mail-carrying 
railroad would perform, and should this company at any time undertake the 
collection and distribution of mail between stations on its various lines — that 
is, the handling of individual pieces of mail — we should certainly find this bill 
an additional expense against our operation rather than a matter of income. 

This writer also has particularly in mind the prospect of handling mail under 
the parcel-post act, and unless some special provision is made for the parcel 
post — some special compensation — this company would certainly strenuously 
object to the basis of compensation proposed in Senate bill No. 7371. 

Answering your direct questions : 

1. The present plan of compensation seems to this writer to be reasonably 
equitable, and in making this reply he has reference particularly to mail han- 
dled by this company under the plan now in vogue. 

2. The underlying principle in the plan embodied in Senate bill 7371 is not a 
proper basis for compensation, because it would not begin to compensate a 
railroad for the service performed. No railroad can afford to handle its traffic 
for the actual cost of the service plus 6 per cent, because of the underlying 
obligations in the shape of securities that must be met, as well as taxes etc. 

3. This writer lacks sufficient familiarity with the whole mail-carrying 
problem as practiced on the trunk lines to give any information of value. It is 
his belief, however, that the United States Mail Department should compen- 
sate the railroads for the service they perform in a liberal manner, so the service 
may be extended and of the very best character. Much complaint is being 
heard in this city and in some other places regarding the inadequate mail 
facilities. What causes this the writer does not know, but statements are 
made in the daily press not infrequently that mail is delayed in transit, is 
delayed in delivery after arrival in Chicago, and certainly a complete study 



48 E AIL WAY MAIL PAY. 

of the whole problem should be made by your honorable committee into its 
minutest details before passing an act regulating this matter. 
Regret I am not able to advise you more fully. Believe me, 
Very truly, yours, 

F. B. Montgomery, 
President and General Manager. 



Delaware, Lackawanna & Western Railroad Co., 

New York, October 31, 1912. 
Hon. Jonathan Bourne, Jr. 

Washington, D. G. 
My Dear Sir : Your letter of September 11 to our secretary, Mr. A. D. Cham- 
bers, with accompanying copy of Senate bill No. 7371, being a bill to provide 
the manner of determining the compensation of railroads for the transportation 
of the mails, and the several questions you submit, have had careful considera- 
tion at the hands of our people. 

Answering your several inquiries in the order in which they are made, I beg, 
in behalf of this company, to submit the following : 

(1) The present plan of compensating the railroads for the transportation 
of United States mails, broadly speaking, is as fair and equitable a one for 
the railroads generally as could probably be devised. From the Government's 
standpoint it certainly never has been inequitable, while, on the contrary, so 
far as the railroads are concerned in the administration of it, much injustice 
has almost continuously been done ever since it was adopted. 

In the first place, the infrequent weighing of mails, whereby this is done 
every four years, has unquestionably resulted in the railroads carrying, dur- 
ing each period of four years, somewhere between 5 and 10 per cent in weight 
of the total mails carried without any compensation whatever. Again, the rail- 
roads have been required to perform services between stations and post offices, 
also terminals, in the way of delivery of mails, at a considerable expense, for 
which they have never been paid. Still again, the horizontal reduction in pay 
made by the act of Congress on March 2, 1907, followed by Order No. 412 of 
the Postmaster General changing the divisor, has worked serious injustice and 
loss to the railroad companies. 

Furthermore, under the regulations of the Post Office Department the rail- 
roads are required to handle mails on all trains, and there are innumerable 
instances where this service has been ordered on trains, the nature of same 
requiring a full extra car to be hauled by these trains in order to provide the 
space required by the Post Office Department for a comparatively small amount 
of mail. The railways are also required to furnish, free of rent, at nearly all 
important terminal points, space for the storage and handling of mails, and 
heating and lighting of the space furnished, as also other accommodations for 
postal employees which cost them in the aggregate large sums of money to pro- 
vide and maintain. 

The recent reductions in compensation for carrying mails referred to above 
have been made in the face of large increases in the cost of almost every item 
entering into the expense of railway maintenance and operation. Railway com- 
panies, furthermore, are continually assessed with fines for failure to deliver 
mails on the scheduled time of trains, although the delays in many cases are 
due to causes wholly beyond the control of the company or its officers. 

(2) The plan embodied in Senate bill No. 7371 for compensating the railroads 
for transportation of United States mails is not a proper and just basis for such 
compensation, and if made effective by law will work gross wrong and injustice 
to the railroads of the country. The proposition to place solely in the hands 
of the Postmaster General of the United States the question of determining 
what the railroads should receive for performing this important service, coupled 
with the provision in the bill fixing the method to be pursued by that official 
in determining the amount of compensation to be paid, is, as we believe, with- 
out precedent in this country and amounts to the Government taking from the 
railway companies their property, or the use of their property, for the public 
benefit, without due compensation. The operating cost of performing the serv- 
ice, arrived at as prescribed by the bill, together with the taxes plus 6 per cent 
for profit, would not by any means justly reimburse the railways for the serv- 



BAILWAY MAIL PAY. 49 

ice performed for the Post Office Department in the manner that department 
requires it done through its various administrative orders. It is wholly with- 
out precedent in this country, we believe, and entirely wrong in prnciple, that 
a department of the United States Government should be given the power con- 
templated in this bill to use the facilities of the railroads of the country for its 
purposes on terms fixed by the officials in that department, the interest of such 
officials being palpably to make the best showing they can for their department 
regardless of the effect upon the railways of the country, upon which it must 
so entirely depend to perform the postal service for the public. 

The interests of the railways in this matter will not be properly safeguarded 
by a provision that an appeal from the Postmaster General may be taken to 
the Interstate Commerce Commission. Not only is that commission now so 
unduly burdened by the duties imposed upon it by existing laws, as respects 
the regulation of railway rates and practices, that it can not possibly assume 
the additional work and responsibilities incident to fixing a just compensation 
for the transportation of United States mails, but its position is and always 
has been, since its original appointment, that its duty is to watch over and 
protect the interests of the public, and not the railroads, in all matters affect- 
ing rates and rules governing the transportation of passengers and freight. 

(3) It does not seem to us that any better or more equitable plan for com- 
pensating the railroad companies for the transportation of United States mails 
can be adopted than the existing one, which has been in effect for many years 
and with the operation of which all concerned, both the postal authorities and 
the railways, are more or less familiar. We believe it might be amended in 
the manner hereinbefore suggested, which would result in the elimination of 
some inequities which now exist and whch should, in all fairness to the rail- 
roads, result in a more impartial adminstration of the law by the postal authori- 
ties than has been prevalent heretofore. 

Trusting what I have stated herein may, in some measure at least, commend 
itself to your careful consideration, I beg to remain, 

Very truly, yours, W. H. Linsdale, 

President. 



Denver & Rio Grande Railroad Co., 

New York, September 18, 1912. 
Hon. Jonathan Bourne, Jr., Chairman, 

Washington, D. C. 
My Dear Sir : Your letter of the 11th instant and copy of Senate bill 7371, 
introduced by you on behalf of the Senate Committee on Post Offices and Post 
Roads, came this morning, and both have been referred to the operating staff 
in San Francisco — Mr. C. M. Levey, second vice president and general manager, 
and Mr. Warren Olney, jr., the general attorney. Western Pacific has been 
favored thus far with but very little United States mail. 

Yours, sincerely, E. T. Jeffery. 



Denver, Boulder & Western Railroad Co., 

Boulder, Colo., September 19, 1912. 
Hon. Jonathan Bourne, Jr., Chairman, 

Washington, D. C. 
Dear Sir: Your esteemed favor of the 11th instant with inclosure as stated 
is received. 

As applied to this company the present plan of compensation for transpor- 
tation of the United States mails, which provides for a minimum rate of $42.75 
per mile per annum, is regarded as equitable, except that it is believed that in 
addition to the compensation now received the Government should remunerate 
the railroad company for the space devoted to the use of the mails in combi- 
nation passenger, mail, baggage, and express cars, such compensation to be 
pro rata to the amount allowed for cars 40 feet in length used exclusively for 
the handling of the mails, as provided under section 1176 of information rela- 
tive to transportation of mails by railroads issued by the Second Assistant Post- 
master General. 

Respectfully, W. B. Hayes, President. 



50 RAILWAY MAIL PAY. 

East Broad Top Railroad & Coal Co., 

Orbisonia, Pa., September 16, 1912. 
Hon. Jonathan Bourne, Jr., Chairman, 

Washington, D. C. 
Dear Sir : Your circular letter of September 11. regarding Senate bill 7371. I 
beg to submit the following answer to your questions : 

1. The present plan of mail compensation so far as it relates to service per- 
formed by this company is equitable. 

2. So far as short lines are concerned, operating under conditions similar to 
ours, the underlying principle of plan embodied in Senate bill 7371 is not equi- 
table. It leaves railroads practically at the mercy of the Post Office Department. 
The department is privileged to demand whatever service and equipment it 
wants and pays whatever it pleases in the way of compensation. 

No short line can afford to antagonize the department, and to combat their 
decisions may cost several years' earnings. 

The idea of not allowing a railroad to judge whether they can afford to 
handle mail for compensation allowed can not be considered equitable. 

The authority given the department to order mail-car service, particularly on 
short lines, may mean more of an outlay for equipment than revenue would 
amount to in five or six years, to say nothing of the expense of maintenance and 
continual transportation of a car that may not be needed. 

3. This question is virtually answered by No. 1. Present plan is apparently 
all right for short lines, particularly when no mail-car service is required. The 
pouch system, which is the one in vogue here, gives satisfaction. Post offices 
have two mails from each direction every day and compensation is based on 
weight of mail handled. 

Yours, truly, Edward C. Hall, 

General Manager. 

Farmers' Grain & Shipping Co., 

(Devils Lake & Northern R. R.), 
Devils Lake, N. Dak., September 18, 1912. 

Dear Senator : This will acknowledge receipt of yours of the 11th inclosing 
copy of Senate bill 7371, and in reply to question No. 1 would say that I do 
not consider the present plan of compensation for carrying the mails as an 
equitable one as between the Government and short railroads, such as ours, 
which is but 66 miles long, mainly for the reason that we do not obtain sufficient 
compensation under this plan. 

In answer to your second question, I object to the principle of your bill for 
the reason that I can not understand why Government service should be per- 
formed at actual cost any more than any other service, and furthermore for 
the reason that under the proposed payments for postal service established 
under this bill we would not get enough revenue to pay the cost of maintenance 
of the postal car aside from the cost of train service and the delivery of the 
mails. 

I have before me a statement from the Post Office Department of the com- 
pensation we are to receive under this bill, and it shows that we are now re- 
ceiving 70 per cent more than we would under your bill; at least this is the 
way the department has figured it. We are now receiving about $10 per trip 
for supplying, maintaining, and hauling compartment car for a distance of 132 
miles, delivering and receiving the mails at 10 different stations, where we have 
to pay our agents extra for this service, besides the wear and tear on the car, 
which has to be renewed every few years. From this you will see for yourself 
that if our compensation is reduced 70 per cent that the Government is forcing 
us to do something for next to nothing. As it is now we are performing the 
service at 40 per cent below cost, regardless of the department's figures, and we 
are doing so for the reason that we wish to accommodate our patrons and not 
for any profit in the business. Therefore I would seriously object to the last 
clause, on page 9 of the bill, which penalizes a railroad for refusing to carry 
the mails for such compensation, for I assure you we would positively refuse 
to carry this mail for any such compensation, and the Government would find 
it would cost them $100 per trip when carried by team for the service we are 
now doing for $10. 

In reply to your third question I would say that the proper method of com- 
pensation for such railroads as ours would be for the Government to pay for 
the space occupied by the postal section of a car or a full postal car at the same 



KAIL WAY MAIL PAY. 5l 

average rate of earnings as if occupied by express or passengers, and I fail to 
see why the Government should have a cheaper rate than anyone else. Under 
this method we would receive about 40 per cent more than we are now getting, 
which in our case would about pay the expenses of carrying the mails. 
Very truly, yours, 

Jos. M. Kelly, President.. 
Senator Jonathan Bourne, 

Washington, D. C. 



Fort Smith & Western Railroad Co., 
St. Louis, El Reno & Western Railway Co., 

Fort Smith, ArTc., September 17, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir: In response to your favor of September 11 regarding Senate bill 
No. 7371, beg to advise that the reply of Mr. W. E. Crane, our vice president, 
will include the views of this office regarding the subject. 

Assuring you that the inquiry is highly appreciated, I remain, etc., 
Yours, very truly, 

W. M. Bushnell, General Manager. 



Fort Smith & Western Railroad Co., 
St. Louis, El Reno & Western Railway Co., 

St. Louis, Mo., September 18, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: With reference to your letter of September 11, inclosing bill S. 
7371, 1 inclose herewith a copy of a letter received from Mr. W. M. Bushnell, our 
general manager, which will give you the views of the Fort Smith & Western 
Railroad Co. on this question. I trust that it may have your committee's seri- 
ous consideration. 

Yours, very truly, W. E. Crane, 

Vice President. 



Fort Smith & Western Railroad Co., 
St. Louis, El Reno & Western Railway Co., 

Fort Smith, Ark., September 17, 1912. 
Mr. W. E. Crane, Vice President, 

St. Louis, Mo. 
Dear Sir: In response to your favor of September 14 regarding Senate bill 
7371. 

I beg to submit the following in reply to Mr. Jonathan Bourne, jr., inquiries 
1, 2, and 3. 

(1) I do not consider the present plan of compensation equitable, for the 
reason that the basis is an arbitrary one having no relation whatever to the cost 
of handling the business or of allowing the carrier a reasonable profit; or, in 
other words, a reasonable rate of interest on that proportion of the investment 
which we consider necessary in performing the service. 

(2) The underlying principle embodied in Senate bill 7371 is defective, for the 
reason it proposes that the profit for handling the mails shall be 6 per cent of 
the cost of such service. 

This railroad has an investment of over $6,000,000, and it costs in round num- 
bers $600,000 per year to operate it. If the courts were to hold that a reason- 
able return on the investment was 6 per cent of the cost of operation, its 
maximum net earnings will then be about $36,000 per annum, equivalent 
to a fraction over 1 per cent on the total investment. 

(3) I believe the railroads desire a plan that will cover the cost of handling 
the mails plus a reasonable rate of interest on such part of the railroad as may 
be said is required to move the traffic. 

In a letter written some time ago I reasoned that $750 per mile was in our 
case a fair value upon which to base at 6 per cent our profit for carrying the 
mails. This valuation equals less than 2£ per cent of the investment and was 



52 RAILWAY MAIL PAY. 

arrived at by assuming that cost of operation was the proper basis for appor- 
tioning the cost of the railroad for rate-making purposes on passenger traffic, 
then subdivided the expense of handling passenger traffic between passenger, 
mail, and express upon a car-foot basis. 

I am aware of the difficulty involved in reaching a satisfactory solution of 
this question, but I feel that the railroad as it stands to-day is just as neces- 
sary in its entirety for handling the United States mails as it is for any other 
class of traffic, and feel that the formula for apportioning the investment is 
fair. 

I do not believe that the Government or any one, in fact, can with an invest- 
ment of $750 per mile provide as satisfactory facilities as we do for collecting 
and distributing the mail over this line. 

As to House Document No. 105, there is very little criticism to offer, except 
with respect to that part of the Postmaster General's recommendation that the 
railroad's profit be based upon 6 per cent of the cost of operation. This propo- 
sition is wrong from every point of view and should be rejected by the railroads. 
What the roads should contend for is a return upon their investment. 

Generally speaking, we agree with the formula adopted by the Postmaster 
General in ascertaining cost of handling the mails. In our particular instance 
the Postmaster General's figures show that during the month of November, 
1909, the Fort Smith & Western handled the mails at a loss of $177. Had the 
test been made in May or June of the same year, with the same formula, it 
would have shown a very much greater loss, and this loss did not include any 
margin above the actual cost of handling the business. 

I believe if Congress would go into the matter thoroughly that a method 
could be found which will more nearly do justice to this road than the one in 
vogue at present. 

Yours, truly, W. M. Bushnell, 

General Manager. 

Galveston, Houston & Hendeeson Railroad Co., 

New York, September 16, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: I have received your letter of the 11 fh. instant in the matter of 
the compensation to be paid to railway companies for transportation of the 
mails. It will give me pleasure to reply to your inquiry a little later. 
Yours, truly, 

J. N. Wallace, President. 



Hoosac Tunnel & Wilmington Railroad Co., 

Malone, N. Y., September 30, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Sir : Yours of the 11th, inclosing copy of Senate bill 7371, relative to compen- 
sation to railroads for carrying the mails, and asking my answer to three ques- 
tions therein propounded, is received. 

First. To the first question I answer no. It is not fair to short-line rail- 
roads, whose compensation under the existing methods is wholly inadequate, 
arbitrary, and inequitable. 

Second. To the second question I answer no. It attempts to confer on the 
Postmaster General the power to determine the compensation for the perform- 
ance of a service by a company, where his interest is, by virtue of his office, to 
be exerted in behalf of the Government, and he is interested, and should be, in 
maintaining as low a cost of transportation as he can. It is like proposing that 
one party to a contract shall have power to dictate its terms and then fining the 
other party if he does not comply with them. It is against all moral sense of 
justice and equity, and the method of appeal to the Interstate Commerce Com- 
mission is not only likewise partial but burdensome and expensive, especially to 
short-line railroads, that can not afford to keep a corps of lawyers, engineers, 
statisticians, etc., to appear before the commission; and the commission's em- 
ployees are partial and have no responsibility except to the Government, and 
can not know the different conditions that affect different railroads on the sub- 
ject of cost, and have no interest for the railroad companies. 



BAILWAY MAIL PAY. 53 

Your steel-car clauses may be well enough for trunk lines, but there are hun- 
dreds of short-line railroads that can not afford or operate steel cars. The bill 
attempts to confer too drastic and sweeping powers on the Postmaster General, 
and its constitutionality may well be questioned. In fact, the whole bill seems 
to be inequitable, drastic, and socialistic. 

Third. To the third question I answer : There is no reason why the Govern- 
ment should not pay railroad companies the same price individuals pay for like 
service. A railroad company, being acquainted with its expenses of operation, 
can determine at what price per hundred pounds it will transport the mails, 
furnish cars, etc., and if the Postmaster General is not content with them^ then 
let him do as any other shipper may — appeal to the commission, State or 
national, from whose decision an appeal to court should be allowed. Such a 
method would be more equitable and make it usually a matter of contract, as it 
should be. We must assume the office of Postmaster General will look after 
the interests of the Government and the railroad company will look after its 
own interest, and from that a more equitable situation will result than through 
the drastic and socialistic methods proposed by this bill. 

Hoping I have fully answered your inquiry, I am, 

Very truly, yours, J. P. Kellas. 

Idaho Southern Railroad Co., 
Milner, Idaho, November 2, 1912. 
Jonathan Bourne, Esq., 

Washington, D. C. 
Sir: Replying to yours of September 11, relative above numbered bill, in 
reply to question 1, would say that I consider the present plan is equitable 
between this company and the Government. I have no figures as to other 
classes of railroads, and am, therefore, not competent to offer any opinion. 
Question 2: I consider the underlying principle of the plan embodied in the 
above bill the proper basis for compensation, so far as this company is con- 
cerned, but I believe that whenever additional service is asked for compensa- 
tion should be allowed for same. Question 3 : I know of no more desirable 
plan than the one proposed, with the exception as noted in reply to question 2. 
Yours, truly, 

D. C. MacWatters, 
Vice President and General Manager. 



Kahului Railroad Co., 
Kahului, Eawaii, October 15, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir : Your letter to Mr. Joseph P. Cooke, treasurer of the Kahului Rail- 
road Co., dated September 11, 1912, has been handed us for acknowledgment. 

We have given careful attention to the copy of Senate bill 7371 introduced 
by you, and embodying a plan recommended by the Post Office Department 
for determining the compensation to be paid to railroad companies for the 
transportation of the mails, and in reply to your questions would say that while 
we have no complaint to make as to the present plan of compensation which 
this railroad receives from the Government, we do think that the underlying 
principle of the plan embodied in the proposed bill is a proper basis for com- 
pensation. 

Yours, very truly, Kahului Railroad Company, 

J. N. S. Williams, Superintendent. 



Kansas Southwestern Railway Co., 

Arkansas City, Kans., September 21, 1912. 
Hon. Jonathan Bourne, Jr., Chairman, 

Washington, D. C. 
Dear Sir: Your letter of the 11th inclosing copy of Senate bill 7371, and ask- 
ing for expression of opinion to three questions. 

It has been some time since I was familiar with the details of this subject, 
and in order that I may reply intelligently, it will be necessary to go over 
previous reports and House House docket No. 105 before making reply. 



54 KAILWAY MAIL PAY. 

If after doing so I feel that I can give you any information, will gladly write 
you in reply to your interrogations. 

Yours, truly, E. L. Kingsbury. 



Keweenaw Central Railroad Co., 

Duluth, Minn., October 11, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
My Dear Sir: I beg to acknowledge receipt of your circular letter of the 
11th ultimo, inclosing a copy of Senate bill No. 7371, as therein stated. I have 
carefully considered the proposed bill embodying the plan recommended by the 
Post Office Department for determining the compensation to be paid to railway 
companies for transportation of the mails, and, complying with your request, 
beg leave to answer the questions of your letter as follows : 

1. I do not consider the present plan of compensation altogether an equitable 
one as between the Government and the railroads. It is my understanding that 
the railroads are now unduly burdened with heavy expense in building and 
equipping mail cars required to meet the increasing demands and exacting con- 
ditions imposed by the Post Office Department for safety, etc., and the comfort 
and convenience of messengers, and that in consequence the railroads' expenses 
incident to the mail service are increasing out of all proportion to the revenues 
earned. 

Also, under the present plan the minimum compensation allowed is too small 
for newly constructed lines struggling for existence in sparsely settled districts 
or in territory that is not largely enough populated to bring the mail weights 
above the minimum. 

2. The principle embodied in the proposed bill is not a proper basis for com- 
pensation, for the reason, among others, that it is absolutely impossible to 
determine the cost of transportation of any particular class of freight or people. 
The plan adopted by the Postmaster General and recommended in said bill for 
arriving at the cost to the railroads of handling the mails would produce an 
illogical and distorted result. It is impossible to determine with any degree of 
accuracy the actual cost of the particular service, and the same plan here pro- 
posed applied to all the business of the railroads would, in my judgment, 
promptly reduce them to bankruptcy. 

3. While the present plan of compensation may now be more nearly equitable 
to the large lines, it will not be equitable even to them in the near future when 
steel equipment throughout is demanded by the Post Office Department. Con- 
sidering, among other things, the efficiency of the service required by the 
Government and the public, and now furnished by the railroads, the rates of 
payment should be increased and not reduced, and the minimum should be con- 
siderably increased. 

4. Since the 1st instant the Keweenaw Central Railroad Co. has been carrying 
14 pouches a day, and is only receiving for transporting the mails $1,192.02 
per annum. If the proposed bill should become the law, and assuming that we 
were allowed the minimum compensation provided thereby of $25 per mile for 
the length of our line from Calumet, Mich., to Mandan, Mich. (28.1 miles), we 
would only receive for this service $702.50 per annum. This company is now 
operating passenger trains at a loss for the convenience of the few residents of 
Keweenaw and to enable them to receive regular mail service. Further reduc- 
tions in the compensation as contemplated by this bill would undoubtedly make 
it necessary for this company to abandon its passenger service. 

5. I desire to protest earnestly against the enactment of any such legislation 
as proposed, on the grounds that it will be impossible to ascertain the cost of 
the service as proposed; that the railroads will not be able to carry the mails 
under it except at a loss ; that such a law will materially handicap new roads 
and the smaller lines like ours, and especially those serving sparsely populated 
districts ; and, in general, that the necessary effect of any such legislation wiJl 
be to impair the present efficiency and high standards of the entire Railway 
Mail Service of the country and be greatly detrimental to the public and all 
concerned. 

Respectfully, T. F. Cole, President. 



RAILWAY MAIL PAY. 55 

Kushequa Route, 
Mount Jewett, Kinzua & Riterville Railroad, 
Kushequa Railroad, Mead Run Railroad, Smethport Railroad, 

Kushequa, Pa., September 23, 1912. 
Hon. Jonathan Bourne, Jr., 

United States Senate, Washington, D. G. 
Dear Sir: Thanking you for your favor of the 11th instant, inclosing copy 
of Senate bill 7371, I have examined same and wish to reply to your three ques- 
tions as follows : 

1. I do not consider the present plan of compensation an equitable one. It 
is inequitable in that it practically compensates as liberally those railroads 
which, passing through thickly settled regions, have abundant earnings and 
frequent profitable passenger trains, so that they are put to very little expense 
for transportation of mails ; and those railroads which, passing through sparsely 
settled regions, perform passenger and mail service at a loss to themselves, but 
as necessary to the existence of the communities along their lines. It is unfair 
to require free delivery by the railroad companies to terminal post offices re- 
gardless of distance. In our case, the delivery from our terminal stations to 
terminal post offices costs us nearly half as mUfch as the total amount we receive 
for carrying the mails. 

2. The underlying principles which I observe in the proposed bill, i. e., ascer- 
tainment of costs by Postmaster General with appeal to the Interstate Com- 
merce Commission and more frequent adjustment of the rate of compensation 
would be a desirable improvement. The principle of the bill is defective in that 
it does not indicate the bases upon which the Postmaster General shall compute 
cost. It is also defective in not providing for compensation for carrying of 
pouched mails. In the case of our road, for instance, all mails are carried in 
mail pouches in the baggage compartment of our combination coach, there be- 
ing no separate car or portion of car devoted exclusively to mail service. I am 
pleased with that feature of the bill which takes the frequency of train service 
into consideration. I think that it is a mistake to make so low a minimum rate 
of compensation as " not exceeding $25 per mile." In the case of short lines 
of road this would be a great hardship. 

3. A desirable plan for compensating for transporting the mails would be power 
on the part of the Postmaster General, subject to appeal to Interstate Commerce 
Commission, and in accordance with well defined rules, to ascertain both the cost 
and the value of the service rendered and base compensation accordingly. 
Among the rules for the guidance of the Postmaster General one should take 
into consideration the loss or profit of the train service on which the mails 
were carried; another, the length of line and cost of delivery of mails at sta- 
tions and termini ; another the relation between the net weight of mail matter 
transported and the gross weight inclusive of pouches and cars or parts of cars 
transported for the purpose of carrying the mails. This latter would form a 
very practicable method of increasing the compensation in accordance with the 
needs of railroads passing through sparsely settled districts and yet endeavor- 
ing to give good service; for in such cases mails might consist of a few letters 
only to the pouch and many pouches, or of a mail car or mail compartment in a 
car transported through a long stretch of country which provided very little mail 
matter. Between large cities, where there is much mail to be transported, the 
passenger traffic in the trains is apt to be profitable, so that the compensation 
for carrying the mails is practically surplus profit. And between such cities 
there is usually one or more competing lines, any one of which could transport 
practically all the mail at a competing rate if allowed to bid for it. There is 
a case on our road where the contents of one mail pouch does not average more 
than one letter per day, and yet the prompt transportation of that one letter is 
almost vital to the success of the industries on which the busiest community on 
the line of railroad depends. The letter in question transports the day's remit- 
tances to bank and arrangements with ,that bank to provide for the day's 
requirements. 

I realize that you are a very busy man; but have endeavored to reply as 
intelligently as possible to the questions in your letter. 
Yours, respectfully, 

Elisha K. Kane, President. 



56 KAILWAY MAIL PAY. 

Lake Superior & Ishpeming Railway Co., 
Munising, Marquette & Southeastern Railway Co., 

Marquette, Mich., October 12, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir: Replying to yours of September 11 relative to Senate bill 7371, 
introduced by you by direction of the Senate Committee on Post Offices and 
Post Roads, I have to say that we have been furnished with a copy of the 
reply forwarded by the committee on railway mail pay and we fully indorse 
the position taken by that committee. 

• We believe that the short railroad should receive more than ordinary con- 
sideration on account of running through a sparsely settled country where the 
mail carried per mile is much lower than the average and the present rate of 
remuneration is not too high. 

Up to July 1, 1911, the Marquette & Southeastern Railway and the Munising 
Railway were two separate corporations, but were consolidated under the 
name of the Munising, Marquette & Southeastern on the above, date. 
Document No. 105 shows the following results: 

Marquette & Southeastern, gain in mail revenue for one month $134. 01 

Munising Railway, loss in mail revenue for one month 124. 87 

Net gain, Munising, Marquette & Southeastern Ry 9. 14 

And this compilation does not take into account the investment in one extra 
compartment car which we must keep in reserve for emergencies. 

As the reply forwarded by the committee on railway mail pay goes into all 
matters in general, I will not touch on any of the details of a short-line 
railroad except as above stated, that due consideration should be given to 
that service as being different from service performed by other railroads. 
Yours, truly, 

H. R. Harris, General Manager. 



Lancaster & Chester Railway Co., 

Lancaster, 8. G., October 2, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir: Replying to your letter of the 11th I am inclosing you a letter 
that I recently wrote to the Assistant Postmaster General, at Washington, re- 
garding the compensation allowed the Lancaster & Chester Railroad Co. for 
hauling mail and mail car. This will fully explain our position. I contend 
that it is not fair to put short-line railroads on the weighing basis owing to 
the fact that they are generally run from one important town to another, and 
when main lines of railroad are running through both of these towns they 
only get to haul local mail, getting no through mail, while they have to 
perform all the services required by the Government. The compensation 
allowed short lines is arbitrary, unjust, and unfair. In my opinion the com- 
pensation should be allowed on a basis of the service rendered irrespective 
of the amount hauled, except on main lines. 

This rule applies as regards rural mail carriers and I can see no reason 
why short-line railroads should be arbitrarily required to render the service on 
a basis that is not remunerative. Thanking you for your inquiry, I am, 
Yours, very truly, 

Leroy Springs, President 



September 13, 1912. 
Hon. Joseph Stewart, 

Second Assistant Postmaster General, Washington, D. G. 
Dear Sir : Effective July 1 you changed your method of determining compen- 
sation for the handling of mail by the Lancaster & Chester Railway Co., which 
operates between this point and Chester, S. C, and of which I am president. 
This cuts our remuneration down to about $1,000. It is necessary that we fur- 
nish a mail car to conform to your rules and regulations and also give free 
transportation to your mail clerk, and the amount you now propose to pay us 



EAILWAY MAIL PAY. 57 

net only does not allow any rent for the car we supply but pays us scarcely 
2 cents a mile for hauling your clerk. I do not think the Government ought to 
expect a short-line railroad to perform this service without fair remuneration, 
and I do not believe you realize the imposition on our railroad under the cir- 
cumstances. 

Do you realize that you are requiring us to give you regulation service on 
trains twice each day between here and Chester for a sum less than you pay 
one of your rural carriers per annum? I do not question that the expense 
entailed in transporting mail between Lancaster & Chester nets the „ Govern- 
ment a loss, but the service has to be performed just as in the case of unprofit- 
able R. F. D. routes, but in your case you have other lines which are profit- 
able and which counterbalance this loss. In our case our only source of revenue 
from the Government is in handling this mail, and just because the line is not 
profitable to the Government is no reason to my mind why you should ask it to 
be unprofitable to us. 

If the service were performed by rural carriers it would be at an expense 
three or four times as great as at present and the service would be from three to 
five hours later. If we transported through mail between these two points our 
income would be considerable and enough to pay us for the facilities we supply, 
but in view of the fact that the trunk lines reach both Chester and Lancaster 
ahead of our line the only through mail we handle is for intermediate points, 
which is of little consequence. 

Under the ruling of the United States Supreme Court we understand it is 
optional whether we perform this service or not, and unless you can arrange 
to give us a fair income for the service we are perfoming we must in fairness 
to ourselves decline to continue handling mail. We therefore respectfully serve 
notice on you now that from this date until a satisfactory adjustment of this 
subject is reached we handle all mail of the Lancaster & Chester Railway Co, 
under protest. It is not the fault of this road that the mail is not of greater 
volume, and the service we render is just the same as if it were ten times as 
great, and we could handle ten times as great volume at absolutely no addi- 
tional expense over our present cost. 

I trust you understand the spirit in which I have placed this subject before 
you. We have no desire to be in the least arbitrary, but it is simply an injus- 
tice to our railroad that we should have to perform a service at a loss which 
should show a fair income for the trouble and expense we are put to. Our 
Congressman, Mr. D. E. Finley, who is a member of the Post Office Committee, 
is familiar with the situatiou, and if you wish further information upon the 
subject I suggest that you take it up with him. 

We trust you will handle this with promptness, so that we may have it satis- 
factorily adjusted at no distant date. 

Yours, very truly, Leroy Springs, President. 



Leavenworth & Topeka Railway Co., 

Emporia, Kans., October 22, 1012. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir: Yours of September 11, inclosing copy of Senate bill 7371. 
As the Leavenworth & Topeka Railway Co. is being operated by the Atchison, 
Topeka & Santa Fe Railroad Co. I take it that Vice President George T. Nichol- 
son's letter of October 17 to you on the subject will give you the information 
called for in your letter of September 11. 

Yours, truly, C. T. McLellan, President. 



Lorama Railroad Co., 
Pennsboro, TV. Va., September 1.',, 1912. 
Hon. Jonathan Bourne, 

Washington, D. C. 

My Dear Sir : I beg to acknowledge receipt of copy of your Senate bill 7371, 
which you were so kind to send me. 

To be frank with you, I must say that I would be very sorry to see this 
bill become a law. It would work a great hardship on all small roads to com- 
pel them to perform a task at a loss of money. This being in violation of the 
spirit of the Constitution the courts would relieve, but the expense of defense 
would work loss anyway. 



58 KAIL WAY MAIL PAY. 

We have operated 9 miles of narrow-guage road for years over which the 
United States mail >s carried for a very significant sum, if one did not care 
what he said. We carry it for $40.28 per month. We pay $5 per month for 
delivery to post office, which leaves us $35.28 per month, to say nothing of the 
fines and reductions. In the last three years we have extended this road 5 
miles to town of Pullman, and we refused to carry the mail over this part of 
road because of the poor pay. The Government offered us $20.83 per month and 
we would have to pay $15 per month to make delivery from depot to post office, 
which would leave $5.83. We refused and did and do not carry over this part 
of road. We would get, if we carried mail, clear $41.11 per month for carrying 
mail four times a day 14 miles, while a rural carrier gets $75 per month for 
carrying once a day on a mule. 

The small roads should be excepted from your bill. I believe you will, be- 
cause in your effort to benefit the Nation you would not confiscate any citizen's 
property. Would you? 

Truly, yours, M. K. Duty, 

President Lorama Railroad Go. 



Louisville & Nashville Railroad Co., 

Louisville, Ky., December 30, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

My Dear Sir: Your favor of September 11, 1912, relative to the compensa- 
tion to be paid to railroad companies for transportation of the mails, in which 
you made certain inquiries in regard to the present plan and the plan recom- 
mended by the Post Office Department, was duly received. 

Inasmuch as the committee on railway mail pay, representing 214,275 miles 
of railway in the United States, operated by 268 companies, prepared and sub- 
mitted a comprehensive statement containing facts and figures going to show 
that the present compensation does not equal the operating expenses incident 
to the transportation of the mails, and, therefore, leaves nothing for return 
upon the value of the property employed, I concluded that it would be best to 
subscribe to the statements of the committee and not inflict a lengthy inde- 
pendent argument upon you. 

I heartily indorse the statement of the committee as set forth in the pam- 
phlet entitled, " Mail Carrying Railways Underpaid," believing it to be an 
absolutely accurate presentation of the fact that the present system is grossly 
unfair to the railroads. 

It has occurred to me, however, that you might be interested in the facts 
and figures concerning specific cases on this company's lines where the existing 
laws or the Post Office Department's methods of applying them result in in- 
equity. I therefore inclose herewith memoranda as follows : 

1. Cost of handling mail to and from post offices at various points. 

2. Mail compeusation earned by mail apartments July 1, 1902, to June 30, 
1912. 

3. The effect of quadrennial mail weighings and adjustments of mail pay as 
compared with annual adjustments. 

The compensation of the Louisville & Nashville Railroad Co. was last fixed 
for the quadrennial period commencing July 1, 1912. The tonnage of mail mat- 
ter will be enormously increased on the 1st proximo when the parcel post 
will be inaugurated. The weight will gradually increase as the parcel post 
grows in favor, as will undoubtedly be the case. It follows, therefore, that 
unless Congress comes to our relief we will be called upon to perform a very 
great and valuable service for a period of three and one-half years without any 
compensation. Under conditions such as have existed heretofore the quadren- 
nial basis is manifestly inequitable, because the measurement of the compen- 
sation wholly disregards the normal annual increase which is inevitable, but 
under the burden of the parcel post this inequity will be greatly multiplied. 

The result of the recent weighing on the Louisville & Nashville Railroad for 
54 of our 59 mail routes was as follows: 

Pay per annum June 30, 1912 $759,943.22 

Pay per annum July 1, 1912 801, 626. 71 

Increase per annum 41, 683. 49 



E AIL WAY MAIL PAY. 59 

Based upon the reasonable assumption that the increase in the amount of 
mail handled was fairly regular during the last four years, annual weighings 
and readjustments of pay would have resulted in our receiving one-fourth of the 
increased rate now shown, or $10,420.87, for three years; another one-fourth 
for two years, and another one fourth for one year, making a total of $62,525.22 ; 
but, under the quadrennial arrangement, we carried the increased amount of 
mail up to June 30, 1912, without receiving 1 cent additional compensation. 
You can readily appreciate what an injustice will be imposed upoD the Louis- 
ville & Nashville Railroad Co. during the next three and one-half years if it 
is not allowed adequate additional compensation for the large volume of par- 
cel post matter. 

If the above should suggest any inquiries I shall be pleased to answer the 
same. 

Yours, truly, M. H. Smith, Jr., President. 

Memorandum as to Cost of Handling Mail to and from Post Offices at 

various points. 

At Pensacola, Fla., the distance between the station and post office, 0.73 of a 
mile, is included in and paid for as a part of two routes, because it is a termi- 
nal of those routes. On route No. 123003, Pensacola and Flomaton, the amount 
of compensation is $92.87 per annum, being at the rate of $127.22 per mile for 
0.73 mile. On route No. 123015, Pensacola and River Junction, the amount of 
compensation for the service between the station and post office at Pensacola 
is $82.88 per annum, being at the rate of $113.54 per mile for 0.73 mile. The 
total of these two amounts is $175.75. As the amount of mail is quite large 
and there are quite a number of trains to be met, for some of which two trips 
have to be made, bringing advance mail and final dispatch from the post 
office, it is necessary to have first-class wagon service. This work is let by 
tender, and we are now paying $75 per month, or $900 per annum, for the 
service, so that we actually lose $724.25 on that part of the mail routes. 

At Columbia, Tenn., on route No. 127017, Columbia and Sheffield, we receive 
for the terminal service between the station and the post office $44.12, being 
at the rate of $73.53 per mile for 0.6 mile. It costs us $120 per year to have 
the service performed. 

At Frankfort, Ky., on route No. 129050, we receive $22.44 per annum for 
the terminal service, being at the rate of $64.12 per mile for 0.35 mile. The 
service costs us $96. 

At Gallatin, Tenn., on route No. 127026, we receive for terminal service 
$20.33 per annum, being at the rate of $52.15 per mile for 0.39 mile. It costs 
us $180 to have the service performed. 

At McLeansboro, 111., on route No. 135078, we receive for the terminal service 
$20.94, being $42.75 per mile for 0.49 mile. The service costs us $84 per annum. 
At this point a condition prevails which looks ridiculous, but is not uncommon 
under the postal regulations. While this company is responsible for the han- 
dling of mail between the post office and trains on route No. 135078, the Post 
Office Department has to pay for the handling of the mail to and from the 
trains on route No. 135032, East St. Louis and Bvansville, because McLeans- 
boro is an intermediate point on that route, aud the post office is located more 
than 80 rods from the station. The fact that the Government employs the 
mail messenger at that point enables us to make contract with the same man 
at a comparatively small figure; but, even at this, the service costs us more 
than four times the amount received. Among the junction points where similar 
conditions prevail are Frankfort, Columbia, and Gallatin, shown in preceding 
paragraphs. 

At Scottsville, Ky., on route No. 127026, we receive for the terminal service 
$23.46 per annum, and it costs us $144. 

At Adairville, Ky., on route No. 129014, we receive for the terminal service 
$31.60, and it costs us $96. 

Paris, Ky., is an intermediate point on routes 129002 and 129015; but as the 
distance between the station and post office is slightly less than 80 rods, we are 
responsible for the handling of the mail to and from the post office. As the mail 
is heavy and there are a great many trips, wagon service has to be provided, and 
the smallest amount for which we could get a contractor to undertake this 
work was $480 per annum. Of course we get no compensation directly for this 
service, rs the side distance to the post office is not included in the length of the 



60 EAILWAY MAIL PAY. 

route. If the post office was about 70 yards farther away, this service would 
have to be provided for by the Post Office Department, and we would not suffer 
any reduction in revenue, but would save the $480 per annum. 

Other instances might be given, but the above ought to be sufficient to empha- 
size the arguments that the performance of terminal and side-messenger service 
is not a reasonable requirement, and that if the carriers are required to perform 
such service it should be paid for at rates much higher than is paid for trans- 
portation on trains. 

Memorandum Illustrating the Effect of Quadrennial Mail Weighings and 
Adjustments of Mail Pay, as Compared With Annual Adjustments. 

Complete figures are not at present available showing the results of the 
mail weighing this year on the larger portion of the Louisville & Nashville sys- 
tem, and the Post Office Department has succeeded, by economical methods in 
connection with mail-bag equipment and in other ways, in holding down the 
amount of mail, so that it seems unlikely that any very great increase will be 
shown over the figures of 1908. 

The adjustment effective July 1, 1908, under which we have been working 
up to June 30, 1912, showed a net increase on the routes weighed of $12,618.70 
per annum, as compared with the rates in effect prior to that time. This was a 
very small percentage of increase as compared with increases shown in previous 
quadrennial periods, because the department had already commenced to apply 
its economical methods, and, by the Postmaster General's order No. 412, chang- 
ing the divisor from six to seven days per week in arriving at the average weight 
carried, had succeeded in reducing the compensation about one-seventh. 

It is only reasonable to assume that the increase in the amount of mail which 
justified the increase in pay of $12,618.70 per annum, took place gradually 
during the four years intervening between the weighing in 1904 and the weighing 
in 1908, or, say, about one-quarter of the increase in each year, so that, if we had 
had annual weighings and adjustments instead of quadrennial, the increase in 
pay at the beginning of the second year — July 1, 1905 — would have been $3,- 
154.67, which we would have received for three years. At the beginning of the 
third year — July 1, 1906 — there would have been a further increase of $3,154.67, 
which we would have received for two years, and at the beginning of the fourth 
year — July 1, 1907 — a further increase of $3,154.67 for that year. In other 
words, we would have received $18,928.05 for carrying an increased amount of 
mail each year, but which, under the quadrennial weighing system, we actually 
carried for nothing. 



Memorandum Showing Mail Compensation Earned by Mail Apartments, 
July 1, 1908, to June 30, 1912. 

All the following statements with reference to the amount of compensation 
credited to particular trains are based directly on statistics furnished by the 
Post Office Department and may be easily verified. They refer throughout to 
the quadrennial contract period of 1908-1912, because similar figures are not 
yet available for the adjustment which is now being made, effective July 1, 
1912. 

Route 12900J/, Cincinnati and Nashville. — Train 10, Bowling Green to Louis- 
ville. On September 12, 1904, the Railway Mail Service people called for a 
mail apartment for this run not less than 16 feet long. The results of the mail 
weighing of 1908 showed that train No. 10 carried only 0.41 per cent (0.41 of 
1 per cent) of the total weight carried over the route, which made the com- 
pensation $1.81 per trip. There is no postal clerk service in this car south- 
bound on No. 9, but a small amount of mail is handled by our baggage-master. 
However, this amount of mail was so small that in the percentage sheets fur- 
nished by the Post Office Department it was disregarded entirely, and no com- 
pensation whatever credited to train No. 9. Therefore we have for some years 
been handling what is practically one-third of a car, fitted up as a traveling 
post office, with mail and the postal clerk, from Bowling Green to Louisville 
for 1£ cents per mile run, or less than the fare of the clerk would amount to. 
and so much less than one-third of the average cost of maintaining and hauling 
the car in a passenger train that such a comparison is ridiculous. As we have 
to handle the apartment southbound without any compensation, we really only 
get about three-fourths of a cent per mile for the service. 



RAILWAY MAIL PAY. 61 

Route J 29008, Memphis Junction and MempMs. — Train 109, between Bowling 
Green and Clarksville, carries only 0.63 per cent of the total mail on the route, 
which makes the compensation for that train only $1.25 per trip. The cor- 
responding figures for train 110 are 0.41 per cent of the total weight ; compensa- 
tion, 81 cents per trip. We handle a mail apartment 18 feet 6£ inches long, 
with equipment, mail, and one of two postal clerks, at an average rate of 1.74 
cents per mile for the round trip. 

For train 107, from Paris to Memphis, the corresponding figures are 0.67 per 
cent of total weight; compensation, $1.33 per trip. Train 108, Memphis to 
Paris, 0.87 per cent of total weight; compensation, $1.72 per trip. The mail 
apartment is 11 feet long, and the average pay for round trip is 1.17 cents per 
mile. Train 106, Memphis to Milan, handles only 0.25 per cent of the total 
mail on route, which makes the compensation only 58 cents per trip, or 6 mills 
per mile. There is no postal clerk service in this apartment southbound. 

Route 127006, Nashville and Montgomery. — Train No. 5, Decatur to Bir- 
mingham, carries 0.37 per cent of total weight; pay per trip, SO cents. Train 
No. 6, Birmingham to Decatur, carries 0.78 per cent of total weight; pay per 
trip, $1.70. The pay for the 12 foot 8 inch apartment for the round trip is 
1.45 cents per mile run. 

Route 129059 and route 129031. — Trains 69, 70, 41, and 46, making round trip 
between Bvansville, Earlington, and Providence, a total of 148.76 miles, earned 
only $1.68, or 1.13 cents per mile run, or less than half fare of the postal clerk 
when traveling on duty. It should be noted that this postal-clerk service has 
recently been discontinued. 

Numerous other instances might be given in detail where the total mail com- 
pensation earned by small mail apartments figured out less per mile run than 
the fare of the clerk or clerks traveling in such apartments. In addition to 
carrying the clerks while on duty we have to carry them as passengers to and 
from their homes without compensation and have to assume full responsibility 
for any injuries received while on our trains. 



Linea Ferrea del Oeste, 
San Juan, P. R., September 23, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
My Dear Sir: In reply to your letter of September 11, I beg to state that 
your mail is carried over this route by a ferryboat and a train. 

No other company runs its trains over our tracks and only one crossing is 
made, near Bayamon, with the tracks of the American Railroad. The post 
offices are located nearer to the railroad, station than to any other point on the 
track. 

In regard to your three questions, I beg to answer them as follows: 

1. I think the plan of compensation is equitable, though considering the small 
amount of mail carried in this country, 6 per cent profit on the expenses is com- 
paratively small. 

2. I think the underlying principle of the plan is on proper basis for com- 
pensation. I, however, believe that as far as fines for lack of equipment is con- 
cerned, the Postmaster General should not be as strict as with railroads in the 
States, where purchasing facilities are at hand. 

Very respectfully, yours, R. Valdes. 



Long Island Railroad Co., 

Neio York, November 15, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
My Dear Senator: The Long Island Railroad is a good illustration of under- 
payment for carrying the United States mails, and I will, therefore, submit 
some of the facts as briefly as possible with the purpose of helping your com- 
mittee to understand why the existing laws are inadequate to do justice and 
of suggesting the direction in which remedial measures should be applied. The 
Post Office Department, in Document No. 105, states that in November, 1909, 
the company's revenues for carrying the mails were about 28 per cent below the 
mere cost of operation and taxes, and if the Post Office Department had extended 
its estimate to include fixed charges, it could have conceded a loss to the rail- 
road of over 80 per cent. The company's calculation on the same data revealed 
a greater loss, about 200 per cent., or about $85,000 a year. 

49396—14 5 



62 KAILWAY MAIL PAY. 

EXTENT AND CHARACTER OF MAIL SERVICE. 

Long Island, as you know, is a section of New York State, extending from 
New York City to Montauk Point, about 125 miles long, 15 to 22 miles wide, 
and has a population of over 2,000,000 people. The Long Island Railroad is 
practically the only transportation agency and, therefore, carries all of the 
United States mails for the entire section. 

The mail service oh the Long Island Railroad includes the following : 

Number of mail routes 12 

Total length of mail routes miles__ 344 

Post offices supplied 188 

Railway post-office trains daily 38 

Total mail trains daily 254 

Total of average weights of mail daily pounds— 16, 028 

Annual pay received in 1911 $43, 949 

In addition to the transportation of the mail on over 250 trains daily, it will 
be noticed that the company furnishes railway post offices in mail apartments 
(15 to 30 feet in length) on 38 trains daily. It also provides extensive space in 
the Long Island City terminal for post-office work, without rent, carries the mail 
between the trains and the post offices at many stations, carries a large number 
of railway postal clerks and postal officials free, and performs other incidental 
services. 

We are required to furnish a special electric baggage car to move the mails 
between Long Island City and the publishing house of Doubleday, Page & Co., 
at Garden City, a distance of 20 miles. This movement amounts to several 
thousand pounds a day, but the railroad company receives absolutely nothing 
for performing this service, because it was inaugurated after the weighing of 
1909. 

HIGH QUALITY OF THE SERVICE IGNORED. 

If we divide the annual mail pay ($43,949) by 365 days and then again by 
344 miles, we find that the company receives about 35 cents a day per mile of 
road for carrying an average daily weight of mail of 16,000 pounds, or 8 tons. 
If all of the 12 mail routes were in one straight line, 344 miles in length, and if 
the daily weight (8 tons) were carried on one train, compactly loaded like 
freight, the rate of pay would be moderately remunerative if the work was 
merely the transportation of the load and did not include the other services 
described above. 

Further, if the company operated only one train a day each way and the Post 
Office Department refrained from calling for extra car space for railway post 
offices, thus permitting the whole mail to be consolidated within one car or less, 
the pay of the company under the present law would be the same as at present. 
The very life and efficiency of the postal service depends upon expedition, in 
which frequency of transmission is a very large factor; yet the 254 daily mail 
trains (varying on the different routes from 5 trains daily to 74 trains daily) 
obtain no particular recognition in the law. The frequency of service is, how- 
ever, a substantial factor in the cost of doing the work, because the load to be 
carried is divided into retail lots with consequent increase of expense. 

The present terminal of mail-car runs is Long Island City, which involves 
wagon service via Thirty-fourth Street Ferry, with greatly increased cost and 
delay. 

With the completion of the new post office at the Pennsylvania Station in 
New York City, this company can extend its mail routes direct to the post office, 
making that the terminal for all mail-car routes, greatly expediting the move- 
ment and eliminating the cost of wagon service. But we must be paid for this 
service on a proper basis instead of the miserable sum of $600 offered by the 
Post Office Department for a high-class service of 10 steel mail apartment cars 
per day through the East River tunnels to the $50,000,000 station in the heart of 
New York, where it costs us for electricity, wages, and ordinary expense over 
$2 for every car moved into and out of the terminal, without adding for rent and 
taxes. We should have at least $15,000 per annum for making the new post 
office the terminal of the Long Island mail service, in addition to pay for 
handling mail via new electric routes at the usual rates for service of that kind. 
This matter is one now under discussion with the Post Office Department. The 
local officials of the department recognize the great benefits which the depart- 
ment will secure through the operation to the Pennsylvania terminal, and agree 



RAILWAY MAIL PAY. 63 

that the railroad company must be paid for it; but the regulations of the de- 
partment are so narrow and unfair that it seems impossible for us to get to- 
gether. The public suffers through such conditions, and the department is 
unable to take advantage of the new facilities. 

MAXIMUM FACILITIES FOR MINIMUM PAY. 

The geographical situation of Long Island with the Long Island Sound on 
the north and the Atlantic Ocean on the east and south, accounts for the fact 
that the heavy load of mail starts from the western terminal at New York City 
and rapidly diminishes as it travels eastward to the vanishing point. Similarly, 
going westward there is naturally only a moderate accumulation of mail until 
trains near the metropolitan district. Therefore, the facilities, and especially 
car space, must be reserved and set aside for the maximum load of the heaviest 
season, while the law prescribes payment for the average weight carried. The 
average is a very lean average; first, because of the geographical conditions 
noted above ; second, because the Post Office Department selects a period for 
weighing believed to be below the normal for this road ; third, because since 1907 
the Post Office Department includes Sundays in the computation, although very 
little service is required or performed on our line on Sundays, instead of con- 
fining the test period to working days, as stated in the law ; and fourth, because 
the average weight when determined is kept stationary for four years, regardless 
of any increased business accumulating in the meantime. 

RAILWAY POST OFFICES SORTING MAIL EN ROUTE. 

It surprises one after he takes up the study of the subject of the transporta* 
tion of mails to discover that the transportation has been superseded in rela- 
tive importance by the traveling post offices carried over the road several 
times daily, in which railway postal clerks open the mails and do a general 
post-office business. It was suggested above that the entire daily lead of 8 
tons could be economically transported in half of one car on one train so far 
as the weight is concerned. In contrast with this please note the fact that the 
Post Office Department uses 38 railway post offices daily on our line, in which 
the car space devoted to the mails aggregate about 800 linear feet, or the 
equivalent of 13 full cars 60 feet in length. The law of 1873 prescribes a rate 
of pay for a certain average daily weight on the condition that the mails 
are carried with " due frequency and speed," and that suitable and sufficient 
room, fixtures, and furniture in a car or any apartment properly lighted and 
warmed shall be provided for route agents to accompany and distribute ths. 
mails. Since then the distribution en route has greatly increased, and there 
is no limitation restricting the Postmaster General as to frequency of service or 
the size and number of apartments. The car space for railway post offices 
can easily be recognized as the main factor at present on our lines, while the 
weight of mail transported is an uncertain and inadequate measure upon which 
the pay is based, but holding a very inferior relation to the car space demanded 
by the Post Office Department or provided by the railroad company. 

THE PAY RELATIVELY LESS FROM YEAR TO YEAR. 

During the past 15 years the wealth and commerce of the country and all 
business activities have increased to a remarkable extent. The same can be 
said of all branches of the Long Island Railroad business except the mail pay. 
In 1S97 the annual rate of mail pay was $40,982.40, and in 1911 it was 
$43,949, an increase of less than 8 per cent in 14 years. In the same period 
the other items of Long Island Eailroad business increased as follows : 

Per cent. 

Earnings from passenger service i 209 

Earnings from freight service 178 

Earnings from express service 201 

Operating expenses 219 

Taxes 235 

Fixed charges 210 

It is not necessary to comment on this obvious disparity, except to say that 
we estimate that the apartment-car space devoted to railway post-office pur- 
poses increased about 100 per cent during this period, while the mail pay was 
raised only 8 per cent. It can be conservatively claimed that the accumulated 
shortage in our mail pay for the period of 14 years was over a million dollars. 



64 KAILWAY MAIL PAY. 

CONCLUSION. 

The remedial amendments to the present laws suggested in the response to 
you from the committee on railway mail pay are indorsed by our own experi- 
ence and study. Pay for mail-apartment cars is the principal need for the 
Long Island Railroad, if the other provisions of the laws remained unchanged. 
An allowance for the side messenger service and terminal messenger service 
performed by the company would be only equitable. Annual weighings of 
mails with annual radjustments of pay are vitally important for many rail- 
roads, and are indispensable to all now that the parcel post is about to be 
established. 

If the deficit in our mail pay as compared with operating cost and taxes 
as ascertained in November, 1909, be expanded to include an allowance for fixed 
charges, the resulting figures would be $95,765.75. If this deficit were to be 
equalized by an allowance of pay for mail apartments, the rate would need to 
be based on 8 mills per car-foot mile. Therefore, the annual rate per mile 
of route for a round trip daily of mail-apartment cars, in addition to the pay 
for weight of mails carried, would be approximately : For 30-foot mail apart- 
ment, $87.60 per mile per per year; for 25-foot mail apartment, $73 per mile 
per year ; for 20-foot mail apartment, $58.40 per mile per year ; for 15-foot mail 
apartment, $43.80 per mile per year. 

The General Government in the maintenance of the Post Office Department 
is performing a social and commercial service for the public; so also the rail- 
roads in carrying passengers and freight are performing a very essential and 
important social and commercial service. The establishment of the parcel 
post emphasizes the commercial aspect of the postal service. The traffic should 
render a fair return to those engaged in the service whether as postmasters, 
clerks, letter carrirs, or as railroads. Viewing the national postal system as a 
whole, the railroads constitute not only the framework of connection for the 
whole structure, but in addition provide and operate the motive power for 
intercommunication between all of its parts. Its importance should be duly 
recognized and its work should be fairly compensated. 
Very truly, yours, 

Ralph Peters, President. 



Louisiana Railway & Navigation Co., 

Shreveport, La., September 19, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir : I have your letter of September 11 and copy of Senate bill 7371, 
embodying apian for determining the compensation to be paid to railroad com- 
panies for transportation of mails. 

The roads that are the least able to comply with the present governmental 
requirements are those who draw the minimum amount of compensation, and 
whose cost for handling per 100 pounds is far greater than those drawing maxi- 
mum pay. 

Under this bill the minimum amount of payment is reduced from $42.50 per 
mile per annum to $25, which will be a great hardship to the roads who need a 
proper compensation in the sparsely settled sections of the country that they are 
developing largely at their own expense. Local conditions can not well be 
taken into consideration in fixing the compensation under this arrangement. 
The Postmaster General will of necessity adopt certain rules which he will 
pursue in determining the cost of handling. In the adoption of these rules, 
local conditions will be ignored; in other words, those most able to handle 
cheaply would probably be overcompensated, whereas in using this method 
those to whom the expense is greatest will be underpaid. It is true, oppor- 
tunity is afforded to appeal the apportionment to the Interstate Commerce 
Commission, but they, like the Postmaster General's department, will also be 
guided of necessity by certain rules and standards. 

In our own case, for example, this line of 350 miles was entirely built by one 
man, he furnishing the entire capital for the project ; no outside investors have 
been called upon to help bear the burden, and beginning about 14 years ago, 
many millions of dollars have been inves'ed up to the present time. The results 
of this has been that a country all the way from west Louisiana to New 
Orleans has had its value increased several hundred per cent. Each individual 
along the line is worth considerably more because of his investment; the great 
convenience to this population, who previously depended upon the irregular 



RAILWAY MAIL PAY. 65 

steamboat service or the mail coach for their mails, is worth thousands of 
dollars to them through the handling of the mails along this line, and yet in 
all this time the investor of the millions tied up in this road has received no 
benefit whatever in the way of interest on his investment. 

In computing the cost under the rules of the Postmaster General, the proba- 
bilities are that only cost of transportation or operating service would be con- 
sidered, and yet it seems but fair that the proportional amount of loss through 
operating for years for the convenience of the public at large should be borne 
by the public. In other words, in conditions of this kind a 6 per cent added to 
the actual transportation or operating costs would not be fair compensation. 

For many years, owing to the thinly settled condition of the country, the 
weight of mails carried did not, under the old law, justify the payment of more 
than the minimum mileage, and had this bill been in effect during that time 
the proprietor's loss would have been increased to the extent of the difference 
between the minimum in the present bill and that of the one now in effect. The 
bill seems to authorize the Postmaster General to carry mails on any train- 
freight or passenger— and to allow the ordering of mail service on freight trains 
after compensation has been fixed without additional payment. 

We are now hampered in our operations to some extent by carrying mails 
on freight trains, and the public always free to expect and demand the best 
of service from a railroad company, even though privately owned, make no 
distinction nor no allowance for the failure of such company to provide their 
requirements with any profit to itself. This bill gives authority to the Post- 
master General to fine the roads for failure to perform the service — even as 
high as three times the value of such service. 

Local conditions would have a great bearing on this phase of the matter. 

Under the old law, while roads were being fined for delayed trains this com- 
pany, with its new line operating in seasons of extreme rainfall, was held up 
to the same standard that was expected and required of the Pennsylvania or 
the New York Central, even to such an extent that in some cases, out of a 
quarterly payment of $2,300, as much as $700 was deducted on this account. 

The requirement under certain conditions with certain roads, at certain 
times, is unreasonable, and such roads would be far better off if they were not 
handling the mails at all. In addition to this, in the near future a road such 
as ours, even yet before it begins to be a profitable investment for its builder, 
will be required to supply a new set of equipment under the Government rules. 
This equipment will be of no benefit whatever to the railroad except for han- 
dling the mail, and if proper compensation is not received would be simply an 
added loss. The Government, through its power to do so, is imposing upon 
the builder of this line, as the 6 per cent added to operating costs would not by 
any means, even though all costs should be included, justify the outlay of 
many thousands of dollars in order to provide a certain class of equipment. 

It therefore seems to me that the minimum compensation should not be re- 
duced ; that some provision should be made for extra compensation to new and 
nonprofitable roads, and that local conditions should be considered in fixing 
compensation and a higher rate of cost per mile allowed to those roads han- 
dling a small tonnage of mail than is allowed in the case of the larger lines. 
Yours, truly, 

H. B. Helm, Second Vice President. 

Milner & North Side Railroad Co., 

Milner, Idaho, November 2, 1912, 
Jonathan Bourne, Esq., 

Washington, D. G. 
Sir: Replying to yours of September 11, relative to Senate bill 7371, in 
reply to — 

Question 1. Would say that I consider the present plan is equitable between 
this company and the Government. I have no figures as to other classes of 
railroads, and am, therefore, not competent to offer any opinion. 

Question 2. I consider the underlying principle of the plan embodied in the 
above bill the proper basis for compensation, so far as this company is con- 
cerned; but I believe that, whenever additional service is asked for, compensa- 
tion should be allowed for same. 

Question 3. I know of no more desirable plan than the one proposed, with 
the exception as noted in reply to question 2. 

Yours, truly, D. C. MacWatters, 

Vice President and General Manager. 



66 RAILWAY MAIL PAY. 

Maryland & Pennsylvania Railroad Co., 

Baltimore, Aid., October 16, 1912. 
Hon. Jonathan Bourne, 

Washington, D. C. 

Dear Sir: In your circular letter of September 11 last you propound three 
questions which I will endeavor to answer concisely. 

Question 1. Do you deem the present plan of compensation an equitable one 
as between the Government and the railroads, etc.? 

Answer. The present plan we deem inequitable : 

(a) The present rate of $75 per mile per annum for 500 pounds is only 
about 5 cents per 100 pounds per mile, for which the railroad not only trans- 
ports the mail but, in addition, a passenger on an apartment specially fitted up 
for that purpose — a miniature post office — and which can be used for no other 
purpose. Especially can this be said of short lines on which the department 
pays nothing for the office on wheels which it requires. 

(6) It is difficult to appreciate the equity of the department's paying for a 
whole cor where such is used and declining to pay anything for a portion of a 
car fitted up in exactly the same manner. 

(c) The service is burdened with deliveries which, on some routes, consume a 
large portion, if not all, of the compensation received by the railroad. 

Question 2. Is the underlying principle of the plan embodied in Senate bill 
7371 a proper basis for compensation, etc.? 

Answer. The plan for compensation embodied in this bill is to allow the rail- 
roads an amount " not exceeding the cost to the railroads of carrying the mail, 
as ascertained by the Postmaster General, and 6 per cent of such cost." This 
appears to be a new method of conducting business, and one which would prove 
disastrous in most, if not all, lines of trade. 

A contractor who furnishes no money and assumes no risk usually receives 
more than 6 per cent on cost for supervision alone. 

Solvent railroads require at least 30 or 40 per cent of their gross revenue to 
keep them afloat and pay a reasonable return on their capital. This repre<- 
sents not 6 per cent but 50 to 60 per cent of their expenses or cost of earning 
their money. 

Moreover the bill does not require the Postmaster General to pay to tKe 
railroad the cost plus 6 per cent. This is a maximum beyond which he may not 
go, and what he shall pay within this is left wholly to bis discretion. You will 
kindly note that what is sometimes called an appeal to the Interstate Commerce 
Commission has no bearing upon the question of what the Postmaster General 
shall pay within this maximum of cost plus 6 per cent. For that procedure 
if an appeal at all is only upon his method of ascertaining the cost so that 
even should the commission decide against him he accepts its findings as to the 
cost, yet still with full discretion as to the compensation, within the maximum, 
which he will offer a railroad. And when he has made the offer the railroad, 
under the last provision of the bill, is bound to accept it or commit an unlawful 
act and make itself liable to a fine of $5,000. 

Now does the bill provide for an appeal to the Interstate Commerce Commis- 
sion? The bill does not use the term appeal. Nor in sketching the proceeding 
does it describe an appeal. The objection of a railroad is to be filed not with 
the commission but with the Postmaster General, who " shall certify the method 
and objection, and such other papers as in his judgment may be essential to 
an understanding of the method, to the Interstate Commerce Commission." 
This seems to be only a reference, not an appeal. 

There is no provision here for an appeal nor a day in court for the railroad. 
Without further pursuit in detail the underlying principle may be characterized 
as one obnoxious to our fundamental conception of justice, in that it proposes 
to confer upon one contracting party full power in his discretion to impose upon 
the other contracting party terms which he is bound to accept, thus depriving 
him of his lawful contractual right. 

Question 3. What is a desirable plan for compensating railroad companies 
for transporting the mails? 

Answer. To ascertain on the average what the space required would be worth 
to the railroad if occupied by passengers or express matter. The department 
requires a certain space fitted up, supplied, and attended to in a prescribed 
manner for its exclusive use. By all rules of trade it should pay for the space 
appropriated, whether filled or not. 

Now, for a few words in general. This bill falls into the class of interstate 
legislation, yet it is in direct contravention of the spirit of and the principle 



EAILWAY MAIL PAY. 67 

underlying that legislation. The underlying principle of the interstate com- 
merce law is absolute equality among shippers. But under this bill the United 
States would assume the position of a favored shipper, entitled to a lower rate 
not only, but a rate of its own making in the discretion of its representative. 

It goes without saying that the United States intends to do what is right. 
It is becoming, therefore, that a fair and adequate rate be found and established 
by statute. Should this be done there will be no kick on the part of the rail- 
roads. Allow me to hand you herewith a copy of a communication addressed 
to the Speaker of the House of Representatives by Mr. Frank Sullivan Smith, 
president of the Short Line Railroad Association, which goes into more detail 
than I have thought necessary to answer your questions. 

I also inclose copy of bill 4044, introduced by Mr. Talbott on April 11, 1911, 
into the House of Representatives, which is supposed to be satisfactory to the 
railroads. 

Respectfully, yours, Jno. Wilson Beown, President. 

You will kindly understand the above is also the answer of the Maryland 
Electric Railways Co. J. W. B 

Has justice fled from Washington, 
And left a naked skeleton, 
'fhat we should take this bill to be 
Remotest kin to equity ? 



Short Line Railroad Association, 

New York, February 29, 1912. 
The Speaker of the House of Representatives, 

Washington, D. C. 

Dear Sir: In view of the admission made by the Postmaster General in his 
annual report for the fiscal year ending June 30, 1911, that the statistics ob- 
tained during the course of the investigation he had caused to be made in regard 
to railway mail transportation, as contained in his report and the recommenda- 
tions submitted to you, designated as House Document No. 105, disclosed the 
fact that certain railroad lines " were actually carrying the mails at a loss," 
the Short Line Railroad Association, whose roads have not only been underpaid 
and in many instances have not been paid at all for the services they rendered 
the Government, was encouraged to believe that House Document No. 105 
would recommend changes in the law, along the lines of those advocated by 
the association, or a reasonable and fair substitute therefor. Being thus led to 
believe, the association, with considerable difficulty, secured a copy of House 
Document No. 105, and after examining the statistics gathered and compiled 
according to the computations and methods adopted by the Post Office Depart- 
ment, eagerly read the recommendations made by the Postmaster General to 
adequately compensate the railroads, many of which showed according to the 
computations made in the report a loss from the mail service, from $16,000, 
$9,000, $5,000, $2,000, $1,000, $500 down to $100 and less for a period of one 
month. 

The recommendations briefly are : 

First. That the present method of compensation to railways for mail car- 
riage, having no sound basis either in cost of operation or value of service, be 
abandoned. 

Second. That there be substituted for the present method a method for com- 
pensation, based upon the cost of the service with a profit of 6 per cent to the 
railways. 

Third. That such cost of operation be determined by annual reports to be 
required by the Postmaster General from the railways upon a method of 
determination to be determined by the Postmaster General and foreshadowed 
to some extent in character by the reports required from railways in the inves- 
tigation of the subject of this report. 

Fourth. That if the railways disagree with the conclusion of the Postmaster 
General, either as to form, significance, or conclusions, the matter shall be 
referred on appeal to the Interstate Commerce Commission. 

Fifth. That it shall be unlawful for any railroad company to refuse to carry 
the mails at the rate of compensation provided by law when (and) for the period 
required by the Postmaster General s*> to do, and for every such offense it shall 
be fined not e^™»wunrc $5,000. 



68 KAILWAY MAIL PAY. 

In considering the practical workings and effect of these recommendations 
in their bearing upon the service and the pay proposed to be accorded railroads 
in general and short lines in particular the services of one of the most capable 
and efficient auditors connected with one of the association short line railroads 
were invoked to analyze the recommendations. This analysis, upon review by 
the association, is fully concurred in and is herewith presented : 

"As to nebulous basis for the present method of compensation: It may be 
granted at once that the present basis of compensation is not scientific, having 
no tangible relationship either as to the cost of operation or the value of 
service. This unhappy state of affairs is true of every method of rate making, 
either for freight or passenger transportation or any other service for which 
railways assess charge upon the public. It is also true probably of the tangible 
charges for every exercise of human activity. There is no scientific reason why 
a clothing merchant should exact a profit of 50 per cent for his merchandise 
as against a profit of 20 per cent by a grocer. 

" Rates for passenger transportation and freight transportation charged by 
railways doubtless took their origin from the rates charged for like service 
prior to and up to the time when rail transportation was introduced. It is not 
probable that they had any consistent relationship with the cost of transporta- 
tion — although some relationship to the value of service as determined by 
economic factors. The rates that prevailed prior to the introduction of rail 
transportation had really less relationship to cost of transportation, but prob- 
ably were somewhat more affected by the value of service, than the original 
rail rates. It is true probably that the rates of transportation, both prior to 
and after the introduction of rail transportation, were affected to some degree 
by costs, because excessive profits would invite a degree of competition which 
could be introduced at moderate capital expenditures, at least prior to the 
introduction of rail transportation. 

" Transportation of mails before the introduction of rail transportation was 
effected along stage and water routes and on horseback, sometimes incidental 
to the established passenger and freight routes and sometimes the existence of 
the mail route occasioned the establishment of the passenger and freight routes. 
The compensation for mail carriage when along established stage routes was 
in the character of additional pay to the existing business of transportation. 
In no cases, or at least in few cases, did either the carrier of the mails or the 
Government contribute to the means of carrying, in the way of roads or bridges, 
which costs were largely borne by the local governments. In this a radical 
departure was introduced when mail carriage was undertaken by the railways, 
the investors in railways then paying the entire cost of providing the channels 
for carriage. 

" In the process of time many influences have intervened to disturb whatever 
relationship originally existed between the cost of service and the rates charged 
therefor. The competition of other methods of transportation has largely af- 
fected rates between definite terminals. These disturbances have affected in- 
terior rates. Community competition and the competition of great industrial 
establishments have further affected rates. 

" Where a given instrumentality affords several characters of facilities we 
must adopt some basis for apportioning the cost of the instrumentality among 
the several objects accomplished. 

"As rates for passenger and freight transportation by railways were probably 
originally based upon the rates previously existing on other methods of trans- 
portation, it is probable that the rates of mail transportation by railways were 
originally based somewhat upon the compensation required to secure mail 
transportation by the facilities existing prior to the introduction of railways. 
It is improbable that the present minimum rate of $42.75 per mile of route was 
arbitrarily evolved from the inner consciousnesss of a postal authority or a 
negotiation between the postal authorities and the railways. It doubtless bore 
some relationship to previously existing rates and ultimately to the cost of 
transportation of mails or to compensation therefor by more primitive methods 
of transportation. A hundred-mile route under this basis would pay $4,275 per 
year. The average minimum weight on these routes could not possibly be 
carried by any other method than rail transportation overland at anything like 
this cost, without taking into account either the cost of highways or advantages 
in time. 

"As to the proposition to substitute a method of compensation based upon the 
cost of handling the business with 6 per cent profit : 

" Years ago the Interstate Commerce Commission formulated an effort to 
ascertain the relative cost of operations as between passenger and freight 



EAILWAY MAIL PAY. 69 

traffic. After some years this effort was abandoned by the Interstate Com- 
merce Commission. Railroads individually for their own information have, 
however, persisted in efforts of this character for the obvious advantages to 
be gained by such knowledge. The matter has again and again been studied 
with reference to the subject of the determination of reasonable rates for pas- 
senger and freight transportation respectively. A very small portion of the 
operating expenses of railways is inherently applicable either to passenger or 
freight traffic. The great bulk of railway operating expenses are not inherently 
capable of apportionment, and if this be true, how much less capable of appor- 
tionment are the original investments, particularly as to rights of way, roadway, 
and structures. It therefore follows that in respect of the great bulk of rail- 
way operating expenses, including taxes, and of the burdens incident to original 
or capital investment, any effort to apportion these burdens as between passen- 
ger and freight traffic must be upon more or less arbitrary bases. As to these 
arbitrary bases there must be adopted by the individual roads some theory of 
apportionment and these bases must differ in a profound and logical study, not 
only with each individual road but with each operating division of every large 
system. 

" It must be kept in mind that prior to any apportionment of expenses against 
mail transportation there must first be made an apportionment of costs as be- 
tween freight traffic and passenger 4raffic. 

" It being apparent that any apportionment of operating expenses between 
passenger and freight traffic involves the assignment of a very large proportion 
of such operating expenses upon arbitrary bases, such bases must have ra- 
tional or logical relationship to the conditions of each road, and only a very 
close familiarity with the conditions can equip anyone to determine these bases. 
The determination of the relative expenses of freight and passenger transpor- 
tation can only be made by each separate road.' Where this apportionment is 
made for a special purpose the results will largely depend upon the parties 
making the apportionment. Therefore, a rate of compensation determined 
upon the additiion of a fixed per cent of profit to the cost of the service will 
result in rates of compensation varying largely according to the officer making 
the apportionment. It may be argued that the postal department will have the 
right of review as to this apportionment. When it is considered .how many 
railroads will be charged with the making of this apportionment and how many 
reports will require review by the Post Office Department, and how relatively 
incompetent the forces of the post office will be to make this review by their 
necessarily imperfect knowledge of conditions prevailing on individual roads, 
the seriousness of the task is apparent. 

" The Postmaster General suggests that the compensation for mail trans- 
portation shall be based upon the ascertained cost plus a profit of 6 per cent. A 
careful study of the document he submits of the results of the departmental 
investigation indicates that in ascertaining the cost he has recognized but 
two factors, namely, those elements of cost usually designated as operating ex- 
penses and taxes. I can not find that he has taken into account any element 
of capital investment or the necessary burdens incident thereto. These bur- 
dens must be borne by traffic, and if it is proper to apportion operating ex- 
penses against mail transportation it would necessarily follow that capital 
burden must also be apportioned against mail transportation. 

" The basis of the Postmaster General's conjecture that a profit of 6 per cent 
upon the mere cost of mail transportation would be compensatory to the rail- 
roads is not indicated in his reports. 

"As a matter of fact, a railroad whose gross earnings bear any less per cent 
to its operating expenses than 100 to 70 per cent is in a bad way; that is to 
say, a railroad company on its entire traffic must realize a gross earning of 
substantially 43 per cent over its operating expenses to afford a fair return 
to its investors. 

" In the apportionment of passenger operating expenses as between passen- 
ger traffic, express traffic, and mail traffic, the Postmaster General in his re- 
port has used the car-foot mileage assigned to each traffic as a basis of appor- 
tionment. As applied to the closed-pouch service, the linear space apportioned 
to mail traffic was on the basis stipulated by the department; that is to say, 
the railroads were directed to allow 6 linear inches full width of car for the 
first 200 pounds or less of average daily weight of mail carried and 3 linear 
inches for each additional 100 pounds. 

" The department, however, states in the report that they followed the follow- 
ing rule: For weights of 100 pounds or less. 6 linear inches; for weights above 






70 RAILWAY MAIL PAY. 

100 pounds and not exceeding 200 pounds, 10 linear inches ; for each additional 
100 pounds, 5 linear inches. 

" The result of this basis is that if a combined passenger, baggage, and ex- 
press car were used to carry mail in closed pouches, the car being 50 feet in 
length and the mail weighing an average of 200 pounds less than two one- 
hundredths of the cost of operating the car would be charged to mail service ; 
that is to say, no matter how much unused space there might be in the balance 
of the car, but, two one-hundred ths of the car expense could be charged to mail, 
leaving ninety-eight one-hundredths of the car to be apportioned against pas- 
senger and express service. It can readily be seen that this method of appor- 
tioning the cost of the mail service applied to short-line railroads carrying 
only pouch mail would place them in the class to receive as he proposes $25 
per mile per year, if the ascertained cost and 6 per cent does not equal that 
amount. 

" In addition to the large burdens put upon the railroads by existing govern- 
mental commissions in exactions of reports of operation, the Postmaster Gen- 
eral proposes that all railroads shall hereafter be required to make a report to 
the Postmaster General annually of the operations of the railroad, with such 
an apportionment of the operation expenses as shall enable a determination 
of the operation expenses applicable to a very small percentage of its traffic. 
Because of the inherent difficulties of this ^apportionment it may be assumed 
that the reports required would be of a very complex character and both diffi- 
cult and expensive to prepare. 

" The Postmaster General proposes that a different period of the year shall 
be selected for this report than the period at which the annual reports to other 
governmental agencies are made, thus inflicting upon the railroads the impossi- 
bility of using the data already prepared, for the purpose of making these 
reports so far as it might be possible. 

" He also proposes to impose upon the railroads certain methods of appor- 
tionment, which, in the words of the committee on railway-mail pay of the 
American Railway Association, are never accepted by anyone with practical 
experience in railway accounting or operation and condemned by the courts in 
at least two important cases.' The imposition of such methods will prevent the 
railroads from using the data which for their own practical purposes they 
have compiled for the purpose of ascertaining the relative costs of conducting 
passenger and freight operations, which, if applicable to one road would be 
entirely inapplicable to another and of no practical value to the railways. 

" The Postmaster General then proposes that if the railways disagree with 
the conclusion of the Postmaster General upon the reports rendered, the mat- 
ter shall be referred on appeal to the Interstate Commerce Commission. 

" It may be mentioned at the outset that the Interstate Commerce Commis- 
sion long ago despaired of applying a rational basis of apportionment of oper- 
ating expenses as between passenger and freight traffic. 

" If the Interstate Commerce Commission did not recognize the methods des- 
ignated by the Postmaster General, endless confusion would result from such 
appeal. Moreover, it may be assumed that in proportion to the burden im- 
posed upon the Interstate Commerce Commission by such appeals the present 
burden upon that commission would become insignificant, particularly as differ- 
ing conditions would render any basis inapplicable to any considerable number 
of roads, and the determination of the appeal would involve the study of each 
road's conditions, varying to some extent from year to year. 

" The situation is presented of a controversy in which judge and plaintiff 
are one, to be appealed to an instrumentality substantially identical in interest 
to the plaintiff and lower court; that is to say, the railways have to accept 
and transport the mail traffic. The compensation to be paid is to be based 
upon an arbitrary percentage of the cost of the traffic, much inferior to the 
compensation ordinarily obtained for its general traffic in proportion to its 
cost ; the method of determining its cost shall be stipulated by Government and 
appeal must be made to the Government." 

According to the statement made by the Postmaster General in House Docu- 
ment No. 105, data was received from 2,778 out of 3.309 authorized mail routes. 
The monthly loss from the mail service on these routes as given in Table 7 is 
$75,733.07, a total for 12 months of $908,796.84. The loss given is based upon a 
computation where the interest on the capital is omitted and a large percentage 
of dead space in mail cars, which can not be used as passenger space, is trans- 
ferred to the passenger service. 



BAIL WAY MAIL PAY. 71 

If the department concedes a loss of nearly a million dollars a year, based 
upon false and misleading methods of computation adopted by it in arriving 
at its conclusions, the actual loss incurred must therefore remain problematical. 

However, enough has been shown to bear out the statement of the Postmaster 
General that if an adjustment of railway-mail pay is lodged in his hands that 
he will still further reduce the amount to be paid the railroads $9,000,000 a 
year. This amount seems conservative when we consider his method of arriv- 
ing at the cost of the service and the percentage of profit he is willing to grant 
based upon his figures giving the cost. 

At the present time short-line railroads, making free side and terminal mail 
deliveries and furnishing apartment-car space for nothing, are contributing 
to the post-office fund more than $5,000,000 a year. 
Yours, respectfully, 

Short Line Railroad Association, 
By Frank Sullivan Smith, President. 



TALBOTT BILL. 
[H. R. 4044.] 

In the House of Representatives. April 11, 1911. Mr. Talbott of Maryland 
introduced the following bill ; which was referred to. the Committee on the 
Post Office and Post Roads and ordered to be printed. 

A BILL To amend existing laws and equalize pay for mail service on railroad lines. 

Be it enacted by the Senate and House of Representatives of the United 
States of America in Congress assembled, That that part of the act of March 
third, eighteen hundred and seventy-three, as it appears in section four thousand 
and two of the Revised Statutes and as it has been modified by subsequent 
legislation, be, and the same is hereby, amended to read as follows, namely: 

" The Postmaster General is authorized and directed to readjust the com- 
pensation to be paid from and after July first, nineteen hundred and eleven, 
for the transportation of mails on railroad routes upon the conditions and at 
the rates hereinafter mentioned: 

" First. That the mails shall be conveyed with due frequency and speed ; 
and that sufficient and suitable room, fixtures, and furniture in a car or apart- 
ment properly lighted and warmed shall be provided for railway postal clerks to 
accompany and distribute the mails. 

" Second. That the pay per mile per annum shall be at the following rates, 
namely: On routes carrying their whole length an average weight of mail per 
day of not more than five hundred pounds, seventy-five dollars; one thousand 
pounds, eighty-five dollars and fifty cents ; one thousand five hundred pounds, 
one hundred and six dollars and eighty-seven cents ; two thousand pounds, one 
hundred and twenty-eight dollars and twenty-five cents; three thousand five 
hundred pounds, one hundred and forty-nine dollars and sixty-two cents; fjye 
thousand pounds, one hundred and seventy-one dollars; and on routes carrying 
their whole length an average weight of mails per day of upward of five 
thousand pounds by making the following changes in the rates per mile per 
annum for the transportation of mail on such routes in effect on June thirtieth, 
nineteen hundred and seven, and hereafter the rates on such routes shall be 
as follows: On routes carrying their whole length an average weight of mail 
per day of more than five thousand pounds and less than forty-eight thousand 
pounds, the rate shall be five per centum less than the rates on June thirtieth, 
nineteen hundred and seven, on all weight carried in excess of five thousand 
pounds; and on routes carrying their whole length an average weight of mail 
per day of more than forty-eight thousand pounds the rate shall be five per 
centum less than the rates on June thirtieth, nineteen hundred and seven ; on 
all weight carried in excess of five thousand pounds up to forty-eight thousand 
pounds, and for each additional two thousand pounds in excess of forty-eight 
thousand pounds, the rate shall be nineteen dollars and twenty-four cents 
upon all roads other than land-grant roads, and upon all land-grant roads 
the rate shall be fifteen dollars and thirty-nine cents for each two thousand 
pounds carried in excess of said forty-eight thousand pounds; the average 
daily weight to be ascertained in every case by the actual weighing of the mails 



72 RAILWAY MAIL PAY. 

on all of the railroad mail routes at the same time for thirty-five successive 
days, commencing on such date, to be designated by the Postmaster General, 
as is fair and just to the Government and to the carriers, and not less frequently 
than once in each year, and the result to be stated and verified in such form 
and manner as the Postmaster General may direct, and that the Postmaster 
General is hereby authorized and directed to require a railroad mail carrier 
to provide for the carriage of the mails between its trains and a post office 
or postal station only where such post office or postal station is located in a 
railroad depot or station of such carrier." _ 

Sec. 2. That section four thousand and four of the Revised Statutes, as modi- 
fied by the act of March second, nineteen hundred and seven, making appro- 
priations for the service of the Post Office Department for the fiscal year end- 
ing June thirtieth, nineteen hundred and ten, and for other purposes, be, and 
is hereby, amended by adding thereto the following, namely : 

"And the Postmaster General is hereby authorized and directed to allow 
for space used for railway post-office purposes in apartment cars at pro rata 
of the rate of compensation allowed for postal cars forty feet in length." 



Missouri & Louisiana Railroad Co., 

Kansas City, Mo., September 20, 1912. 

Mr. Jonathan Bourne, Jr. 

Dear Sir: Your letter of the 17th, to which is attached a copy of Senate 
bill 7371, to provide the maimer of determining the compensation of railroads 
for the transportation of the mails. We are not entirely familiar with the gen- 
eral proposition as it would naturally affect the more important trunk lines of 
the country, but as to smaller lines like ours, operating but 10 miles of main 
fine over which the mail is transported, we have to suggest that the compensa- 
tion is not reasonable. We provide on our line in this State two trains each 
way per day, except that we do not operate on Sundays. We are allowed an 
annual compensation of $449.28. This for transporting the mail and in addition 
caring for the handling of pouches to and from post offices at Bevier, Keota, and 
Ardmore, Mo. At the least calculation it costs us $5 per month at each of these 
towns to have the mail carried to and from the post offices, or a total of $180 
per year to be deducted from the allowance made us by the Government, leaving 
us but $269.28 for the service of transportation. It does appeal to us that with 
the smaller lines a greater allowance per mile should be made. The same rate 
of pay per mile as applied to the larger lines yields, perhaps, a fair revenue for 
the service furnished, but for the smaller lines it does not, all of which we sub- 
mit for your kind consideration. 

Yours, truly, Jno. A. Sargent. 

Missouri, Oklahoma & Gulf Railway Co., 

Muskogee, Okla., November 1, 1912. 

Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir : Replying to yours of September 11, I submit the following memo- 
randa for your consideration: 

(1) The present plan of compensation for railway mail pay is inequitable to 
the short-line railroads, for the reason that large railroads are paid a rental 
charge for all cars 40 feet in length, while small roads are paid no rental what- 
soever. Many of the short-line railroads are paid on the basis of the minimum 
of $42.75 per mile, and have not had a weighing of the mail on their line for 
several years, while on the large lines the mail is weighed annually and the pay 
adjusted accordingly. The present plan is also unscientific, because it has no 
tangible basis and has no relation to the cost of the service. 

(2) I do not consider the present plan as outlined in bill S. 7371 a proper 
basis for arriving at the compensation for several reasons. First, the railroads 
are allowed only 6 per cent over the cost of transporting the mails, which cost 
includes operating expenses and taxes. Now railroads are heavily bonded and 
pay a large interest charge on their bonded indebtedness, and are forced to 
earn at least 30 per cent of their gross revenues in order to pay this interest; 
that is, their expenses should not exceed 70 per cent of their gross earnings. 
Then there are other charges and expenses to be met that are not included in 



KAILWAY MAIL PAY. 73 

their operating expenses, such as rents, discounts, and additions and better- 
ments to their existing property, which are necessary to meet competition, or 
for the proper conduct of their business. As before stated, in order to pay their 
interest and their other charges, and to give their investors a fair return, it is 
necessary that they earn at least 30 per cent of their gross revenues, and if 
freight traffic, passenger traffic, etc., is expected to carry this burden, why should 
not the mail traffic also earn 30 per cent of its gross revenue instead of 6 per 
eent? Second, this bill seems to be based on the recommendations of the Post- 
master General contained in House Document No. 105. The Postmaster General 
in arriving at his cost of carrying the mail distributes the car space as follows: 
For weights of 100 pounds or less, 6 linear inches; weights above 100 pounds 
and not more than 200 pounds, 10 linear inches; and for each additional 100 
pounds, 5 linear inches. 

On this basis, on this line, which carries about 800 pounds of mail per mile 
per day, there would be about 40 linear inches of the car assigned to the mail 
traffic or one-fifteenth of the space, while as a matter of fact there are 15 feet 
of each 50-foot car devoted to the mail, or about one-third of the space, and 
it can readily be seen that under the Postmaster General's plan, the mail would 
not receive its proper proportion of the expense. Third, under this bill it will 
be necessary for each railway to make reports to the Postmaster General in 
order that he may determine the cost of carrying the mail. Now, in order to 
arrive at such cost, it is first necessary that the expenses of a railroad be 
divided into freight expenses and passenger expenses. Only a small percentage 
of a railway's expenses is directly assignable to either freight or passenger 
traffic; the large majority is chargeable to both freight and passenger traffic 
and can not definitely be segregated ; however, most railways endeavor to make 
such a separation of their expenses, and in order to do so they employ various 
arbitrary bases for the segregation ; these bases being determined by the actual 
physical conditions on the railway itself. It does not appear, therefore, that 
the Postmaster General or his corps of assistants are competent to pass on the 
reports of the various railways throughout the country, they being ignorant 
of the local conditions and the methods employed in separating the expenses 
and the reasons therefor. House Document No. 105 provides that the railways' 
reports to the Postmaster General shall be made at different times and for 
different periods from those now made to the various Government commis- 
sions. This appears unreasonable, and will put an unnecessary hardship on 
the railways by depriving them of the use of the statistics and figures already 
prepared. 

(3) As the various railways are themselves in the best position to determine 
the cost to them of handling the mail, it would seem that they should also be 
in the most advantageous position to name the compensation. Therefore, it 
seems to me that they should be allowed to file tariffs with the Interstate Com- 
merce Commission governing the rates for transportation of the mails the same 
as for the transportation of freight and passengers. Of course these rates 
would be subject to attack by the Postmaster General just the same as the rates 
for freight and passenger traffic are open to the criticism of the public. 
Yours, truly, 

Wm. Kenefick, President. 



Missouei Pacific Railway Co., 
St. Louis, Ikon Mountain, & Southern Railway Co.. 

St. Louis, Mo., November 22, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: I have to acknowledge receipt of your letter of September 11, 
1912, inclosing a copy of Senate bill 7371, and requesting views upon three 
specific inquiries on the subject of railway mail pay, which, with answers 
thereto, are contained in a memorandum attached. 

The real issue is whether the railroads are overpaid or underpaid for mail 
transportation. The railroads have been protesting since 1907, particularly, 
that they were underpaid, and that reductions of about $S,000,000 per annum, 
made in that year, were unjust to them, and that some form of adjustment 
should be made. 

The Senate Post Office Committee Report No. 955, Sixty-second Congress, 
second session, July 23, 1912, page 25, which accompanied the Post Office ap- 



74 RAILWAY MAIL PAY. 

propriation bill, stated that " the committee is of the opinion * * * that 
the rates are excessively high." 

This view, presumptively, is founded upon the report of the Postmaster Gen- 
eral, Document No. 105, wherein he purports to show that the railroads are 
overpaid $9,000,000 per annum, which might be saved by enactment of a bill 
proposed by him, and introduced by your committee, as S. 7371. 

There is no proof in his report that the railroads are overpaid; on the con- 
trary, even superficial analysis explodes any such theory, because the methods 
employed in making his deductions are fatally in error and fortunately easily 
demonstrated. 

His first serious error is in overlooking the right of railroad property or 
capital to earnings, which is a recognized primary and constitutional factor in 
all rate cases. 

This property is, of course, of enormous value, as follows (1910, I. C. C. 
Report) : 

Represented by funded debt $10,303,474,858 

Stock 8, 113, 657, 380 

Total 18, 417, 132. 238 

This represents the plant, which, of course, must exist to enable the rail- 
roads to perform mail and other transportation services. It is almost too 
apparent to allude to the effect of such a policy. If applied generally to rail- 
road or any business, it would, of course, bankrupt and destroy them. 

His second serious error consists in arbitrarily and erroneously cutting out 
millions of car-foot miles used directly or incidentally in performing mail serv- 
ice, as reported to him by the railroads in the reports he used and changed to 
the extent of approximately 28 per cent. As the proportion of car-foot miles 
is the essential and material factor in his calculations, his erroneous action 
in not only cutting out such mail car-foot miles but changing the same instead 
to passenger car-foot miles, is fatal to any theory that the railroads are over- 
paid. 

His third serious error is in dismissing without any consideration, either as 
to costs or compensation, the extensive and valuable service rendered by the 
railroads in performing what is commonly known as " messenger service," and 
which is the carrying of mails between the railroad stations and the post 
offices, where the latter are within one-quarter mile of the station. This is 
not a natural function of the railroad company, because it does not handle pas- 
sengers, baggage, freight, or express beyond its station property, but is an 
extra service which the railroads perform and saves the Post Office Department 
from employing 30.000 to 40,000 contract messengers, and which saving former 
Postmaster General Meyer reported to the Senate committee, amounted to 
$4,393,000 per annum. A service of so great value is ignored in treating rail- 
way mail pay generally and in the calculations made in Document No. 105. 

It is obvious that the railroads are not overpaid, as that document indicates, 
and no foundation exists for such opinions which may be based thereon. On 
the contrary, the reports which the Post Office Department required of the rail- 
roads demonstrated that they were very greatly underpaid for mail service. 
Perhaps best illustrated by figures which the Postmaster General does not ap- 
pear to bave submitted in his report, namely, that mail space earned only $3.23 
per thousand car-foot miles, whereas the passenger space earned $4.42 per 
thousand car-foot miles. This indicates underpayment to the railroads of over 
$16,000,000 per annum, according to figures compiled by the committee on rail- 
way mail pay. 

Unfortunately and prejudicially to their interests and justice, there has al- 
ways seemed to exist a feeling that the railroads were paid excessively for 
carrying the mail. Such views have not been founded upon any competent in- 
quiry, but upon mere assertion. It has been no uncommon thing to notice 
newspaper items asserting it, and having the effect of creating public sentiment 
in that direction when there has been nothing substantial in the way of official 
evidence to support such assertions. 

The annual amount of railway mail pay has only seemed large and attracted 
attention because it represented the largest single item in the Post Office appro- 
priation bill, and without full consideration of the immensity of the service ren- 
dered by the railroads receiving it, not only in the transportation throughout 
the year on all the railroads, and practically on all of the train service of the 



KAILWAY MAIL PAY. 75 

country, but in hauling post offices in addition on this mileage for the distri- 
bution of the mail while it was in transit and for the performance of other 
incidental services. 

The Government collected in 1910, $224,128,637.12 in postage, yet for the 
above service by the railroads only paid $49,405,311.27, while on the other hand 
it paid over $170,000,000 for the function of collection and delivery of that mail 
and the administration of the postal service. In other words, the railroads re- 
ceived about 22 cents out of the dollar the Government collected in postage 
for the transportation of the entire mail, whereas the Government used about 
78 cents for collection, delivery, and administration. 

In the past 10 years the amount paid the railroads in proportion to postal 
revenue has been very steadily decreasing from 34 to 22 cents per dollar, while 
the collection, delivery, and administration cost during the same time has in- 
creased from 66 to 78 cents per dollar. There is nothing in these facts to sup- 
port any theory of overpay to railroads. In reality railway mail pay instead of 
representing a large proportion of railroad revenue is, indeed, very .small. In 
1910 it only amounted to 1.78 per cent of gross revenue, while the roads had 
to depend upon freight, passenger, and express business for 98.22 per cent of 
revenue. The railway mail pay does not even equal one-half of the taxes alone 
which the railroads pay. 

The only thorough inquiry, previously made on the subject of railway mail 
pay, was by the commission of 1898, which, after two years' study and volu- 
minous testimony, reported as follows: 

" Upon a careful consideration of all the evidence and the statements and 
arguments submitted and in view of all the services rendered by the railways, 
we are of the opinion that ' the prices now paid to the railroad companies for 
the transportation of the mails ' are not excessive, and recommend that no 
reduction thereof be made at this time." (S. Doc. No. 89, pp. 19, 22, 25, 29, 
52d Cong., 2d sess.) 

It demonstrated then that there was no foundation for the sentiment of 
overpay that existed, based upon mere assertion, and which culminated in the 
appointment of the commission. Nothwithstanding, a further agitation of the 
subject arose in 1907, with disastrous and, as we believe, decidedly unjust results 
to the railroads. 

Congress had the subject before it, and by act approved March 2, 1907, re- 
duced the railway mail pay $2,723,000 per annum, cutting the pay on weights 
and full postal cars. No sooner, however, was this done — in fact on the day 
the act was signed by the Executive — the Postmaster General issued order No. 
165, commonly known as the " divisor order," which cut the railway mail pay 
$4,941,000 per annum more than Congress, by its own action at that time, re- 
garded as justifiable. 

The railroads have been protesting this double method of reduction from two 
sources was decidedly unjust and far beyond the wishes and action of Congress 
at that time. 

Instead of a reduction of $2,723,000 per annum designed by Congress, an 
actual reduction of $7,664,000 has been made. Included in the reductions made 
by Congress was a cut in the pay of full postal cars, which, at that time, were 
of wooden construction. Since then not only has Congress required the recon- 
struction of the wooden cars to standards, but at the last session provided for 
their retirement and replacement by all-steel equipment and without any pro- 
vision whatever for compensation to the railroads. Certainly the higher class 
of equipment required and the expense of substituting it for wooden cars, 
which must be abandoned, form a sufficient businesslike basis for a restoration 
of the rates that were in effect prior to the cut of 1907. 

It is hoped the commission, of which you are chairman, will recommend a 
restitution to the railroads of these reductions in the form of an annual weigh- 
ing, pay for mail-apartment car space, and compensation for messenger service. 

The fairness of such action is especially emphasized at this time by the in- 
auguration of the parcel post on January 1, next, which, apparently, will in- 
crease the volume of mail and for which no provision in the way of compen- 
sation has been made to railways, although such provision has been made to 
increase the pay of rural carriers, star-route carriers, and messenger service. 

The principal* service in connection with parcel post will be that performed by 
railroad companies in its transportation over the immense mileage of the 
country, and the justice of an equitable method of pay will, no doubt, appeal 
readily to every Member of Congress, as it can not be expected that it will be 



76 RAILWAY MAIL PAY. 

transported by the railroads for nothing while the Government is collecting a 
revenue thereon, and considering that the railroads, at the present time, are 
being compensated for its transportation as express. 

The Post Office Department, as a result of the complaints of the unjust re- 
ductions in 1907, called upon the railroads for information and statistics on 
forms which it had sent out. The railroads, with the object of assisting in 
collection of the data correctly and promptly, designated a committee on rail- 
way mail pay to assist and to study the results. 

The committee, on behalf of the roads, has answered the three inquiries con- 
tained in your letter, in which views I fully concur. 

For convenience there is attached a copy of the questions and answers thereto, 
submitted by the committee. 

Yours, very truly, E. J. Pearson, 

First Vice President. 



Nevada Copper Belt Railroad Co., 
Salt Lake City, Utah, November 11, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir : The writer does not believe the present plan of compensation for 
carrying mails is equitable in the following respects : 

If he is not mistaken, all roads are paid alike for the service without regard 
to conditions. In some cases the cost of handling the mail is greatly in excess 
of what it is in others and should be paid for accordingly. A road having a 
long haul can certainly carry the mail at a less price per mile than one having a 
short haul. If a flat rate is allowed in all cases it should be sufficient so as 
not to work a hardship upon the small, weak roads. The writer understands that 
the present compensation is not sufficient in a great many instances to pay the 
expense incurred in handling mail. 

I would also suggest that the railroad company ought not to have to deliver 
the mail beyond its stations, but that it should be carried by the postmaster 
from the station to the post office. The writer also understands that where the 
mail is carried in apartment cars where part of the space is used for express 
and baggage, that the mail matter does not pay for its proportion of the 
dead space in the car, but throws an undue burden upon the express, baggage, 
and passenger service. 

Would it not be better to allow each of the mail-carrying roads to fix its own 
tariff the same as it does in carrying other freight or express, and let it be 
subject to revision by the Interstate Commerce Commission? 

It seems to us, however, that the present law, supplemented by H. R. 4044, 
would be a just and equitable basis for compensation. We understand that 
there have been several hearings in Washington on this bill, and that those 
Members of the House who were present were convinced of the justice and 
equity of its provisions. 

I do not believe that it is right to make the Postmaster General a judge of 
what the compensation should be, in view of the fact that it is to his interest 
to make as. good a showing as possible in his department, so that assuming that 
he is ever so honest and capable, he is not in as good a position to judge fairly 
as an entirely disinterested person or board. 

We understand that Senate bill 7371 was based upon the Postmaster Gen- 
eral's report in House Document No. 105, and that according to his recom- 
mendations the pay of the railroad for carrying mail is to be cost plus 6 per cent, 
and that in arriving at the cost he only takes into consideration operating ex- 
penses and taxes. This certainly is not just, but would amount almost to 
confiscation. If it is going to be fixed on a percentage basis, the cost of the 
mail should certainly bear its proportion of all of the expenses. If we take 
only part of them into account we may leave out enough to entirely wipe out 
the profit and more. The mail service should be made to carry its proportion 
of overhead charges, interest on capital, upkeep of the road, and all other ex- 
penses that are necessary in operating a reasonably well-operated road. Any- 
thing less than this imposes a burden upon a small road, which it can not 
afford to carry, and the Government has no right to impose any such burden. 
Yours, very truly, 

W. C. Orem, 
President Nevada Copper Belt Railroad Co. 



KAILWAY MAIL PAY. 77 

Nevada County Narrow Gauge Railroad Co., 

Grass Valley, Cal, November 7, 1912. 

Hon. Jonathan Bourne, 

Washington, D. G. 

Dear Sir • Yours of September 11 at hand and contents carefully noted, and 
in answer, considering the effect on this road, beg leave to answer as follows to 
question No. 1: ., , , ._ ., - 

The present plan of compensation is not an equitable one to the railroads 
unless the extra weight of the mail carried during the biennial election contest 
for Representatives, and the four-year contest for President, and the franking 
privilege then used be taken into consideration and the roads compensated 
therefor Weight, value, and time being the chief factors in making all rates, 
why not continue the present plan until a better one is found? The Post Office 
Department is not now paying us an exorbitant figure for the mail service, the 
ascertained weight being carried by us 52,200 pounds per annum, carried on 
seven trains, for which we receive an annual compensation of $2,021, from 
which we are required to pay $180 for the transfer of the mail to and from the 
terminus at Nevada City and the post office, and about a like amount in the 
time of our employees at Colfax for a like service there, so that the mail nets 
us about $1,700 per annum, or a little over 30 cents per 100 pounds. 

The express company pays us an average of 34 cents per 100 pounds on their 
business, and that company provides a messenger on the trains and one at each 
end to give and receive packages and check the same, while our employees are 
required to do that service for the mail. Can't the post office pay as much? 

Our average first-class freight rate is 20 cents per 100 pounds. Our passen- 
ger rate is 1\ cents per mile, and he takes himself on and off the train and pays 
us at the rate of about $1 per 100 pounds for carrying him the same distance 
we carry the mail for 30 cents, and as the tables submitted by the report of 
the Second Assistant Postmaster General are based on passenger service, we 
fail to see any justice in the proposed reduced rates. 

Question 2. The principle of the plan may be all right, but the terms proposed 
are most certainly unjust for the following reasons : 

It proposes to place the compensation for carrying the mail at $25 or less 
per mile of road per annum. 

The Postmaster General may order new or additional service during a term 
without increase of compensation, but may decrease compensation for any re- 
duction in service. Are not these beautiful and just provisions for the Govern- 
ment, but where does the carrier get off? 

This will cut our revenue to $550 or less per annum from our present return 
of $1,700, and this in the face of the fact that with the first of the year a 
parcel-post service will be inaugurated, which will no doubt cut heavily into 
the express business and thus diminish our revenue from that source. It will 
add the loss of the express business to the postal business, and the carrier will 
be required to transport it as mail matter, thus our return of between $4,000 
and $5,000 per annum from the express will be cut possibly one-half, and as 
I understand from the bill we would have to accept not more than $550 for 
all this, and whatever new business the cheap postal service will create under 
a penalty of $5,000 for refusal. 

Another provision of 'the bill requires the railroads to carry all accredited 
agents and officers of the Post Office Department, when in the exercise of their 
duties, free of charge. 

Why should we be required to do this? We have to place a post-office stamp 
on every piece of mail matter we send out, whether on Government require- 
ments or on our private business. The Government did not build or help build 
this road, the stock and bondholders built it entirely, and all contracts we have 
with other corporations requiring free transportation, it becomes reciprocal, and 
we are compensated thereby. Why not the Government do likewise or cut this 
provision out entirely? 

Our road cost about $700,000 to build. Our returns, as shown by our reports 
made to the Interstate Commerce Commission, to which you are respectfully 
referred, showed our road made a net revenue last year of $24,544, being 3£ per 
cent on the investment. For 23 years this road paid no dividends. By strict 
economy it is now paying a 4 per cent dividend to its stockholders from its 
earnings. 

I trust you will give the foregoing careful consideration and view the situa- 
tion from the carrier's point of view as well as the Government's. 

49396—14-= 6 



78 E AIL WAY MAIL PAY. 

If a change of plan is necessary or desirable, I suggest you consider H. R. 
4044, prepared by the Short Line Railroad Association, as furnishing a plan 
more equable to all concerned, but to the provisions of the Senate bill 7371, rec- 
ommended by you, we earnestly protest, as the returns from it would be totally 
inadequate, and the penalty very harsh and entirely uncalled for. 
Respectfully. 



Superintendent and Treasurer. 



New Park & Fawn Grove Railroad, 

New Park, Pa., September 19, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir : Replying to your letter of the 11th instant, regarding plan of com- 
pensation for service of carrying the mails, beg to say in answer to questions 
1 and 2 that I am not in position, with the limited knowledge I have, to answer 
these; would say that, as far as our line is concerned, we are satisfied with 
the present compensation, but would not be satisfied with any less. 
Regarding question 3 I have no plan that I could offer you. 
Hoping this will be satisfactory, I am, 

Yours, respectfully, John H. Anbebson, President. 



New River, Holston & Western Railroad Co., 

Narrows, Giles County, Va., October 26, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir : We note your recent communication regarding Senate bill 7371, 
and thank you very much for calling our attention to same. 

We are only a 20-mile road and naturally think the present compensation for 
carrying the mails small enough. 

Yours, very truly, F. E. Bastian, Manager. 



New York, New Haven & Hartford Railroad Co., 

New Haven, Gonn., September 20, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 

My Dear Sir: Your letters to President Mellen, asking for comments upon 
S. 7371, have been duly received. 

I note that the bill is substantially that recommended by the Postmaster 
General in House Document No. 105. I hope to have an opportunity of making 
specific criticisms of it before your committee at some of the hearings to be 
held, I assume, between now and the opening of Congress. For the present I 
shall offer the following general criticisms : 

The business of carrying mail for the United States Government should be 
established upon a similar basis to that of carrying commodities for other 
shippers. Neither the rate nor the cost of performing the service should be 
determined in the first instance by the Postmaster General. The Interstate 
Commerce Commission should be charged with that duty, upon representations 
made by the Post Office Department on the one hand and by the railroad com- 
pany on the other, with full authority on the part of the Interstate Commerce 
Commission to verify, by investigation or otherwise, all statements and reports 
made by each party. 

The Interstate Commerce Commission and not the Postmaster General should 
be authorized and directed to readjust the pay after the investigation afore- 
said. When that has been fixed and the service prescribed, the Postmaster 
General and the railroads should each be held strictly to the performance of 
the contract. Additional service required by the Post Office Department should 
be anticipated by the commission and the rate fixed for it. Failure to perform 
the service prescribed in the contract should meet with a penalty anticipated 
and prescribed by the Interstate Commerce Commission. It is not fair nor 
reasonable to permit the Postmaster General to order new or additional service 
during the term the adjustment shall have been made without giving additional 
compensation therefor during such term ; nor, on the other hand, is it fair that 



RAILWAY MAIL PAY. 79 

service prescribed by contract, abandoned because the same has become unneces- 
sary, should entitle the railroads so abandoning the service to as much pay as 
they had previously received. 

It is proper to embrace in the contract transportation of those engaged in the 
actual work of sorting the mails and to provide compensation for their carriage 
as a part consideration for the contract. The Post Office Department ought not 
to ask free transportation, which it is the policy of the Government to forbid 
to other shippers. Much more should this apply to post-office inspectors and 
their accredited agents, who are traveling on the regular trains of the railroad. 
They should be required to pay their fare the same as any other passenger and 
charge the same as part of their expense account to the department. 

I have no criticism to make of the specifications for R. P. O. and apartment 
cars used for Railway Mail Service. Undoubtedly they should be of such con- 
struction as should fit them for the service and should be first class and sani- 
tary in every respect ; but the cost of constructing and maintaining them should 
be reckoned in as a part of the compensation to be paid to the railroad companies 
and any change in existing specifications should be reflected in the adjustment 
of compensation. I think also that there should be taken into consideration the 
class of trains upon which the mail is carried. Upon certain of our trains 
which make very fast time and which are limited in equipment an additional 
R. P. O. car would require a slowing of the schedule. On other trains a schedule 
can easily be made with one or even more additional R. P. O. cars. It is a 
question, in frequent service such as we give, running, for instance, substan- 
tially 14 trains each way per day between Boston and New York, whether 
it is essential that mail should be sent on our limited trains and so arrive in 
Boston or New York half an hour or, at most, an hour before a slower train. 
If the department insists upon sending mail upon these fast trains, they should 
be prepared to pay for it and for the motive-power equipment necessary to 
make the time. In other words, my criticism generally of the bill is that it pur- 
ports to make a contract between the Post Office Department and the railroads 
and then leaves it in the power of the Postmaster General to modify the terms 
of that contract in his discretion without providing any additional compensation 
or in fact giving the railroads reasonable notice of the proposed changes. 

As I have said, I will criticize this bill more in detail before your committee 
if you will give me an opportunity to appear before you between now and the 
1st of December. 

Very truly, yours. E. G. Buckland, Vice President. 



Norfolk & Western Railway Co., 

Roanoke, Va., October 11, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 

My Dear Sir : I have received your letter of the 11th ultimo inclosing me a 
copy of Senate bill 7371, embodying a plan recommended by the Post Office 
Department for determining the compensation to be paid to railroad companies 
for the transportation of the mails. 

You are aware that this matter is of so much importance to the railway com- 
panies of this country that they have appointed a special committee on railway 
mail pay, which committee has been considering from time to time the various 
phases which this matter has assumed. Of course, the special consideration of 
your letter has been referred to this committee, and I am in receipt of a copy 
of the committee's communication to you of the 3d instant. 

W T hile I indorse what this committee has transmitted to you, representing 
as it does almost the entire railway mileage of the country, yet I feel that it 
is proper for me to state two general objections to the bill which you submit 
and which would seem to me to be fatal to the bill so far as it is intended to 
provide fair and equitable treatment to the railroads of the country. 

First. The bill provides that the Postmaster General shall apportion the 
revenues and expenses of the railway companies in such manner as to him shall 
be deemed fair and equitable in order that he may determine the cost to each 
railroad company of carrying the mails on its road. 

You, of course, are aware that this imposes upon the Postmaster General a 
task which has not yet been successfully performed by anyone. Although for 
a number of years many of the best minds of the country have studied the 
problem, no conclusions have yet been reached which would justifv the formu- 



80 RAILWAY MAIL PAY. 

lation of rules establishing any uniform units upon which cost of the particular 
business can be predicated. 

This bill does not provide for any representation by the railway companies 
in the investigations which are intended to bring about a conclusion as to what 
it does cost the particular company to carry the mails, and the only appeal 
that is permitted is to the Interstate Commerce Commission, whose decision 
shall be based upon such papers as the Postmaster General shall furnish to 
the commission and which, in his judgment, are deemed essential to an under- 
standing of the method adopted by him in fixing the compensation. 

If the railway companies have any rights which the law shall respect, it 
would seem to me that in so important a matter involving so vast an amount 
of money the railway companies would be entitled to the opportunity to present 
their views somewhere or somehow before a disinterested tribunal. 

All of us must recognize that a zealous Postmaster General is properly inter- 
ested in reducing the cost of service in his department, and I take it that in 
approaching the subject from that viewpoint he would necessarily be disposed 
to minimize the cost to the railway companies of performing the mail service. 

Second. The second objection to the bill that seems to me to be fatal is the 
fact that on its face the bill contemplates the partial confiscation of the property 
of the railroads of the country to the extent to which their instrumentalities 
are used in the service of the Government in carrying its mails. 

The only compensation to be accorded to the railways under the bill is to 
reimburse to them the cost of the service as ascertained by the Postmaster 
General, to which cost is added 6 per cent of such cost. 

I -am sure that a moment's reflection would satisfy any experienced mind that 
in the event all of the business of the railway companies was done on this 
basis, bankruptcy of all the roads would result. It does not seem to me that 
the Government should by law undertake to force upon the railway companies 
a schedule of charges which could not be carried into effect in connection with 
all the business; and the imposition of the scheme, if carried on successfully, 
would simply mean that the shippers of the country would pay for the service 
performed for the Government, and it does not seem to me that the Govern- 
ment can properly put itself in such a position. This is not its policy with 
regard to any other service performed for the Government, and I fail to see 
any just reason why a discrimination in this respect should be imposed upon 
the railway companies. 

The proposed act seems to contemplate the doing of the mail service on 
'* force account," which is a familiar form of service in the simpler contracts 
for labor and material, but I call your attention to the fact that even in those 
contracts the compensation in the ordinary transactions varies from 10 to 25 
per cent on the actual cost of labor and material, the variation being based 
upon the complexity of the machines and instrumentalities incident to the con- 
struction of the work and the risks involved. It must certainly appear to the 
fair-minded person that the instrumentalities used by the railway companies 
in performing this governmental service are of a high degree of complexity 
and involve no little risk. 

Very truly, L. E. Johnson, President. 

Pacific & Idaho Northern Railway Co., 

New Meadows, Idaho, October 9, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

My Dear Senator Bourne : In reply to your communication of September 11, 
relative to Senate bill 7371, embodying a plan recommended by the Post 
Office Department for determining the compensation to be paid to rail- 
road companies for transportation of the United States mails, I beg to 
state that I see but little fairness or merit in the bill in question. In my judg- 
ment, confirmed, I believe, by the admitted facts, there has at all times been a 
great hardship worked upon the smaller lines of railroad, at least in the adjust- 
ment of compensation for space assigned in our rolling stock for the exclusive 
use of the Railway Mail Service. If there is to be a fixed rate, applying alike to 
all mail-carrying roads, the present law, if amended in conformity with House 
bill 4044, prepared by the Short Line Railroad Association, would seem, in 
my judgment, to be equitable to all concerned. 

I believe that the practice of weighing mail at intervals of four years works 
a great hardship upon roads in the West in districts which are developing, as 



RAILWAY MAIL PAY. 81 

is ours, very rapidly. As a Western man you will appreciate that the volume of 
mail may ofttimes multiply several times in four years, which places a pioneer 
railroad in the position of carrying for the Government a weight far in excess 
of that upon which its compensation is based. The underlying principle of the 
plan embodied in Senate bill 7371 seems to me to be arbitrary and unjust 
as a basis of compensation. A discussion of this feature involves the bread 
question as to the factors to be considered in determining the cost of carrying 
mail. I understand that the honorable Postmaster General recognizes only two 
factors in computing the cost ; that is, operating expenses and taxes ; audi take it 
these two items are the only ones considered by him in making his reports to 
Congress in railway-mail pay Document No. 105. The element of capital and es- 
sential burdens incident to the upkeep of the road do not appear to be consid- 
ered. In addition the Postmaster General is given the power to compute the mail 
compensation on the car-foot miles devoted to the mail service. This would com- 
pel a large percentage of the smaller railroads to charge at least 95 per cent 
of the cost of operating the car against the passenger and express service, re^ 
lieving the mail service from paying its proper proportion of the dead space, and 
this notwithstanding that the dead space for which the Railway Mail Service is 
directly responsible may not be utilized in any way by the railway company for 
other than Railway Mail Service purposes. As a matter of fact and of equity, 
I will state to you that so far as compensation is concerned and dismissing en- 
tirely for the time being the questions of public policy and of facilitating the 
mail service in the interest of the communities which we serve, I should be most 
happy as a cold-blooded business proposition to dispense entirely with carrying 
the United States mail upon the basis of compensation which we now receive. 
That being true, it can readily be seen that I could not consistently acquiesce in 
a measure that contemplates a reduction of nearly one-half in that compensa- 
tion. It seems to me peculiarly arbitrary, unjust, and unreasonable to stipulate 
" that it shall be unlawful for any railroad company to refuse to carry the maila 
at the rate of compensation provided by law, when and for the period required 
by the Postmaster General so to do." The fine of $5,000 for refusal is also un- 
reasonable, unjust, and unfair. 

To conclude, if the postal rates now in effect can not be amended to conform 
with House bill 4044, then it would seem to me to be fair and reasonable and 
in the interest of all concerned to repeal the existing laws governing the com- 
pensation to railroads for the carrying of mail and to place the entire matter of 
compensation for such service in the hands of the Interstate Commerce Com- 
mission. 

There is another feature involved which is worthy of consideration and which 
should appeal to the sense of fairness of any Western Representative or Sen- 
ator ; that is, that conditions differ very widely as between railroads in different 
parts of this country, and that what might be fair and equitable as applied to a 
railroad in a densely populated district, might, and probably would be, dis- 
tinctly unfair and unreasonable as applied to a pioneer railroad in the growing 
West. 

You will doubtless agree with me that whatever views we may hold upon 
various questions involved in the treatment of public-utilities corporations or 
common carriers, the fact remains that new railroads and extensions of lines 
already existing are absolutely essential in order that the Western States, now 
iu the throes of development, shall achieve their fullest destiny. In the case of 
transcontinental railroads, you will appreciate that the through traffic in which 
they participate is an important item in revenue. In the case of local or feeder 
lines, they are dependent exclusively upon the development of their local dis- 
trict for their revenue, and the basis of compensation by the Government for 
any service rendered to it should be so adjusted in the best interest of the 
people at large so as not to discourage the investment of capital, which has the 
world as its field of operation in additional railroad construction in the thinly 
settled West. 

Yours, very truly, E. M. Heigho. 



Paul Smith's Electeic Light & Power & Railroad Co., 

Paul Smiths, N. Y., September 16, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir: Replying to your letter of the 11th instant, inclosing Senate bill 
7371, we feel that $42.75 per mile of trackage per annum for hauling mail is 



82 KAIL WAY MAIL PAY. 

fair to both the Government and the railroad company, considering the space 
occupied and the weight carried. 
Very truly, yours, 

Paul Smith's Electric Light & Power & Railroad Co. 



[Atlantic City Railroad, Catasauqua & Fogelsville Railroad, Gettysburg & Harrisburg Railway, Northeast 
Pennsylvania Railroad, Perkiomen Railroad, Philadelphia & Chester Valley Railroad, Philadelphia & 
Reading Railway, Philadelphia, Newtown & New York Railroad, fickering Valley Railroad, Reading 
& Columbia Railroad, Rupert & Bloomsburg Railroad, Stony Creek Railroad, the "Williams Valley 
Railroad.] 

PHILADELPHIA & READING RY. 

Office of Vice President, Reading Terminal, 

Philadelphia, October 15, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir: Referring to your letters of September 11, addressed to President Baer 
to each of the above companies, inclosing copy of Senate bill 7371, introduced by you 
by the direction of the Senate Committee on Post Offices and Post Roads, embodying 
a plan recommended by the Post Office Department for determining the compensation 
to be paid to railroad companies for the transportation of mails, and requesting replies 
to inquiries bearing on the present plan, and that introduced in your bill. 

The subject of mail-transportation costs and revenues has been a familiar matter 
since the preparation of data for the Post Office Department in 1909, and I have before 
mea copy of a letter dated October 3, addressed to you by the committee on railway 
mail pay in reply to your inquiries, in advance of a response now in course of prepara- 
tion by the committee on House Document No. 105. This communication fairly 
sets forth our views in regard to compensation for the carriage of mails, and we indorse 
the expressions contained therein. We would further ask your attention to the dis- 
play of the above companies under transportation of mail, on pages 276 and 277 in 
Document No. 105, which shows a loss from mail services for the month of November, 
1909, of $3,652.81. This loss is against a total monthly revenue from mail'service 
during that period of $11,797.66, and while this shows a large percentage of loss, we feel 
that the basis under which the car-foot miles were arbitrarily developed by the Post 
Office Department in preparing these statistics of cost does not equitably state our posi- 
tion in cost, of carrying mail. 

Briefly, the plan followed by the Post Office Department in producing the car-foot 
miles in mail service of 3,270,478, as shown in Document No. 105, shows that they 
made an arbitrary assignment of space in apartment cars on basis of space reported 
by Railway Mail Service as being necessary for that train, and in closed-pouch serv- 
ice an arbitrary assignment of space was made based on weight, which was produced 
on an average fixed weight for each mail pouch and sack. 

The figures submitted by this company in its reports were 5,226,386 car-foot miles, 
and were on a basis of space in apartment cars, and space in closed-pouch service in 
baggage and combination cars, and the space used by each mail, baggage, and express 
in apartment, plus the proportion of dead space each bears to the total of the space 
occupied. 

We feel it is necessary to provide carrying facilities in the several branches of the 
passenger service both as to space in car apartment to properly care for and expedite 
the handling of the several classes of matter, and in the seating capacity of coaches 
to care for the traveling public, and that each of the several classes of matter take 
care of its proper proportion of dead or unused space. This arbitrary assignment of 
space by the Post Office Department resulted in the reduction of 1,955,908 car-foot 
miles, or 37.42 per cent. 

The above is respectfully submitted for your consideration. 
I am, yours truly, 

Theodore Voorhees, 
Vice President, President Williams Valley R. R. 

The Pittsburgh, Lisbon & Western Railroad Co. 

Lisbon, Ohio, September 21, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: I beg to acknowledge the receipt of yours of the 11th instant, 
■submitting copy of Senate bill No. 7371. This bill I have read. I am now 
unable to state whether it would afford the relief that seems to be due to the 
short-line railroads. 



KAIL WAY MAIL PAY. 83 

This company carries United States mail over 25 miles of road on four trains 
each day, and received therefor $1,566.52 per annum, less fines. This makes 
practically $5 per day. The space required in the car is about 64 square feet. 
For this space, carrying the mail and the clerk, the company received about 
5 cents per mile. 

I am advised that operations of many other short lines show about the same 
results. It seems to me that every one must concede that this compensation is 
clearly inadequate for the service rendered. Out of the compensation received 
the railroad company is required to pay about $10 per month for delivering 
mails from railroad stations to post offices. 

I trust that some plan may be arrived at which will confer upon the Post- 
master General authority to put the short-line railroads on a more equitable 
basis, 

Yours, truly, N. B. Billingsley, President. 

Raritan River Railroad Co., 
Jersey City, N. J., September 19, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: Replying to your circular letter of September 11, instant, beg to 
advise that this railroad handles a very small amount of mail matter between 
South Amboy, N. J. — our junction point with the New York & Long Branch 
Railroad — and Parlin, N. J. (There are no intermediate post offices on oui 
line between these two points. ) 

The distance is 4 miles, and we receive, at the present time, $15.67 monthly 
for this service. 

Owing to the insignificant amount of this traffic, we do not feel that we are 
in a position to express an opinion as to an equitable method to be pursued 
in compensating railroad companies for carrying mail matter. 
Very truly, yours, 

Wm. G. Bumsted. President. 



Roaring Fork Railroad Co., 
Blackwood, Va., September 14, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
My Dear Sir : We have your letter of September 17, inclosing copy of Senate 
bill 7371, indorsed by you, embodying a plan for determining the compensation 
to be paid to railroad companies for the transportation of the mails. 

In reply to the first question, we do not believe that the present plan is an 
equitable one, for the reason that the small roads do not receive adequate 
compensation and the larger systems are very much overpaid. 

2. We believe bill 7371 is very proper, and we have no comments to make 
on it. 

3. It is a very hard matter to determine on a desirable plan for compen- 
sating railroad companies for transportation of the mails. I believe that this 
question could be submitted to an impartial board, who would secure all 
necessary data, and then could determine a fair and just compensation. 

Yours, very truly, 

Roaring Fork Railroad Co., 
By C. J. Cutting, General Manager. 



Seaboard Airline Railway, 
Norfolk, Va., October 21, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: I beg to submit the following replies to interrogatories contained 
in your circular letter dated September 11, addressed to the president of this 
company : 

1. TLe basis of the present plan of compensation is fair in principle, but tbe 
law has been supplemented by so many regulations and administrative require- 
ments that it does not provide fair compensation to railroads generally, as 
shown by data compiled by the committee on railway mail pay in answer to 
Document No. 105, Sixty-second Congress, first session. 



84 RAILWAY MAIL PAY. 

2. The underlying principle of the plan embodied in Senate bill 7371 is not, 
in my opinion, a proper basis for compensation. No rate is or ever has been 
based upon cost of operation. Such a plan presents many varying and not 
readily determinable conditions which would give rise to almost insurmount- 
able difficulties. It would place a premium upon inefficiency and a very great 
accounting burden upon the railroads. It does not provide for any return 
whatever upon investment, which return is absolutely necessary to the preserva- 
tion of corporate existence. 

The operating expenses and taxes of the railroads for the year ended June 
30, 1910 (see Interstate Commerce Commission report), amounted to $1,920,- 
665,026 ; 6 per cent of that amount is $115,239,922, whereas for interest, rentals, 
etc., for the same period $560,905,952 was required. It will therefore readily 
appear that the plan advocated by the Postmaster General and proposed in 
Senate bill 7371, if applied to all the business of the railroads, would produce 
only 20.55 per cent of the amount necessary to keep them out of the hands of 
receivers. It is scarcely conceivable that Congress would wish to fix a rate 
for the transportation of mail on railroads which would make the mail service 
a tax upon every other service rendered by them. 

The collection and preparation of the data contained in Document No. 105 re- 
quired nearly two years' time. We may fairly presume each annual adjust- 
ment under the plan proposed would not require less time, would be influenced 
more or less by administrative policy, give rise to more or less contention, 
and must, of necessity, place the railroads in a position where they would 
never be able to tell what they are to receive for the service they perform, 
while Congress would be called upon to appropriate money on a speculative 
basis. 

The practically unlimited authority which it is proposed in the bill to confer 
upon the Postmaster General as to the determination of cost and administration 
are as objectionable as the principle involved. These objections are well set 
forth in an article over your signature in the August number of the Review of 
Reviews. 

3. In their answer to Document No. 105 the railroads have shown that com- 
pensation for mail transportation is not remunerative as compared with other 
elements of passenger- train revenue. They have frequently demonstrated in 
passenger-rate cases that earnings from . passenger service are not excessive. 
Our conclusion, therefore, is that reductions in pay for the transportation of 
mails on railroads by acts of Congress and by Executive orders have not been 
justified by the evidence presented ; that the rates provided by the law of 1873 
(R. S. 4002) should be restored; that pay for railway post-office cars, as pro- 
vided in Revised Statutes, 4004, should be restored ; and that pro rata space pay 
should be allowed for mail apartments in cars. The law should be definite and 
specific in terms, limiting service to rail distance and relieving railroads of 
burdensome regulations and requirements at present enforced by fines and 
deductions, which are not incident to any other class of transportation. 

Very truly, yours, 

Chas. R. Capps, Vice President. 



Siekka Railway Co. of California, 

Jamestown, Gal., October 16, 1912. 
Hon. Jonathan Botjkne, Jr., 

Washington, D. G. 

Dear Sir: Referring to your letter of September 11, addressed to Mr. T. S. 
Bullock, requesting views of this company as to the merits of Senate bill 7371 
as applying to railway mail pay. 

I am in receipt of a copy of the letter addressed to you under date of Octo- 
ber 3 by the committee on railway mail pay, and same embodies the views of 
this company in the main. There are one or two points in which I would go 
farther than the stand taken by the committee. 

Clause D, question 1. — In the committee's reply they desire a fair allowance 
to the railroads for the side and terminal messenger service which they per- 
form for the Post Office Department. In my opinion the railroads should be 
relieved of this service altogether. It is not a question of railway transporta- 
tion in the general sense. Carriers do not perform this or a like service for 
other patrons of the road, and I see no good reason why the Government should 
not make other arrangements for this service. 



EAILWAY MAIL PAY. 85 

Paragraph E, question 1. — The committee say, " That all rates of pay should 
be definite and not subject to the discretion of the officers of the Post Office 
Department." On this point I would particularly specify that no penalties 
should be exacted from the carriers on account of delays or failures to handle 
the mails except in cases where such delayed mail may be diverted over other 
routes. I see no reason for penalizing a carrier simply for the reason they are 
a few hours late or did not move the mail on a specific train when the service 
is performed later. 

The mail is transported by the railroad lines. The persons receiving the 
mail are not allowed anything by the Government for the delay, and it is only 
an arbitrary reduction going to the credit of the Government and does not 
in that sense correspond with other railway transportation. 

Yours, very truly, S. H. Smith. 

South Georgia Railway Co., 
Quitman, Ga., October 7, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir: Replying to your letter of recent date in reference to the cost of 
handling the mails via our line. 

I will say that the pay is entirely inadequate and but for the interest of the 
people along our line M^e would not consider the expense of equipment and cost 
of handling at the price we receive. 

To inconvenience the people from whom we get our living would, of course, 
react upon us and for that reason we continue the hardship. 

I would respectfully call your attention to detailed answers to your questions 
made by Mr. Ralph Peters, acting chairman of committee on railway mail pay 
of various lines, which I think fully covers most all phases of this matter and 
I fully indorse what he says in answer to your questions. 
Yours, truly, 

J. W. Oglesby, President. 

South Georgia Railway Co., 
Quitman, Ga., October 14, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. G. 
Dear Sir: As a supplement to my previous letter in reference to mail com- 
pensation. 

We have been reduced $50 per month in compensation for handling mail over 
our 77 miles of road under the last weighing period. They claim that we are 
handling less mail, than we handled four years ago. while our territory is con- 
stantly growing and we can show by every postmaster along the line that he 
is handling more mail to-day than he has ever handled. 

I will be glad to have the committee investigate the rather peculiar condi- 
tions that exist at the present. 

Yours, very truly, J. W. Oglesby, President. 

St. Louis Southwestern Railway Co., 

St. Louis, November 29, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir: I have to acknowledge receipt of your letter of September 11, 1912, 
inclosing a copy of Senate bill 7371, and requesting views upon three specific inquiries 
on the subject of railway mail pay, which, with answers thereto, are contained in a 
memorandum attached. 

The real issue is whether the railroads are overpaid or underpaid for mail trans- 
portation. The railroads have been protesting, since 1907 particularly, that they 
were underpaid, and that reductions of about $8,000,000 per annum made in that 
year were unjust to them, and that some form of adjustment should be made. 

The Senate Post Office Committee Report No. 955, Sixty-second Congress, second 
session, July 23, 1912, page 25, which accompanied the Post Office appropriation bill, 
stated that ' ' the committee is of the opinion * * * that the rates are excessively 
high." 

This view, presumptively, is founded upon the report of the Postmaster General, 
Document No. 105, wherein he purports to show that the railroads are overpaid 



86 RAILWAY MAIL PAY. 

$9,000,000 per annum, which might be saved by enactment of a bill proposed by him 
and introduced by your committee as Senate bill 7371. 

There is no proof in his report that the railroads are overpaid; on the contrary, even 
superficial analysis explodes any such theory, because the methods employed in 
making his deductions are fatally in error and fortunately easily demonstrated. 

His first serious error is in overlooking the right of railroad property or capital to 
earnings, which is a recognized primary and constitutional factor in all rate cases. 

This property is, of course, of enormous value, as follows (I. C. C. Report, 1910): 

Represented by funded debt $10, 303, 474, 858 

Stock 8,113,657,380 

Total 18, 417, 132, 238 

This represents the plant, which, of course, must exist to enable the railroads to 
perform mail and other transportation services. It is almost too apparent to allude 
to the effect of such a policy. If applied generally to railroad or any business it would, 
of course, bankrupt and destroy them. 

His second serious error consists in arbitrarily and erroneously cutting out millions 
of car-foot miles used directly or incidentally in performing mail service, as reported 
to him by the railroads in the reports he used and changed to the extent of approxi- 
mately 28 per cent. As the proportion of car-foot miles is the essential and material 
factor in his calculations, his erroneous action in not only cutting out such mail car- 
foot miles but changing the same instead to passenger car-foot miles is fatal to any 
theory that the railroads are overpaid. 

His third serious error is in dismissing without any consideration, either as to costs 
or compensation, the extensive and valuable service rendered by the railroads in per- 
forming what is commonly known as "messenger service," and which is the carrying 
of mails between the railroad stations and the post offices where the latter are within 
one-quarter mile of the station. This is not a natural function of the railroad company, 
because it does not handle passengers, baggage, freight, or express beyond its station 
property, but is an extra service which the railroads perform, and saves the Post Office 
Department from emnloying 30,000 to 40.000 contract messengers, and which saving 
former Postmaster General Meyer reported to the Senate committee amounted to 
$4,393,000 per annum. A service of so great value is ignored in treating railway mail 
pay generally and in the calculations made in Document No. 105. 

It is obvious that the railroads are not overpaid, as that document indicates, and no 
foundation exists for such opinions which may be based thereon. On the contrary, 
the reports which the Post Office Department required of the railroads demonstrated 
that they were very greatly underpaid for mail service — perhaps best illustrated by 
figures which the Postmaster General does not appear to have submitted in his report, 
namely: That mail space earned only $3.23 per thousand car-foot miles, whereas the 
passenger space earned $4.42 per thousand car-foot miles. This indicates underpay- 
ment to the railroads of over $16,000,000 per annum, according to figures compiled by 
the committee on railway mail pay. 

Unfortunately and prejudicially to their interests and justice there has always 
seemed to exist a feeling that the railroads were paid excessively for carrying the 
mail. Such views have not been founded upon any competent inquiry but upon 
mere assertion. It has been no uncommon thing to notice newspaper items asserting 
it and having the effect of creating public sentiment in that direction when there 
has been nothing substantial in the way of official evidence to support such assertion. 

The annual amount of railway mail pay has only seemed large and attracted atten- 
tion, because it represented the largest single item in the Post Office appropriation 
bill, and without full consideration of the immensity of the service rendered by the 
railroads receiving it, not only in the transportation throughout the year on all the 
railroads, and practically on all of the train service of the country, but in hauling 
post offices in addition on this mileage, for the distribution of the mail while it 
was in transit, and for the performance of other incidental services. 

The Government collected, in 1910, $224,128,637.12 in postage, yet for the above 
service by the railroads only paid $49,405,311.27, while on the other hand, it paid 
over $170,000,000 for the function of collection and delivery of that mail and the 
administration of the postal service. In other words, the railroads received about 
22 cents out of the dollar the Government collected in postage for the transportation 
of the entire mail, whereas, the Government used about 78 cents for collection, 
delivery, and administration. 

In the past 10 years, the amount paid the railroads in proportion to postal revenue 
has been very steadily decreasing from 34 to 22 cents per dollar, while the collection, 
delivery, and administration cost during the same time has increased from 66 to 
78 cents per dollar. There is nothing in these facts to support any theory of over- 



RAILWAY MAIL PAY. 87 

pay to railroads. In reality, railway mail pay, in stead of representing a large pro- 
portion of railroad revenue, is indeed very small. In 1910 it only amounted to 1.78 
per cent of gross revenue, while the roads had to depend upon freight, passenger, 
and express business for 98.22 per cent of revenue. The railway mail pay does not 
even equal one-half of the taxes alone which the railroads pay. 

The only thorough inquiry previously made on the subject of railway mail pay- 
was by the commission of 1898, which, after two years' study, and voluminous testi- 
mony, reported as follows: 

"Upon a careful consideration of all the evidence and the statements and argu- 
ments submitted, and in view of all the services rendered by the railways, we are of 
the opinion that ' the prices now paid to the railroad companies for the transportation 
of the mails' are not excessive and recommend that no reduction thereof be made 
at this time." (52d Cong., 2d sess., S. Doc No. 89, pp. 19, 22, 25, 29.) 

It demonstrated then that there was no foundation for the sentiment of overpay 
that existed, based upon mere assertion, and which culminated in the appointment 
of the commission. Notwithstanding, a further agitation of the subject arose in 1907, 
with disastrous, and, as we believe, decidedly unjust results to the railroads. 

Congress had the subject before it, and by act approved March 2, 1907, reduced the 
railway moil pay $2,723,000 per annum, cutting the pay on weights and full postal 
cars. No sooner, however, was this done, in fact on the day the act was signed by the 
Executive, the Postmaster General issued Order 165. commonly known as the "divisor 
order," which cut the railway mail pay $4,941,000 per annum more than Congress, by 
its own action at that time, regarded as justifiable. 

The railroads have been protesting this double method of reduction from two 
sources was decidedly unjust and far beyond the wishes and action of Congress at that 
time. 

Instead of a reduction of $2,723,000 per annum, designed by Congress, an actual 
reduction of $7,664,000 has been made. Included in the reductions made by Congress 
was a cut in the pay of full postal cars, which at that time were of wooden construc- 
tion. Since then not only has Congress required the reconstruction of the wooden cars 
to standards, but at the last session provided for their retirement and replacement by 
all steel equipment, and without any provision whateA'er for compensation to the rail- 
roads — certainly the higher class of equipment required — and the expense of substi- 
tuting it for wooden cars, which must be abandoned, for a sufficient businesslike basis 
for a restoration of the rates that were in effect prior to the cut of 1907. 

It is hoped the commission, of which you are chairman, will recommend a restitution 
to the railroads of these reductions in "the form of an annual weighing, pay for mail 
apartment car space, and compensation for messenger service. 

The fairness of such action is especially emphasized at this time, by the inauguration 
of the paicel post on January 1 next, which apparently will increase the volume of 
mail, and for which no provision in the way of compensation has been made to railways, 
although such provision has been made to increase the pay of rural carriers, star-route 
carriers, and messenger service. 

The principal service in connection with parcel post will be that performed by rail- 
road companies in its transportation over the immense mileage of the country, and the 
justice of an equitable method of pay will, no doubt, appeal readily to every Member of 
Congress, as it can not be expected that it will be transported by the railroads for noth- 
ing while the Government is collecting a revenue thereon, and considering that the 
railroads at the present time are being compensated for its transportation as express. 

The Post Office Department, as a result of the complaints of the unjust reductions 
in 1907, called upon the railroads for information and statistics on forms which it had 
sent out. The railroads, with the object of assisting in collection of the data, correctly 
and promptly designated a committee on railway mail pay to assist and to study the 
results. 

The committee, on behalf of the roads, has answered the three inquiries contained 
in your letter, in which A r iews I fully concur. 

For convenience, there is attached a copy of the questions and answers thereto 
submitted by the committee. 

Yours, very truly, F. H. Britton, 

President and General Manager. 

Susquehanna, Bloomsburg & Berwick Railroad Co., 

' Watsontown, Pa., October 12, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington^ D. C. 
Dear Sir: Referring to your recent letter, accompanied with Senate bill 7371, 
upon the subject of determining compensation to be paid railroad companies for the 
transportation of United States mail. 



88 RAILWAY MAIL PAY. 

We have read over the bill carefully and also your letter upon the subject. It 
recalls to us a former communication addressed to Mr. Joseph Stewart, Second Assistant 
Postmaster General, Post Office Department, Washington, D. C, dated January 12, 
1910. This letter was accompanied with statements in detail, showing the cost to 
this company for carrying United States mail. 

m I may say that our mail route is short, viz, 22.7 miles. Our passenger train con- 
sists of one compartment car for mail and baggage and one passenger coach. The 
baggage end of the compartment car is used daily for baggage, express, and local freight. 
The mail compartment is used exclusively for United States mail and a mail clerk. 

At the time the above-mentioned letter was written to Mr. Stewart it was upon his re- 
quest that we furnish the information covering one month's period, viz, from midnight, 
October 31, to midnight, November 30, 1909. Conditions at the present time do not 
vary much from that date. This estimate was worked out upon a per square foot 
of floor space basis, covering the distance mails were carried, and includes all items 
which we consider properly chargeable to the mail portion of- our business. These 
figures show that it cost this company for the month of November, 1909, $182.10 for 
the mail-carrying portion of our business. We received from the Government for this 
service $97.93. It will be noticed, therefore, that this service is being handled by 
our company at a loss of nearly $100 per month, figured upon the exclusive use of the 
the floor space necessary to handle the mail. 

We believe this estimate to be not far from correct, and if this is true there is no doubt 
we are much underpaid for the mail service on our line. 

Conditions, no doubt, vary considerably upon different lines and a rate for com- 
pensation that might suit here may not fit the conditions elsewhere. From lack of 
better information I would hesitate about expressing an opinion as to fixing upon a 
uniform rate to cover all cases, and we therefore believe it proper to confine our views 
to conditions and facts on our line as we find them. Our opinion is that we should 
receive for the mail service on our line actual cost, as already worked out, plus 25 per 
cent — or in other words $227.62 per month for the service, as it is now performed on 
mail route 110166 on our line. 

For the above reasons we wish to reply to your inquiries as follows: 

(1) Do you deem the present plan of compensation an equitable one as between the 
Government and the railroads? If not, in what respects and as to what classes of 
railroads is it inequitable? 

Answer. No, sir. 

(2) Is the underlying principle of the plan embodied in the inclosed bill a proper 
basis for compensation? If not, wherein is it improper, and why? 

Answer. I hardly think so, for reasons explained in the accompanying letter. 

(3) What in your opinion is a desirable plan for compensating railroad companies 
for transporting the mails? 

Answer. Owing to the variations in the character of the service between long and 
short lines, I believe a fair basis upon which to adjust rates for carrying the United 
States mail to be as we have previously worked it out, viz, ascertain as nearly as possi- 
ble the actual cost, to which should be added a fair remuneration for the railroad com- 
pany, and we do not believe 25 per cent of the cost to be out of the way. 

We make this suggestion for the reason that all materials, repair work, renewals, 
etc., we purchase carry with them profits of approximately 25 per cent above the 
actual cost of producing such articles. 

For your information I beg to inclose herewith copy of our letter, dated January 12, 
1910, addressed to Mr. Joseph Stewart, Assistant Postmaster General, and statement 
of cost of handling mail route upon our line No. 110166, made up on Post Office De- 
partment form 2603. 

I wish to call attention to a point mentioned in this letter which we discovered 
after sending it, viz, the last 14 words in the letter on the last two lines should have 
been omitted, and the letter ended with the word "MiUville." We included in our 
estimate (copy attached) 7 per cent of the general office and clerks' expenses as applied 
to mail service. This, however, does not alter the figures in estimate. 
Yours, truly, 

S. B. Haupt, 
President and General Manager. 

I Form 2603.J 

Name of system reporting: Susquehanna, Bloomsburg & Berwick Railroad Co. 

Railroad mail route covered by the system, 110166. 

Train mileage of passenger traffic (covering all passenger and baggage, express, and 
mail service), 4,576. 

Car mileage of all passenger equipment (including all cars, passenger and baggage, 
express, and mail), 9,152. 



EAILWAY MAIL PAY. 89 

Total revenue received from passenger traffic (not including man and 

express) $1, 067. 64 

Total revenue from express service 36. 12 

Total revenue from mail service 97. 93 

Total operating expenses (including passenger, mail, express, and freight). 9, 656. 04 
Total passenger operating expenses, covering all passenger and baggage, 

express, and mail service 1, 279. 10 

Assignable expenses. 

Fuel for locomotives 246. 75 

Repairs to passenger cars 20. 00 

Locomotive repairs, one-seventh of total 88. 15 

Oil, tallow, and waste, one-fifth of total 7. 17 

Fuel for coaches, estimated. Heated by locomotive and included in 

locomotive consumption 25. 00 

Taxes on gross receipts 8. 54 

Wages of enginemen, conductor, baggageman, and watchman 316. 00 

Man carrying mail at Watsontown 5. 00 

716. 61 

Proportion of nonassignable expenses. 

5 per cent on value of passenger equipment, $10,795.37 44. 98 

Proportion of — 

Maintenance of roadway, 7 per cent 216. 50 

Superintendence, 7 per cent 7. 70 

Station agent, 7 per cent 29. 97 

General office, 7 per cent 24. 50 

General office clerks, 7 per cent 12. 95 

General expenses, 7 per cent : 8. 24 

Stationery and printing, estimated 2. 50 

Water rent, one-fifth of total ' 9. 95 

Interest on mortgage, 6J per cent 189. 60 

Taxes on capital stock, 6 J per cent 15. 60 

582. 49 



Watsontown, Pa., January 12, 1910. 
Joseph Stewart, Esq., 

Second Assistant Postmaster General, 

Post Office Department, Washington, P>. C. 

Dear Sir: Your favor of November 22, accompanied with inclosures, including 
blank forms, letters of instruction, etc., relating to receipts and expenditures of rail- 
roads for carrying United States mail, came duly to hand. 

We have recently closed our figures showing general operating expenses and gross 
receipts for the month of November, so that we are now able to work up such data as 
we hope may be satisfactory for the information you desire. 

We find it difficult to separate the cost of carrying the mails from the total cost of oper- 
ating the passenger train absolutely. Our regular passenger train is made up of one 
coach and one combination car. 

Seventeen feet of the combination car is used for United States mail purposes, includ- 
ing mail clerk. It may be proper to calculate on the use of 12 feet of the combination 
car only, that being the length specified as being absolutely necessary by the post- 
office authorities. The reason we use 17 feet is because the car came to us that way 
and we did not wish to alter the partition. 

While we have endeavored to give the information in full as called for in your 
blanks, we desire to add some additional information throwing light upon the sub- 
ject from another standpoint. The total floor space of our passenger train, including 
one coach and one combination car, is 806 square feet. Of this, 110 square feet are 
used exclusively for United States mail purposes. 

The total cost of operating our passenger train for the month of November, 1909, was 
$1,279.10, as you will note in statement. This makes the cost per square foot $1.59. 

Figuring upon this basis we would find the cost of handling the United States mails 
for the month of November as follows: 

110 square feet used in mail compartment car at $1.59 per square foot $174. 90 

Messenger for carrying mail at Watsontown, $5 per montn 5. 00 



90 KAIL WAY MAIL PAY. 

Time of agents, Ottawa, Strawberry Ridge, and Millville, occupied in han- 
dling mails $2. 10 

This would make the total cost for handling the mails for the month of November 
$182.10. For this service our company receives from the Government $97.93 per 
month. 

The above figures do not include anything for the hauling of the mail clerk four 
times daily between Watsontown and Millville or the time given to the service by the 
management and general office clerks. 

Yours, truly, S. B. Haupt, General Manager. 



United Verde & Pacific Railway Co., 

Jerome, Ariz., September 20, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir: In reply to your letter of September 11, relative to S. 7371, I beg to 
state that in my opinion this bill is grossly unfair and would work a very considerable 
hardship on railroads. The question is undoubtedly a very complicated one and 
should, I believe, involve equations other than the mere cost of transportation plus a 
6 per cent profit thereon. Under the regulations of this bill no account seems to be 
taken of the cost of equipment and other facilities, nor the revenue haul displaced by 
mail and mail equipment unless, of course, these phases would be taken into consid- 
eration by the Post Office Department in determining cost of handling mail. 

A railroad company should not be expected to sell its transporation, even to the 
Government, at a loss, nor at anything but a reasonable and just profit. In deter- 
mining such profit not only the cost of the actual equipment used in the Railway Mail 
Service, together with the operating expense should be used, but that proportion of 
cost of motive power, track, and other facilities which mail equipment bears to all 
other equipment, should be capitalized and the resulting figure computed in the 
expense of operating mail. While these matters may be taken into consideration 
under the terms of the inclosed bill I do not deem these terms sufficiently explicit, 
and in order definitely to provide for such consideration I believe the bili should so 
state in plain and unmistakable language. 

I believe also that short line railroads should be allowed a higher minimum than 
$25 per mile per year; especially should such allowance be made on mountain roads, 
where only limited tonnage can be handled and where operating and maintenance 
expenses are very high. Not only should cubic space of mail actually handled be 
considered, but cubic space required for possible necessities should be taken into 
consideration, and a fair and reasonable return made accordingly. 

Rates based on average operating costs and figured accordingly on a mileage basis 
are inherently wrong. Every rate made should be based on individual character- 
istics with, of course, sufficient leeway to meet competition and other local conditions. 
Mail contracts should be given little consideration. 
Yours, truly, 

Will L. Clark, Second Vice President. 



Virginia-Carolina Railway Co., 

Abingdon, Va., September 14, 1912. 
Senator Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir: Your circular letter 11th, asking opinion on bill 7371. 

I have read the bill, but it is so drastic and autocratic that it is almost lese majestie 
to criticize it. The first difficulty is to find the actual cost of carrying the mail. 
The greatest experts in the world have never been able to properly figure the cost of 
transportation Especially difficult will it be to find the actual cost of moving under 
the special requirements of standard metal cars, depot space, room for post-office 
employees, etc., required in addition to the actual transportation. 

The movement over the larger lines could, no doubt, be discussed by the managers 
of those lines much more ably than I could after extended study. Ours is a short 
line, and the compensation received by such line is entirely inadequate. I do not 
doubt but that very many of the short lines, like ourselves, would rather be without 
the mail than to have to handle it as at present. 

In the first place the arbitrary rate is unremunerative and in the second place the 
requirement of short lines to deliver the mail pouches to the various post offices along 
the line within the limit of 40 rods for intermediate points and to terminal points, 
whatever the distance. 



RAILWAY MAIL PAY. 91 

It seems to us that, in all justice, the compensation to such short lines should bo 
increased, and they should be relieved from this burden of delivering to the post 
offices. 

Yours, truly, W. E. Mingea, 

President and General Manager. 

Virginian Railway Co., 

Norfolk, Va., October 24, 1912. 
Hon Jonathan Bourne, Jr., 

Washington, D. C. 
My Dear Sir: I beg to present for your consideration the following reply to the 
inquiries made in your letter of September 11, 1912, viz: 

Question 1. Do you deem the present plan of compensation an equitable one as 
between the Government and the railroads? If not, in what respects and as to what 
classes of railroads is it inequitable? 
Answer. The present plan of compensation is not fair to the railroads. 

(1) On account of the great length of time elapsing between weighing periods. 
There should be at least annual instead of quadrennial weighing, and there should 
also be a definite and fan method for ascertaining the daily average weights. Under 
the present four-year period of weighing, the railroads carry a certain quantity of 
mail a great portion of the time without any compensation. 

As a case in point: The weighing of the mails on the Virginian Railway took place 
before the road was fully connected up and in operation. On short portions of the 
line only was there any train service. The company protested against the unfair- 
ness of rating its pay from the Government for four years in the future upon weighings 
made upon detached portions of the road. No attention was paid to our protests, 
and the injustice has been continued. 

(2) On account of insufficient compensation, or allowance, for the maximum space 
demanded by the Government for postal-car accommodations; that is to say, pay is 
not allowed for all the space demanded. The recently enacted parcel-post law will 
mean greater injustice to the railroads under the present method of compensation for 
the average weight carried, instead of pay for the maximum space demanded. 

(3) On account of requiring the railroads to perform unusual service without any 
pay therefor; we refer to side and terminal messenger service. The railroad is cer- 
tainly entitled to proper compensation for work of this kind performed for the Post 
Office Department. The establishment of the parcel post will add to the burden. 

(4) On account of the use of a wrong divisor, the latter having been changed 
unjustly. 

(5) Laws have been enacted requiring steel postal car equipment, resulting in 
increased operating expenses for the railroads, while at the same time the compensation 
for carrying the mail has been reduced. This is not fair nor reasonable. 

Question 2. Is the underlying principle of the plan embodied in the inclosed bill 
a proper basis for compensation? _ If not, wherein is it improper, and why? 

Answer. The underlying principle of the plan outlined in Senate bill No. 7371 is 
not correct. A plan based upon operating cost and taxes, with 6 per cent added, can 
not be considered right, there being no allowance for the property employed. It would 
penalize the railroads which have the higher physical condition and which give the 
most efficient and valuable service to the Post Office Department. 

Question 3. What, in your opinion, is a desirable plan for compensating railroad com- 
panies for transporting the mails? 

Answer. Amend the existing law in a way that would correct serious inequalities 
now existing, some of which have been mentioned in our answer to question 1, and then 
place upon the same a fair interpretation in its administration on the part of the postal 
authorities. 

Very respectfully, yours, Raymond Du Puy. 

Wabash, Chester & Western Railroad, 

Chester, III, September 14, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: Your favor 11th with copy of Senate bill 7371 received and noted. 
Any legislation proposed by Mr. Hitchcock for payment to railroads for carrying 
mail can safely be condemned without reading. He is notoriously unfair and un- 
reasonable. 

The treatment the small roads have received by the Post Office Department for 
many years has been a disgrace and stamps the officials in charge as not only unfair 
and unreasonable but absolutely dishonest. 



92 E AIL WAY MAIL PAY. 

For the treatment this company has received I refer you to the testimony taken by 
the House Committee on Post Offices and Post Roads, of Sixty-first Congress (I think 
it was). As for requiring such roads as this to provide steel cars is absurd. This 
road does not make operating expenses and taxes. It has to be content with second- 
hand equipment, discarded by other companies. It can not afford new wood cars, 
let alone steel cars, of the Government specifications. Seventy-five dollars per mile 
is the minimum such roads should be allowed, and even that would barely pay cost 
of the service rendered. They should also be exempt from delivering mail to post 
offices at terminals and at stations. 

No other freight is delivered to patrons, and this is a discrimination that should be 
unlawful. 

Yours, respectfully, C. B. Cole, President. 



Chester, III., October 9, 1912. 
Hon. Jonathan Bourne, 

Washington, D. C. 
Dear Senator: I am in receipt of a copy of letter written you by the committee 
on railway mail pay of the American Railway Association, which I heartily indorse, 
referring to the proposed bill for regulation of railway mail pay. While this answer 
refers in a general way to the objections of the railroads in general, it does not put the 
case as strong as it should be on the part of the short lines. They should have special 
consideration, which I trust will be fully brought out in the hearings I assume will be 
held sometime this next winter. 

Yours, respectfully, C. B. Cole, President. 

Wabash Railroad, 
Chicago, September 17, 1912. 
Hon. Jonathan Bourne, 

Chairman Senate Committee on Post Offices and Post Roads, Washington, D. C. 
My Dear Sir: Your letter of September 11, inclosing copy of Senate bill 7371, 
embodying a plan recommended by the Post Office Department for determining 
compensation to be paid to railway companies for transportation of mails, has come 
duly to hand. 

The receivers desire to aid to the extent of their ability in the general discussion 
of this question ; in fact, we have worked up a good deal of data along this line and 
have supplied it to a joint committee under whose jurisdiction has been placed 
the responsibility of supplying full information to your honorable body. I do not 
understand that you have any objections to our presenting the data in this manner. 
Yours, very truly, 

F. A. Delano, Receiver. 

White Deer & Loganton Railway Co., 

Sunbury, Pa., September 13, 1912. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
My Dear Sir: Replying to your letter of the 11th, we are operating a narrow-gauge 
railroad of 25 miles from White Deer, Pa., to Loganton, Pa., and owing to our limited 
experience do not feel that we can give a full answer to your questions. 

We wish to suggest that for small roads like ours, operating in sparsely settled terri- 
tory where traffic is not heavy, the maximum provision, on page 2 of Senate bill 7371, 
of $25 per mile would be a hardship, and we beg to ask that you consider the matter of 
some adjustment of compensation for service furnished such as by our line that will 
authorize a compensation such as would enable the roads to maintain the service, 
and think page 4, $42.50 per mile, would be a minimum in such cases. 
Yours, truly, 

Charles Steele, General Manager. 



Yosemite Valley Railroad Co., 

Merced, Cal., September 23, 1912. 
Senator Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: I have your letter of September 11, addressed to our president, Mr. F. G. 
Drum, which has been referred to us for reply. 

(1) I do not deem the present plan of compensation equitable for all roads and under 
all conditions. In our own case our road was built through practically virgin country 
and of course the mail carried was very light, but we have developed the business and 



RAILWAY MAIL PAY. 93 

it is rapidly increasing each year and some arrangement should be made on roads of 
this character where more frequent weighing and adjustment could be had. 

Furthermore, our business is greatest during certain months in the year and at the 
time that the mail is weighed does not cover any of the months in which our business 
is greatest, consequently we do not receive proper compensation for the mail we carry. 

(2) The underlying principle of the plan embodied in the bill is correct, but should 
be elastic enough to meet special cases and conditions such as nearly all small roads 
and new roads have to contend with. 

Yours, truly, 0. W. Lehmer. 



Yreka Railroad Co., 
Yreka, Siskiyou County, CaL, November S, 1912. 
Mr. Jonathan Bourne, Jr., 

Washington, D. C. 

My Dear Sir: I have your kind favor of September 11, 1912, with reference to 
proposed Senate bill 7371, as regards compensation of railroad companies for handling 
the mails. I beg leave to address a few remarks to you as regards our views in the mat- 
ter, which, of course, cover our particular case, as we are situated quite differently 
than the larger roads and, perhaps, some of the smaller roads. We feel that the pres- 
ent compensation for the services performed is wholly inadequate, and in the event 
of establishing a $25 per mile maximum revenue, as provided in this bill, such a 
rate would be confiscatory on our part. 

I do not quite understand just how the matter of mileage is arrived at on this pro- 
posed basis. Presume, however, it would be based on the round-trip mileage on this 
road, account service rendered both ways. In this event, our mileage being 7.50, 
we could not claim over 15 miles for the double service, which would amount to a 
maximum of $325 for the year's service. Yreka is a terminal post office, and we are 
compelled to transport the mail from our depot to the post office, approximately 
one-half mile distant. The mail transported by team includes the Yreka mail, as 
well as the mail for 19 tributary post offices which goes through that office. 

This mail approximates 14,000 to 16,000 pounds monthly, and, taking into consid- 
eration the mail delivered from the post office to the depot here in Yreka, we are called 
upon to handle approximately 20,000 pounds of mail by wagon each month, besides 
deliveries three times daily at Montague post office and handling at Yreka and Mon- 
tague stations and transporting over our line, 7.50 miles each way three times daily. 
For this service we are allowed $46.21 monthly, not deducting any fines the postal 
department may feel disposed to impose upon us. Mr. H. Schock, who has been in 
the dray business here ever since the road was first established, has transported the 
mails between the depot and the Yreka post office by handcarts and team. 

This has been for the past 25 years. For this service he was started off with a 
monthly compensation by this company of $10, and at the present time is being paid 
only $12.50 per month. On account of the great increase of all mail during the past 
few years, additional labor is involved, and Mr. Schock is becoming very much dis- 
satisfied with the present arrangement, as he states it does not pay him for the time of 
man and team it takes to do the work. This, of course, you realize includes Sundays 
as well as other days, and he oftentimes has a full load of mail, account Sunday being 
one of the heaviest days. While his compensation has been extremely small con- 
sidering the service rendered, he realizes we are not in a position to help him much 
at our present compensation, and his desire to help us out in the past has caused him 
to handle the mail at a much less figure than we could possibly obtain from any other 
party. 

Mr. Schock feels quite discouraged under present conditions and is considering 
quite strongly of throwing up the proposition unless he can get somewhere near a 
reasonable compensation for the service. He feels that he should be paid a mini- 
mum of $30 monthly for this service, and we consider this a very fair and reasonable 
demand. Should we be compelled to pay this amount for this service without 
increased allowance from the postal department for this company, we would practi- 
cally be giving the service for slightly more than 50 cents per day — a mere pittance. 
I do not believe my predecessor has ever brought this matter up with the depart* 
ment, as I feel quite certain that they could readily see that the compensation is 
wholly inadequate. It was my intention to take the matter up with them in the near 
future, and, receiving your letter, I concluded to place the matter before you as I 
have. 

I feel for this service we should be allowed $75 per month, which would enable us 
to pay Mr. Schock $30 for his services, which is, indeed, a very reasonable charge. 
This amount would leave us a fair compensation for services performed, which^ on 
the present basis or the one proposed, would be entirely too small for the services 

49396—14 7 



94 RAILWAY MAIL PAY. 

rendered. I am giving you conditions as they now exist here and feel that some 
relief should be afforded us. At the present time we are receiving slightly more 
than $1 per day for our services in this matter. 

While I realize that your communication was not directed to us for the purpose of 
procuring a statement of our personal grievances in this mail matter, I have taken 
the liberty to put our case before you in such a manner that you may know our posi- 
tion in connection therewith. If there is any further information desired or sugges- 
tions you would like to make, I will be pleased to hear from you further. 
Yours, very truly, 

F. A. Reiser, 
Superintendent and Manager. 

DATA ASKED FROM INTERSTATE COMMERCE COMMISSION. 

In order to still further aid the joint committee in the inquiry with 
which it is charged and to secure the most competent judgment that 
might be had in regard thereto, I addressed the following letter to 
Hon. C. A. Prouty, chairman Interstate Commerce Commission: 

January 3, 1913. 
Hon. C. A. Prouty, 

Chairman Interstate Commerce Commission, Washington, D. C. 

My Dear Sir: Under the provisions of an item in the Post Office appropriation act 
of recent session of Congress the Senate and House of Representatives have appointed 
a joint committee to make inquiry into the subject of compensation for the transporta- 
tion of mail. This committee has not yet organized, but as a member of said joint 
committee and as chairman of the Senate Committee on Post Offices and Post Roads, 
and under authority of Senate resolution 56, I earnestly desire that the most com- 
petent judgment may be had in reference to the subject matter of the inquiry. 

In order, therefore, to aid the joint committee in the inquiry about to be under- 
taken, I shall be pleased if your commission will have an analysis made showing the 
relative returns to the railroad companies for the different classes of traffic they handle, 
namely, passenger, freight, express, and mail, approximating as nearly as possible the 
expense to the railroads for handling such respective classes of traffic as compared with 
the earnings received by the railroads from such traffic. 

In connection with the foregoing inquiry, attention is called to the fact that the 
Government for the fiscal year ending June 30, 1912, appropriated for the railway 
post-office car service $5,010,000, of which $4,426,144.16 was expended in that service, 
leaving an unexpended balance as of June 30, 1912, of $583,855.54. Since there is an 
impression prevalent throughout the country that the Government would do better by 
owning and operating its own postal cars, I beg to inquire whether you can and will 
prepare a statement showing what, if any, saving to the Government could be effected 
by governmental ownership and operation of postal cars, taking into consideration 
cost and upkeep of same, covering maintenance, cleaning, duplicating, and allowance 
for depreciation. 

If it is possible to comply with the above request, I shall be pleased to have you 
advise me when the information will be available for the use of the joint committee. 
Yours, very truly, 

Jonathan Bourne, Jr. 

To this letter I received the following responses : 

Interstate Commerce Commission, 

Washington, January 4, 1913. 
Hon. Jonathan Bourne, Jr., 

United States Senate, Washington, D. C. 
My Dear Sir: Replying to yours of January 3, 1913, in reference to inquiry into 
relative cost of handling mail, express, and passengers, permit me to say that I will 
lay your letter before my associates and write you further not later than Wednesday 
of next week. I do not think we have any figures from which any accurate informa- 
tion of the kind for which you asked can be obtained, certainly not any comprehen- 
sive information. This subject has been gone into in one or two cases as applied to 
individual railroads or localities. 

Very truly, yours, C. A. Prouty, Chairman. 



RAILWAY MAIL PAY. 95 

Interstate Commerce Commission, 

Washington, January 7, 1913. 
Hon. Jonathan Bourne, Jr., 

United States Senator, Washington, D. C. 
My Dear Sir: Further replying to your letter of January 3, 1913, in reference to 
cost of handling mail matter in comparison with other passenger-train service. Having 
laid the matter before my associates, I am instructed to say: 

First. The commission now has no figures from which the information asked for by 
you could be compiled. In one or two cases this matter has been incidentally gone 
into, but in so fragmentary and unsatisfactory a manner that we could not, upon the 
strength of what was there developed, express an opinion. 

Second. The commission has no knowledge and no means of knowing the expense 
of maintaining and operating postal cars. Some time ago we sent to Congress some 
information as to the relative cost of maintaining steel and wood cars. 

Third. The commission could, by means of an investigation to be instituted by it, 
probably give you information on both these points, certainly on the first point, which 
would be reliable, but such a proceeding would require several months, possibly a year, 
and would be somewhat expensive. 

Awaiting your suggestion, I am, very truly, yours, 

C. A. Prouty, Chairman, 

ORGANIZATION OF COMMITTEE. 

As I have already indicated, the Joint Committee on Postage on 
Second-Class Mail Matter and Compensation for the Transportation 
of Mail did not organize immediately after the appointments were 
made, for the reason that the members went home on their summer 
vacations. Organization was delayed after the reconvening of Con- 
gress in December by the absence of several of the members. On 
January 6, 1913, I called the members together, at which time there 
were present: 

Senators: Jonathan Bourne, jr., John H. Bankhead. Representa- 
tives: J. T. Lloyd, W. E. Tut tie, jr. 

On motion of Mr. Lloyd the joint committee elected Senator Jon- 
athan Bourne, jr., as chairman. 

On motion of Mr. Lloyd the chairman was authorized to appoint a 
secretary and to employ such clerical, expert, stenographic, and other 
assistance as he deems necessary. The chairman announced the 
appointment of Mr. Robert H. Turner as secretary of the joint com- 
mittee. 

On suggestion of the chairman, Mr. Richard B. Nixon was appointed 
to act as disbursing officer of the joint committee. 

DEPARTMENT MODIFIES ITS PLAN. 

In order that I might bring out the points of difference and a pos- 
sible satisfactory adjustment thereof between the parties interested, 
viz, the Post Office Department and the railroad companies, I ar- 
ranged for a conference of individuals representing the conflicting 
interests. This conference was held in my committee room on Mon- 
day, December 30, 1912, prior to the organization of the committee, 
Hon. Joseph Stewart, Second Assistant Postmaster General, appear- 
ing as the representative of the Post Office Department, and Mr. 
Ralph Peters, president of the Long Island Railroad Co. and acting 
chairman of the committee on railway mail pay, Mr. W. A. Worth- 
ington, assistant director of maintenance and operation, Union and 
Southern Pacific Systems, and Mr. V. G. Bradley, general supervisor 



96 RAILWAY MAIL PAY. 

of mail traffic, Pennsylvania Railroad Co., appearing as the repre- 
sentatives of the railroads. At this conference it was suggested by 
Mr. Stewart that the Post Office Department was willing to make 
certain concessions to the railroad companies by modifying in cer- 
tain particulars the position taken by it in House Document No. 105, 
and as expressed in S. 7371, heretofore referred to. Influenced by 
this suggestion, I, as chairman of the joint committee, addressed the 
following letter to the Postmaster General : 

January 6, 1913. 
Hon. Frank H. Hitchcock, 

Postmaster General, Washington, D. C. 
My Dear General: Referring to telephonic conversation had with you several 
days ago, in which you stated that the department was willing to make certain con- 
cessions to the railroad companies in the matter of railway mail pay by modifying the 
Eosition taken by it in House Document No. 105 and as expressed in the pending bill, 
.7371: 

As I understand it, while approving in general the plan outlined in House Document 
No. 105, you are now prepared to recommend certain modifications of that plan in 
these particulars, to wit: 

First. That the Interstate Commerce Commission instead of the Postmaster General 
be authorized to make the primary separation between passenger and freight business. 
Second. That in the matter of car space the railroad companies be credited with the 
maximum space in both directions. 

Third. That in addition to a compensation of 6 per cent of the operating expenses the 
railroad companies, after an apportionment, be credited with a reasonable percentage 
of the capital employed in and relating to the Railway Mail Service. 

The joint committee organized this morning and is anxious to have you indicate 
in writing at the earliest possible date your recommendations modifying the plan as 
outlined in House Document No. 105, with your reasons therefor. 
As prompt a response as the nature of this request will permit is desired. 
Yours, very truly, 

Jonathan Bourne, Jr., 
Chairman Joint Committee on Postage on Second-Class Mail Matter 

and Compensation for the Transportation of Mail. 

To this letter I received the following response: 

Post Office Department, 
Office of the Postmaster General, 

Washington, D. C, January 9, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail 

Matter and Compensation for the Transportation of Mail. 
My Dear Mr. Chairman: Referring to your letter of the 6th instant, regarding 
certain proposed modifications of the general plan outlined in House Document 
No. 105 for readjusting railroad mail pay, I have the honor to state that I am willing to 
recommend the following in connection therewith: 

First. That the Interstate Commerce Commission, instead of the Postmaster General, 
be authorized to make the separation of operating expenses between passenger and 
freight services. 

Second. That in computing the car-foot miles the mail service shall be charged in 
both directions for a line of railway post-office cars with the maximum space authorized 
in either direction. 

Third. That in addition to the operating expenses and taxes apportionable to the 
mail service and 6 per cent thereof, companies may be allowed such additional amounts, 
if any be necessary, as shall render the whole a proper proportion of a fair and reasonable 
return on the value of the property necessarily employed in connection with the mail 
service. 

Such modification of the phraseology of the proposed law as may be necessary to 
effect these changes will be prepared as early as practicable. 
Yours, very truly, 

Frank H. Hitchcock, 

Postmaster General. 



BAIL WAY MAIL PAY. 97 

department's REPLY TO RAILROADS. 

On November 30, 1912, I submitted to the Post Office Department 
all answers received from the railroad companies to my circular letter of 
September 1 1 and asked that the Second Assistant Postmaster General, 
on behalf of the department, furnish the committee his views in 
reply thereto. Under date of January 17, 1913, the Postmaster Gen- 
eral addressed a letter to me as chairman of your joint committee sub- 
mitting, on behalf of the Post Office Department, a memorandum 
prepared by the Second Assistant Postmaster General. Although 
dated January 17, 1913, this letter was not sent to me by the Post- 
master General until noon, January 22. 

This letter and memorandum read as follows : 

Post Office Department, 
Office of the Postmaster General, 

Washington, B.C., January 17, 1918. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class 

Mail Matter and Compensation for the Transportation of Mail, 

Congress of the United States. 
My Dear Mr. Chairman: I hand you herewith, a memorandum prepared by the 
Second Assistant Postmaster General on behalf of the Post Office Department in 
reply to a statement entitled "Mail Carrying Railways Underpaid," prepared by the 
committee on railway mail pay, representing certain railway companies carrying the 
mails, and submitted to the Joint Committee on Postage on Second-Class Mail Matter 
and Compensation for the Transportation of Mail, and received by the department 
from you informally with request for a reply. 

Yours, very truly, Frank H. Hitchcock, 

Postmaster General. 



Memorandum on Behalf of the Post Office Department in Reply to a State- 
ment Entitled "Mail-Carrying Railways Underpaid." 

Post Office Department, 
Second Assistant Postmaster General, 

Washington, January 17, 1913. 

The pamphlet Mail-Carrying Railways Underpaid, a statement prepared by the 
committee on railway mail pay representing the larger number of the railway com- 
panies in the United States carrying the mails and submitted to the Joint Committee 
on Postage on Second-Class Mail Matter and Compensation for the Transportation of 
Mails, and received by the department from chairman thereof with request for a reply, 
has been carefully examined and the statements analyzed. _ A reply will be made in 
this memorandum to the arguments advanced and attention will be called to the 
important erroneous statements found in the claims of the pamphlet. 

The purpose of the pamphlet is stated to be to show that the department's estimate 
of cost to the railroads for carrying the mails is far below the real cost and that the 
department's figures and calculations when analyzed and supplemented demonstrate 
that the mail service has not been fairly remunerative to the railroads. The state- 
ments advanced to support these propositions are specifically set forth in the pam- 
phlet, but are preceded by a general claim in the following language: 

"Railway mail pay is about to be forced still further below the level of just com- 
pensation, unless payments are promptly readjusted, on account of the additional 
volume of mail that will result from the inauguration, on January 1, 1913, of the 
parcel post" (p. 3). 

With regard to this, the department grants the contention of the railroads that they 
should receive additional compensation for the increased weight of mails they will 
be required to carry under the operation of the parcel post. 

The Postmaster General has recommended to Congress that in the event that the 
legislation proposed in Document No. 105 be not passed he be authorized to weigh the 
mails on all railroad routes in the fall of 1913 for a period of not less than 30 successive 
working days and to readjust compensation on the routes from the date of commence- 



98 KAIL WAY MAIL PAY. 

ment of such weighing. Recommendation has also been made for the additional 
amount of appropriation necessary. It is proposed that the readjustments of compen- 
sation, if the authority be granted, shall continue until the commencement of the next 
regular contract term in each section, subsequent weighings and readjustments to con- 
form to the present practice of weighing each section once in four years. 

It is believed that the plan recommended is an equitable one and eminently fair to 
the railroads. It has been suggested that by a weighing in the fall and an adjustment 
from the date of the commencement of the weighing period, the companies will receive 
no compensation for parcel post mails carried from January 1, 1913, to the weighing 
period. The fact should not be overlooked that, on account of the impracticability 
of weighing the parcel-post mails separately and adjusting therefor alone, the com- 
panies will receive compensation for the increase in other mails for periods of six 
months, one year, one and one-half years, two and one-half years, and three and 
one-half years, according to the section, which they would otherwise not receive until 
the regular contract term began in each section. In other words, in the New England 
States, in the first section, the railroads would receive the additional compensation 
accruing from one year's increase in the other mails for nearly the entire four-year 
period; in the remainder of the first section they would receive compensation for six 
months' increase for nearly the same period; in the second section they would receive 
compensation for one and one-half years' increase in the mails for nearly three years; 
in the third section they would receive pay for two and one-half years' increase in other 
mails for nearly two years; and in the fourth section they would receive the pay for 
three and one-half years' increase in the other mails for nearly a year. It is thought 
that these additional amounts received will compensate for the failure to receive com- 
pensation for the parcel-post mails carried from January 1, 1913, to the date of such 
readjustment. 



The first statement in the pamphlet in support of the propositions advanced is as 
follows: 

"The Postmaster General's erroneous assertion that the railways were overpaid 
'about $9,000,000' in the year 1909 rests primarily upon his adopting an unprece- 
dented theory which allows nothing for a return upon the capital invested in railway 
property" (p. 4). 

In support of this the pamphlet advances an argument based upon a consideration 
of the entire operating expenses of all of the United States railways for a year, plus 
the taxes and 6 per cent upon the total, as compared with the total interest of the 
obligations on the funded debt of all of the United States railways for one year, plus 
rentals of leased properties for the same period, and shows that a return equal to the oper- 
ating expenses, taxes, and 6 per cent would be insufficient to meet the interest obligations 
and rentals for the entire railroad service. The logic of the argument is that (1) the 
operating revenues should always be sufficient to meet operating expenses, taxes, 
interest on all funded debt, and rentals of leased properties, and that (2) the perform- 
ance of mail service by the railroad companies for the United States shall be considered 
upon the same basis as their performance of service for the public. The department 
is not in a position to venture an opinion as to how far the question of interest on 
funded debt should enter into the consideration of rates, but it may be said that there 
are no authorities which have been found that propose the ascertainment of a rate 
purely upon this. In this connection the case of Buell v. Chicago, Milwaukee & St. 
Paul Railway Co., heard before the Railroad Commission of Wisconsin, will shed 
much light. It is said on page 160 of the report as follows: 

"Under normal conditions the owners of a railroad are entitled to a fair return upon 
a fair valuation of their property. This statement raises two questions: First, What is 
a fair rate of interest in such cases? and, second, What constitutes a fair valuation of 
the property involved? Both of these questions are so closely related to other ques- 
tions and involve so many problems about which there is more or less dispute that 
any full or adequate discussion of each can not be entered upon here. At the same 
time it is necessary to call attention to a few facts which are more intimately connected 
with these questions. 

"It has been quite generally held that a fair rate of interest is a rate which, other 
things being equal, corresponds to the current market rates on money. This is a 
position with which it is not easy to take issue, for it is quite clear that whatever rate 
money brings in the market is a safe index to what it is generally worth for investment 
purposes. It may also be said, and with a great deal of force, that a fair rate of interest 
for any particular road is the rate of income which its securities bring on their market 
value. The market rate includes the ordinary risks as it is usually considerably 



RAILWAY MAIL PAY. 99 

higher than the rate which is obtained on Government and other securities where 
substantially no risks at all are involved . 

"What constitutes a fair valuation of the plant? Is it the original cost of construc- 
tion, the amount at which it is capitalized, the cost of reconstruction new, or the cost 
of reproduction up to its existing condition? The original cost of construction is an 
item that can not generally be ascertained except for relatively new roads. Most of 
the roads were built by construction companies whose records are not in existence, 
and then turned over to some other company at a different value than the original 
cost. Many of the roads are undergoing constant improvements; in fact, some of them 
have been almost entirely rebuilt since the time of their first construction. The 
original cost, as well as the amount that has been expended upon the plant to any 
given date, exclusive of the maintenance, are items that for these and other reasons 
can not be obtained, and which would probably be of little value if they could be had. 

"The capitalization of the roads, or the bonds and stocks issued by them, in most 
cases falls short of being a fair index of a reasonable valuation. The main reason for 
this is found in the manner in which these securities are issued. The railroads are 
often both constructed and equipped by the proceeds obtained from the sales of its 
bonds, while the stock is often thrown in as a bonus. Again, bonds and stocks are 
often issued for other purposes than construction. Many roads, for instance, issue 
securities for the purpose of acquiring an interest in other roads, or in other property 
than that which can properly be considered as a part of their respective plants. At 
times the securities are sold at a discount and the bonds alone may often amount to 
more than the entire cost of the road. For these and other reasons the capitalization is 
subject to great variations. In some cases it may greatly exceed the amount actually 
invested, or what might be a fair valuation of the property.- In other cases, again, it 
may correspond quite closely to the true value of the plant, or it may even amount 
to less than this value. From these facts it seems clear that the bonds and stocks 
which are outstanding may not represent what the roads are reasonably worth, and 
the amount upon which they are entitled to a fair return. 

"The cost of reproduction has been suggested aa the valuation that might be fair to 
all concerned. This cost includes the value of the right of way, yards, and terminals 
at two and one-half times the prices of adjacent real estate, or at some other price 
ratio. It also includes the cost of buildings and structures of all kinds, new, if con- 
structed at current prices of material and labor. It further includes the labor and 
material at current rates for the construction of the road and its equipments, together 
with engineering, superintendence, legal expenses, cost of organization, cost of 
material on hand, freight charges on the material used, etc. In short, it includes every 
item of expense which would be involved in building the road to-day, including the 
interest on the investment during the construction period." 

In States where public utilities commissions have jurisdiction over public service 
corporations other than steam railways practically a like rule of valuation in con- 
nection with rate making is observed. New York may be cited as an example. 
W. H. Lyon, in his work on "Capitalization — A Book on Corporation Finance," 
states, on page 242, in connection therewith, as follows: 

"valuation of physical property. 

"Information about the method of valuing a corporation's physical property as a 
basis for rate making comes from two cases. Experts of the commission made an 
appraisal of all the property of the Bronx Gas & Electric Co. This included cost to 
reproduce and depreciation. The commission undertook similar appraisal work on 
the Kings County Electric Light & Power Co. It makes such appraisals either in 
connection with bond or rate cases or in anticipation of reorganization applications. 
The significance of a consideration of cost to reproduce and depreciation will be clear 
after a study of the methods of valuation the Wisconsin commission employs. 

"valuation op property other than physical. 

"In prescribing uniform accounts the commission orders that franchise accounts 
shall be charged only with the amount actually paid to the State for the right, exclusive 
of taxes. Furthermore, the corporation must amortize this amount during the life of 
the grant. It must similarly charge all other intangible assets at their actual money 
cost alone, and must amortize this amount during the life of the asset." 

The second question, namely, as to whether the same rule as to rate of return for 
service performed shall apply for the United States as for the public, is one which is 
worthy of mature consideration and may be submitted to the congressional commis- 
sion for determination. 



100 RAILWAY MAIL PAY. 

In specific defense of the theory respecting the basis for rate upon which Document 
No. 105 was prepared and submitted to Congress it is only necessary to refer to the act 
of Congress under which the same was done. The act of March 3', 1879, chapter 180, 
section 6 (20 Stats. L., 355), provides as follows: 

"The Postmaster General shall request all railroad companies transporting the mails 
to furnish, under seal, such data relating to the operating, receipts, and expenditures 
of such roads as may, in his judgment, be deemed necessary to enable him to ascertain 
the cost of mail transportation and the proper compensation to be paid for the same; 
and he shall, in his annual report to Congress, make such recommendations, founded 
on the information obtained under this section, as shall in his opinion be just and 
equitable." 

It will be seen from the above that the statutes require the ascertainment of the 
cost of transportation and the proper compensation to be paid for the same. 

Upon the further question of capitalization or basis of valuation the department 
had no information. 

In order to thoroughly meet and consider this feature of the question consideration 
has been given to it since the preparation of Document No. 105, and the Postmaster 
General has signified his willingness to recommend that, in addition to the operating 
expenses and taxes apportionable to the mail service and 6 per cent thereof, companies 
may be allowed such additional amounts, if any may be necessary, as shall render the 
whole a proper proportion of a fair and reasonable rate on the value of the property 
necessarily employed in connection with the mail service. 

II. 

The second statement in the pamphlet in support of the propositions advanced is 
as follows: 

"The mail service supplied by the railways costs them more in operating expenses 
and taxes than they are paid for it, and leaves nothing for return on the property " 
(p. 6). 

In elaboration of this statement several positions are taken. The first is that the 
passenger-train services as a whole do not produce revenue sufficient to meet their 
lair proportion of the operating cost and the necessary return upon investment and that 
the mail service, being only a part of the passenger service and producing a less rate 
of gross revenue per car-foot mile is therefore unprofitable. In support of their con- 
tention the pamphlet alleges substantially (1) that it is the general belief of railway 
managers that the passenger revenues are insufficient to meet these items, and (2) 
that the rate of gross receipts per car-foot mile received for the mail service is 3.23 
mills and for other services 4.35 mills. 

With respect to the first the department has no information which would warrant a 
conclusion, and as to the second it is to be observed that the rates given by the pam- 
phlet are rates computed by the railroad committee on railway-mail pay based entirely 
upon the companies' statistics as to car space and mail service performed unchecked 
and uncorrected by the department, which results in the ascertainment of a larger per 
cent of car-foot miles to the mail service than is justified by the corrected data. The 
department's figures show revenue from mail service of 4.14 mills per car-foot mile 
and for revenue from other services 4.16 mills per car-foot mile. 

From these figures it will be readily observed that the discrepancy between the mail 
and other services comprising the passenger services alleged by the pamphlet does not 
exist to the extent claimed. Furthermore, the pamphlet in this connection raises the 
interesting question which the railroad committee on railway mail pay does not touch 
upon, namely, how the question may be affected by the fact that their operating 
revenues for all passenger services (of which the mail is only a small par.t) do not pay 
operating expenses, taxes, and a fair return on the investment, and apparently are not 
expected by the companies to do so. 

The second position taken is that no merely statistical comparison can reveal the 
whole story, for the railways are required to furnish many incidental facilities and to 
perform many additional services for the Post Office Department which render the 
mail service exceptionally arduous and costly. 

In support of this the pamphlet sets forth the requirements of the postal regulations 
and the practice of the department regarding the receipt and delivery of mails en route, 
supplying of rooms, etc. 

In reply to this it may be said that with respect to the passenger service, as well, the 
railroad companies furnish very elaborate and extensive facilities for the accomoda- 
tion, convenience, and safety of persons who patronize their passenger service. 

It should not be overlooked, however, that whatever facilities may be furnished by 
the railroad companies for the mail service will, under the plan proposed by the Post 
Office Department, be paid for upon the basis proposed. 



RAILWAY MAIL PAY. 101 

In this connection, on page 7 of the pamphlet there is a statement which seems to 
be fully in line with the purpose of the inquiry, reported in Document No. 105. This 
statement is as follows: 

"The fairness of railway-mail pay can also be tested by apportioning operating 
expenses between passenger and freight traffic, and then making a secondary appor- 
tionment of the passenger expenses between mail and other kinds of traffic carried on 
passenger trains. This method involves charging directly to each kind of traffic all 
expenses pertaining exclusively thereto, and the apportionment, on some fair basis, 
of those expenses which are common to more than one kind of traffic." 

This is the method which was substantially followed by the department. 

However, the pamphlet states that the railway companies arrived at the conclusion 
by this method — that the operating expenses, not including taxes, for conducting the 
mail service, were $4,009,184, as against the department's figures for substantially like 
mileage, $2,676,503.75. It is to be observed from the statements of the pamphlet that 
in obtaining this result the railroads used the revenue train mileage for apportioning 
common expenditures for passenger and freight services, which, in the opinion of the 
authority consulted by the department, is not the best basis for such division in all 
cases, and used the percentage of car-foot miles made in the mail service for apportion- 
ing to the mail the passenger operating expenses, which was too high, because obtained 
by using the unchecked and uncorrected data before referred to. With respect to the 
use of revenue train mileage for the purpose named, the Wisconsin commission, in the 
case above cited, state as follows: 

"The revenue train-mile is the unit of work done in hauling trains between ter- 
minals, and it is the most direct unit of cost. That is, the passenger revenue train 
mileage is the most direct unit of those expenses which depend upon the same, and 
the freight revenue train mileage is the most direct unit of those expenses which 
depend upon this mileage. This is an important distinction, for the passenger-train 
mileage differs materially in cost as well as in many other respects from the freight- 
train mileage. * * * They evidently assume that passenger and freight train 
mileage stand for substantially the same thing and that this is the proper unit of all 
expenses. Even a superficial analysis of the facts will show that this is not the case. " 

With respect to other statements subject to criticism set forth under this heading 
in the pamphlet, a discussion will be found under subsequent headings where they 
are more specifically referred to. 

III. 

The third statement in the pamphlet in support of the propositions advanced is as 
follows: 

"The Postmaster General's apportionment of space between the mail service and 
the other services rendered on passenger trains did not allow to the mails the space 
which they actually require and use and this had the result of unduly reducing his 
estimates of the cost to the railways of the mail service" (p. 9). 

The rules adopted by the department in checking the reports of the railroad com- 
panies of space necessary for the mail service differed from the ideas of the railroad 
companies as to the proper amount of the space to be charged, but it is believed that 
the department's rules were equitable and adhered closely to the actual conditions 
obtaining on the various trains. In order that there may be no doubt as to these 
rules they are here set forth in full: 

"closed-pouch space. 

"The following basis for the estimate of the space in baggage cars devoted to mail 
service for closed pouches during the month of November, 1909, in connection with 
the railroad companies' reports, will be observed: 

"For 100 pounds or less, allow 6 linear inches; 

"For weights above 100 pounds and not exceeding 200 pounds, allow 10 linear 
inches; 

"For weights above 200 pounds, allow 5 linear iiches for each additional 100 pounds. 

"The weight will be ascertained by multiplying the maximum number of pouches 
and sacks reported by the company as carried at any one time by the average weight 
of pouches and sacks as shown by the report of the General Superintendent, Pvailway 
Mail Service, upon the actual weighing for 10 days of closed pouches on express trains, 
namely, 20 pounds." 

APARTMENT CAR SPACE. 

"Where the railroad reports cars longer than those authorized by the department, 
enter the authorized length in column 11, Form 2601, and enter the excess space in an 
additional column to be headed 'Linear feet of the cars — dead space,' and its car-foot 
mileage to be computed and entered in another additional column headed 'Car-foot 
mileage — dead space . ' " 



102 RAILWAY MAIL PAY. 

RAILWAY POST OFFICE OAR SPACE. 

"Where the railroad company reports cars longer than those authorized by the 
department, the cases may be one of the following three characters: 

"Full line authorized with maximum pay. — Where the space reported is greater than 
that authorized by the department, enter the authorized length in column 9, Form 
2601, and the excess space in an additional column marked 'Linear feet of cars — dead 
space ' and compute the car-foot mileage on the dead space and enter it in another 
additional column, marked 'Car-foot mileage — dead space.' 

" Agreement lines. — These cases are where the department authorizes a full line of 
cars (as, for instance, a 60-foot line), and the company operates such sized cars in both 
directions, but the department pays a rate equal to half the rate for a full line of the 
maximum length, plus one-half the rate for a full line of minimum length (as, for 
instance, pay equal to half a 60-foot plus half of a 50-foot or 40-foot line). In this case 
enter the length of the line, as authorized, in column 11, Form 2601. 

"Half lines. — These are cases where the authorizations are for specific half lines (as, 
for instance, half line of 60-fcot cars in one direction and half a line of 40-foot cars in 
the opposite direction). It is usual for the company to operate the maximum length 
of car in both directions. If, therefore, the company reports greater length than that 
authorized, enter the authorized length in column 11 and the surplus space reported, 
if any, in another column (additional), marked 'Linear feet of cars — deadhead space' 
and compute the car-foot mileage upon the deadhead space and enter it in another 
additional column headed 'Car-foot mileage — deadhead space.' " 

"If a railway post-office car is reported deadhead and its running is necessary for the 
maintenance of the authorized car service, the space should be entered in the column 
'Linear feet of cars — deadhead space' and its car-foot mileage computed and entered 
in the column 'Car-foot mileage — deadhead space.' 

"Milk car operated in passenger train. — Where a milk car is operated in a passenger 
train the car space should be treated as passenger car space. 

"Railway post-office cars run beyond the points between which such service is duly 
authorized and paid for. — Where a company reports the operation of a full railway 
post-office car beyond the points between which the line is duly authorized, give 
credit in column 11 for the length of space necessary for apartment car service, if any 
be necessary, for the extra distance for which the car is so operated and enter the 
surplus space in the column 'Linear feet of cars — dead space' and carry the car-foot 
mileage for each to their appropriate columns. If no space is needed for apartment 
car service over the extra distance run, enter the entire space reported for such dis- 
tance in the column 'Linear feet of cars — dead space' and carry out its car-foot 
milpnge." 

The space ascertained to be "Deadhead space" under the foregoing rules was 
charged to the mail service, and formed part of the car-foot mileage percentage for 
that service. 

The assertion is made that "the Postmaster General obtained from the railways 
statements which he might have used in applying this method (the apportionment), 
..and these statements showed that 9.32 per cent of the total space in passenger trains 
was required by the mails, but, instead of using the data showing this fact, he sub- 
stituted figures of his own which reduced the space credited to the mail service to 
7.16 per cent of the total." The statement that the Postmaster General used figures 
of his own is incorrect. The figures used by the department were those furnished 
by the railroad companies, after being checked and carefully scrutinized under the 
•rules hereinbefore set forth. The utmost care was exercised in verifying the reports 
of the companies, and in case any change was made in the figures there was ample 
authority therefor. 

The railroad companies, generally, reported the space used by the mails at the 
maximum of operating conditions, whether warranted by the needs of the mail service 
or not. An examination of the instructions of the various companies to their employees 
in regard to reporting closed-pouch space indicates that no matter what the size of 
the baggage car utilized, the mail service, even if the mail was very light in weight 
and quantity, was charged with unused space in the baggage car proportional to the 
amount carried. The rule of the department to allow 6 linear inches across the 
entire car for 100 pounds of mail or less was based upon measurements and tests made 
by officials of the department and represented 18 linear inches by 36 inches upon 
one side of the car the full height of the car. This space is ample for 100 pounds of 
mail. 

The pamphlet further makes specific statements regarding the operating necessity 
for providing for the maximum traffic, although during much of the trip the actual 
traffic may be considerably below this limit, and states that the Postmaster General 
refused to credit the mail service with much of the space thus required by the depart- 



RAILWAY MAIL PAY. 103 

ment. This statement is incorrect, as will be fully perceived by an examination of 
the rules hereinbefore stated regarding the charges against the mail service for rail- 
way post-office car service. From these rules it will be noted that excess space was 
charged to dead space (that is, space which was afterwards charged to the passenger, 
not mail, service) only in cases where the company operated cars of greater length 
than authorized by the department, and also where the companies operated for their 
own purposes authorized lines beyond the points between which such lines were 
duly authorized to be run, and that in other cases, as, for instance, agreement lines 
and half lines, the excess space was charged to deadhead space and finally accounted 
for as a charge to the mail service. 

IV. 

The fourth statement in the pamphlet in support of the propositions advanced is as 
follows: 

"The Postmaster General ignored data which he had obtained showing expendi- 
tures on account of the mails largely in excess of the direct expenses for that service 
which he reported" (p. 11). 

In support of this the pamphlet contains the statement that the Postmaster General 
obtained from the railroad companies statements showing the amounts expended by 
them for station and terminal services required by the department, etc., which were 
not used, and that no adequate allowance was made in any other way for such unused 
items. It sets forth specifically an itemized statement of all items reported, aggre- 
gating $401,136. 

This statement contains two material allegations: (1) That no adequate allowance 
was made in any other way for the items that were not specifically^ used by the de- 
partment, and (2) that the total of all items which should be considered under this 
heading is as above stated. These will be considered separately and it will be con- 
venient to consider the second first. 

An examination of the items set forth on page 12 of the pamphlet immediately 
discloses the fact that they contain two specifications and the greater part of a third 
which are improperly included as operating expenses, namely, rental value, plus 
average monthly cost of light and heat, of room or rooms set apart for the exclusive 
use of the mail service, $37,258.93 (the part of this item improperly included is the 
rental value); rental value of tracks occupied daily for advance distribution of the 
mail, $47,029.12; and interest at the legal rate upon the value of cranes, catchers, and 
trucks required for mail service, $3,895.36. The total of these is $88,183.41. The 
part of this which represents the cost of light and heat of room or rooms set apart for 
mail service is not shown. Neither is it possible to apportion to the amount the 
proper proportion of the $9,993.19 stated in the footnote on page 12 of the pamphlet 
as having been reported by four companies which gave totals for these items but did 
not report the items separately. _ Therefore, the true amount representing operating 
expenses for station service, etc., is made up of the other items stated, namely, amount 
of wages paid to messengers and porters employed exclusively in handling mails, 
$79,980.84; portion properly chargeable to mail service, prorated, etc., $198,927.01; 
amount expended for maintenance of horses and wagons, etc., $5,640.98; and average 
monthly cost of light and heat for postal cars placed daily for advance distribu- 
tion of mail, $18,400.57; making a total of $302,949.40. This would be augmented 
by the unseparated amount for cost of lighting and heating rooms and the due 
proportion of the $9,993.19 above referred to. 

It will be observed from this that the statement in the pamphlet as to the amount 
which should have been accounted for is over $88,000 too much (not accounting for 
the undetermined items above referred to). Furthermore, the items making up the 
total of $302,949.40 had not been checked by the department, and it is to be remem- 
bered that they rest wholly upon the statements of the companies. That the largest 
item among them, namely, $198,927.01, the portion said to be properly chargeable to 
mail service, prorated on the basis of actual time employed, is largely in excess of a 
proper charge is shown by the following facts: Notwithstanding the statement made 
in the pamphlet that this item is the portion properly chargeable to mail service, "pro- 
rated on the basis of actual time 1 employed, of wages paid to station employees a part 
of whose time is employed in handling mails," the instructions given by the railroad 
committee on railway-mail pay (the committee which prepared the pamphlet under 
consideration) to the companies they represented contain the following with reference 
to this item : 

"In computing the pay of station employees and time consumed in handling mails 
30 minutes should be allowed for each train exchanging mails, and, in addition, the 

\ Italics are department's; 



104 RAILWAY MAIL PAY. 

mail time should be charged with its proper proportion of idle time of agent or em- 
ployee handling mails; same proportion to be added in transfer trips to other stations." 

In the light of this instruction the department, in fairness to the Government, could 
have made no specific use of the item under consideration. 

Furthermore, the item contained on page 12 of the pamphlet, "Amount of wages 
paid to messengers and porters employed exclusively in handling mails, $79,980.84," 
appears also to be evidently excessive in the light of the instructions given by the 
railroad committee representing the companies and who prepared the pamphlet, as 
follows: "Where solely on account of handling the mails an additional person has been 
employed, his whole pay should be shown in column 3, even though after employment 
he may perform some other work incidentally." This instruction is directly contrary 
to the theory otherwise insisted upon by the companies that the mail service should 
bear its proportion of expenses, inasmuch as it charges to the mail service the entire 
amount paid for the employment of exclusive porters, even though they performed 
duties for the passenger service. 

As to the first part of the statement, to the effect that in the data furnished for 
messengers, porters, and station service which were not specifically used by the 
department, there was no adequate allowance made in any other way, this will now 
be examined. 

It will appear evident that no items for these expenditures could be used specifi- 
cally unless the individual accounts including such direct expenditures were also 
segregated and reported separately to the department in order that when the appor- 
tionment of expenditures on the car-foot mile basis should be made the department 
should not participate in a double charge for the same service. Therefore the depart- 
ment assigned to the mail service such expenses for these items as were reported by 
the companies in this manner; that is, where not only the direct expenditures were 
reported, but also the expenditures for the accounts including such direct expendi- 
tures were also reported separately from other expenditures for like accounts. In 
this manner $21,993.06 was reported by the companies and directly assigned to the 
mail service, as shown in Table 7, Document No. 105, and the totals of the accounts 
including them were eliminated from the totals for station service for the respective 
systems. Having thus disposed of the direct expenditures which could be used in 
this manner and ascertained the sum of such like expenses unaffected by the already 
assigned direct expenditures, this sum was apportioned to the mail service on the 
basis of the car-foot miles performed in that service. The total of the amount directly 
assigned, as above stated, and the amounts apportioned upon the car-foot mile basis 
for all roads reporting, was $167,813.39. It will be recognized that any other method 
of handling the items would have resulted in a double charge to the Government, 
because if the amounts reported by the companies directly expended on account of 
the mail service had been charged to that service, and then the accounts affected 
included in the total amounts apportioned, it is readily seen that the mails would 
be charged twice for the same service performed by the companies. This would have 
been the result had the department followed the plan suggested by the railroad com- 
mittee, as set forth in the pamphlet, even though the amounts named could have 
been verified or corrected. 

Regarding the claim that the cost of personal transportation furnished the Post 
Office Department was not allowed for, it may be said that after a careful consideration 
of this matter it was decided in view of the inability to satisfactorily verify the data 
of this character reported by the companies and the fact that similar data regarding 
the passenger service was lacking, the data could not be made use of for the purpose 
of the inquiry. 

V. 

The fifth statement in the pamphlet in support of the propositions advanced is as 
follows: 

"The month of November is not a fair average month in any railway year or one that 
is typical of a year's business, and its use as the sole basis of the Postmaster General's 
calculation was so unfavorable to the railways as to deprive the results of any value 
even if in all other respects his methods were beyond criticism" (p. 13). 

To support this the railway committee assert that November is not a typical or 
average month, that all its deviations from the averages of the year are such as to 
greatly favor a finding disadvantageous to the companies, and specifically mention 
that the maintenance of way and structures expenditures for the month of November, 
1909, were lower than the average for the year, and that the traffic on passenger trains 
was lighter and the freight traffic heavier during that month than for the average of 
the year. From this the committee conclude that the proportion of operating ex- 
penses assigned to the passenger service was lower than the average for a month in the 



RAILWAY MAIL PAY. 105 

year and that, therefore, the part of such expenditures assigned to the mail service 
was lower than the average for a month of the year. 

At the time the preparations were completed for securing the statistics from the 
railroad companies, the month of November, 1909, appeared to be the first available 
month which would probably produce the fairest result, and it was accordingly ac- 
cepted. As to whether the result was as alleged by the railroad committee will de- 
pend upon consideration of rmore factors than have been set forth by that committee 
in the pamphlet under consideration, and these additional facts do not appear to sup- 
port the conclusion of the pamphlet. If it is true that during the month of Novem- 
ber the passenger traffic was reduced below the average for the year, it is fair to con- 
clude that there was a corresponding reduction in the operation of purely passenger 
trains. This would appear to be substantiated by a comparison of statistics of the 
Interstate Commerce Commission with the department's statistics for November, 1909, 
as to car and train mileage; that is to say, the Interstate Commerce Commission report 
shows the average monthly^car miles for 1910 to be 249,847,541 for all roads. The 
department's statistics for November, 1909, show the car miles for the roads reporting 
(practically all the large systems) as 219,733,424. Again, the Interstate Commerce 
Commission report shows the average monthly train mileage for 1910 as 45,751,250, 
and the department's statistics for November, 1909, show the train mileage for the 
roads reporting as 42,896,628. From this it must be concluded that the car miles and 
train miles of passenger service performed by the railroad companies in the month of 
November, 1909, were below the monthly average for a year, and therefore the car- 
foot miles for the passenger service for November would be less than the average of the 
year. If this was true the effect of it was to increase above the average the rate of 
percentage of car-foot miles in the passenger services devoted to the mail service, 
because the actual space devoted to the mail service in passenger trains is compara- 
tively constant and would not be reduced during the month of November, but on the 
other hand would inevitably be increased during that month. 

Consequently, if the total car-foot miles for all the passenger services were below the 
average and the mail car-foot miles were the average or above the same, thus resulting in 
a larger ratio for the mail service in the participation in the expenditures for the passen- 
ger services, it can not be maintained that the selection of November was disadvanta- 
geous to the railroad companies unless the apparent disadvantage to the mail service be 
overbalanced by other factors having a contrary effect. That the volume of the mails 
for November was actually above the average is shown by statistics. The postal reve- 
nues from 50 of the largest post offices for the fiscal year ended June 30, 1910, by 
months, indicated that the month of November exceeded all other months in the year 
in postal receipts except the months of March and December. The receipts for Novem- 
ber were 8.48 per cent of the total for the year, or 0.15 of 1 per cent above the average. 
Statistics compiled in the department as to the weights of second-class matter (which 
comprise the large percentage of the mails), by months, show that November is fourth 
among the months in the quantity handled. Figures secured from a number of large 
offices for a period of five years show the monthly average weight to have been 
29,609,438 pounds, and the November weight 30,064,002 pounds, or 454,644 pounds 
more than the average. Inasmuch as the space used for the mail service aside from 
the specific authorizations of space in cars increases as the weight increases, it follows 
that more than the average space and car-foot miles are necessary for mail service in 
November, and therefore, even if the passenger car-foot miles were not below the 
average, and thus increase the ratio of the mail car-foot miles, this increase in weight 
of mails in November would result in a greater participation of the mails in the pas- 
senger operating expenses than in the average month. 

VI. 

Tne sixth statement in the pamphlet in support of the propositions advanced is as 
follows: 

"A commission of Senators and Members of Congress which, between 1898 and 1901, 
most fully and carefully investigated the subject, ascertained and declared that rail- 
way mail pay was not then excessive; since then there have been many and extensive 
reductions in pay accompanied by substantial increases in the cost and value of the 
services rendered by the railways" (p. 14). 

Under this heading the statement in the pamphlet refers to the fact that a congres- 
sional joint commission reported in 1901 that the prices then paid to railroad companies 
for the transportation of the mails were not excessive, and sets forth the further facts 
that since 1901 the ratio of railroad mail pay to the gross postal receipts per annum has 
decreased, and that certain reductions have been made by statutes and administrative 
order and changes which have lowered the mail income per unit of weight. 



106 RAILWAY MAIL PAY. 

The findings of the joint commission referred to must be considered, if at all at this 
time, in connection with the findings of Document No. 105, based upon a line of in- 
quiry quite different from that pursued previously. The finding of the commission 
made no discrimination with respect to the services performed by the different sys- 
tems or roads, while the inquiry upon which Document No. 105 is based disclosed 
for the first time that the present system of adjustments resulted in an ununiform 
measure of compensation to the several companies, the result in some cases being a 
loss and in other cases a gain over cost of operation. 

There appears to be even less relevancy to the question to be found in the ratio 
between total railroad mail pay and the gross postal receipts of the department. The 
inferential argument in the statistics presented appears to be that there is a necessary 
relation between the compensation paid railroad companies for carrying the mails 
and the gross receipts of the postal establishment, and, further, that the railroad 
companies have some right to receive a proportional increase in compensation for 
carrying the mails if the gross revenues of the department increase. Neither of these 
propositions is true. The sources of revenue to the postal establishment are various 
and are not necessarily connected with the expenditure for transportation on rail- 
roads. It is true that the expenditure for transportation on the railroads increases 
as the weights of the mails increase, but the rate of increase in such pay is not neces- 
sarily the same as the rate of increase in postage. Furthermore, there are sources of 
revenue which are entirely disassociated from the functions involving transportation. 

With respect to the items of reduction enumerated on page 16 of the pamphlet it 
may be said that one at least is not susceptible of verification, and as to all of them 
they appear to be immaterial except as a part of the argument to show that if the 
finding of the commission in 1901 was true it is with greater force true to-day. This 
may be passed with no further comment than what has been made above. 

VII. 

The seventh statement in the pamphlet in support of the propositions advanced is 
as follows: 

"The administration of the Post Office Department has not, in the last 12 years, 
effected any reduction in the annual total of its expenses for other purposes than 
railway transportation or in the proportion of its revenues required for such other 
expenses. But the whole saving which has nearly eliminated the annual deficit of 
the department is represented by the reduced payments, per unit of service, to the 
railways" (p. 17). 

To support this proposition the pamphlet sets forth certain statistics of gross receipts 
and total expenditures compared with total expenses for railroad mail service and for 
other purposes separately for the years 1901 and 1911. The fallacy of this line of 
argument, so far as a comparison between receipts of the postal establishment and 
expenditures for railroad mail service is concerned, has been fully shown under 
preceding subdivisions. Any argument based upon comparison of gross expenditures 
with the expenditure for railroad mail service or any other one item is equally fal- 
lacious. If the subject matter remains the same year after year, or if in 1911 it was 
substantially the same as it was in 1901, its conditions are sure to vary, as, for instance, 
Congress increases from time to time the compensation paid post-office clerks, railway 
post-office clerks, assistant postmasters, etc., so that the increase in expenditures 
never necessarily represents a true gauge for measuring the increase in the business 
of the postal establishment. It is evident that nothing can be proved by an argument 
of this character. 

VIII. 

The eighth statement in the pamphlet in support of the propositions advanced is 
as follows: 

"The continuous refusal of the Post Office Department to order reweighings of the 
mails except after the maximum interval of four years which the law allows, the de- 
mands for station and terminal services that are rendered without any or without 
adequate compensation and the unjust discrimination against compartment cars 
used as railway post offices are all abuses, seriously injurious to the railways, which 
have grown up under the present system of payment and ought at once to be reme- 
died" (p. 18). 

The statements in the pamphlet under this heading are substantially (1) that Con- 
gress in providing that the mails shall be weighed not less frequently than once in 
every four years intended that they.should be weighed whenever a substantial change 
in volume had taken place; (2) that the present basis of payment plainly does not 
contemplate the performance of side service by the companies between stations and 



E AIL WAY MAIL PAY. 107 

post offices as required by the department; and (3) that Congress provided for addi- 
tional payment for full railway post-office cars, but when the practice of requiring 
portions of cars for the same service was inaugurated no provision for payment there* 
for was made. 

With respect to the periods of adjustment following weighings it may be said that 
the railroad contract service developed in connection with the contract service for 
carrying the mails otherwise — that is, on star routes and on steamboat routes — the con- 
tract period for which has uniformly been four years. Formal written contracts; 
where they could be obtained, were entered into with the railroad companies for 
four-year periods corresponding with the periods of service on star routes in the same 
contract sections prior to 1873. By the law of 1873 the basis of paying for railroad 
mail service was entirely changed, and that statute prescribed the present plan based 
upon the average daily weight of mails carried over the whole length of the route, 
such average daily weights to be ascertained by a weighing of the mails not less fre- 
quently than once in every four years. Following the passage of the law of 1873 the 
department inaugurated its mail weighings for readjustments on the quadrennial 
plan, or not less frequently than once in every four years, which general plan has 
been adhered to ever since. It is understood, however, that re weighings were ordered 
from time to time when conditions upon routes radically changed during the quad- 
rennial term, but the quadrennial term remained as first inaugurated . 

With respect to the second contention, namely, as to the performance of side service^ 
the railroad committee is clearly wrong so far as the original intention of the statute 
forming the present basis is concerned. ^ The requirement made of railroad companies 
to perform the service is of long standing and in some form appears to antedate the 
passage of the act of 1873, which is the basic law for the present plan of readjustments, 
and continued thereafter without interruption, and with only variations in the manner 
of the requirement, to the present day. As to whether or not Congress had it in con- 
templation when the law of 1873 was passed has been considered by the courts and 
decided in the affirmative. In the case of the Jacksonville, Pensacola & Mobile Rail- 
road Co. v. The United States, decided by the Court of Claims in 1886 (21 C. Cls., 155), 
the company attempted to recover specific compensation for performing this character 
of service. This claim was denied by the court, which, in deciding the case, said as 
follows: 

" For a long period of time, extending back to the first establishment of the lailroad 
mail service, it has been the practice to include the. delivery of the mails within 80 
rods of railway stations as part of the railroad route, and that has been promulgated in- 
all advertisements for proposals and in the official regulations published by authority, 
as shown by Finding XI. A requirement to that effect was inserted in the claimant's 
written contract (see first of the numbered articles at the end thereof, in contract set 
out in Finding II), and was no doubt in all written contracts. 

" Such a well-established practice, in our opinion, must have been considered by 
Congress in fixing the maximum compensation, and by the Postmaster General iii 
making his orders allowing the full amount of the maximum, and therefore the pay for 
such service must be held to be included in the general compensation fixed for the 
routes." 

This decision of the Court of Claims was affirmed by the Supreme Court in 118 United 
States, 626. 

With respect to the third contention, regarding payment for apartment cars, it 
would be inferred from the language used in the pamphlet that when Congress pro* 
vided specific additional compensation for full railway post-office cars there was no 
apartment-car service in existence and that the requirement to operate apartment 
cars was made afterwards and with no additional compensation, of which complaint 
is made in the pamphlet. The facts are that apartment-car service existed long before 
full railway post-office car service, and the Postmaster General was authorized by the 
act of 1872 (17 Stat. L., 309) to compensate railroad companies who furnish railway 
post-office cars by allowing such additional compensation beyond that allowed for the 
service as he might see fit, not exceeding, however, 50 per cent of such rates. It was 
not until the law of 1873 that Congress afterwards authorized specific additional pay- 
ment to the transportation pay for full railway r5ost-office cars. This statute, however, 
repealed the act of 1872 and left the Postmaster General without authority to make 
specific payment for apartment cars. 

As to the question whether, under a proper system of readjustment which shall be 
entirely just and fair to both the Government and the railroad companies, the latter 
should not be fully compensated for the service they perform from year to year, aa 
well as the special services between stations and post offices and for the furnishing of 
apartment cars, there is no difference of opinion between the railroad companies and 
the department, and the plan as a basis for readjustment which has been suggested 
in Document No. 105 makes full provision for these features. 



108 EAILWAY MAIL PAY. 

IX. 

The ninth statement in the pamphlet in support of the propositions advanced ia as 
follows: 

"The Postmaster General's proposed plan of payment based upon operating cost 
and taxes, to be ascertained by the Post Office Department, plus 6 per cent, is seriously 
wrong in principle and would encourage and perpetuate injustice" (p. 20). 

The statements contained in the pamphlet in support of this proposition are sub- 
stantially (1) that the operating expenses and taxes plus 6 per cent of the sum of 
these expenses and taxes constitute an insufficient basis for remuneration for the 
service, (2) that the basis of cost would be unfair to the economically conducted 
road as against the road otherwise conducted, and (3) that the Post Office Depart- 
ment should not be given the power of apportioning the operating expenditures 
between the freight and passenger services. 

The first objection has been fully answered hereinbefore. 

With respect to the second objection, it may be said that it hardly appears to be 
of great force, in view of the concession of the department that the basis for com- 
pensation should take into consideration not only cost and taxes but, in addition, 
railroads may be allowed such additional amounts, if any be necessary, as shall render 
the whole a proper proportion of a fair and reasonable return on the value of the prop- 
erty necessarily employed in connection with the mail service. 

With reference to the third objection, the Postmaster General has signified his 
willingness to recommend as a part of the plan of readjustment proposed that the 
Interstate Commerce Commission, instead of the Postmaster General, shall be author- 
ized to make the separation of operation expenses between the passenger and freight 
services. 



CONCERNING THE SPECIFIC REPLY OF THE RAILROAD COMMITTEE ON RAILWAY MAIL 
PAY TO THE CHAIRMAN OF THE SENATE COMMITTEE ON POST OFFICES AND POST 
ROADS. 

The foregoing relates to the main body of the document prepared and submitted by 
the railroad committee. Appended to the document, however, and marked "Appen- 
dix G," is set forth a letter addressed to the chairman Senate Committee on Post Offices 
and Post Roads, and signed by "committee on railway mail pay," etc., in which 
specific replies are made to. certain inquiries submitted by the chairman. The sub- 
stance of the replies appears to be that the companies represented by the railroad com- 
mittee prefer the present plan of adjusting pay, with certain modifications, namely, 
annual weighings, relief from performance of side service, and payment for apart- 
ment car service. 

No specific reply from the department is needed to the statements and contentions 
set forth in this letter other than are submitted above in reply to the general body of 
the pamphlet. However, it should be further stated that the railroad committee on 
railway mail pay has entirely failed to notice a fact of fundamental importance shown 
in Document No. 105, namely, that under the present system of paying for railroad 
mail service the compensation that can be allowed under the law to some railroad com- 
panies is inadequate, and probably less than the cost of performing the service. This 
feature of the results of Document No. 105 is, as we understand, undisputed by the 
railroad committee on railway mail pay . It is therefore difficult to understand how 
any system for compensating the railroad companies for carrying the mails can be 
considered the most desirable if it does not fully compensate each railroad company 
for the service rendered the Post Office Department. The present plan does not do 
this, whilst the plan proposed by the Postmaster General in Document No. 105 seeks 
to do it. 

Joseph Stewart, 
Second Assistant Postmaster General. 

PLAN AS MODIFIED BY DEPARTMENT. 

On January 24, 1913, I received a letter from the Postmaster 
General, dated January 20, 1913, submitting draft of a proposed bill 
incorporating his modified views regarding the general plan for 
readjusting railway mail pay. 



RAILWAY MAIL PAY. 109 

This letter and draft read as follows: 

Post Office Department, 
Office of the Postmaster General, 

Washington, D. C, January 20, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Committee on Postage on Second-Class Mail Matter and 

Compensation for the Transportation of Mail, 

Congress of the United States. 
My Dear Mr. Chairman: Referring to your letter of the 6th instant, regarding 
certain proposed modifications of the general plan outlined in House Document No. 
105 for readjusting mail pay, and to my reply of the 9th instant, in which I recom- 
mended certain legislation in connection therewith and stated that such modifica- 
tions of the phraseology of the proposed law as were found necessary to effect the 
changes recommended would be prepared as early as practicable, I have the honor 
to submit herewith an amended draft of the proposed legislation. 
Yours, very truly, 

Frank H. Hitchcock, 

Postmaster General. 



Tentative Draft of Proposed Law for Regulation of Railway Mail Pay. 

The Postmaster General is authorized and directed to require companies operating 
railroads by steam, electricity, or other motive power, carrying the mails to furnish, 
under oath and seal, not less frequently than once in each fiscal year, such information 
relating to the service, operation, receipts, and expenditures, and such other infor- 
mation of such roads for a period of not less than thirty days, to be designated by him, 
as may in his judgment be deemed necessary to enable him to ascertain the cost to 
the companies of carrying the mails on their respective roads and the proper com- 
pensation to be paid for that service. He shall require all such companies to submit 
such information not later than March first, nineteen hundred and fourteen, and in 
each fiscal year thereafter, at such times and for such periods as he shall prescribe. - It 
shall be the duty of such railroad companies to furnish such information, and if any 
railroad company fails or refuses to do so when required its compensation for service 
rendered thereafter until such company shall comply and an adjustment is made by 
the Postmaster General shall be forfeited to the United States and shall be withheld 
as liquidated damages. 

If any officer, agent, or employee of a railroad company shall knowingly furnish any 
information required under the provisions of this act that is false and fraudulent he 
shall be fined not more than twenty thousand dollars and imprisoned not more than 
five years. 

Trie Postmaster General shall determine the cost to each railroad company of carry- 
ing the mails on its respective road or roads, and shall verify and state the result in 
such form and manner as he shall deem proper. For this purpose he shall transmit 
the information furnished by the railroad companies relating to the operating expendi- 
tures to the Interstate Commerce Commission, who shall credit, assign and apportion 
such operating expenditures to the passenger and freight services, and report the result 
as to the passenger service to the Postmaster General. The Postmaster General is 
authorized to credit, assign, and apportion the passenger operating expenses as reported 
to him by the Interstate Commerce Commission, and the taxes in such manner as will 
determine the proportion thereof chargeable to the mail sendee, a statement of which 
shall be given the company concerned. If any railroad company shall object to the 
method of crediting, assigning, and apportioning the passenger operating expenses 
and taxes to the mail service, it may file objection with the Postmaster General within 
twenty days after such statement is made to the company, and the Postmaster General 
shall thereupon certify the method and objection and such papers as in in his judgment 
may be essential to an understanding of the method, to the Interstate Commerce 
Commission, who shall review the finding of the Postmaster General and affirm, 
modify, or revise the same, and certify the result to the Postmaster General, which 
action thereon shall be final. 

The Postmaster General is authorized and directed to readjust the pay to companies 
operating railroads for the transportation and handling of the mails and furnishing 
facilities in connection therewith, not less frequently then once in each fiscal year, com- 
mencing with July first, nineteen hundred and fourteen, at a rate of compensation per 
annum equal to the cost to the railroad companies of carrying the mails as ascertained 
by him, and six per centum of such cost; in addition, companies may be allowed such 
additional amounts, if any be necessary, as shall render the whole a proper proportion 
of a fair and reasonable return on the value of the property necessarily employed in 

49396—14 8 



110 KAILWAY MAIL PAY. 

connection with the mail service: Provided^ That when such sum does not equal $25 
per mile per annum, he may, in his discretion, allow not exceeding such rate. 

Railroad companies whose railroads were constructed in whole or in part by a land 
grant made by Congress, on the condition that the mails should be transported over 
their roads at such price as Congress should by law direct, shall receive not exceeding 
the cost to them of performing the service. 

Information shall be furnished and adjustments made as nearly as practicable by 
accounting systems or roads, and the cost and the compensation for the term shall be 
stated for all service covered by each system or road. The routes for a system or road 
may be stated for administrative purposes in such manner as the Postmaster General 
may determine. 

The Postmaster General may order new or additional service during a term for 
which an adjustment shall have been made or service authorized on any system or 
road in any train operated by such system or road over any part of the trackage 
included in the adjustment or authorization, and without additional compensation 
therefor during such term. 

He may order service over new or additional trackage of an adjusted system or road 
during a term and state the amount performed for the remainder of such term on sta- 
tistics obtained for the first thirty days of service. Payment therefor may be made 
at not exceeding the average rate per car-foot mile for the system or road ascertained 
at the regular adjustment. Entire discontinuance of service over trackage included 
in the adjustment or thereafter added shall be deducted for at the car-foot mile rate 
of adjustment or mile rate of authorization. In case the operation of service over 
trackage included in an adjustment or thereafter added is undertaken by another 
company during the term, the same may be recognized by the Postmaster General, 
provided the companies in interest shall file with him their joint agreement as to the 
part of the compensation of the old operating company to be paid the new operating 
company; otherwise payment to the company first authorized shall be full payment 
for all service performed for the term. 

The Postmaster General may order service over trackage of a railroad company not 
operating service under an adjustment or authorization after the regular adjustment 
for the remainder of the term, and pay therefor at not exceeding $42.75 per mile of 
trackage per annum. 

Service over property owned or controlled by a terminal company shall be con- 
sidered service of the roads or systems using such property and not that of the terminal 
company. 

Railroad companies carrying the mails shall furnish all necessary facilities for car- 
ing for and handling them while in their custody. They shall furnish all cars or parts 
of cars used in the transportation and distribution of the mails, and place them in 
stations before the departure of trains when required to do so. They shall provide 
side, terminal, and direct transfer service and all station and depot space and rooms 
for handling, distribution, and transfer of mails en route, and for offices and rooms 
for the employees of the postal service engaged in such transportation when ordered 
by the Postmaster General. 

Every railroad company carrying the mails shall carry on any train it operates and 
without extra charge therefor the persons in charge of the mails, and when on duty 
and traveling to and from duty, all duly accredited agents and officers of the Post 
Office Department and the postal service, while traveling on official business, upon 
the exhibition of their credentials. 

_ All cars or parts of cars used for the Railway Mail Service shall be of such construc- 
tion, style, length, and character, and furnished in such manner as shall be required 
by the Postmaster General, and shall be constructed, fitted up, maintained, heated, 
lighted, and cleaned by and at the expense of the railroad companies. No payment 
shall be made for service by any railway post office car which is not sound in material 
and construction, and which is not equipped with sanitary drinking-water containers 
and toilet facilities, nor unless such car is regularly and thoroughly cleaned. No pay 
for service shall be allowed for the operation of any wooden railway post office car 
unless constructed substantially in accordance with the most approved plans and speci- 
fications of the Post Office Department for such type of cars, nor for any wooden railway 
post office car run in any train between adjoining steel or steel underframe cars, or 
between the engine and steel or steel underframe car adjoining. After the first of 
July, nineteen hundred and seventeen, the Postmaster General shall not approve or 
allow to be used or pay for any full railway post office car not constructed of steel or 
steel underframe or equally indestructible material, and not less than twenty-five 
per centum of the railway post office cars of a railroad company not conforming to this 
provision shall be replaced with cars constructed of steel annually after June, nineteen 
hundred and thirteen; and all cars accepted for this service and contracted for by the 
railroad companies after the passage of this act shall be constructed of steel. The 



RAILWAY MAIL PAY. Ill 

Postmaster General shall made deductions from the pay of the railroad companies 
on the basis of the value of the service computed on the car-foot mile basis in all cases 
where the cars do not comply with the provisions of this act. 

The space in cars devoted to the use of the mails, as ascertained during the period 
fixed by the Postmaster General for the rendition of information by the railroad com- 
panies, shall be taken as the basis for computing the car-foot miles devoted to the mail 
service for the purpose of readjustment, effective from the 1st of July next following: 
Provided, That no credit shall be given for space in cars devoted to the distribution of 
the mails unless such space shall be authorized by the Postmaster General or unless 
he shall determine that its use is made necessary by a specific authorization. In 
computing the car-foot miles, the mail service shall be charged in both directions for 
a line of railway post-office cars with the maximum space authorized in either direction. 

If any railroad company shall fail or refuse to provide cars or apartments in cars for 
distribution purposes when required by the Postmaster General, or shall fail or refuse 
to construct, fit up, maintain, heat, light, and clean such cars and provide such appli- 
ances for use in case of accident as may be required by the Postmaster General, it 
shall be fined such sum as shall, in the discretion of the Postmaster General, be deemed 
proper. 

The Postmaster General shall in all cases decide upon what trains and in what 
manner the mails shall be conveyed. Every railroad company carrying the mails 
shall carry on any train it operates all mailable matter directed to be carried thereon. 
If any railroad company shall fail or refuse to transport the mails when required by the 
Postmaster General upon any train or trains it operates, such company shall be fined 
such amount as may, in the discretion of the Postmaster General, be deemed proper. 

The Postmaster General may make deductions from the pay of railroad companies 
carrying the mails under the provisions of this act for reduction in service or frequency 
of service where, in his judgment, the importance of the facilities withdrawn or 
reduced requires it, and impose fines upon them for delinquencies. He may deduct 
the price of the value of the service in such cases where it is not performed, and not 
exceeding three times its value if the failure be occasioned by the fault of the railroad 
company. 

The Postmaster General is authorized to have such weights of mails and measure- 
ments of space taken and to collect such other information by sworn employees of the 
Post Office Department as he may deem necessary and to have such information stated 
and verified to him by such employees, under such instructions as he may consider 
just to the Post Office Department and the railroad companies, to assist in the ascertain- 
ment of the space used for the transportation and the handling of the mails on rail- 
roads, and to employ such special clerical and other assistance as shall be necessary 
to carry out the provisions of this act, and to rent quarters in Washington, District of 
Columbia, if necessary, for the clerical force engaged thereon, and to pay for the same 
out of the appropriation for inland transportation by railroads. 

The provisions of this act shall apply to service operated by railroad companies 
partly by railroad and partly by steamboats. 

The provisions of this act respecting the rate of compensation and the determina- 
tion thereof shall not apply to mails conveyed urider special arrangement in freight 
trains, for which a rate not exceediug the usual and just freight rates may be paid, in 
accordance with the classifications and tariffs approved by the Interstate Commerce 
Commission. 

It shall be unlawful for any railroad company to refuse to carry the mails at the 
rates of compensation provided by law when and for the period required by the 
Postmaster General so to do, and for every such offense it shall be fined not exceeding 
$5,000. 

All laws or parts of laws inconsistent herewith are hereby repealed. 

By the adoption of the course above outlined and the consequent 
securement of the information herewith submitted, we now have 
before us the respective viewpoints of the Post Office Department, 
through its admmistrative representatives, and the transportation 
companies with whom the Government has mail contracts. The 
attitude of the department having just been made known, no time 
has been lost by the failure of the committee to organize sooner. We 
are now able to proceed as a committee in the study of one of the 
problems submitted to us in that provision of the act of August 24, 
1912, constituting the committee. 

Respectfully, yours, Jonathan Bourne, Jr., 

Chairman. 



! ■ --; . ^mm. 



m -: 



RAILWAY MAIL PAY 



HEARING BEFORE THE JOINT COMMITTEE ON POSTAGE 
ON SECOND-CLASS MAIL MATTER AND COMPENSA- 
TION FOR THE TRANSPORTATION OF MAILS 



JANUARY 28 to APRIL 3, 1914 



RAILWAY MAIL PAY. 



TUESDAY, JANUARY 28, 1913. 

Committee on Second-Class Mail Matter, 

Washington, D. 0. 
The joint committee met at 3 o'clock p. m. 

Present: Senator Jonathan Bourne, jr. (chairman), Senator John 
H. Bankhead, Representative James T. Lloyd, and Representative 
William E. Tuttle, jr. 

TESTIMONY OF MR. JOSEPH STEWART, SECOND ASSISTANT 
POSTMASTER GENERAL. 

The Chairman. General Stewart, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you please state your age, residence, official 
position in the Government, and the length of time you have been in 
the Government employ? 

Mr. Stewart. My name is Joseph Stewart. I am Second Assistant 
Postmaster General. I am 53 years old. I have been in the Govern- 
ment service about 25 years altogether. 

The Chairman. Have you been in the Post Office service all of that 
time? 

Mr. Stewart. Most of the time. 

The Chairman. Will you explain, General, for the information of 
the committee, the initiation of the inquiry resulting in the report 
known as Document No. 105, which the committee has before it, and 
give a history of the reasons leading up to that document and briefly 
a description of what it purports to contain? 

Mr. Stewart. I think it was in the year 1907, while Mr. Cortelyou 
was Postmaster General, the question came up on inquiry as to what 
action had been taken by the Post Office Department in compliance 
with the act of March 3, 1879, which reads as follows: 

The Postmaster General shall request all railroad companies transporting the mails 
to furnish, under seal, such data relating to the operating, receipts, and expenditures 
of such roads as may, in his judgment, be deemed necessary to enable him to ascer- 
tain the cost of mail transportation and the proper compensation to be paid for the 
same; and he shall, in his annual report to Congress, make such recommendations, 
founded on the information obtained under this section, as shall, in his opinion, be 
just and equitable. 

The transportation of the mails is assigned by the Postmaster 
General to the jurisdiction of the Second Assistant Postmaster Gen- 
eral, and therefore it was incumbent on the Second Assistant Post- 
master General to advise Mr. Cortelyou upon that question. He 
was advised that soon after the passage of that statute of 1879 an 



4 RAILWAY MAIL PAY. 

effort had been made to secure the information required, but that 
these reports of the companies were so meager and unsatisfactory 
that they were practically worthless for any purposes such as those 
required by the statute. I think it was the general opinion that at 
the time the railroad companies did not have their accounts in such 
shape as to enable them to make the reports which the department 
needed for the purpose. It was also stated that it had been believed 
by the department that the spirit of the law of 1879 had been sub- 
stantially complied with by the several postal commissions, depart- 
mental and congressional, that had taken up the matter in the 
meantime and reported from time to time. 

The Chairman. That is, from the date of the passage of the law 
up until 1907 ? 

Mr. Stewart. Yes. But that if the Postmaster General desired 
an inquiry made along the lines of that statute, it was believed that 
the railroad companies at that time had their accounts in such form 
as would enable them to respond to the necessary inquiries, and that 
if he desired an effort made it would be undertaken. He indicated 
his desire that it should be made; consequently the then Second 
Assistant Postmaster General directed that the inquiries be prepared. 

The Chairman. Who was Second Assistant Postmaster General at 
that time ? 

Mr. Stewart. Hon. W. S. Shallenberger. I had immediate charge 
of the matter under Mr. Shallenberger, and it fell to my lot to attempt 
to prepare the necessary forms and inquiries. I afterwards became 
superintendent of railway adjustments, in whose division the matter 
would naturally rest, under the direction of the Second Assistant 
Postmaster General. With the assistance of others in the department 
I prepared forms and instructions which were intended to bring out 
from the railroad companies the necessary information with respect 
to the operation of passenger- train service, the amount of car space 
devoted to the several classes of service which are known as passenger 
services, that is, passenger service proper, express service, and mail 
service, and designed further to bring out the operating expenses as 
prescribed by the schedule of the Interstate Commerce Commission — 
I think one hundred and sixteen items for the larger systems. You 
will observe that the inquiry was started along the line of space as a 
gauge for ascertaining cost. 

The Chairman. Did you start your inquiry with the impression 
that the substitution of space for weight was desirable, or was your 
recommendation of that substitution based upon the results of your 
inquiry? 

Mr. Stewart. The inquiry was not started with any specific idea 
that space would be substituted for weight, but space was adopted 
as apparently the only gauge by which we could measure the cost of 
the service. I endeavored to avail nryself of every possible source 
of information as to the practicability of the plan and as to 
whether it would elicit information which would bring about the 
result desired, that is, the ascertainment of cost. In the early stages 
of preparation I took my plans and instructions to the Interstate 
Commerce Commission, and consulted with their statistician, Prof. 
Adams. Prof. Adams very kindly went over the whole matter with 
me for a number of days, advised me upon them, and expressed 
opinions as to what ones were practicable and what were not prac- 



KAIL WAY MAIL PAY. 5 

ticable, and, as a result of that conference, I made changes in those 
that I had prepared. In order to cooperate with the railroad com- 
panies, or rather to have them cooperate with us to the fullest extent, 
the Second Assistant Postmaster General invited the representatives 
of the railroad companies, practically all the large systems and repre- 
sentative systems otherwise, to meet with me and other officers of 
the department to go over our forms and discuss with us their 
practicability. 

The Chairman. Was this in 1907 or 1908 » 

Mr. Stewart. No; this was some time after 1907. 

The Chairman. Probably in the year 1908 ? 

Mr. Stewart. Yes; 1908. The task of preparing these forms and 
instructions and determining their practicability was a large and 
difficult one because we were practically in a new field pursuing 
a new line of inquiry and in a new way. In the meantime the 
Postmaster General changed and Postmaster General Meyer, who 
succeeded Mr. Cortelyou, directed that the inquiry be continued. The 
railroad companies met with us and we had a number of conferences 
going over the forms and instructions. They suggested features that 
they thought were practicable and indicated others which they 
thought impracticable, and, so far as those were concerned, we 
deferred to their judgment. 

The Chairman. As specialists ? 

Mr. Stewart. Yes, sir. We did not desire to ask anything which 
was impossible or impracticable of accomplishment, but at the same 
time we desired to bring out all the information which we thought 
was necessary to comply with the statute. The result of those con- 
ferences was the final completion of the forms. Thereafter the tables 
and letters of instruction set forth in Document No. 105 were prepared. 

The Chairman. With practical concurrence, so far as you know, 
on the part of the railroad representatives as to the forms adopted 
for the purpose of obtaining the information ? 

Mr. Stewart. Yes. I do not recall any material objections that 
we had from the railroad companies. It then became a question of 
getting them out at the earliest practicable moment and receiving 
the returns. The month of November, 1909, I believe, was the 
earliest practicable time at that period for securing statistics, and 
accordingly these forms and instructions were sent out to all the 
railroad companies to return us the information requested for that 
month. 

The Chairman. The selection of that month being for what reason ? 

Mr. Stewart. We thought it was a fair average for the year. 
Congress, at our request, granted us $10,000 to defray the expenses 
of the tabulation of these returns. We organized a special force 
of as expert people as the Civil Service Commission could supply 
us under the supervision of a trained departmental force for re- 
ceiving and checking up the returns and making the computations 
necessary. Later we asked for $10,000 additional, which was granted, 
to complete the statistics. Before the work was finished the 
present Postmaster General, Mr. Hitchcock, came into office and 
authorized the continuance of the work and its completion, and 
it has been under his administration that the main part of the work 
in connection with the preparation of Document No. 105 has been 
done in the department. 



6 RAILWAY MAIL PAY. 

The Chairman. The two appropriations of $10,000 each were 
expended in the compilation and tabulation of the information sub- 
mitted by the railroads to you in answer to the forms submitted by 
you to them? 

Mr. Stewart. The larger part of them. We did not expend the 
whole amount. 

The Chairman. How much was expended ? 

Mr. Stewart. The exact amount expended was $19,423.20. These 
forms required the return from the railroad companies of quite exact 
information with reference to their train operations and the amount 
of space for these three classes of service devoted to each respectively 
in the passenger trains operated. We checked up all those reports 
very carefully with their official time-tables to see that they were 
correct so far as train operation was concerned. Then we checked 
up the amount of space devoted to the mail service as reported by the 
railroad companies with our official records, allowing as a charge against 
the mail service the space occupied by closed-pouch, apartment-car, 
and for all railway post-office car service, as set forth on pages 101 and 
102 of this document " Railway Mail Pay." The railroad companies 
furnished us also very complete returns with reference to their operat- 
ing expenses under the several items prescribed by the Interstate Com- 
merce Commission. The details of these and the manner in which 
they were used in making an apportionment of expenditures between 
the freight and passenger services and then apportioning the passenger 
service to the passenger, express, and mail services are fully set forth 
in Document No. 105. The purpose of the inquiry, you will observe, 
was to comply with the statute of 1879 to ascertain the cost of the 
service and to afford a basis for recommendation to Congress as pro- 
vided by law. This ascertainment, therefore, of Document No. 105 
is an ascertainment of the cost to the railroad companies of carrying 
the mail based upon the service performed and a fair and equitable 
apportionment of the operating expenses chargeable to the mail service. 

The Chairman. Was there a commission formed in the depart- 
ment for the purpose of making this study? If so, at what time; and 
of whom did that commission consist? 

Mr. Stewart. After the work of compiling the statistics and mak- 
ing the computations had been done, as shown in the main body 
of the report, Document No. 105, the Postmaster General on November 
4, 1910, appointed a committee to consider the results of the infor- 
mation secured and to report to him thereupon with such recom- 
mendations regarding railway mail pay and railway post office car 
pay as might be deemed proper. That committee, consisting of the 
Second Assistant Postmaster General; R. S. Sharp, Chief Inspector; 
Theodore Ingalls, General Superintendent Railway Mail Service; G. F. 
Stone, Assistant General Superintendent Railway Mail Service; C. B. 
Keen, post office inspector in charge; and C. H. McBride, Superin- 
tendent of the Division of Railway Adjustments. They made a report 
to the Postmaster General under date of July 25, 1911, and that report 
is set forth in Document No. 105. 

The Chairman. You were the chairman of the committee? 

Mr. Stewart. I was chairman of the committee. 

The Chairman. That report was submitted to the Postmaster 
General July 25, 1911. I see your letter to the Postmaster General 
here in Document No. 105, dated July 24, 1911. 



RAILWAY MAIL TAY. 7 

Mr. Stewart. The submission of the results of the inquiry to the 
Postmaster General, and the report of the committee, was done 
practically at the same time. 

The Chairman. That was July 24, 1911 ? 

Mr. Stewart. Yes, sir. 

The Chairman. And the Postmaster General submitted that infor- 
mation to the Speaker of the House on August 12, 1911 ? 

Mr. Stewart. Yes, sir; that is right. 

The Chairman. In next to the last paragraph of your report to 
the Postmaster General, as expressed in your letter of July 24, 1911, 
you say, "The result indicates that the companies represented in the 
computation would receive annually, under such method of pay- 
ment, about $9,000,000 less than at present." Do you mean to 
imply from that statement that, in your opinion, based upon the 
information received and the deductions made by you in your study 
of this question, the railroads have been overpaid $9,000,000 annually 
for the transportation of mail ? 

Mr. Stewart. No ; there is no purpose to make a statement of that 
kind. The statement which you have read is a statement which is 
made solely upon the basis of the statistics furnished and the ascer- 
tainment made upon those statistics, namely, that having consid- 
ered the data and considered the computations made by the depart- 
ment, the cost of the service upon that basis $9,000,000 less than 
the amount which was being paid to the railroads for the transpor- 
tation charge. 

The Chairman. That is, by the substitution of your plan of space 
for weight and an allowance of 6 per cent profit on the annual cost of 
hauling the mail, the Government would pay $9,000,000 less than 
they pay under the present system ? Is that it ? 

Mr. Stewart. Yes, sir; that is it. Furthermore, it should be 
borne in mind that I made no recommendation that the railway mail 
pay should be adjusted upon the ascertainment of Document No. 105. 
Those statistics were the first statistics ever attempted in an exhaust- 
ive manner along those lines. The results were the first results ever 
worked out by the department, and I think by anyone else upon such 
basis. While I think they are approximately correct, it was not a 
result upon which I was willing to recommend the readjustment of 
pav. If a plan such as we suggested to the Postmaster General and 
which he sent to Congress should be adopted 

The Chairman. Which plan do you refer to? We have two 
plans before us. 

Mr. Stewart. The plan recommended by the Postmaster General 
on the adjustment on the basis of space, on the ascertainment of 
cost, etc. 

The Chairman. You mean the bill that was introduced at the last 
session ? 

Mr. Stewart. Yes; or its modification — either one. If either one 
were adopted, or, we will say, if the modification were adopted, the 
department would proceed to make this ascertainment in the best 
possible manner, mainly along the general and broad lines indicated 
in Document No. 105. 

The Chairman. Would there not be a vast difference in the esti- 
mated saving, or, if you please, the amount paid the railroads as 
between the enactment of the original bill as suggested by the depart- 



8 RAILWAY MAIL PAY. 

ment and the supplemental bill as recently suggested, modifying 
somewhat the terms, especially the one of allowing a percentage on 
capital employed in the service rendered instead of the sole allow- 
ance being 6 per cent on the cost of the operation? 

Mr. Stewart. There would be a difference in two respects. The 
first one is with reference to the amount of space which would be 
credited to the railroad companies, or rather charged against the 
mail service. There would be some more car space charged to the 
mail service, I think, in the case of apartment cars in cases where the 
railroad companies might be entitled to a larger credit than they 
received for space in cars on the return movement. Such credit in 
regard to full car lines was substantially given as indicated on pages 
101 and 102 of the document " Kailway Mail Pay. " 

The second point of difference would be in this: The Postmaster 
General has stated that in addition to the operating expenses and 
taxes apportionable to the mail service, and 6 per cent thereof, com- 
panies should be allowed such additional amounts, if any be necessary, 
as shall render the whole a proper proportion of a fair and reasonable 
return on the value of the property necessarily employed in connec- 
tion with the mail service. 

In the preparation of Document No. 105 we did not have before us 
information which would have led to a safe conclusion in regard to 
that item. If the railroad companies are to be allowed credit for 
what would be a fair return on the value of the property employed in 
performing the service it would increase the amount considerably. 

The Chairman. Have you any idea as to what the increase 
would be ? 

Mr. Stewart. I have no definite idea, because of the difficulty of 
arriving at a physical valuation of the property employed. 

The Chairman. Have you an impression? In other words, what 
change would the last suggested bill, printed on page 109 of this blue 
pamphlet, make on the $9,000,000 estimated difference in payment 
to the railroads, as indicated in Document No. 105 ? How much, if 
any, would it decrease that $9,000,000 difference in pay? 

Mr. Stewart. Stating from a general impression of the subject — 
and that is all I have — I should say that it would eliminate the 
$9,000,000, that is, if a fair return were allowed the railroad compa- 
nies upon a fair valuation of the property employed in performing the 
mail service in addition to the cost of performing it and 6 per cent. 
The aggregate amount paid the railroad companies now is probably 
not in excess of what that aggregate amount would be. 

The Chairman. So that, in the adoption of the suggested plan of 
substitution of space for weight, an allowance of a fair amount on the 
capital with no duplication of credit, such as the 6 per cent, the actual 
operating expenses for handling the mail, there would be no reduction, 
in your opinion, of the gross amount now paid under the present 
system to the railroads ? 

Mr. Stewart. That is my judgment on the best information I have. 

The Chairman. As I understood, in 1907, when you started on this 
study at the request of the then Postmaster General, Mr. Cortelyou, 
your impression was that it was desirable to subsitute space for 
weight. How did you get that impression as to the desirability of 
space rather than weight before making any study of the problem ? 



RAILWAY MAIL PAY. 9 

Mr. Stewart. You misunderstood me. I did not start in the 
inquiry with the idea of substituting space for weight as a basis for 
paying the railroads. I took space as the only gauge for determining 
the cost; that seems to be the only gauge for ascertaining the cost 
of the mail service. Here you have the total cost of all the passen- 
ger service, and you have certain elements which represent approxi- 
mately the service performed for each of the three classes that con- 
stitute the passenger service — that is, you have your passenger cars, 
you have your express cars, and you have the mail cars. 

The Chairman. Then your goal was the determination of the actual 
cost of operation on the part of the railroads and then the develop- 
ment of a fair plan for compensation to the railroads for that activity ? 

Mr. Stewart. Yes ; that was it. 

The Chairman. Why did the department modify its views pre- 
sented in document 105, and expressed in the suggested bill, which 
was introduced in Congress, in order to get a concrete plan before the 
country and the parties in interest — the Government and the trans- 
portation companies — which modifications are shown by the draft of 
a bill recently received by the commission from the department, 
giving certain modifications, especially the one of an allowance of a 
reasonable compensation on capital charges ? 

Mr. Stewart. Because, Senator, upon a further and more careful 
consideration of the subject we were convinced that the railroad 
companies were entitled to consideration for this additional element. 
We are not prepared to say what that should be. It is a very diffi- 
cult question, and it involves the physical valuation or ascertainment 
of capitalization and then the ascertainment of a fair proportion of 
that devoted to the mail service, and, furthermore, after you ascer- 
tain that, a determination of what rate per cent return thereon is 
due the companies for performing a public function for the United 
States. It is a difficult question, but we believe that that is an 
element which should enter into compensation to some extent, and 
having come to that conclusion, we submitted this amendment to 
our original plan. 

The Chairman. Why did the department modify its views as 
shown by its suggested substitution of the Interstate Commerce 
Commission for the Postmaster General to make the separation of 
operating expenses between passenger and freight service ? 

Mr. Stewart. Because after the submission of our plan to Con- 
gress it was pointed out that the plan devolved upon the Postmaster 
General or the Post Office Department the necessity for making a 
separation of the operating expenses between the passenger and the 
freight service in order to get a basis for a further separation for 
the mail service. That is a necessary step in the procedure, but it 
is a step in which the Post Office Department is not primarily inter- 
ested, and, furthermore, it has been represented — and I think very 
properly by the railroad companies^-that the Post Office Depart- 
ment, not being primarily interested in that, should not have the 
great power of making such separation, which separation might 
become the basis for the fixing of rates for other classes of service 
in which we are not interested at all; as, for instance, freight and 
passenger service. Furthermore, the Post Office Department has 
no interest in making this separation except to obtain a basis for 



10 RAILWAY MAIL PAY. 

our further separation to the mail service, and, taking it from these 
points of view, we suggested that this separation should devolve 
upon some independent tribunal; as, for instance, the Interstate 
Commerce Commission, and I have made that suggestion and modified 
the original plan of the proposed law. 

The Chairman. If I understand, should Congress see fit to enact 
legislation as presented by your modified plan it is your opinion 
that the net result in dollars to the Government would be practi- 
cally the same, or possibly we would pay the transportation com- 
panies even more than they are now paid under the present method, 
90 per cent of the mail transportation being paid for according to 
weight and 10 per cent according to space, as represented in the 
R. P. O. cars. Am I correct in that statement? 

Mr. Stewart. That is substantially correct. 

The Chairman. Now, what would be the benefit that the people 
of the United States would receive? Would the efficiency of the 
service be improved by congressional adoption of the modified 
suggested plan coming from the department? 

Mr. Stewart. In the first place, the plan would settle the question 
as to the correctness of the rates. You would then have rates based 
upon an ascertainment which could not be disputed and which every- 
body would have to concede were correct rates, so far as adequacy or 
inadequacy is concerned. You would put an end to the controversy 
that has been going on for many years as to whether or not the Gov- 
ernment is paying too much for railroad transportation. The further 
advantage in the plan is that it pays every railroad company for the 
performance of the service which the department receives from it. 
Under the present plan, as has been shown by the results of Document 
No. 105, it is conceded that some roads are inadequately paid. 
Furthermore, the plan, if it is practicable, seems to be scientific in 
its basis; you ascertain the cost of the service and then you pay that 
cost plus a fair return on the value of the property employed. That 
seems to be reasonable and seems to commend itself to the mind. 

The Chairman. Has the cost of the transportation service been 
satisfactorily ascertained ? 

Mr. Stewart. Prior to the issuance of this document or including 
this? 

The Chairman. Including that. Has the cost of the service been 
ascertained in a satisfactory manner ? In other words, has a method 
of determination as to segregation of the different costs to all parties 
in interest been satisfactorily determined and adopted ? 

Mr. Stewart. No; it has not been. Really, I think the only ascer- 
tainment of cost that has ever been made, that I know of, is Document 
No. 105. There have been other inquiries as to the adequacy of railroad 
rates, but, as I understand it, there has been no actual ascertainment 
of the cost by any commission. Now, so far as Document No. 105 is 
concerned, the method employed by the department in making an ap- 
portionment of expenditures and in computing car foot miles is more 
or less disputed by the railroad companies interested. 

The Chairman. That is the point I wanted to bring out. As I 
understand, the railroads claim from the information submitted to 
you that they receive from the mail 3.23 mills per car-foot mile; they 
receive from other service 4.35 mills per car-foot mile. Now, on the 



RAILWAY MAIL PAY. 11 

same information submitted by them you draw the deduction that 
the railroads receive for revenue from mail service 4.14 mills per 
car-foot mile and a revenue from other service of 4.16 mills per car- 
fo.ot mile. It would seem as though you were a long way apart in 
the deductions that you draw from the same figures, and it would 
look to me as though it would at least be difficult for you to get to- 
gether in a satisfactory determination of a yardstick, if you please, 
by which to measure the amount to be paid by the Government to 
the transportation companies. 

Mr. Stewart. That would be entirely true, Senator, with the first 
effort, as, for instance, is shown in document 105, but the plan which 
we have suggested includes this, that where the railroad companies 
dispute any method employed they have the right of appeal to the 
Interstate Commerce Commission. That question, then, would go 
before the Interstate Commerce Commission and would be settled, 
so that, after one or two ascertainments of cost practically all the 
questions involved would be settled by precedent, and after that there 
would be very little ground for dispute between the department and 
the railroad companies. The question as to how much space should 
be allowed the companies where the companies run larger cars than 
those which are authorized by the department — and they claim in 
all cases that they should have credit for the entire length of the 
car — would be settled once for all after an appeal had gone to the 
Interstate Commerce Commission and both sides had their hearing. 
If the Interstate Commerce Commission decided that the companies 
were right in their contention with respect to that,, the department, 
of course, would acquiesce; it would have no recourse otherwise and 
would have no interest to do anything else but acquiesce with the 
ruling. On the other hand, if the commission decided the depart- 
ment's plan was right no doubt the companies would acquiesce with 
just as much grace. 

The Chairman. You think the Interstate Commerce Commission 
could determine that ? 

Mr. Stewart. I think so. 

The Chairman. Under date of January 3, 1913, I addressed a 
letter to the chairman of the Interstate Commerce Commission, in 
which letter I asked, among other things, the following: 

In order, therefore, to aid the joint committee in the inquiry about to be undertaken, 
I shall be pleased if your commission will have an analysis made showing the relative 
returns to the railroad companies for the different classes of traffic they handle; namely, 
passenger, freight, express, and mail, approximating as nearly as possible the expense 
to the railroads for handling such respective classes of traffic as compared with the 
earnings received by the railroads from such traffic. 

Then followed the inquiry in reference to the R. P. O. cars. Under 
date of January 7 Mr. Prouty, chairman of the commission, replied 
as follows: 

Further replying to your letter of January 3u, 1913, in reference to cost of handling 
mail matter in comparison with other passenger-train service. Having laid the matter 
before my associates, I am instructed to say: 

First. The commission now has no figures from which the information asked for by 
you could be compiled. In one or two cases this matter has been incidentally gone 
mto, but in so fragmentary and unsatisfactory a manner that we could not, upon the 
strength of what was there developed, experess an opinion. 

Second. The commission has no knowledge and no means of knowing the expense 
of maintaining postal cars. Some time ago we sent to Congress some information as 
to the relative cost of maintaining steel and wood cars. 



12 RAILWAY MAIL PAY. 

Third. The commission could by means of an investigation to be instituted by it 
probably give you information on both these points, certainly on the first point which 
would be reliable, but such a proceeding would require several months, possibly a 
year and would be somewhat expensive. 

So that practically all there would be at the present time would be 
the result of your several years' study, as presented in Document 105. 
That is true, is it not ? 

Mr. Stewart. Yes. But so far as the relevancy of what you have 
said is concerned, what I was proposing you should bear in mind was 
that that reply of the commission is made upon their present informa- 
tion, and an appeal under this proposed law to the Interstate Com- 
merce Commission would send up all of our ascertained facts upon 
those points, and the commission would not be without the means of 
deciding. I can realize how they must necessarily answer as they 
did at this time, but the questions which we would submit to them 
on an appeal from the railroad companies would be with reference, 
for instance, to a specific case, as to how much space should be charged 
the mail service under specific conditions, naming all the facts and 
circumstances and data submitted by the railroad companies and 
checked by us and which would be certified to the commission. 
They would have it all before them. 

The Chairman. Then you think the commission could determine 
whether the yardstick that you take, namely, that the railroads 
receive 4.14 mills per car-foot mile for the postal service and 4.16 
mills per car-foot mile for other service is correct, or whether the 
railroads' conclusions as quoted above are correct ? 

Mr. Stewart. Yes, sir; because we would certify all the facts to 
them, having ascertained them, and they would determine whether 
our methods were the right ones or whether the railroads' methods 
were the right ones; but most of those appeals would go up on specific 
questions, such as the one I mentioned — what charge should be made 
against the mail service for running a 60-foot car in both directions 
where we authorize only 50 feet of space in it; should the company 
receive credit for the entire length of the car because they have 
to run it as an operating proposition in connection with the mail 
service which we authorize, or should they receive credit for only 
the 50 feet which we authorize and in connection with which they 
have to run 10 feet more ? That is the kind of question that would 
go before the commission. 

The Chairman. Let me see if I understand your position. You 
recommend the enactment of the suggested legislation, not with the 
expectation of saving the Government anything in dollars paid to 
the railroads as compared with what is now paid under the present 
system, but purely for the reason that, hi your opinion, it is more 
scientific, will be more equitable, and less provocative of irritation or 
dispute between the governmental representatives and the trans- 
portation companies. Does that sum it up ? 

Mr. Stewart. Yes. 

The Chairman. Are there any other features ? 

Mr. Stewart. One strong feature in regard to the proposition is 
this, which I mention incidentally: That it guarantees a proper return 
to every railroad company for the service they perform. 

The Chairman. That is covered in the question of the more equi- 
table payment to the transportation companies? 



KAILWAY MAIL PAY. 13 

Mr. Stewart. Yes; it is not free from difficulties, however, as we 
have informally discussed. 

The Chairman. Would it be more expensive in administration ? 

Mr. Stewart. I do not think it would be. We have now our field 
force thoroughly organized; they are competent and sufficient to re- 
port upon the question of space that would be adequate. You must 
remember that, while we pay only for car space now about one-tenth 
of the total charge, practically the whole question of cars pace, which 
covers a very large per cent of the mail service, is a matter now of 
ascertainment, report, and authorization. That is to say, we ascertain 
now and practically authorize the space in apartment cars for which 
we pay no specific charge. We pay a specific charge for the regu- 
lar railway post office cars. So that our field force now is sufficiently 
organized to make the proper reports on what space is necessary. 
The additional space which we do not now report upon and spe- 
cifically authorize would be the space for the closed-pouch service, 
and that would have to be ascertained by a weighing of the mails at 
the period specified in the act. 

The Chairman. Representing less than 10 per cent of the mail? 

Mr. Stewart. Yes. 

The Chairman. On the substitution of space for weight would you 
not have to keep an account of every car ? 

Mr. Stewart. We would make an authorization of space of what 
would be required in every line of cars, whether full cars or apartment 
cars. 

The Chairman. Would you not, under that plan, have to keep a 
separate account on each authorization ? 

Mr. Stewart. No. The authorization would be made and record 
kept on our books. When the statistics were taken and reported by 
the companies they would be checked up with our authorizations. 

The Chairman. But in your opinion, under the proposed system 
and the present system of weights, there is no opportunity for any 
padding of mails or cheating the Government or anything of that 
kind? 

Mr. Stewart. No, sir; I think not. 

The Chairman. And there is no irritation now, because when it 
has been found that mistakes have been made, they are adjusted 
satisfactorily by the department? 

Mr. Stewart. Yes. 

The Chairman. So that you have to-day, under the present method, 
the least possible degree of irritation ? 

Mr. Stewart. Yes. I think that can be fairly said, especially 
where you have two bases of pay, as we now have, both weight and 
space. 

The Chairman. It is your judgment that by the substitution of 
space for weight you eliminate weight entirely, except on pouch 
matter, representing 10 per cent of the mail ? 

Mr. Stewart. Yes. 

The Chairman. So you would just reverse your present position. 
Under the existing condition of ascertainment by weight, approxi- 
mately 90 per cent of the mail pay is ascertained by weight ? 

Mr. Stewart. Yes. 

'I*he Chairman. And 10 per cent ascertained on space represented 
hv the R. P. O. car? 

49396—14 9 



14 EAILWAY MAIL PAY. 

Mr. Stewart. Yes. 

The Chairman. And now you propose to reverse that and have 90 
per cent represented by space and 10 per cent by weight; that is, the 
pouch mail ? 

Mr. Stewart. That is substantially correct. 

The Chairman. So you substantially have the two systems which 
you have to-day, but transfer the percentages ? 

Mr. Stewart. There would not be two systems in this sense : That 
we simply weigh closed-pouch mail to ascertain a proper space charge. 

The Chairman. You determine the proper charge for the space used 
on the weight itself ? 

Mr. Stewart. Yes, sir; the weight of the closed-pouch mail during 
that period. 

The Chairman. It would cost the Government less by the adoption 
of your method, substituting space for weight, than the present sys- 
tem of quadrennial weighing? 

Mr. Stewart. The adoption of the method of space for weight 
would be a saving. 

The Chairman. Would be a saving of what ? 

Mr. Stewart. That is very difficult to say accurately. I think at 
one time we made some estimate, but I do not recall the result. I do 
know that the result was less than the cost of weighing. 

The Chairman. The cost of weighing for the four years was prac- 
tically $1,600,000? 

Mr. Stewart. Yes. Of course, in addition to the work in the 
field we would perhaps have to have an additional force employed 
during the 30 days of the statistical period. 

The Chairman. That would be required every year under the sup- 
plemental plan submitted by the department ? 

Mr. Stewart. Yes. But it would not be very expensive because 
our present force would be almost ample. In addition to that, when 
the reports came in to the department we would have to have the 
means for handling them, checking them up, and for making compu- 
tations. In this respect there would be considerable expense. We 
now have a division called the Railway Adjustment Division, whose 
work is devoted to the adjustment under the present plan. The 
work of that division could be adapted very largely to the new work, 
but it would require an additional iorce. 

The Chairman. Y®u have made no estimate as to what the cost 
would be ? 

Mr. Stewart. No. 

The Chairman. Have you any idea that you think would be of 
value on that ? 

Mr. Stewart. Yes. You can get an idea from what we did on 
Document 105. It cost us $20,000 to complete that work. 

The Chairman. But that was compilation and tabulation ? 

Mr. Stewart. Yes, sir. 

The Chairman. Under this other method you have to get your 
ascertainment. The railroads are not going to give you that infor- 
mation, but you have to get it yourselves through your own organi- 
zation, as to what the space is, as to what amount you will need and 
what amount you authorize, and it seems to me it would cost you 
more than the mere compilation and tabulation ? 



RAILWAY MAIL PAY. 15 

Mr. Stewart. No. The information is required to be furnished 
by the railroad companies. You will notice the first paragraph of 
the proposed statute but it would be checked by the Department as 
far as practicable. 

The Chairman. Are you going to let the railroads determine what 
space you will take ? 

Mr. Stewart. No. We authorize that from time to time. We 
set the standard of what we need. The railroad companies furnish 
us the information as to the operation of their trains and the space 
devoted to these three classes of service during those 30 days. The 
work that I referred to in the department would be the work of 
checking up those returns with our authorizations, just as we did in 
preparing Document 105, so as to verify their report of service per- 
formed. 

The Chairman. But you would have a number of activities under 
this plan that are not represented in Document 105. In the first 
place, you would have to get the information as to the space you 
require. In the second place, you would have to notify the rail- 
roads what space you authorize and then get information as to the 
space that you use, and you would have to keep an account with 
each activity, it seems to me, which you do not have to do under the 
weight yardstick. 

Mr. Stewart. We do not have to do that with reference merely 
to weight now, but we do with reference to full post-office railroad 
cars. We do not with reference to apartment cars. 

The Chairman. You do not on the storage cars ? 

Mr. Stewart. No, sir. 

Mr. Lloyd. Under this section do you not have to make an ascer- 
tainment on the apartment cars ? 

Mr. Stewart. Yes, sir. 

Mr. Lloyd. What would you do on the blue- tag mails ? 

Mr. Stewart. The blue-tag mails would be handled just as they 
are now, on fast freight trains. 

Mr. Lloyd. You make no suggestion of chargmg with reference 
to that? 

Mr. Stewart. No, sir. In regard to that we recommend that 
they be continued; that the Postmaster General be authorized to con- 
tinue those shipments at reasonable freight rates on fast freight trains. 

Mr. Lloyd. I want to ask what your objection is to the ascertain- 
ment that is made by the railroad companies ? As I understand it 
they take the net investment in road and equipment which is given 
by the Interstate Commerce Commission in the statistics of railways 
in the United States in the last ascertainment that was made in 1910 
as $14,387,816,099. Then the railroad company takes that as a 
basis and uses the percentage that is received in revenue from the 
mails as compared with other sources of revenue, which is 1.78 per 
cent, according to that authority, and make a computation which 
shows that the capitalization which would be authorized to be charged 
against the mails would be about $250,000,000. Then, on that 
basis of $250,000,000 they take 6 per cent, which would be about 
$15,000,000. Now, that is the statement which they make, and they 
claim that ought to be charged up to expenses and be paid by the 
Government. What is your objection to that statement? 



16 RAILWAY MAD. PAY. 

Mr. Stewart. My criticism of the statement would be in these 
particulars. The $14,000,000,000 is assumed to represent the proper 
capitalization of the road. Is it the bonded indebtedness ? 

Mr. Lloyd. The statement is given by the Interstate Commerce 
Commission under the head of "Assets." "Net investment in road 
and equipment." Then it has other items "Book value, system of 
securities permanently held, other permanent investments, working 
assets and accrued interest not due, sinking and redemption fund, all 
other deferred debit items." These amount to nearly $7,000,000,000, 
these other items making the total assets of the railroad companies 
a little over $21,000,000,000. Then in the liabilities they charge 
stock a little over $8,000,000, mortgaged, bonded, and secured debt 
a little over $10,000,000 working liabilities, accrued liabilities not due 
$1,000,000,000, deferred credit items $161,000,000, property surplus 
$331,000,000, profit and loss $1,039,000,000. Those are the two sides 
of the account. 

Mr. Stewart. If the $14,000,000,000 represented substantially 
the final valuation of the property, there would be no criticism against 
that item as such. The 1.78 per cent which they charge to the mail 
service is subject to this criticism: That it is ascertained on the basis 
of mail revenue, which seems to me to beg the question in this respect, 
that it employs as a basis for apportionment the item in controversy, 
namely, compensation paid the companies. 

Mr. Lloyd. Is not the assumption equally good as against the 
other items of revenue ? Here is the freight revenue, the passenger 
revenue, the mail revenue, the express revenue, and the different 
items. The total revenues received for that year were $2,750,670,435. 
This makes a total of 100 per cent, of which amount of receipts the 
mail was 1.78 per cent. 

Mr. Stewart. Yes. Its correctness would further depend also upon 
whether there was a necessary connection between the revenues and 
the facilities which are furnished by the railroad companies through 
which those revenues are derived. One of the largest questions, to 
my mind, in dealing with the physical value of property is the deter- 
mination of what facilities the railroad companies employ which are 
used in connection with the mail service sufficiently to constitute a 
charge against it. 

Mr. Lloyd. What expense used in strictly passenger service is not 
found in mail service? 

Mr. Stewart. Take, for instance, the great station at New York. 
The Pennsylvania Railroad Co. is one of the best examples. There 
is a station costing nearly $100,000,000, the larger part of which 
might be admitted by everybody to be a passenger facility, in which 
the mails are not interested at all. They have provided us with 
sp^ndid mail facilities, and yet only a small part of the cost of the 
entire service should be charged to the mail service. The same is true 
of the Union Station at Washington. There is a magnificent edifice 
largely devoted to passenger service with facilities of every kind, 
elaborate, in fact, to take care of the passengers. The mail service is 
not directly or even indirectly interested in any of that. They 
furnish us, however, all the facilities we need for the mail service. 

Mr. Lloyd. Take the other side, what is there that is furnished the 
mail service that is not furnished in passenger facilities ? 



RAILWAY MAIL PAY. 17 

Mr. Stewart. These special services which these gentlemen have 
mentioned informally. 

Mr. Lloyd. We are not supposed to know that they said anything 
informally. 

Mr. Stewart. Well, the fast mail trains, for instance. 

The Chairman. Representing how much, in dollars ? 

Mr. Stewart. I could not tell you that because really the railroad 
companies furnish us this fast mail service without any additional 
specific compensation. 

The Chairman. But it is an additional expense to them? 

Mr. Stewart. An additional expense, but at the same time it is an 
additional advantage to them, because they thereby attract to them- 
selves large weights which they otherwise would not get, as a ruie. 
It is not a one-sided proposition at all. They furnish a magnificent 
service, but they get some return in these respects for furnishing it. 

Mr. Lloyd. Is there anything eke in the facilities they must 
furnish that is not furnished the passenger service ? 

Mr. Stewart. They furnish side service between the station and 
the post office. Where the distance is 80 rods or less and they have an 
agent or representative they are required to carry the mails between 
the station and the post office. They also perform terminal service; 
that is, they carry the mails between the station at the end of the 
route and the post office in cases where the department does not 
provide otherwise. 

The Chairman. What does the side service represent, in your 
opinion ? 

Mr. Stewart. Something over $4,000,000 a year, if the depart- 
ment was compelled to provide it. 

Senator Bankhead. Why should the railroad companies be re- 
quired to deliver the mails between the station and the post office % 

Mr. Stewart. The railroad service grew up as a contract service 
in connection with the old star route service, and under the old 
stage or star route contracts the stage had to deliver the mails into 
every post office along the route. The contracts were made with 
railroad companies first right along with the star routes; they were 
handled by the same people in the department; the same clerks 
handled both classes of service. When the law of 1873 was passed 
the same general requirements which had applied to all contract 
service were simply continued in operation, and when the question 
came up in court years afterwards, upon a suit to recover for 
payment for this side service, the Court of Claims held that Congress 
took that service into consideration when they established the rates 
of 1873. Therefore, we have practically a duty to continue that 
requirement. 

Senator Bankhead. Is there anything in the law that would indi- 
cate that Congress did take that into consideration when they estab- 
lished the rates % 

Mr. Stewart. Only the history of the matter. 

Senator Bankhead. Then you continue it because it is ancient % 

Mr. Stewart. Not only because it is ancient but because the court 
has said that Congress must have had that in view when they fixed 
the rates. 



18 EAILWAY MAIL PAY. 

The Chairman. I do not think the department has any alternative, 
under the existing law. 

Senator Bankhead. I would like to pursue that a little later on. 

Mr. Stewart. I have not finished all I was going to say about the 
question asked by Mr. Lloyd. If we assume that the 1.78 per cent 
of this $14,000,000,000, based upon the proportion of the mail reve- 
nue to the whole revenue, is a proper segregation to the mail service, 
then it becomes a further question as to whether the United States 
should pay 6 per cent upon it. 

Mr. Lloyd. If they paid 6 per cent it would be about $15,000,000, 
but suppose they paid 4 per cent? That would be $10,000,000. 

Mr. Stewart. If you say 6 per cent, that is virtually putting the 
United States on the same basis as a passenger or a shipper of freight, 
and it raises this very interesting question as to whether the relations 
between the United States and the railroad companies carrying the 
mails for the Untied States are the same with respect to compensa- 
tion that they are between the passenger or the shipper of freight 
and the railroads. 

Mr. Lloyd. Is not this true : If you consider that phase of it, that 
either the mail ought to be carried at its cost by the railroads as a 
gratuity, or the railroad company ought to have the same compen- 
sation as an individual would pay for the same kind of service ? 

Mr. Stewart. Well, that is a question. 

Mr. Lloyd. Is not that really the question ? 

Mr. Stewart. Yes. 

Mr. Lloyd. If there is a patriotic influence that must assert itself 
by the railroads, ought it not to prompt them to do this service 
without compensation, just simply at cost; but if no patriotic con- 
sideration is to be observed, then would it not be right for the rail- 
road companies to be paid just the same as an individual would pay 
if the Government were an individual ? 

Mr. Stewart. I do not know whether you could push that con- 
sideration of patriotism as far as you suggest ; that is, that they should 
perform services only at cost. On the other hand, the Supreme 
Court has recently held that a railroad company in carrying the 
mails is performing a governmental function and they are not in the 
same relation to the Government that they are to the ordinary 
individual. 

Mr. Lloyd. That is due to the fact that the Government requires 
them to do some things that an individual could not require. For 
instance, you require them to carry the mail on the fastest trains 
and you make the specifications by which they shall be governed in 
carrying the mails. You designate the kind of car and you desig- 
nate everything connected with the equipment, while the individual 
shipper could not make that kind of a designation. The designation 
to the individual shipper must necessarily come, and does come, from 
the railroad companies. 

Mr. Stewart. In other words, you construe that dictum to mean 
this: That the obligations a railroad company owes to the United 
States are different in their essentials than in its obligations it owes 
to the passengers? 

Mr. Lloyd. The obligation is greater because we make it so by 
law. 

Mr. Stewart. I see your point. 



KAIL WAY MAIL PAY. 19 

Tiie Chairman. And the requirements are greater. 

Mr. Lloyd. If they carry the mail at all they have to carry it as 
the Government directs them. 

Mr. Stewart. Yes, sir. That is what is held by the court. 

Mr. Lloyd. While on the other hand the individual is not placed 
on the same basis at all. The railroad companies say to him, "We 
will carry this for so much money." He takes it or not, as he pleases. 

Mr. Stewart. The individual goes to the railroad company as 
going to a common carrier? 

Mr. Lloyd. That is right; and the railroad company dictates the 
terms. The United States goes to the railroad company and the 
Government dictates the terms. 

Mr. Stewart. That is the main distinction, although in the case 
of the common carrier, of course, the rates must be reasonable. 

Mr. Lloyd. Certainly. Yes. 

Mr. Tuttle. Has it not always been the policy of the Government 
to pay a profit to these railroads, or have they not contemplated that 
the railroads were earning a profit in carrying the mails ? 

Mr. Stewart. Oh, yes, sir. 

Mr. Tuttle. They have never estimated that the mails were car- 
ried at cost and never expected them to be ? 

Mr. Stewart. No, sir. 

Mr. Tuttle. And they never subsidized the railroads by paying 
them more than they were entitled to ? 

Mr. Stewart. In some cases they have been subsidized somewhat, 
as, for instance, in what was called the special-facility trains from 
New York to New Orleans. In that case there was an appropriation 
carried for a number of years for a fast through mail train from New 
York to New Orleans. Then there was a train from Kansas City to 
Newton, Kans., carried for a few years at a special rate of compensa- 
tion provided by Congress in addition to the ordinary compensation. 

Mr. Lloyd. Those were discontinued some years ago ? 

Mr. Stewart. Those were discontinued some years ago; yes. 

The Chairman. General, as I understand your position in reference 
to special mail trains and the expense to the railroads incident to 
putting them on, while there is no direct compensation to the rail- 
roads for that extra cost to them for the improved facility, there is 
an indirect compensation to them because of the increased business 
that they get incident to the adoption of that improved facility. Is 
that right? 

Mr. Stewart. Yes, sir. 

Senator Bankhead. What amount of penalty does the Post Office 
Department receive annually from what is known as a failure to 
deliver the mail on schedule time ? Haven't you a penalty attached 
for that failure ? 

Mr. Stewart. No, sir; not at this time. 

Senator Bankhead. You used to have ? 

Mr. Stewart. We used to have, by special direction of Congress, 
and that was carried, I think, for two years, and we assessed fines 
against the railroad company for failure to keep their schedule time. 

Senator Bankhead. I know that was in practice at one time not 
very long ago. 

Mr. Stewart. Yes. But that was discontinued for this reason — 
that all the fines we would assess for this purpose did not accomplish 



20 KAILWAY MAIL PAY. 

anything in the way of improving their schedules. It simply caused 
irritation, and took the money of the road instead of allowing it to 
go toward improved service. 

Senator Bankhead. I supposed the same rule was in vogue now. 

Mr. Stewart. No. Upon our representation to Congress of those 
facts Congress dropped that out of the appropriation bill. 

Senator Bankhead. You spoke awhile ago of subsidizing trains 
from New York to New Orleans. You finally decided you did not 
want them any more because it was an additional expense to them, 
and the additional pay they received would not justify them in the 
schedules they were required to make, and in the end all the addi- 
tional pay they received was taken in fines, because they failed to 
make a schedule, and I think the Post Office Department made the 
schedules for them and said when they should leave and when they 
should arrive at a certain destination ? 

Mr. Stewart. Yes, in order to make connections we would have 
to do that. In the case of a train like that, if they did not make their 
schedule we would fine them. 

Senator Bankhead. Yes. That is what I had in mind. 

Mr. Lloyd. Let me sum up. If the $14,000,000,000 can be taken 
as a correct estimate of the capitalization of the railroads and 1.78 
per cent can properly be taken as the share that goes to the railway 
mail pay, and 6 per cent on that capitalization be taken as a fair com- 
pensation on account of capital, then is it not true that the railroad 
companies ought to receive $15,000,000 annually more than they 
now receive. 

Mr. Stewart. That is true, granting those premises. 

Mr. Lloyd. Yes. Granting those premises. 

Mr. Stewart. That would be reduced by the subtraction of the 
$9,000,000, so that it would be an aggregate increase of the difference 
between $9,000,000 and $15,000,000 ? 

Mr. Lloyd. Yes. But I mean, your original asttement was, if you 
took the $9,000,000 into account it would add $15,000,000 to the 
other side, and taking the $9,000,000 would leave $8,000,000 that 
might, under the present system, be received by the railroads that 
ought not be received % 

Mr. Stewart. That is correct. 

The Chairman. In a report of Mr. Wm. F. Vilas, Postmaster Gen- 
eral, in the year 1887, in the discussion of R. P. O. cars, the following 
appears : 

It is within bounds to affirm that all these might be to-day purchased or their dupli- 
cates manufactured for $1,600,000; add for cleaning, etc., as above, at $720 per year 
each for 342 in use, $246,240, the total is reached of but $1,846,240. Yet simply for 
the use of these cars for the last year, including cleaning, etc., the department was 
under the annual rate of charge by the existing system of $1,881,580, and the estimate 
deemed necessary to submit in prudent provision for the coming fiscal year, on the 
eame basis, is $2,000,000. 

[Reference to special instances in the annexed table of the longer lines discovers 
greater disparity than the average. In illustration, $59,037.75 is annually paid on one 
line for the use of four cars that might be built and fully equipped in the best modern 
style for less than $17,500; and this in addition to the full- weight pay for transporta- 
tion, amounting in the case mentioned to $504,573.69. 

Instead, then, of appropriating $2,000,000 to rent the use of these cars for the coming 
year why should not the appropriation be of a smaller sum to buy them and of another, 
say, $250,000 for their keeping, the two together not aggregating the proposed rent? 
The department will thereafter gain at least $1,500,000 per year while sustaining the 
cost of casualties. 



RAILWAY MAIL PAY. 21 

If Mr. Vilas was sound in his inferential recommendation made in 
1887, why is it that the department has taken no action on the line 
of the recommendation as set forth in the quotation from the report 
just read ? 

Mr. Stewart. I do not want to criticize or say anything in the 
way of criticism of so great an authority as Postmaster General Vilas, 
nor can I say specifically why the department has not taken definite 
action to change the law with respect to car pay. 

The Chairman. The department could not change the law, but the 
department could make suggestions and recommendations as it has 
done in document 105. 

Mr. Stewart. That is what I meant to say, Senator. However, I 
presume the fact that the views expressed by Postmaster General 
Vilas have never been largely held by the departmental officers would 
account for the reason that there was no recommendation to change 
the laws in that respect. The fallacy of the statement of Mr. Vilas, 
it seems to me, lies in this: That there is no account taken of the cost 
of operating the cars. The payment that we make to the railroad 
companies for cars may soon equal their cost, but there is nothing to 
be argued from that as to the adequacy or the inadequacy of that pay, 
because that leaves out of consideration entirely the cost of operat- 
ing or hauling the cars. 

The Chairman. How many R. P. O. cars are now used by the 
railroads ? 

Mr. Stewart. On June 30, 1912, there were 1,388 in use and in re- 
serve. In connection with this question, Mr. Chairman, I would like 
to submit as a part of my reply the letter of Postmaster General 
Hitchcock to Hon. John W. Weeks, chairman of the Committee on 
Post Offices and Post Roads, House of Representatives, dated March 
2, 1910, in specific reply to the question raised by Postmaster General 
Vilas in the report to which you have referred. 

Office of the Postmaster General, 

Washington, B.C., March 2, 1910. 
Hon. John W. Weeks, 

Chairman Committee on Post Offices and Post Roads, House of Representatives. 

My Dear Sir: In response to your inquiry made of the Second Assistant Postmaster 
General in regard to the cost of maintaining and operating railway post-office cars and 
its relation to the compensation received by railroad companies for the same and your 
reference to the speech delivered by Senator Vilas on the subject in the United States 
Senate February 13, 1895, I have the honor to advise you as follows: 

The department has not at this time sufficient information upon this point to give 
from its own records a reliable estimate. As you are aware, we have recently asked 
railroad companies to submit answers to inquiries with reference to the cost of operating 
the mail service, and it is believed that when these shall have been received we will 
be in a position to furnish such information. Inasmuch, however, as it may be of 
importance to you to have estimates made from time to time by others and such incom- 
plete information as we have at present, I submit the following: 

The cost of operating a railway post-office car has been variously estimated (but not 
officially by the department) as from 15 to 30 cents a car- mile. The average run per 
day of such a car is about 300 miles. Estimating the cost at 18 cents a car-mile, the 
total cost of operating such car for one year would be $19,710. 

The specific items which constitute this total cost are not definitely known to the 
department. However, as to the cost of lighting, cleaning, repairs, etc., the General 
Superintendent of Railway Mail Service furnished the following estimates before the 
commission to investigate the postal service in 1899, viz: Lighting, $276; heating, 
$365; cleaning, water, ice, oil, etc., $365; repairs, $350; proportion of original cost of 
car (estimating the life of a car at 15 years and the original cost at $6,000), $400; total, 
$1,756. Recent inquiry gives the following as the approximate cost of maintaining 
a car at the present time: Lighting (electric), $444; heating, $150; cleaning, $360; 



22 KAILWAY MAIL PAY. 

repairs, $300; oil and brasses, $120; interest on cost of car (at $7,500), $300; annual de- 
terioration (estimating the life of a car at 20 years), $375; total, $2,049. These figures 
give the cost of a car built according to the department's standard specifications. 
The cost of modern steel cars being built by some of the railroad companies is from 
$14,000 to $15,000. 

The compensation received by a railroad company for operating a car and carrying 
the mails in it would be approximately as follows : 

The pay for a 60-foot car at $40 a track mile per annum for a track mileage of 150 
miles would be $6,000. The average load of a 60-foot car, according to statistics 
obtained recently, is 2.83 tons. The rate per ton of an average daily weight of 50,000 
pounds carried over the route is $25.06. At this rate the company would receive 
$10,637.97 per annum for the average load of mail hauled in the car. This sum added 
to the specific rate for the railway post-office car ($6,000) makes the total pay for the 
car and its average load $16,637.97 per annum. 

Senator Vilas's argument was based upon the theory that the rates fixed for rail- 
road transportation alone, based on the weights of the mails carried, are adequate 
compensation for all services rendered, including the operation of railway post-office 
cars, and that therefore the railroad companies would be required to operate postal 
cars owned by the Post Office Department for the compensation allowed by law for 
the weight of mails alone, including apartment-car space and facilities. Such theory 
is not justified by the facts, as will appear from the following: 

A careful perusal of the debates in both Houses of Congress which led to the enact- 
ment of the present law fixing the rate of pay for railroad transportation of the mails 
and for railway post-office cars clearly indicates that the additional compensation for 
railway post-office cars was intended to cover the additional expense imposed upon 
the railroad companies for building, maintaining, and hauling such cars. The com- 
panies at that time insisted that these cars, which were practically traveling post 
offices, did not carry a remunerative load, and that therefore the amount of pay, 
based on weight, did not compensate them for their operation. This led to the spe- 
cific appropriation for railway post-office cars. In this connection it should be borne 
in mind that the purpose of the railway post-office car is to furnish ample space and 
facilities for the handling and distribution of mails en route. Therefore the space 
required is much greater than would be required for merely hauling the same weight 
of mails. 

In regard to any proposal for Government ownership of postal cars, other facts as 
well as the above should be given consideration. Such cars must be overhauled, 
cleaned, and inspected daily. It would be necessary to either arrange with the railway 
companies for this service or for the department to employ its own inspectors, repair 
men, and car cleaners at a large number of places throughout the country, which would 
probably be more expensive than the cost to the railway companies in that respect at 
present. It would hardly be feasible to establish a Government repair shop. There- 
fore the department would be compelled to use the shops of the several railway com- 
panies throughout the country. Without the closest supervision and attention of the 
Government's inspectors it could scarcely be expected that our cars would receive 
the same consideration in railroad shops as those owned by the railway companies. 
These shops are frequently congested, and it is probable that the railroad work would 
be given the preference. 

Yours, very truly, Frank H. Hitchcock, 

Postmaster General. 

The Chairman. What is the average cost of the R. P. O. cars ? 

Mr. Stewart. I do not know. The companies are now building 
steel cars and the cost of a steel car is very much greater than the 
cost of a wooden car. I think the steel car might be built for about 
$12,000. Under the present law, Mr. Chairman, all the cars which 
shall be used in the service, excepting those which are now of steel 
and steel unclerframe, must be replaced by steel cars before the 30th 
of June, 1917. 

The Chairman. At the rate of 25 per cent a year ? 

Mr. Stewart. Twenty-five per cent a year, beginning with the 
fiscal year 1914. 

The Chairman. Is it true, according to your knowledge, that under 
a determination of the Interstate Commerce Commission the Govern- 
ment now pays to thb railroad companies 25 cents a mile for hauling 
the car of the Bureau of Fisheries ? 



RAILWAY MAIL PAY. 23 

Mr. Stewart. I have no personal knowledge of that. I have been 
informed that it is correct. 

The Chairman. Is the mileage that the R. P. O. cars are hauled 
easily ascertainable ? Have you that information in your office so 
that it could be easily determined without any great expense to the 
Government ? 

Mr. Stewart. Not very readily. We are not required to keep those 
statistics because we pay per mile of routes per annum. It would 
require checking up the official schedules. 

The Chairman. Do you know whether the railroads have such 
information ? 

Mr. Stewart. I do not know whether they have. 

The Chairman. Could you readily prepare and submit to the 
commission a statement showing the number of R. P. O. cars, esti- 
mated average cost, estimated cost of cleaning, operating, maintain- 
ing, and then a statement as to the cost of transportation; that is, the 
amount that would have to be paid to the railroads for hauling same, 
providing the Government owned them ? In other words, could you 
present a statement from the dollar standpoint demonstrating the 
advisability of the Government's owning and operating the R. P. O. 
cars or continuing the present system of rental, or would that be 
difficult and expensive of ascertainment ? 

Mr. Stewart. It would be difficult for the reason that we have 
not the statistics which would enable us to reach a determination of 
cost for those particular cars. We could give you the miles of service 
a year; we could compile that, but we have not the data to make an 
estimate as to the cost of operation. 

The Chairman. How long would it take to compile and tabulate 
data showing the mileage per year, and the cost to the Government 
on a basis of 25 cents a mile for the 60 or 65 foot cars? That as I 
understand is thejength of the car owned by the Bureau of Fisheries ? 

Mr. Stewart. I think a few da}^s. 

The mileage of full railway post-office cars of all sizes made in the 
performance of service during the fiscal year of 1912 was 126,798,405. 
The cost at 25 cents a car mile would be S31 ; 699,601.25. 

The Chairman. In any of } 7 our studies of computation have you 
ever determined the number of postal employees which the railroad 
companies carry without any additional compensation than the com- 
pensation rendered to them in the payment of railway mail service, 
supposed to cover the cost of the employees as passengers ? 

Thereupon (at 4.45 o'clock p. m.) the committee took a recess until 
8 o'clock p. m. 

AFTER RECESS. 

The joint commission reconvened at 8 o'clock p. m., according to 
adjournment. 

Present: Senator Jonathan Bourne, jr. (chairman), Representative 
John W. Weeks, and Representative William E. Tuttle, jr. 

TESTIMONY OF MR. JOSEPH STEWART— Continued. 

Mr. Stewart. The railroad companies carry, without specific com- 
pensation other than that paid for the transportation of mails, the 



24 RAILWAY MAIL PAY. 

railway postal clerks who are engaged in the distribution of the mails 
en route. In my annual report for 1911 it is stated that during that 
fiscal year there were a total of 1,657 lines of all kinds manned by 
15,575 clerks, representing the working force of the lines. In addition 
to these men there are also mentioned 30 officials and 130 chief clerks 
who would travel when necessary. The transfer clerks who are also 
mentioned would, as a rule, not travel on the trains. In addition to 
these persons the railroad companies carry under the same conditions 
the post-office inspectors when traveling on official business for the 
department, and also the officers of the Post Office Department when 
traveling on official business and under the orders of the Postmaster 
General. 

The Chairman. Have you any idea what the average miles traveled 
would be for these 16,000 governmental employees who practically 
travel free, except so far as the railway-mail pay is supposed to com- 
pensate the railroads for the passenger service rendered to the 
governmental employees ? 

Mr. Stewart. No; I have not. 

The Chairman. Is that easily ascertained ? 

Mr. Stewart. Not easily. 

Mr. Lloyd. Do you know how many miles are traveled ? 

Mr. Stewart. I think we know how many car miles are traveled 
by the lines in the performance of service, but how many clerks are 
on those lines I do not know that I could tell you, nor what the aver- 
age number cf clerks per line would be, with any certainly. 

The Chairman. Have you ever made an estimate in the depart- 
ment as to what proportion of the railway-mail pay was in lieu of 
passenger pay for governmental employees ? 

Mr. Stewart. No; I never have, but in compiling the statistics 
furnished us by the railroad companies in connection with the other 
data, which forms the basis for document 105, the railroads made 
statements with reference to persons in the Government service 
carried during that period. I think we have some statistics on that 
point, but we did not use them, because we had no adequate means 
of checking the data, and we had no information with respect to the 
passenger service for the same period. 

The Chairman. Do you think that information would be of value 
to the commission in the study it now has before it ? 

Mr. Stewart. If it were reliable and could be depended upon it 
would be useful. 

The Chairman. You would not doubt the correctness of your own 
figures and your own deductions ? 

Mr. Stewart. No; but these are not our own. They were re- 
ported and we had no means of checking them. 

The Chairman. You know the number of employees you have in 
the postal service ? 

Mr. Stewart. Yes, sir. 

The Chairman. You know the number that travel on cars. It is 
ascertainable from the mileage or the per diem that is paid these 
employees ? 

Mr /Stewart. We could take statistics for a short period upon 
which we could make an estimate. 

The .Chairman. On the doctrine of averages ? 

Mr. Stewart. Yes. 



EAILWAY MAIL PAY. 25 

The Chairman. And it is easily ascertainable what the passenger 
rate per mile is over the United States ? 

Mr. Stewart. Yes. 

The Chairman. And a computation could then be readily made ? 

Mr. Stewart. Yes. 

Th^ Chairman. Would not that be a factor entering into this study. 

Mr. Stewart. It would be worth considering. But it should be 
borne in mind that the Government pays what you might call a rental 
for the car in which they travel and the department has always insisted 
that in paying for the rental of that car we have the right to put 
anything in it we please. Consequently the very interesting ques- 
tion is raised as to whether the railroad companies are entitled to a 
fare from these men, or any part of a fare from them or from the Gov- 
ernment representing them. 

The Chairman. Would it not have a bearing on the segregation of 
revenues and cost in the passenger traffic of the transportation com- 
panies and the apportionment of the percentage from both stand- 
points, on the railway mail ? 

Mr. Stewart. It might, if the whole matter were reduced to a 
question of space. 

The Chairman. That is what you suggest, is it not ? 

Mr. Stewart. Yes. 

The Chairman. So it would have a bearing on your suggestion ? 

Mr. Stewart. And yet, if we are going to go to the space basis, 
you must bear in mind that the amount of mail carried in the space 
is not material. 

The Chairman. In the calculations on which you base your space 
determination, do you figure any space occupied by the Government 
employees in the cars themselves ? 

Mr. Stewart. Only so far as it is necessary to handle the mails. 
Of course that is taken into consideration to some extent. 

The Chairman. Do all the employees ride in the postal cars ? 

Mr. Stewart. Not always; they do when they are on duty distrib- 
uting the mails. Under some conditions they are allowed to ride in 
the coach, but as a rule they ride in the cars. When they are dis- 
tributing mails they are always in the cars. 

The Chairman. From a governmental and an administrative 
standpoint, do you think it would be better to have whatever method 
of pay was determined upon cover the employees as well as the actual 
mail or to make a segregation ? 

Mr. Stewart. I would have the rate of pay cover all the service 
furnished without a segregation. 

The Chairman. It would minimize the possibility of dispute and 
irritation ? 

Mr. Stewart. Very much. 

Mr. Lloyd. Have you any method of determining or have you 
attempted to determine how much mail clerks and postal employees 
use the passenger coaches and Pullman cars ? 

Mr. Stewart. I think we could give you approximate figures on 
that. I think the occasions on which they use the coaches are very 
rare. 

Mr. Lloyd. Have you ever used or recommended a different kind 
of a card or any kind of a statement by the railroad company to 
indicate that the person was a postal employee traveling in a coach ? 



26 HAIL WAY MAIL PAY. 

Mr. Stewart. Yes, sir. 

Mr. Lloyd. Have you had any returns from that ? 

Mr. Stewart. You mean for the purpose of getting statistics ? 

Mr. Lloyd. Yes. 

Mr. Stewart. No; I think not. What I supposed you meant was 
whether we recognized the right of the railway company to have 
issued a special card to the employees which would entitle them to 
ride in a coach. 

Mr. Lloyd. Yes; that is what I meant. Have you ever suggested 
the requiring of two kinds of cards, one which the railway-mail clerks 
would carry who work in a car and one which would be presented by 
the railway-mail clerks when they were not working in a car but rode 
in the passenger coaches ? 

Mr. Stewart. I think on some lines that is in operation now, 
although I am not entirely advised on that. The commission of 
the clerk, of course, entitles him to ride in a car always, and I think 
there are some lines that require us to issue a special card to be 
presented when they ride in a coach. 

Mr. Lloyd. Have you made any investigation to ascertain whether 
the complaint that is sometimes made that clerks take advantage 
of this car privilege to ride in coaches when they are not engaged 
in the business of the Government is well founded? 

Mr. Stewart. I have heard very, very few complaints of that kind. 
I do not think there is any abuse of that now. We are very strict 
ourselves and of course the Interstate Commerce Commission for- 
bids it and everybody understands that is a violation of law and I 
think there would be very little disposition to take any chance on it. 

Mr. Lloyd. Could you put in the record something of a compari- 
son as to the travel on business and travel in the mail cars ? 

Mr. Stewart. I will see what I can do along that line. I would 
like the record to show that we regard this travel in the coach as 
on duty — that is, they are traveling under the orders of the depart- 
ment. The department regards a postal clerk as being on duty 
when he is traveling to or from his home in connection with his 
work on a line — that is to say, when he leaves his home to take up 
his run at the head of the route, he is regarded as being on duty 
and traveling under the orders of the department. Likewise, when 
he finishes his tour of duty and returns to his home, using the rail- 
road, he is regarded as being on duty and being under the orders 
of the department. 

Mr. Lloyd. You have never made a sufficient investigation to 
ascertain what the railroad companies would receive if every employee 
in the postal department was required to pay a 2-cent fare, have you ? 

Mr. Stewart. Not outside of this data which I referred to as having 
been submitted by the companies during the month of November, 
1909. I think we made an estimate on that. 

Mr. Lloyd. But you do not now remember what the amount was? 

Mr. Stewart. No. I can supply the record with that if it is avail- 
able. 



RAILWAY MAIL PAY. 27 

The data reported by the companies as to the personal transportation of the Post 
Office Department employees for the month of November, 1909, was tabulated, and the 
result shows as follows: 
Miles traveled by departmental officials, inspectors, and railway postal 

clerks not actually in charge of the mails miles. . 4, 882, 545. 14 

Value of same $97,650.89 

Miles traveled by departmental employees actually in charge of the 

mails miles.. 6,915,448.80 

Value of same $138,308.97 

The department undertook to check the data reported by the companies in so far as it 
embraced the travel of officials and employees not actually in charge of mails for the 
same month, but as the information as regards railway postal clerks was secured in the 
summer of 1910 it is believed that it is not accurate in so far as they are concerned. The 
total of the miles traveled by officials and clerks for the month was 3,948,188.41. 

Mr. Lloyd. I would like to get that in the record, because I think 
that question is very material. 

Mr. Stewart. I will look up our figures on that. 

Mr. Tuttle. The privilege of using the passenger coaches has been 
withdrawn from a lot of clerks recently, has it not, by reason of those 
employed in the terminal offices ? 

Mr. Stewart. Yes, sir. That matter came about in this way: 
The practice has long been, in assigning railway postal clerks to posi- 
tions in transfer offices and also in the offices of the superintendent 
at their several headquarters, to appoint them to a line. Under the 
old law there was no other way of appointing a clerk, he had to be 
appointed to some railway post-office line and he was generally 
appointed to a line which ran into his station. That gave him the 
right of transportation to his home under the general practice of the 
department. He might live in the suburbs a short distance and the 
railroads would carry him in to and carry him out from his place of 
duty. Under the reclassification act, the law requires us to appoint 
these men to the offices, either a transfer office or to the division 
superintendent's office. We do not now appoint them to a line, so 
that, by reason of that change and the change in the department's 
practice, the appointment of these men to such offices no longer 
entitles them to transportation. 

Mr. Tuttle. That affects a large number of clerks ? 

Mr. Stewart. It affects a good many clerks who are in the division 
headquarters and also in the transfer offices in the large cities. 

Mr. Tuttle. You could not give an estimate of the number ? 

Mr. Stewart. I can place it in the record. There are about 
1,500 clerks detailed to office duty as transfer clerks and as clerks 
in terminal post offices. Consequently, with the beginning of 
January of this year, all those commissions were withdrawn. We 
could not ask the railroad companies to carry these men any longer. 

The Chairman. In your study, as presented in Document 105, rec- 
ommending the substitution of space for weight, do you make any 
credit or allowance for these sixteen thousand and odd employees 
carried ? 

Mr. Stewart. Not specifically. 

The Chairman. Well, how do you allow for space in your compu- 
tation when your specific statement is to the effect that by the adop- 
tion of the plan suggested the pay to the railroads would be $9,000,000 
less than the present pay ? 

Mr. Stewart. In that estimate no consideration was given to the 
item of the carriage of the Government employees specifically. If it 



28 RAILWAY MAIL PAY. 

could be said to be included, it would be covered on the basis of 
space, the same as the transportation of the mails. 

The Chairman. What space did you allot in your computation to 
an individual ? 

Mr. Stewart. The space that was necessary for the working of 
mail in a postal car. We allowed the full space in working cars; the 
authorized space for the distribution of the mails. That space covers 
not only the mails that are in a car, but the clerk who works the 
mails, so that in that case it seems to me that the space for the 
clerk is allowed in the same manner that the space for the mails is 
allowed. 

The Chairman. I agree that it is immaterial whether it is mail 
or clerks that occupies the space, from your viewpoint, but I simply 
wanted to know whether that entered into your calculations in your 
conclusions and recommendations ? 

Mr. Stewart. No; it did not, specifically. 

The Chairman. Then, I do not see how you are justified in making 
the statement that there is a $9,000,000 difference in cost if, in your 
calculations on which that statement is based, you do not figure the 
space occupied by the individual. 

Mr. Stewart. Well, I think you misunderstood my last answer. 
I do estimate his value as occupying space, but not as a passenger — 
not his value as a mere passenger, aside from the other considerations. 

Mr. Lloyd. Is it the law that the postal employees shall be carried 
by the railroad companies, or is it regulation ? 

Mr. Stewart. It is the law that the companies shall carry the 
mails and the persons in charge of them. 

Mr. Lloyd. Is an inspector in charge of the mails ? 

Mr. Stewart. I am speaking now of the railway postal clerks. 
The inspector travels under a regulation of the department. 

Mr. Lloyd. That is what I was getting at. The clerk travels under 
the law and the postal employee other than the clerk under regulation ? 

Mr. Stewart. Travels by virtue of the authority of a regulation 
and the order of the Postmaster General. 

Mr. Lloyd. Did you, during the afternoon, give all the reasons that 
you think might be presented in favor of the space basis in the cor- 
roboration of Document No. 105 ? 

Mr. Stewart. I think I did, substantially. They are, very 
briefly, that the space basis seems to present a definite and scientific 
gauge of measuring the service and paying for the service rendered 
and received. It furnishes a means of definitely settling the question 
of the adequacy of the rates paid and putting an end to the endless 
controversy that is going on and always will go on, in my judgment, 
to the annoyance of the department, Congress, and the railroad com- 
panies themselves. It furnishes a sure means of properly and 
equitably distributing the railway mail pay so that every company 
will be properly paid for the service it renders and no company will 
furnish a service for less than the cost of carrying the mails. Those 
are the general points I have in mind. I notice since I was speaking 
this afternoon my attention has been called to a memorandum 
which I made in 1907 when the matter came up in the department. 
This memorandum is addressed to the Second Assistant Postmaster 
General, signed by myself as superintendent of the Division of Rail- 
way Adjustments, and contains excerpts from the reports of previous 



RAILWAY MAIL PAY. 29 

commissions who have studied the question and all of whom have 
reported in favor of a space basis, and one recommends the basis for 
pay the same as it is recommended in document 105, a fact of which 
I was not consciously aware. That is, they believed the pay to the 
railroads should be the cost of the service and a fair per cent of 
that cost. They did not take into consideration this question of 
capitalization at all and I do not notice that any of these commis- 
sions have taken that into consideration. 

The Chaikmax. Would you like to put that into the record ? 

Mr. Stewaet. I think for the information of the commission I 
should like to append these excerpts as an exhibit; not that the 
department indorses everything in them, but I think it is valuable 
information. These commissions to whom I referred have analyzed 
the subject quite carefully, and they give many reasons for the space 
basis. (These excerpts are printed at the end of Mr. Stewart's 
testimony.) 

The Chairman. Will you be kind enough to state what, in your 
judgment, are the obstacles or reasonable objections that may be 
urged to the space basis ? 

Mr. Stewart. The principal obstacles that occur to me now, since 
the submission of document 105, and since our concession that it 
would be proper to consider capitalization in some form to some ex- 
tent, are the physical valuation of the property; the ascertainment 
of the reasonable part of the capitalization which should be consid- 
ered as associated with the mail service which should form the basis 
upon which to compute a fair return; and the ascertainment of 
what is a fair return, considering the fact that the railroads are 
performing a service for the Government and that they do receive 
intangible benefits from being in that relationship. Other obstacles 
are the administrative difficulties which would arise in the ascertain- 
ment of space, the authorization of it, the careful supervision and 
checking up to see that too much space was not authorized, and, 
of course, to do entire justice to the railroad companies. It can be 
depended upon that the railroad companies will look after their 
interest very sharply, of course, and the departmental officers would 
have to be faithful and careful and look after the interests of the 
Government. There of course will be continual controversy, but not 
to such an extent that the controversies can not be determined 
properly, I think, and I should say that honest, courageous, and fair 
officers of the department would not find those difficulties insuperable. 
I think in a general way those are the difficulties. 

Mr. Tttttle. Are the railroads compelled to accept the compensa- 
tion fixed by Congress, by law, and by department regulations ? 

Mr. Stewart. The courts have decided, wherever controversies 
have come before them involving the question of pay, that the 
relations between the railroad companies, other than the land-grant 
companies, and the United States, are relations of contract only. 
I think they have decided that mainly only because contract cases 
have been submitted to them. However, those are the decisions 
that are now on the books, and the effect of that is simply this: 
That a railroad company is not obliged to carry the mails unless it 
contracts to do so, but the courts have gone still further and said if 
they do carry the mails they are obliged to carry them on the terms 
named by the Post Office Department. The terms must not be in 

49396—14 10 



30 EAILWAY MAIL PAY. 

contravention of law, but the Postmaster General can make lower 
rates than the maximum provided by the law. 

Mr. Tuttle. Would the Government be justified in asking the 
railroads to carry the mails at cost, or at a loss ? 

Mr. Stewart. I do not think it would be justified in asking them 
to carry them at a loss, nor at cost. We have conceded that the 
other elements should be taken into consideration. 

The Chairman. Have you any question in your mind as to the 
constitutional right of Congress to compel the railroads to carry the 
mails, providing the rates are not confiscatory ? 

Mr. Stewart. Yes; stated just as you have given it. For instance, 
I do not think that Congress has the right to compel the railroads 
to perform a service if the railroads do not choose to do it, but I think 
Congress has ample power under the Constitution to regulate and 
establish post offices and post roads, and to provide for the carriage 
of mail on any railroad. 

The Chairman. At rates provided by Congress, provided those 
rates are not confiscatory? 

Mr. Stewart. Yes. But as to the right to compel a nonaided 
or nonland-grant railroad to perform a specific act, I doubt that. 
Congress has already made all railroads post roads. We make them 
post routes when we authorize the carriage of the mails over them. 
Congress has exercised Federal jurisdiction over the railroads, and it 
can provide for the carriage of mails on them by the agents, officers, 
or employees of the United States independently of the railroad 
companies, but I do not think it has the power to compel a railroad 
company to specifically perform mail service. However, if a rail- 
road has received a grant of lands or other rights from the Federal 
Government on condition that it shall carry the mails, a refusal to 
carry would in my opinion, lead to action to compel performance. 

The Chairman. How did you determine 6 per cent profit in your 
Document 105 as a fair profit on the cost of the activity of the rail- 
road? 

Mr. Stewart. That was suggested and adopted by the Post- 
master General as representing the usual fair return on investment. 

The Chairman. And yet, as I remember the testimony you have 
submitted, you thought one of the problems for determination and 
difficulty would be the arrival at what would be a fair compensa- 
tion for the capital charge. Why should one be more difficult of 
determination than the other? I do not mean that I concur indi- 
vidually as to whether 6 per cent would be the right basis if the plan 
was adopted or not, but I was trying to get your line of mental pro- 
cedure in coming to that conclusion and why the difficulty would 
present itself in one case and not in the other. 

Mr. Stewart. There would seem to be a distinction between the 
two cases. If a man lays out $100,000 in actual expenditure, he is 
certainly entitled to the current rate of interest; but if you are con- 
sidering the furnishing of a facility, as, for instance, a part of the 
capitalization of the road, you must take into consideration all the 
other conditions of the employment and relationship in estimating 
what rate of per cent should be allowed; for instance, it is quite an 
advantage to a railroad company to carry the United States mail. 
That is an intangible asset of great advantage. 



RAILWAY MAIL PAY. 31 

The Chairman. Does not that apply to the cost of the activity 
as well as to the capital cost ? 

Mr. Stewart. I hardly think so. 

The Chairman. You would make a distinction ? 

Mr. Stewart. Yes; they are entitled to get their cost back — 
surely, with a fair rate of interest on that. 

The Chairman. Your explanation that you just gave applies 
with equal force to the capital charge as well as to the cost charge. 
Your original bill allowed 6 per cent on the cost of the operation 
itself. 

Mr. Stewart. Well, I make that distinction between the actual 
cost and the consideration of the capital charge. 

The Chairman. We are very much obliged, Mr. Stewart. 

[Extract from the "Minority report of the special commission on railroad mail transportation." 45th 
Cong., 1st sess., S. Misc. Doc. No. 14. Dec. 14, 1877. 

THE BASIS OP COMPENSATION. 

The weight of mail is ascertained by weighing it for 30 days in succession, and the 
daily average is used as the basis for calculating the compensation for the next four 
years. The weigher appointed by the Post Office Department weighs the mails at 
the beginning of the route; at each station he deducts and adds the weights of the 
mails delivered and received, and at the end of the trip forwards the weights to the 
department, where the average weight for the whole trip is calculated. 

This method is not only difficult, expensive, and complicated, but sometimes 
unjust, as the season selected for the weighing may be when the mails are the lightest 
or when they are the heaviest. Moreover, the mails are frequently changed from one 
route to another, and as the mail increases about 8 per cent a year, an average of 16 
per cent more is carried than is paid for. The railroad is required to furnish maximum 
accommodation and is only paid for average weight, while the mails are invariably 
much heavier one way than the other, except upon the route between Boston and 
Washington. The outward bound mail from New York west is nearly seven times 
heavier than the return mail. This is caused by the additional weight of daily and 
weekly newspapers, periodicals, and merchandise sent from the eastern cities to all 
parts of the country. On many local roads the mail matter filling a car at starting 
will be almost all delivered before reaching the terminus, and will leave on the return 
trip with a light mail, gradually increasing to the starting place. If the mails were 
carried in bulk, and the railroad companies were required to furnish space for maxi- 
mum weight the whole trip, the average weight is not a fair basis upon which to 
estimate the compensation. 

The evidence annexed to this report proves that the mails are rarely carried in bulk; 
that one-quarter of the space occupied in the postal car would be sufficient for the 
same mail if carried in bulk; and therefore when the railroad companies are required 
to furnish and run a distributing office, space becomes essential to the department, 
and should be paid for. 

Weight is the proper basis for charges on freight trains, for each train usually carries 
one way as much freight and as many cars as the engine can draw. The weight of the 
paying and dead load are about equal; therefore, the average weight carried the train- 
mile and the expense being ascertained, the charges are based upon weight. Space is 
the proper basis for charges in passenger trains. Every passenger train could carry 
twice as many passengers as there are seats, and nearly five times the average actually 
carried. The paying load has therefore little relation to the dead weight. Therefore, 
the average number of passengers per train-mile, the length of the train, and the 
expense being ascertained, the charges should be based upon the linear feet occupied. 
If the mail was carried in bulk it would be necessary to ascertain the value of the 
space occupied by a given weight before the cost of carrying it could be determined; 
but when space is required for distributing as well as for carrying the mail, the cost 
can be fairly determined only by reference to the space required. 

On the Pennsylvania Railroad, where the mail in a single train will frequently 
weigh as much as the passengers and baggage, the mail could be carried in one car, 
while the passengers and baggage would require at least six cars; if the expenses 
were apportioned according to weight, the mail would pay as much as the passengers; 
if according to space, one-sixth as much as the passengers. 



32 EAILWAY MAIL PAY. 

The railroad companies require, for the safety of their passengers, that the maximum 
weight for a car shall be determined by them. The department required that no more 
space shall be used than is necessary for working the mail. 

The tables furnished by the department, following page 171 of the first part of the 
report of evidence, show that on some routes more space is used than is required. On 
one route, 28,952 linear feet per mile per annum are in use, while the same table shows 
that only 15,024 feet are necessary. On another route in the same State 46,637 feet 
are in use, where only 31,300 are necessary. On another, 32,082 feet are in use, and 
only 11,268 necessary. 

The same table also shows that on other routes more space is required than is in use. 
On the route from Cincinnati to Indianapolis and Terre Haute 56,027 are now in use, 
where 81,380 are required. The space required on the same route is sometimes 
reduced, and again greatly increased, by transferring mails from one route to another; 
where a quick and fine distribution is made five or six clerks are required, while on 
another route one clerk would work the same amount of mail. It is therefore impos- 
sible to prescribe by law how much space should be allowed for a given weight of mail. 

The proper basis of compensation was considered by the Select Committee of the 
Senate on Transportation. In June, 1874, they recommended it to be based on space, 
the space required to be determined by the average weight of the mail. 

The basis for determining the cost of railway mail service has never been determined 
either by the cost or the value of the service rendered, and no equitable or satisfactory 
adjustment of the differences between the department and the railroads can be made 
until the cost of the service is ascertained upon principles regarded as just and equitable. 

We therefore recommend that space should be taken as the basis of compensation, 
the amount of space required to be regulated by the Postmaster General from time to 
time. 

RECAPITULATION. 

The principal duty of the commission was to decide the basis of compensation for 
the transportation of the mails by railroads and the compensation. 

On the transfer of the mails to the railroads, in 1837, they received the same com- 
pensation that has been paid to stagecoaches. The routes were classified according 
to the importance of the service, and the rates then established remained unchanged 
for over 30 years. The railroads were at first greatly overpaid, but by the increase 
of the mails in weight and bulk, and the space required by route agents on the trunk- 
lines the cost was increased until, about 1867, the trunk roads were as much under- 
paid as they were formerly overpaid. At their request the mails were weighed, a 
readjustment of the compensation was made in 1873, which increased the compen- 
sation to many roads. 

When the mail was carried in bulk, a gross sum for a given weight of mail carried 
each mile of road was a proper method for compensation. When a traveling post 
office was introduced, and the mail distributed in transit, another method was re- 
quired, but no change was made. The increase of the space used for the mail service 
on some of the roads has been very rapid. On one, where, in 1868. 32 feet a day was 
sufficient, ten times as many are now required. Since the introduction of postal cars 
there has never existed perfect harmony between the railroads and the department. 
The readjustment in 1873 would have satisfied the roads temporarily if the distribu- 
tion of newspapers in the postal cars had not commenced at that time, requiring a 
large amount of additional space, so that their compensation for each linear foot used 
was scarcely increased. 

The commission have endeavored to ascertain the cost of a linear foot of space per 
passenger- train-mile. They have obtained returns from representative roads of 
each section of the country, transacting three-quarters of all the railroad business of 
the country, and from these returns the commission have calculated the cost of an 
average passenger train per mile. These returns show that there are other elements 
affecting the cost more important than speed. 

They recommend that the basis for determining the compensation shall be space ; 
that the railroads shall receive the mails at the stations, transport, and deliver them at 
stations, and for this service shall be paid the cost and a fair profit thereon. ^ 

That to give a fair compensation 13 per cent should be deducted for station and other 
expenses, and to the remainder 45 per cent should be added to the expenses for profit. 
These sums will yield on the average 6.2 mills per linear foot, or nearly the same com- 
pensation, according to the cost of service, that the railroads receive from the remaining 
business on the passenger trains. 

That the Postmaster General shall from time to time ascertain the cost on the plan 
recommended, and what percentage should be added to give a fair profit. If any road 






EAILWAY MAIL PAY. 33 

is overpaid, the Postmaster General shall refer the question to a tribunal to be ap- 
pointed, and any railroad may apply to the same tribunal if aggrieved by any act of 
the Postmaster General. 

Such tribunal shall have power to adjust the compensation in such cases and to 
award payment out of the appropriations annually made by Congress for the trans- 
portation of the mails. 

That the Postmaster General shall determine what space is required for a given 
amount of mail matter. 

The commission were required to report such rates of compensation as will enable 
the department to perform the postal service for the best interest of the public. This, 
they believe, can not be done by reducing appropriations and making the department 
self-sustaining, as has been proposed. Cheap postage in 1851 reduced the cost to the 
public, and greatly increased the volume of correspondence, while, at the same time, 
it reduced the revenue and increased the expenditures of the department. When the 
department was self-sustaining, a pound of mail matter, transported on an average 
120 miles, cost 56.6 cents while the cost to the public was $1.17. Now it costs the de- 
department 16J cents to transport a pound on an average of 813 miles and the public 24 
cents. Then the cost of transportation and office expenses was 93.6 cents per pound; 
now 29.4 cents. 

The fast mails which were in operation 10 months from September, 1875, proved 
to be of great value, not only to the terminal cities and the places on the line of the 
roads, but also to cities beyond the two termini. It makes little difference to the 
correspondent at Chicago or St. Louis whether he receives his letters at 8 or 10 o'clock 
in the morning, but by the same delay the connections of the mail for the Western 
States will be delayed from 12 to 24 hours. The establishment of limited mail trains 
between the East and the West is therefore recommended, with an extension and 
increase in the efficiency of the Railway Mail Service. Two- thirds of the letters 
and newspapers pass through postal cars, and are there distributed by the railway 
mail clerk. 

The introduction of postal cars and every improvement in and extension of the 
postal mail service is the result of cheap^ postage. For the present the expense of 
the department is increased by the additional facilities offered, and by the carriage of 
most pieces of the second and third class at less than cost, the volume of correspond- 
ence is increased. In this way "the best interests of the public " can be maintained, 
and when the whole country becomes as populous as New England, New York, and 
Pennsylvania the department will become once more self-sustaining. 

Some examination has been made in regard to the carriage of the mails on inland 
waters and the ocean and also of the star service. Data has been collected in regard 
to the river and the ocean service. 

Considerable thought has been given to the star service, and inquiries made of 
many different parties, but on account of the magnitude of the interests involved 
and the want of time to thoroughly consider the subject, they are unable to say when 
any report will be made. The whole contract system has come frequently before 
Congress and the department; many abuses have been corrected, to be followed by 
others worse, if anything, than the first. Large discretionary power is left to the 
Postmaster General and his subordinates, and although the department is at present 
wisely and economically administered and is a safe custodian of the funds placed in 
its charge, it is believed some plan should be devised for the reorganization of the 
star service and rules and regulations for its management established by Congress. 

RULES AND REGULATIONS. 

The following rules and regulations are recommended for the transportation of the 
mails on railroad routes: 

1. That the basis for determining the compensation to railroads for transportation 
of the mails shall be space used, limited by the average weight of mails carried over 
the roads. 

2. That the Postmaster General shall, from time to time, decide what space is 
required for the transportation of the average weight of mail upon any railroad route. 

3. That the compensation for a car, or part of a car, used for the Railway Mail 
Service shall be a fixed sum for each linear foot used. Where the mails are carried 
in baggage cars, the linear feet of space actually occupied shall be paid for: Provided, 
however, That in no case shall less than 10 linear feet be paid for on any route; but 
this compensation shall cover the use of the car for a double daily service, where not 
more than 10 linear feet a day are required. 



34 EAILWAY MAIL PAY. 

4. That the Postmaster General shall, once in every four years, or oftener, ascertain 
the average cost of running a linear foot of passenger train on the plan herein recom- 
mended and what percentage should be added thereto to give a fair profit to the 
railroads. Until the cost shall be ascertained by the Postmaster General the com- 
pensation for each linear foot of car used for railway mail purposes running between 
terminals at a speed of — 

Mills. 

23 miles per hour and under shall be 5. 82 

24 miles per hour shall be 5. 87 

25 miles per hour shall be 5. 92 

26 miles per hour shall be 5. 97 

27 miles per hour shall be 6.07 

28 miles per hour shall be 6. 17 

29 miles per hour shall be : 6. 27 

30 miles per hour shall be 6. 37 

31 miles per hour shall be 6. 52 

32 miles per hour shall be 6. 67 

33 miles per hour shall be .- 6. 82 

34 miles per hour shall be 6. 97 

35 miles per hour shall be 7. 12 

5. That no postal car shall be loaded with more than 15,000 pounds of mail if ob- 
jected to by the carrying company. 

6. That the department shall deliver the mails to the railroads and receive them at 
the stations or pay the railroads a reasonable compensation for such service. The 
railroads shall transport the mails and deliver them to connecting roads when required 
by the department: Provided, hoivever, That when the mails are carried in baggage 
cars they shall be in charge of the railroad company until delivered to the connecting 
roads, or to such persons as may be duly authorized by the department to receive them. 

7. That the railroad companies performing the mail service shall be paid in the same 
manner as are all other creditors of the Government. 

8. That the same compensation shall include the transportation of superintendents 
and officers of the Railway Mail Service, special agents of the department, and all 
railway mail employees, while engaged in their official duty or going to or returning 
from it. 

9. That all cars used for the Railway Mail Service shall be of such style, length, and 
character and furnished in such manner as shall be required by the Postmaster General, 
and shall be fitted up, maintained, heated, and lighted by the railroad company. 

10. That in all cases where there shall be any disagreement between the Postmaster 
General and the railroad company, in relation to the transportation of the mails, either 
party may have the matter referred to a commission to be appointed as Congress may 
determine. Said commission shall have the power to adjust the compensation of 
the railroad cases so referred and to award payment thereof out of the appropriations 
annually made for the transportation of the mails; and such awards shall be binding 
for the term of four years, unless the service shall be increased or diminished during 
said period. 

11. That the Postmaster General shall deduct from the pay of the railroad com- 
panies for every failure to deliver a mail within its schedule time not less than the 
price of the trip, and where the trip is not performed not less than the price of two 
trips, and not exceeding, in either case, the price of three trips: Provided, however, 
That if the failure is caused by a connecting road, then only the connecting road shall 
be fined. And where such failure is caused by unavoidable casualty the Postmaster 
General may remit the fine. And he may make deductions and impose fines for 
other delinquencies. 

12. That the Postmaster General shall have the power to decide upon what trains 
the mail shall be carried, and shall have power to direct the running of limited or 
special mail trains; and in such cases to prescribe when the trains shall start and 
arrive, and what connection they shall make. 

13. That railway-mail employees be divided into five classes, with compensation 
varying with the amount of work required and length of time in the service. 



RAILWAY MAIL PAY. 35 

{Extract from the "Report of the committee appointed to devise a more complete system of gauging the 
rates of pay for carrying the mails on railroad routes," Dec. 3, 1883.] 

THE BASIS OF COMPENSATION. 

Taking up the subject in the order indicated in the letter put forth by the com- 
mittee, we come first to the basis on which the rate of compensation should be deter- 
mined. 

The changed conditions of the service compel a different basis on which to estimate 
the rate of pay. The present system is cumbrous, and is gauged chiefly by the weight 
of the mails, which is not the only element to be considered. 

Since weight no longer enters as the chief factor in the determination of the require- 
ments of the service — space being the chief thing— weight becomes a modifying 
element only as it helps to determine what space will be required, fixing a definite 
limit to the amount of space to be used and paid for on all roads. 

The problem is therefore to determine approximately the amount of space required 
in every instance, and the value of it, applying to this required space the rate allowed, 
as deduced from some average space value, modified by the allowance for the rate 
of speed at which the mails are conveyed. Whilst the reasonableness of shifting the 
basis from weight to space is apparent, still a word of explanation may be necessary 
as to the part that weight is to play in the new scheme proposed by the committee. 

WEIGHT GAUGE. 

While it is proposed to pay for space, yet the amount of space and consequent 
expenditure on any railroad must be restricted by some method which in its operation 
will lie outside of the discretion of executive officers. Without some such restrictive 
gauge there would be no limit to the expenditures for transportation by railroads, 
save such as might be fixed at the will of an officer of the Post Office Department. 
Under such a condition of affairs it is evident that space itself would be an arbitrary 
basis of compensation, unsafe both for the railroads and for the Post Office Depart- 
ment. The gauge prescribed by the committee, resting upon the weight* of mails, 
modified by the room necessary in which to assort and distribute the same, and the 
speed with which they are conveyed, removes all possibility of improper or arbitrary 
allowances in determining the space and pay on any particular railroad. 

SPACE VALUE. 

It is evident that any scheme which bases pay on the amount of space used, esti- 
mating by linear feet, ought in fixing the rate per linear foot to be supported by some 
facts and figures showing the approximate value of car space in linear feet. 

The committee found some difficulty in obtaining information as accurate and widely 
distributed as they desired, but beg to present herewith tables showing the earnings 
per train -mile on almost all the railroads in the United States; also showing, as gathered 
from official reports of the roads and from the reports of the railroad commissioners 
of the several States, so far as they could be obtained, the yield per car-mile on all 
passenger traffic, including express, extra baggage, and mails. 

These tables will be found to furnish the data from which to estimate approximately 
the value of car space per linear foot per mile run. 

One statement shows the average yield per car per mile in six important^ States, 
as deduced from the commissioners' reports, to be 26.6 cents. This statement, in- 
volving a car service of over 600,000,000 miles, is full of significance in this connection. 

In the State of Pennsylvania there are 30 roads earning less than 26 cents per car- 
mile, and there are 20 roads earning more than 26 cents per car-mile. In the State 
of Michigan there are 9 roads earning less than 26 cents per car-mile, and 13 roads 
earning more than 26 cents per car-mile. In Ohio there are 38 roads earning less than 
26 cents per car-mile, and 9 roads earning more than 26 cents per car-mile. In Massa- 
chusetts there are 10 roads earning less than 26 cents per car-mile, and 12 roads earning 
more than 26 cents per car-mile. 

On comparing statistics gathered from every quarter it will be found that the range 
of receipts from the running of passenger trains is between a minimum of 50 cents 
and a maximum of $3 per train-mile. 

An examination of the tables submitted will also reveal the fact that the wide 
difference apparently between the earnings per train-mile on the several roads prac- 
tically disappears when the receipts per car-mile are compared. And for this reason, 
that where the earnings per passenger-train mile are shown to reach toward the 
maximum, there the number of cars run in each train is correspondingly great, thus 



36 RAILWAY MAIL PAY. 

bringing down the average earnings per car per mile run to nearly the same point in- 
dicated for each car on trains where the number of cars in each train is at the minimum, 
and the receipts per train-mile correspondingly small. 

The smaller earnings per train-mile will thus be seeen to correspond to the fewer 
cars in each train, the higher rate of earnings following an increase in the number of 
the cars. 

Thus it will be evident that the range of the earnings from the passenger cars per 
mile run must be between much narrower limits. 

The most careful estimates have been made, covering a wide field of statistics, 
applying to every railroad in the United States. As a result of this study of the whole 
field the committee are convinced that the average yield per passenger car (as ascer- 
tained by such a multiplicity of methods, each confirmatory of the other) can not be 
very far from 26 cents per car per mile run, the great majority of railroads yielding 
under 26 cents per car per mile. 

This careful analysis of the returns of all the railroads in the United States points 
to the conclusion that as the average yield per car per mile is about 26 cents, if the 
roads receive 5 mills per linear foot per mile run, or at the rate of 25 cents for a 50-foot 
car, at the ordinary speed of 20 miles per hour, they will be getting a rate corresponding 
closely to the returns from all passenger traffic combined, which on the face of it would 
seem to be both just and reasonable. And the committee feel constrained to make 
this further qualification, that the regularity and frequency of the service, the free- 
dom of the railroads from liability, the certainty of the compensation, the exemption 
of the carrier from those expenses ordinarily attending passenger traffic, all combine 
to strengthen the conviction in the minds of the committee that the rate herein rec- 
ommended is both just and reasonable. 

In the annexed correspondence will be found letters from the leading car builders 
showing that the minimum length of passenger cars is 45 feet, the maximum 54 feet; the 
sleeping and drawing-room cars reaching from 60 to 70. The express and baggage cars 
are built from 40 to 50 feet in length. The committee have ascertained that six of the 
principal States in which complete official returns are available show on passenger 
trains a car mileage of 646,348,821 miles, representing 180 companies, of which 41 com- 
panies performed 508,000,000 miles of the car service, or one-fifth of the companies doing 
four-fifths of the service, showing that the greater part of the service is performed on 
the great lines on which the longer cars are used. Upon this data the committee have 
accepted 50 feet as being a fair average of the length of the cars of all description on 
passenger trains. 

SPEED. 

On the general question of speed as a modifying element in making up the rate of 
pay, the committee would say that there has been no attempt to determine the rate of 
increase in cost to the railroads because of increased speed, since this is practically 
impossible. 

Yet it is absolutely certain that an increase of speed must be at an increase of cost 
to the road. By a well-known law in mechanics the increase in the amount of energy 
required, and the wear and tear resulting, is not directly proportional to the rate of 
increase in speed, but multiplies rapidly as the speed arises. This renders any nice 
adjustment on the score of speed very difficult. 

The chief thing to be taken into consideration in connection with speed is the 
greatly enhanced value of the service to the public. If one mail is carried 15 miles 
per hour and another mail is carried at the rate of 35 miles per hour, there ought to 
be a difference in the rate of pay, both because of the difference in the cost of the 
service to the roads, as well as the difference in the value of the service to the public. 

If the higher rates of speed were run only for the postal service, it would be desir- 
able to fix an exact rate, closely graduating pay to speed. But the demands of travel 
and competitions of traffic compel these higher rates of speed apart from the postal 
service. 

While not attempting, therefore, to closely estimate the value of speed in the service, 
the committee felt that any just and reasonable rate must include speed as a factor, 
and they further believe that the result of their recommendations, if they shall be 
adopted, will be to gradually inprove the service, the value of which as a whole 
depends to so great a degree upon the regularity and speed of each particular road. 

In fixing upon the amount to be allowed for different rates, as set forth fully in the 
final recommendations of the committee, they have been guided by several consider- 
ations, such as the previous experience of the department, the opinions of those 
speaking for the railroads, the testimony of experts, and the prompt recognition on 
the part of press and public of every attempt hitherto made to increase the value of 
the postal service through increased facilities. 



RAILWAY MAIL PAY. 37 

It was deemed best that no notice be taken of speed as a factor modifying the rate 
of pay under 20 miles per hour, since all service under this rate of speed, however 
valuable it might be in itself, could not lay claim to special value on account of its 
speed. 

The committee would add one-tenth of a mill to the ordinary rate of 5 mills per 
linear foot per mile run on all railway post-office service for each 2 miles increase in 
speed between 20 and 30 miles per hour; and above 30 miles per hour one-tenth of a 
mill for each additional mile. This increase is not to apply to closed or pouch mails;. 
and speed in every case is to be estimated by the running time between terminals. 

SPECIAL TRAINS. 

The letter herewith submitted from the British post office explains one method of 
enhancing the value of the postal service, which in some of its phases might be appli- 
cable to the railway service in the United States. 

By act of Parliament the postmaster general of Great Britain has power to call upon 
any railway company to carry mails by trains run at such hours as he may direct, and 
at a speed not exceeding the speed of the company's first-class passenger trains, the 
stopping places and the duration of the stoppages being also under his control. For 
services of this class, where the hours of departure and arrival, places of stoppage and 
speed, are placed under the control of the postmaster general, high rates of payment 
are almost inevitable. 

The mails now going out of the great cities are of such volume and weight that it 
might be desirable to arrange for a similar service upon our lines between the great 
centers, where the postal facilities should be of the highest order. The weight at this 
time is so great as to make it a cumbersome element in the composition of passenger 
trains, and yet is hardly sufficient to warrant the payment for trains run exclusively 
for its transportation. 

The day is not far distant when such trains will be fully justified and actually 
necessary. At present the practicable thing is for the postal service, in connection 
with other items of transportation, to contribute its share in maintaining trains 
approaching as nearly as possible the same character of service. 

THE LAW OF COMPETITION. 

Since the railway postal service by the very nature of it is debarred from those- 
advantageous rates of which it might avail itself if competition were possible, it would 
seem but fair and natural that the laws which obtain in competition should also hold 
here, at least in part. 

One well-known authority on transportation, writing of governmental regulation of. 
railroad tariffs, says in reply to the question whether a railroad shall carry its freight 
and passengers for the same that other lines charge, or not carry them at all — 

"All that has to be known by the railroad manager to answer this question is the 
minimum cost at which the service can be performed. If the obtainable rate exceeds 
cost, no matter how little, it becomes his interest to accept the terms offered." * 

The application of this well-known principle in the operation of railroads, so far as 
the mails are concerned, would be, not to argue, in the absence of competition, that the 
mails should be carried as if under competition, at the smallest margin above cost, 
or at the minimum of profit, but rather to argue that the scheme of the committee 
should not be open to fatal objection simply because it did not reach the maximum 
of profit on comparison with other items of passenger traffic; in other words, as the 
Government could not, in justice, demand the railroads to carry the mails at rates so 
low as to be practically unremunerative, so neither could the railroads fairly demand 
the highest possible rate of compensation. 

The rate recommended by the committee would seem to be both just and reasonable, 
inasmuch as it is a mean between these extremes of an unremunerative and an extrava- 
gant rate of compensation. 

SIDE SERVICE. 

The committee think that the universal objection of the railroad companies to 
carrying the mails between stations and post offices is well grounded. The whole 
system is a relic of stagecoach methods, and justice to the roads, as well as perfection 
in the mail service, requires that the duty of the railroads with respect to the mails 
should cease on their delivery to some responsible person at the railway station. 

1 Vide Albert Fink's pamphlet on "Cost of Railroad Transportation, Railroad Accounts, and Govern- 
mental Regulation of Railroad Tariffs." 



38 KAIL WAY MAIL PAY. 

What provision shall be made for this service so as to relieve the railroads of it is a 
matter of detail for the department, not within the purview of this committee. 

We therefore unanimously recommend that this side service, which is no part of the 
legitimate work of the railroads, is prejudicial to the dignity and best interests of the 
service, leaving the mails frequently for an interval in the hands of trainmen whose 
first duty is elsewhere, abridging the facilities of the public, be no longer demanded of 
the railroads, unless specific compensation be given to them for performing it, although 
in the judgment of the committee this would not be the most economical method of 
supplying this service. 

The committee beg to submit herewith such statistical tables and statements pre- 
pared and used by them in reaching their conclusions as bear directly upon the text of 
the report, together with the correspondence in full. > 

A statement in detail of the cost and service on railroad routes is not given in this 
report for the reason that these items are given in full in the annual report of the Post- 
master General. 

RECOMMENDATIONS. 

The committee would, in conclusion, respectfully recommend as follows: 

(1) That the compensation to the railroads for carrying the mails shall be deter- 
mined upon the basis of the space used and the frequency and speed with which the 
mails are conveyed. 

(2) That the space factor shall be determined by the Postmaster General, in view of 
the needs of the service, modified by the weight and frequency of the mails; that the 
speed factor shall be determined by the schedules of the various railroads, in connec- 
tion with the official reports of the Railway Mail Service. 

(3) That the pay for all mail transportation shall hereafter be at a fixed rate per linear 
foot of car per mile run. This rate to cover the entire cost of the service, furniture, and 
fixtures in the car, transportation of postal clerks, etc. 

(4) That the Postmaster General may at any time order an increase or a reduction 
in the amount of space to be paid for if after a weighing it be found that there has been 
a sufficient increase or diminution in the amount of mails transported on any railroad 
to require the same. 

(5) The closed or pouch mails, now carried in express or baggage car, without 
postal clerks accompanying them, requiring no space for distribution en route, shall 
be paid for on the following basis, viz : The aggregate weight of the closed or pouch 
mails carried on any road on all trains for 24 hours shall be made the basis of pay, 
and this aggregate weight reduced to an equivalent in linear feet of car space in the 
following proportions: 

Two hundred pounds of mail or less shall be rated as the equivalent of 6 linear 
inches, to be paid for at the rate of 5 mills per linear foot per mile run. 

Five hundred pounds of mail shall be rated as 1 linear foot, and for each additional 
500 pounds 1 linear foot of car space shall be allowed, with the proviso that the pay 
for transportation of mails upon any railroad route for six round trips per week shall 
not be less than $35 per mile per annum. 

(6) That the side service be discontinued. 

(7) That the pay for railway post offices, at a speed of 20 or less miles per hour 
between termini, be 5 mills per linear foot, inside measurement, of car space per 
mile run, and for each increase of speed amounting to 2 miles per hour up to and 
including 30 miles per hour, one-tenth of a mill; i. e., 22 miles per hour, 5.1 mills; 
24 miles per hour, 5.2 mills; 26 miles per hour, 5.3 mills; 28 miles per hour, 5.4 mills; 
30 miles per hour, 5.5 mills; and for each additional mile per hour, one-tenth of a 
mill. 

And it is further recommended that in the adjustment of space by linear feet for 
railway post offices a daily average of 500 pounds of mail or less shall be entitled to pay 
for space not to exceed 13 feet. From 500 to 1,000 pounds, space not to exceed 15 feet. 
From 1,000 to 2,000 pounds, space not to exceed 25 feet. From 2,000 to 4,000 pounds, 
space not to exceed 40 feet. And we recommend that no change in the allotment of 
space shall be made until the average weight reaches 6,000 pounds. For 6,000 pounds, 
50 feet; for 8,000 pounds, 60 feet — the weight to be ascertained by a weighing of not 
less than 30 consecutive days; and no additional space shall be paid for unless it is 
found to be necessary. 

In all railway post offices the load should not exceed double the greatest weight 
specified for the respective lengths, and for any gross weight carried on two or more 
trains daily the space may be subdivided upon the gradients of space for lower weights, 
as the nature of the service may require, with the further provision that the Postmaster 
General may increase the compensation upon any railroad route not to exceed 50 per 



EAILWAY MAIL PAY. 39 

cent per annum for special mail trains performing service upon schedules fixed by him. 
In all these estimates the minimum car width should be fixed at 8 feet 6 inches, inside, 
measurement. 
Respectfully submitted. 

Rich'd A. Elmer, 
W. B. Thompson, 
Isaac C. Slater, 

Committee. 

[Extract from the report of the joint commission to investigate the postal service, 1901, 56th Cong., 

2d sess., H. R. Rept. No. 2284.J 

SPACE AS THE BASIS OF COMPENSATION. 

The commission has heard much testimony and suggestion as to whether the ad- 
justment of the compensation by weight (excluding for the moment railway post- 
office car compensation) is the fairest method. Many of those who have appeared 
before the commission strenuously contended that "space" occupied would be a 
very much better gauge by which to fix the compensation; that by this standard the 
service rendered would be more accurately ascertained and a schedule of rates fixed 
which would be fairer, to the railroads on the one hand and to the Government on 
the other, than is possible under the present system of adjusting the rates according 
to weight. (Printed testimony, Pt. I, pp. 217, 245, 252., 349, 403, 404, 496, 498, 530, 
560, 607, 644, 672; Pt. II, pp. 27, 148, 160, 411.) 

The commission, while recognizing that the question of "space" must be con- 
sidered as having strong influence upon the question of the reasonableness of the 
present railway-mail pay, feels unwilling to recommend it as the controlling stand- 
ard by which the rates of compensation for the transportation of the mails shall be 
fixed, because of the impossibility, with the evidence before the commission, of 
applying the "space" basis of payment to the carriage of the mails. 

Others have contended that "space" and "speed" combined should be made the 
basis cf compensation, and others still that the basis of compensation should be 
"services rendered," so that the many services and facilities which are now furnished 
by the railroads incidentally and without pay should receive their due proportion 
of compensation. 

Some idea of the value and amount of these incidental services may be obtained 
from a single item appearing in the testimony of the Second Assistant Postmaster 
General (printed testimony, Pt. I, p. 401), where it is shown that out of 27,000 sta- 
tions supplied by messenger sendee 7,000 of them are supplied by the Post Office 
Department at a cost of between $1,000,000 and $1,100,000 per annum, leaving the 
other 20,000 stations to be supplied by and at the expense of the railroads. Attention 
is called especially to this item because it is so frequently referred to by witnesses, 
and also because the Post Office Department, through the reports of its chief officials, 
has so repeatedly disapproved of requiring the railroads to perform this service and 
recommended that they be relieved therefrom. (See also printed testimony, Pt. I, 
pp. 357, 399, 401, 611, 612.) 

* * * * # * * 

RAILWAY POST-OFFICE CARS. 

Until a comparatively short time prior to 1873 the distribution of the mails in 
transit was unknown. Prior to the late sixties the railroads simply transported the 
mails, which were delivered at the post offices and there distributed. Accordingly, 
"weight," as the basis of compensation, was at the time of its adoption and long there- 
after entirely adequate. 

For a few years, however, prior to 1873 the distribution of the mails in transit had 
been practiced to a sufficient extent to satisfy the Post Office Department and Con- 
gress that it was a desirable innovation and a branch of the postal service that should 
be very much enlarged; but it was recognized that if the railroads were not only to 
transport the mail itself but also to supply, equip, and haul post offices for the distribu- 
tion of the mails the compensation upon weight basis that had obtained up to that 
time was not entirely adequate and just, and therefore the law of 1873, as already indi- 
cated, contained a provision allowing additional compensation for railway post-office 
cars. At first these cars were mostly not exceeding 40 or 45 feet in length and of light 
construction similar to baggage and express cars. 

From the policy of the department, however, of constantly demanding better and 
better facilities from the railroads and the introduction of every improvement that 
could be discovered, it has come to pass that to-day the railroad post-office cars, with 



40 EAILWAY MAIL PAY. 

the exception of a few obsolete ones that are being discontinued as rapidly as prac- 
ticable, are elaborate structures, weighing between 90,000 and 100,000 pounds (printed 
testimony, Pt. I, pp. 566 ; 601, 652); built as strongly and fitted up, so far as suitable 
to the purpose for which it is intended, as expensively as the best Pullman and parlor 
cars, costing from $5,200 to $6,500 (printed testimony, Pt. I, pp. 312, 370, 380, 674; 
Pt. II, pp. 72, 87); maintained at a cost of $2,000 per year (printed testimony, Pt. I, 
pp. 312, 370, 374, 602, 608-609); traveling on an average of 100,000 miles per annum 
(printed testimony, Pt. I, pp. 107, 242, 311, 370); provided with the very best appli- 
ances for light, heat, water, and other comforts and conveniences; placed in position 
for the use of the postal authorities from two and a half to seven hours before the 
departure of the train upon which they are to be hauled (printed testimony, Pt. I, 
pp. 611-612), and owing to the small space allowed in them for the actual transporta- 
tion of the- mails, accompanied on the denser lines by storage cars for which no addi- 
tional compensation is paid by the Government (printed testimony, Pt. I, pp. 275, 612) 
and that on the less dense lines the larger bulk of mails is carried in the baggage cars 
without additional compensation for the car. 

These cars are constructed and fitted up by the railroads in accordance with plans 
and specifications furnished by the department, and the amount of mail transported 
therein is determined exclusively by the postal authorities. From these two facts 
it results that the railroad must haul 100,000 pounds of car when the weight of the mail 
actually carried therein is only 3,500 to 5,000 pounds — often very much less and 
occasionally somewhat more. (Printed testimony, Pt. I, pp. 87, 317, 319; Pt. II, 
p. 79.) 

Taking in view all these facts, as disclosed by the testimony filed herewith, we are 
of opinion that the "prices paid * * * as compensation for the postal car serv- 
ice" are not excessive, and recommend that no reduction be made therein so long as 
the methods, conditions, and requirements of the postal service continue the same as 
at present. 

We are confirmed in this conclusion by the testimony bearing upon the question as 
to whether or not it is advisable for the Government to construct, maintain, and own 
the railway post-office cars. Without commenting at large upon the testimony intro- 
duced upon this subject, it suffices for the purposes of this report to say that, so far as 
the testimony discloses, it is highly improbable that the present compensation to the 
railroads for railway post-office cars exceeds in amount what the Government would 
have to pay under the new arrangements, and, furthermore, the expense to the Gov- 
ernment for the construction and maintenance of its own railway post-office cars would 
be very considerable, and the Post Office Department would be under the necessity 
of materially enlarging its present force and the scope of its operations. 

We do not, however, think that the evidence now before us is sufficient to warrant 
us in making any recommendation as to Government ownership of the railway post- 
office cars. 

The main report was signed by Hon. Edward O. Wolcott, chairman, and Hon. W. 
B. Allison. 

Hon. Thomas S. Martin concurred in the report with the exception of that which 
refers to "Special facilities." 

Hon. E. F. Loud concurred in the report so far as it relates to pay upon space. The 
subject of space as a basis he reports upon separately as follows: 

Space, in my opinion, should be the basis of pay, and I reach this conclusion from 
the fact, which must be apparent to everyone who has made a careful study of this 
question, that space is the principal and therefore should be the controlling factor. 

The testimony shows that the average weight of mail carried compared with the 
carrying capacity of the space used is as 1 to 20 and over, which of course renders the 
ratio of unknown factors or uncertainties to known factors or certainties as 1 to 20 
and over. 

The carrying capacity of a given amount of space is easily ascertainable, and when 
obtained it would seem to be not a difficult task to find the carrying capacity of similar 
space either upon freight or passenger trains or both; or, to express myself in another 
way, on the basis of weight the unknown factors are as 20 to 1, while on the basis of 
space the known and unknown would seem to balance and the result more nearly 
scientific and mathematically more accurate. 

It may be urged, and it is the testimony of some, that under the space basis the 
tendency would be unduly to increase the space, hence increase the rate of pay beyond 
what would be fair and just. To admit this would, to my mind, be a conclusion that 
our executive officials are incompetent or corrupt and almost a conclusion that our 
form of government is a failure. Experience has taught me that our officials are 
honest, careful, and painstaking and competent. I believe that a larger degree of 
personal responsibility placed upon the officials would result in a more efficient and 



RAILWAY MAIL PAY. 41 

economical administration, especially of this branch of our governmental affairs, 
which is a business branch wholly. And if this basis be adopted, Congress then as 
now would hold the purse strings and could appropriate for only so much space as it 
saw fit, after a careful investigation of the recommendations of the department and in 
their opinion the demands of the service required. 

Under the present system railway post-office cars, which I denominate space, are 
so small a factor of consideration in the total of mail pay that there is not the incentive 
to curtail space that there would naturally be where space was the whole or at least 
the controlling factor. Under the present system, especially on the light routes 
using railway post-office cars, each increasing pound of weight means increased com- 
pensation. On the basis of space no increase in compensation would result from any 
increase of weight until at least the maximum carrying capacity of the car had been 
reached. Or, to express it another way, it would require substantially the same 
space to distribute 4,000 pounds as 8,000 pounds of mail. It would remove the expen- 
sive and aggravating system of weighing which is now had upon each system once in 
four years. It would simplify the now complex mail system so that the average mind 
could comprehend the subject. 

There will be urged as one of the objections to this system that some of our service 
is pouch service and the space to be occupied is difficult of measurement. That is 
true, but payment for such service could easily be made upon the basis of average num- 
ber carried for a period of 30 days to fix the rate for 1 year. 

The law compelling railroad companies to deliver mail within the limit of 80 rods 
of station should be repealed, and the transportation of mails should be the simple 
question of transportation upon railroads. 

There is not sufficient testimony before the commission, in my opinion, to recom- 
mend what rate should be paid for given space, but the lack of such testimony results 
from the fact that the system of space payment was regarded generally by the com- 
mission as impracticable, and a proper investigation in that direction was not pursued. 

The report of Hon. W. H. Moody, in so far as it may relate to space, is as follows: 

Applying to these facts the fundamental law of transportation, that the cost per unit 
of transportation decreases as the density of the traffic increases, Mr. Adams declares 
that they indicate that there should have been decidedly greater fall of mail than in 
passenger or freight rates. He is led at once to the inquiry whether the rates upon 
the routes where there is the greatest concentration of mail are not excessive. The 
rule of transportation invoked is based upon the assumption that the increase of 
traffic permits the introduction of increased economy, notably the economy which 
results in so loading cars that the ratio of dead weight to paying freight is decreased. 
Yet this economy is precisely what our method of transporting mail denies to the 
railroads. Instead of permitting the mail cars, whether apartment or full postal cars, 
to be loaded to their full capacity, the Government demands that the cars shall be 
lightly loaded so that there may be ample space for sorting and distribution of mail 
en route. In other words, instead of a freight car, we exact a traveling post office. 
The modern GO-foot postal car weight from 80,000 to 100,000 pounds. It is clear that 
if but 2 tons of mail are carried upon it all the economies which result from density of 
traffic upon the route are lost. This is true, although the extra pay for running the 
postal car is about equal to the pay for a ton of mail. 

Mr. Adams recognizes clearly the effect of these facts working against the normal 
operation of the fundamental law of transportation under consideration. He is 
apparently of the opinion that if the facts are as they are claimed to be, namely, 
that on an average but 2 tons of mail are loaded on a postal car, and apartment 
cars are loaded in like proportion, the pay ought not to be reduced. Nevertheless, 
with this concession, he recommends a reduction of pay on the dense routes by extend- 
ing the principle of the existing law, so that all routes carrying in excess of 5,000 
pounds per day shall be subjected to a progressive reduction of from 1 to 12 per cent. 
This would effect a saving of something over a million dollars per annum. It has 
been suggested that there is an inconsistency between the opinion and the recom- 
mendation. I am anxious not to misrepresent Mr. Adams's views and conscious that 
I may do so. But as I understand them there is no inconsistency. He makes the 
recommendation in spite of the opinion, because he is unwilling to accept without 
further inquiry the hypothesis in respect to the loading of cars which has been pressed 
upon us. He is also unwilling to accept without further inquiry the present method 
of loading as a finality. 

In both these respects I agree with him, and join in his opinion, so many times 
expressed, that further investigation is demanded. We all agree that the loading 
of the cars is the "principal question," to use Mr. Adams's expression. It is the one 
point of agreement between the representatives of the railroads, the post-office officials, 



42 RAILWAY MAIL PAY. 

the members of the commission, and its expert. Yet it is the one question upon which 
there is no evidence beyond mere assertion. 

As a result of our deliberations over the voluminous evidence, I have arrived at 
the following conclusions: 

(1) The railway mail pay is not grossly excessive. 

(2) If the mail is loaded in the proportion of paying freight to dead weight, which is 
claimed, then it is not excessive at all. 

(3) There is an uncertainty as to the proportion of paying freight to dead weight, 
which should be removed by investigation. 

(4) An effort should be made to modify existing methods so that savings may be 
made without injustice to the carrier. 

These are some facts which tend to show that an effort to modify existing methods 
of transportation deserves a more minute consideration than a commission constituted 
as this can profitably give. 

Hon. T. C. Catchings concurred in Mr. Moody's report so far as the above is con- 
cerned. 

Hon. William H. Fleming made a separate report, but does not specifically dis- 
cuss space as a basis of compensation excepting in his general treatment of the subject 
of railway post-office car pay. 

STATEMENT OF MR. RALPH PETERS. 

The Chairman. Mr. Peters, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you kindly state your age, residence, and 
occupation ? 

Mr. Peters. Age, 59; residence, Garden City, N. Y.; occupation, 
president of the Long Island Railroad Co. 

The Chairman. Will you kindly explain for the information of the 
committee the official position that you occupy in reference to the 
association which you gentlemen represent in appearing before the 
committee this evening? 

Mr. Peters. I am also chairman of the committee on railway 
mail pay, which was appointed to collate information and look after 
the matter of the question of railway mail pay. At an informal 
meeting before one of the regular meetings of the American Railway 
Association in Chicago, the representatives of the railroads got to- 
gether and a statement was made in regard to the investigation that 
was taking place as to the cost of the handling of mails, and it was 
thought wise to appoint this committee. 

The Chairman. They represent practically what mileage ? 

Mr. Peters. There are 214,275 miles of road operated by 268 
companies^ represented by the committee. 

The Chairman. What is the total railroad mileage, in round 
numbers, in the United States ? 

Mr. Peters. About 250,000 miles, or a little under that. The 
appointment of this committee resulted from the general dissatis- 
faction on the part of the railroads following the reductions in pay 
made in 1907, under the act of Congress making a general reduction 
in the rate of pay. At the same time a change in the divisor was 
made, making a double reduction. At that time the department had 
initiated the inquiry into the general subject of mail pay. Blanks 
had been sent out calling for elaborate data, and some railroad 
representatives who had heard of it and noted from the reports of 
the Postmaster General that an investigation was to take place, 
requested that they be given an opportunity to confer about it. 



KAILWAY MAIL PAY. 43 

These representatives developed the fact that the data required 
could not be furnished in the manner proposed with any degree of 
accuracy and would be valueless, and on their advice the blanks 
were changed and the instructions changed and different blanks were 
sent out. That practically concurs with what General Stewart stated. 
That occurred in 1907, 1908, and the early part of 1909, prior to the 
time I was connected with the committee. 

The Chairman. You are familiar with the attitude of the depart- 
ment in the two suggested bills that have been submitted to the 
committee here, are you not ? 

Mr. Peters. With the first one; yes. I have only glanced over 
the second one and have not had time to study it to the extent that I 
should say I was familiar with it. I am familiar with the general 
scope of the bill. 

The Chairman. Assuming, for the sake of information before the 
committee, that the committee advocates the substitution of space 
for weight as the method of determination of railway mail pay and 
its apportionment among the different railroads of the country, will 
you kindly state for the information of the committee your views rel- 
ative to that suggested change and the views of the organizations that 
you officially represent here before the committee ? 

Mr. Peters. As General Stewart stated, the space basis for the pay- 
ment for the mails is not new. There were bills introduced in Con- 
gress in 1874 and 1876 by Senator Mitchell and Representative Stone 
providing for a system of pay on the basis of space. The Hubbard 
Commission, in 1878, likewise reported on the space basis and recom- 
mended it, but to be in proportion to the weight. The Elmer, Thomp- 
son, and Slater Commission, in 1883, recommended a space basis, but 
the space to be regulated by a gauge of weight or weight gauge. I 
believe the Wolcott and Loud committee, in 1901, reported on a space 
basis, but made no recommendation in regard to it. What we object 
to chiefly in the proposed bills is the plan to pay for the mails on the 
basis of cost and not so much space, space being used merely as a meas- 
ure for apportioning the cost between the different elements on the 
passenger trains. 

The Chairman. You think space would be just as good a yardstick 
as weight ? 

Mr. Peters. No; space is a useful measure for determining the 
relative distribution of service on passenger trains between the 
passenger, the express, and the mail traffic. By this measure of 
service a fairly reasonable comparison of the cost of a passenger 
train and its distribution between the passenger, the express, and 
the mail can be made, but for purposes of comparison only. This 
measure, however, does not represent all the service that is per- 
formed in completing the transportation for which each class of 
service pays. The passenger loads and unloads himself, but expen- 
sive station buildings, ticket offices, platforms, and other conven- 
iences and safeguards must be furnished for the passenger before 
the expense of movement on the train begins. 

In the case of express, other service has to be performed, but it is 
done by the express companies, except that the terminal tracks and 
stations are provided for the express traffic, separate as a rule from 
the great passenger terminals and ticket offices required for the 
passenger. 



44 KAILWAY MAIL PAY. 

In the case of the mail, the distributing post offices must be fur- 
nished several hours in advance of their departure at the terminal 
stations for the mails to be worked. At junction and terminal points 
labor must be furnished for transferring the mails; at local stations 
messenger service must be provided for taking the mails to and from 
the post offices; mail cranes or catchers must be furnished and the 
mails placed upon same for the exchanges. 

In the case of special mail trains special schedules must be made 
for the departure of trains at hours that will best suit the forwarding 
of mails that have been gathered up in the great cities during the 
afternoon and evening. Track facilities, signals, and all other safe- 
guards must be provided to give these special mail trains quick and 
safe movement in preference over all other classes of traffic. Kesponsi- 
bility for the safety of the postal clerks and free transportation for 
inspectors and officers of the department can not be accurately meas- 
ured by space. 

In the case of special R. P. O. cars, or moving post offices, type of 
construction must conform to the requirements of the department by 
a special act of Congress providing special features and facilities for 
the safe and prompt assortment or distribution of the mails en route. 

All of these are points of service which can not be measured by 
space. In the same way we can consider the forwarding of single 
pouches or lock pouches on intermediate trains, constituting frequency 
of service, as another special feature that can not be measured by 
space, and yet is not fully covered by the measure of weight. On 
certain given trains the space can be, with reasonable accuracy, dis- 
tributed between the three kinds of service, but in the majority of 
cases the space fluctuates and varies with every train. This fluctua- 
tion makes it unsafe to adopt space as a measure for fixing the pay. 
Constant friction will arise over the disputes as regarding the space 
furnished, or the space used, or the space allotted for each train. Where 
such conditions exist there will be the possibility of manipulating the 
space, either in favor of or against the railroads or the Government, 
as the case may be. 

Granting that these difficulties might be overcome by some fixed 
rules of measurement, the rate of pay for the space must be made 
large enough to cover all the special facilities furnished outside of the 
train service proper. 

This rate for the space can not be based on cost, as it would result 
in practically 795 rates of pay for the 795 railroads with which the 
department now has contracts, making discriminations and varia- 
tions in the pay for a service that is universal, under universal regu- 
lations and conditions, making more opportunities for manipulation 
and unfair dealings between the department and the railroads. 
These varying rates would make it still more difficult for Congress to 
supervise with any degree of accuracy the expenditures for railway 
mail pay, and, above all, would make most difficult the preparation 
of the estimates for the appropriations necessary to cover the service. 

The fixed rate paid per annum for each mile of road, for the average 
weight carried per mile, with special compensation for the special 
facilities furnished, has for more than 40 years proven to be a fairly 
safe method of pay. Improve this by providing for an annual weigh- 
ing and providing payment for the apartment cars furnished as travel- 
ing post offices, as well as pay for the full R. P. O. cars, with relief 



RAILWAY MAIL PAY. 45 

from the station messenger service, or proper payment therefor, will 
provide the safest and more nearly accurate basis for ascertaining 
the value as well as the measure of service. If space were adopted 
as the measure of service, the value being determined in some arbi- 
trary way, the cost of accurately measuring and checking up the space 
for 30 days each year would probably equal the cost of weighing and 
checking up the weights for the same length of time each year. It 
certainly would be necessary to take the weight of a large portion of 
mail in order to properly measure the space and to adjust the differ- 
ences in regard to the space furnished. It will certainly be necessary 
to check and measure the space provided at least once a year. It 
would not be fair to the Government nor to the railroads to put such 
power in the hands of any executive officer as the arbitrary allot- 
ment, in advance, of the space to be used on each train in each mail 
route during each year, thus determining in advance the amount he 
will pay for the fluctuating service. No fair comparison can be made 
with rates for other service on a basis of pay that is fixed by cost on 
the space measure. 

The Chairman. In practical railroad operations do the railroads 
in any case use space as a measure of service? 

Mr. Peters. I do not know of any. 

The Chairman. Is weight a measure? 

Mr. Peters. Weight is the measure, and yet in the classification by 
which the rates are fixed for different classes of freight the bulky 
articles are given a different rate or a different class, so that space 
may be said to be considered in articles of that kind. Carloads of 
buggies knocked down and crated would take a lower rate than a 
carload of buggies that were all set up on wheels or not altogether 
taken apart. 

The Chairman. But even where your space is the measure, weight 
is the determining factor as to the space used, is it not ? 

Mr. Peters. Yes, as to the space used. 

The Chairman. That is universal, is it, in transportation? 

Mr. Peters. That is universal, to the best of my knowledge and 
belief. I am not an expert on freight tariffs or classification. 

The Chairman. Do you concur in General Stewart's opinion, as 
expressed, that the substitution of space for weight as the measure of 
service rendered is more scientific ? 

Mr. Peters. I do not, for the reason of the objection I have just 
stated. 

The Chairman. And is not in use in any transportation, so far as 
you are aware? 

Mr. Peters. I do not know of any case, so far as I am aware. 

The Chairman. Where are the possibilities for favoritism or 
injustice by the substitution of space for weight, according to your 
mmd? 

Mr. Peters. Employees of the department will be zealous in 
making a record and without the knowledge or any information on 
the part of heads of departments, will endeavor to economize in the 
space. They will endeavor to report that only so much space can be 
used, or that so much space is necessary. There will be differences of 
opinion between the railroad officers reporting the ■space and those of 
the department. As I take it, in this case, the department through 

49396—14 11 



46 KAIL WAY MAIL PAY. 

its representatives is to assign that space themselves without confer- 
ence or consultation with the railroads. 

The Chairman. Necessarily the department's representative would 
have to determine what amount of space would be required, would 
he not ? 

Mr. Peters. That would depend on the amount of mail that was 
given for each run. That varies. There are days when we would have 
every foot of space and more taken up. There would be other days 
when there would not be 20 per cent of the load. Sunday, for 
instance, is a light mail day, and Monday; while Fridays and Satur- 
days are very heavy days. We have to provide extra space and 
extra facilities. 

The Chairman. Do you not have to do that under the present 
modus operandi ? 

Mr. Peters. We do now. 

The Chairman. So that the same objection would lie. But it is 
absolutely necessary, is it not, in the movement of the mails ? 

Mr. Peters. It is necessary in the movement of the mails to take 
care of them. I think the chief objection lies in the fact that 
you make a different rate of pay for each railroad, depending on its 
cost. The two or three railroads lying alongside of each other would 
have varying rates of pay, yet each road is entitled to have just as 
much compensation as any other for carrying the mails for the Gov- 
ernment. If one road is so fortunate, by its careful construction or 
careful management, or its good location, as to show a low cost of 
operation, it has to carry the mail at a very much lower rate than 
another road in the same territory that has a higher cost because of 
its bad location or its poor management. Each road is performing 
practically the same universal service and is entitled to the same gen- 
eral basis of pay. 

The Chairman. The present method is general, is it ? 

Mr. Peters. The present method, as I understand it, is general. 
I think sometimes, in parallel routes or competing routes, there are 
adjustments made by the department that the longer route takes the 
same pay as the shorter route. 

The Chairman. But in practice, you have a universal rate ? 

Mr. Peters. We have a universal rate in practice. 

The Chairman. And it is your contention that under the substitu- 
tion of space for weight it will be absolutely necessary to have a sep- 
arate rate for each one of the 795 railroads ? 

Mr. Peters. On the basis recommended by the department. 

The Chairman. Do the modified views of the department, as pre- 
sented in the bill suggested by the department to the committee, 
in which an allowance would be made on capital charges, modify your 
views at all in reference to your position to the substitution of space 
for weight, or is your opposition a fundamental one that the measure 
of space is impracticable and unfair ? 

Mr. Peters. Practically all of the members of our committee have 
opposed the space basis. They are all confident that it will make more 
difficulty and trouble than they have ever had before. The hardest 
part of Document 105 has been removed by the explanations of 
General Stewart. What we resented in that document and what 
made us feel so bitterly opposed to it was the fact that we 
were represented to the public as being overpaid for a service 



RAILWAY MAIL PAY. 47 

where the compensation has been constantly reduced and more 
and more work placed upon the railroads. There has been 
nothing but reductions in pay for a number of years past, and 
we welcomed this investigation when it was started as presenting 
an opportunity to show that we were not overpaid. Consequently 
when the document came out with the statement that we were over- 
paid $9,000,000 it was very uncomfortable and very disappointing to 
everyone, although we knew positively that we were not overpaid. 
The difference as we make it by the allotment of space as used and 
not as allotted by the department from the records taken in 1909 
makes a difference in favor of the railroads of something like 
$9,600,000 a year. The difference in the method of accounting would 
make a difference of approximately $5,000,000, although I have not 
those figures here, as we eliminated them from our final pamphlet for 
the reason that we did not want to go into too deep a discussion of the 
methods of cost assignment while the Interstate Commerce Commis- 
sion was investigating the question, but in a rough estimate it amounted 
to $ 5,000,000. Interest at 4 per cent on 1.78 per cent of the net capital 
investment of all the railroads would amount to $10,209,000. These fig- 
ures added together would show a difference in our favor of $24,809,000 
per annum. Deduct from that the excess as assumed by the depart- 
ment in Document No. 105, $9,000,000; that would leave a net amount 
of $15,809,000 which we feel the railroads are actually underpaid 
to-day. 

The Chairman. You mean under the present system? 

Mr. Peters. Under the present system of four years weighing and 
no allowance for the apartment cars and no allowance for the very 
heavy station work and terminal work that we have to perform. 
That is the case to-day when we have taken on the parcel post with- 
out any provision whatever being made for giving us additional 
compensation. 

The Chairman. How could a provision be made before a determi- 
nation was reached as to what additional compensation you are 
entitled to % 

Mr. Peters. It might have been cared for by a provision for the 
annual weighing until you had reached a final determination of the 
question, and also with compensation for the apartment car. 

The Chairman. What has the parcel-post extension or the in- 
crease in your activity in fourth-class mail matter to do with pay on 
apartment cars, for which I understand your contention is you are 
underpaid, or not paid at all, as traveling post offices % 

Mr. Peters. There is a greater demand for apartment cars to-day 
than there was before. 

The Chairman. It is an accentuation ? 

Mr. Peters. An accentuation of the case, because they are required 
just as much, or even greater, for the parcels in the local territory 
as before. 

The Chairman. Let me ask you in that connection, if you had a 
special weighing early in the fall to determine what increased business 
was brought upon the transportation companies by the enlargement 
of the fourth-class mail matter through increase in weight limit and 
decrease in cost, would not that remedy the matter ? 

Mr. Peters. Only partly so. We would be carrying the parcels, 
or the increased weight, from the 1st of January until that time of 



48 RAILWAY MAIL PAY. 

weighing, unless you do as we have suggested — adjust back from the 
1st of July on the weights ascertained in October. You can give us 
a reasonable compensation for this increased weight adjusted from 
the 1st of July, with another weighing each following year, until you 
have finally settled the matter. I believe, after your final study of 
the question, that you will have a weighing over the entire country 
every year for about 30 or 35 days. I do not think the cost will 
exceed the cost of the long quadrennial weighing in each of the four 
weighing sections. I do not believe, after you have adjusted the 
matter of bringing all the roads to a change each year, that the annual 
increase will be very much more than the increase that now takes 
place as the result of bringing up the roads in each section every 
four years. I would like very much, if possible, to enter in the record 
merely as an exhibit a copy of our preliminary report on the inves- 
tigation of railway mail pay which gives that table showing the rela- 
tive revenue per 1,000 foot-miles. 

The Chairman. We will be very glad to have it inserted. 



Exhibit A. 



Preliminary Report op the Investigation and Recommendations op the 
Committee on Railway Mail Pay. 

historical. 

January 6, 1911. 
To the railways: 

The history of the handling of mail by railroads may be briefly summarized as 
follows: 

On July 7, 1838, Congress enacted the first law regulating the pay for carrying mail 
on railroads. This law provided that the pay should not exceed 25 per cent more 
than similar service would cost in stage coaches. 

Sy 

The Government was slow to make general use of the limited mileage of the times, 
and, as late as 1842, only 3,091 miles of the 4,026 miles of railroad in existence were 
utilized for mail service. 

By an act of March 3, 1845, the rates for mail pay were divided into three classes, 
paying, respectively, $300, $100, and $50 per mile per annum, and these rates, as fixed 
by the act of 1845, continued in effect until June 30, 1873. 

The developments leading up to the present high stage of efficiency in the Railway 
Mail Service are in the following order: 

The single pouch, with the carrier stopping at each post office to permit the .post- 
master to remove mail addressed to his station, and to deposit mail to be dispatched. 

The distributing post office, where central offices were established for accumulating 
the mail from surrounding stations, sorting, and classifying it for other distributing 
centers for final distribution. While this method served for many years, the delays 
incident to the distribution and the cost of the service resulted in an investigation 
being instituted in 1853, looking to some improvement in method. It was about 
this time the "distributing office on wheels," or the railway post-office car, was first 
suggested. 

Traveling agents. — In 1857 agents were dispatched with the mail to attend to its 
transfer from one route to another. This practice proved successful and resulted in 
a large reduction in the number of distributing offices. 

Distributing on trains. — Prior to 1862 no attempt had been made to distribute 
through mail en route. The postmaster at a large distributing and transfer point, 
desiring to distribute the mail in advance of its arrival at his station, sent clerks out 
on the line a short distance, who sorted the mail in an ordinary baggage or box car, 
performing the service previously performed after the arrival of the pouches at the 
distributing station. Later the railroad provided suitable accommodations in its 
cars and the service was made regular. From this small beginning grew the extensive 
Railway Mail Service as it is known to-day. 

Establishment of a graded schedule for transporting mails and post-office cars. — By the 
act of March 3, 1873, Congress fixed a schedule of mail pay based on weight, together 
with additional rates, based on space, for the movement of specially equipped cars 



KAILWAY MAIL PAY. 



49 



used for the distribution of mail en route. This same act provided for the weighing 
of mails as a basis of payment, weighings to be not less frequent than once in each 
four years. 

The Post Office Department has chosen to direct that the weighing shall be done 
every four years, thus adopting the maximum time allowed by law. 

REDUCTIONS IN PAY. 

The schedule adopted by the act of March 3, 1873, has not been changed since, 
except to reduce the pay as follows: 

(1) The act of July 12, 1876, reduced the rate of pay 10 per cent. 

(2) The act of June 17, 1878, made a further reduction of 5 per cent. 

(3) The act of March 2, 1907, further reduced the pay 5 per cent on all routes moving 
more than 5,000 pounds and not exceeding 48,000 pounds per day, and 10 per cent 
on all weights above 48,000 pounds per day. and also reduced the pay for space in 
railway post-office cars 16 per cent. 

These acts, together with the regulations of the Post Office Department, govern the 
payment for the service rendered by the railroads at the present time. 

Schedule of rates for mail transportation by railroads. 

The maximum compensation for general railroad mail service and for service over 
and-grant railroads is shown in the following table: 1 







Pay per mile per annum. 










Intermediate 








weight war- 






Rates allow- 


ranting allow- 
ance of $1 per 

mile under 
the law of 1873 
and the cus- 
tom of the de- 
partment, sub- 
ject to acts of 


Average weight of mails per day carried over 




Rates allow- 


able to land- 


whole length of route. 


Rates allow- 


able under 


grant rail- 




able under 


acts of July 


roads under 




act of Mar. 3, 
1873. 


12, 1876. and 
June 17, 

1878. 


acts of July 

12, 1876, and 

June 17, 

187S. 








July 12, 1876, 










and June 17,. 










1878. 










Pounds. 


200 pounds 


$50.00 


$42. 75 


#34. 20 




200 to 500 pounds 








12 




75.00 


G4. 12 




500 to 1,000 pounds 








20 


1,000 pounds 


100.00 


85.50 


C8.40 




1,000 to 1,500 pounds 








20 


1,500 pounds 


125.00 


106. 87 


85.50 




1,500 to 2,000 pounds 








20 


2,000 pounds 


150. 00 


128.25 


102. 60 




2,000 to 3,500 pounds 








60 


3,500 pounds 


175.00 


149. 62 


119. 70 




3,500 to 5,000 pounds 








GO 


5,000 pounds 


200. 00 


171.00 


136. 80 









In excess of 5,000 pounds by act of Mar. 2, 1907, and act of May 12, 1910. See note. 2 

1 From information issued by the Second Assistant Postmaster General, 1909. 

2 Note. — For weight in excess of 5,000 pounds and less than 48,000 pounds the following rates: For each, 
2,000 pounds §25 less 10 per cent and 5 per cent and 5 per cent, or $20.30, and for each additional 80 
pounds $1 less 10 per cent and 5 per cent and 5 per cent, or $0.81, for nonland-grant routes: and on land- 
grant roads for each additional 2,000 pounds $25 less 10 per cent and 20 per cent and 5 per cent and 5 per 
cent, or $16.24; and for each additional 80 pounds $1 less 10 per cent and 20 per cent and 5 per cent and 5 
per cent, or $0.04. 

On routes carrying more than 48,000 pounds: For the first 5,000 pounds at same rate as stated abr.vo, 
namely, $171; for the next 43,000 pounds the same rate as above provided, namely, $436. 17; for each addi- 
tional 2,000 pounds at the rate of $19.24, and for each additional 103.96 pounds $1: and on land-grant 
roads for the first 5,000 pounds the same rate as stated above, namely, $136.80, for the next 43,000 pounds 
the same rate as above provided, namely, $348.94; and for each additional 2,000 pounds at the rate of 
$15.39, and for each addtional 129.95 pounds $1. 



50 



KAIL WAY MAIL PAY. 

Railway post office car pay. 



Cars 40 feet in length 

Cars 45 feet in length 

Cars 50 feet in length 

Cars 55 feet or more in length 



Prior to 

July 1, 

1907. 



$25.00 
30.00 
40.00 
50.00 



Subsequent to July 1, 1907. 



$25 per mile per annum. 
$27.50 per mile per annum. 
$32.50 per mile per annum. 
$40 per mile per annum. 



No pro rata compensation authorized for cars which are less than 40 feet in length. 

A full understanding of the pay schedules included in the act of 1873 is of vital 
importance in any consideration of the subject of mail pay, since the item of railway 
post office car pay recognized for the first time the factor of space as well as weight 
in determining the value of the service. Although this schedule has been in opera- 
tion for 37 years, during which period the service has been extended to cover prac- 
tically the entire railroad mileage of the country, nothing has been done to make this 
recognition adequate either by extending the payment to apartment cars or other- 
wise. 

THE CORTELYOU ORDER. 

In addition to the reductions caused by the several acts above mentioned, the Post 
Office Department, under date of March 2, 1907, issued Order No. 165, reading as 
follows: 

"That when the weight of mail is taken on railroad routes the whole number of 
days the mails are weighed shall be used as a divisor for obtaining the average weight 
per day." 

This order was superseded by Order No. 412, under date of June 7, 1907, reading 
as follows: 

"That when the weight of mail is taken on railroad routes the whole number of 
days included in the weighing period shall be used as a divisor for obtaining the aver- 
age weight per day." 

This arbitrary "change of divisor" further reduced the pay about 12 per cent. 

OTHER FACTS AND COMPARISONS. 

The department has also secured, through the cooperation of the railroads, many 
concessions under which the same service is given for less money or better and more 
expensive service for the same money. 

Starting as a mere incident, the handling of mails by the railroads has developed 
into a vast business. The improvement of the service, by the adoption of train sched- 
ules, which greatly expedite the mails, by the construction of stronger and more 
expensive railway post office cars, containing greatly enlarged facilities for assortment 
and distribution in transit, and equipped with modern lighting and heating arrange- 
ments, and the application of various improved devices for gathering and dispatching 
mails, etc., have been the result of the cooperation of the railroads with the Post 
Office Department. In return for this cooperation, the rate of compensation has been 
reduced approximately 33 per cent during the period of development, and at the 
present time the railroads are burdened with a business for which they are inade- 
quately compensated. 

In 1907 the railroads received $49,757,960 for the transportation of the mails, and, 
as a result of the reductions adopted in 1907, the pay for 1908 was $48,155,378, a de- 
crease of $1,602,582, notwithstanding the fact that the increased volume of the mails 
for 1908, as shown by the department's report, produced an increased revenue for 1908, 
over 1907, of $7,893,658. 

The report of the Postmaster General shows that the revenue of the department (and 
consequently the volume of mail handled) in 1910 increased $40,543,652 over that of 
1907, and during the same period the increased cost of handling by the Post Office 
Department was $39,737,936, divided as follows: 

Salaries of post-office clerks increased over $11, 000, 000 

Rural delivery service increased over 10, 000, 000 

City delivery service increased over 8, 000, 000 

Railway postal clerks increased over 4, 000, 000 

Postmasters' salaries increased about 3, 000, 000 

Miscellaneous increased about 3, 700, 000 



KAILWAY MAIL PAY. 51 

But not one cent of increase in payments to the railroads for the hauling and fur- 
nishing cars for the distribution of the vast increase in amount of mail carried, viz, 
over 22 per cent, and producing, as stated, over forty millions of revenue; in fact, the 
railroads were actually paid $352,760 less in 1910 than in 1907. 

Further analysis of the Postmaster General's report shows that in the last 10 years 
there was an increase of postal revenue of over 118 per cent, or $121,774,078. The 
proportion, however, of expenditures for railway mail pay in 1900 was 34 per cent, 
but was only 21 per cent in 1910, a decrease of 13 per cent. 

A feature not generally known or recognized is that the mere delivery of mail in 
cities and by rural carriers costs more than the entire transportation of mails by rail- 
roads, as shown by the following figures taken from the report of the Postmaster Gen- 
eral (p. 42) for the year ended June 30, 1910: 

Transportation of mail on railroads $44, 654, 515. 97 

Railway postal car service 4, 686, 122. 27 

Total pay to railroads 49, 340, 638. 24 

Rural delivery 36, 844, 968. 61 

City delivery 31, 683, 639. 42 

Total for delivery 68, 528, 608. 03 



Excess cost of delivery 19, 187, 969. 79 

ORGANIZATION OF COMMITTEE ON RAILWAY MAIL PAY. 

The general dissatisfaction on the part of the railroads following the reductions in 
pay made in 1907 resulted in the Post Office Department initiating an inquiry into 
the general subject of railway mail. This inquiry was started in March, 1907, and 
blanks, calling for elaborate data, were prepared by the department and conferences 
with the railroads' representatives developed the fact that the data required could 
not be furnished with any degree of accuracy and would prove valueless to the 
department. 

After further consideration the inquiry was resumed by the department, and on 
September 28, 1909, other blanks were sent to certain railroads, requesting informa- 
tion covering certain routes. The data requested covered the service performed 
during November, 1909, on the basis of space occupied by the mails in cars of the 
railroad companies; the receipts and expenditures in detail; comparative statements 
of station expenses incurred on account of mail and express service, and the number 
and cost of the railway post office cars and apartment cars. 

For the purpose of securing uniformity in the basis of compilation, and to prevent 
misunderstanding relative to the method to be used, the committee on railway mail 
pay, representing 282 railroads, with 208,526 miles of line (see Exhibit A), was 
appointed October 12, 1909. 

After the committee was formed it called upon the Postmaster General to explain 
its object and to offer its cooperation with the department in securing the necessary 
information, and, among other things, suggested to the department that all railroads, 
instead of a few, be requested to furnish information for all mail routes, which sug- 
gestion was accepted. 

The committee on railway mail pay has carefully checked the information gathered 
for the Post Office Department, and from this and other information has compiled 
statistics which show that the railroads are carrying the mails for the Government 
on a lower basis of revenue per car foot-mile of space on passenger trains than is 
received for performing either passenger or express service. 

COMPARATIVE STATEMENTS. 

The final results of the tabulation and compilation of the statistics for the month 
of November, 1909, in condensed form, are as-follows: 

Summary of replies to Post Office Department's forms; 187 roads, 2,411 routes, 
178,709.96 miles operated 



52 



RAILWAY MAIL PAY. 



Car foot-miles 

Percentage 

Revenue 

Percentage 

Average revemie per car foot-mile. . 
Average revenue per 1,000 foot-mile 
Ratio of foot-mile revenue 



Mail. 



1,153,110,245 

9. 32 

$3, 721, 796! 04 

7.08 

$0. 003228 

$3.23 

100% 



Passenger. 



9,902,370,150 
80. 01 
$43,738,722.85 
83.26 
$0.004417 
$4.42 
137% 



Express. 



1,320,108,589 

10.67 

$5,075,221.53 

9.66 

$0.003855 

$3.86 

119% 



Total. 



12,375,588,984 

100. 00 

$52, 535, 740. 42 

100. 00 

$0. 004245 

$4.25 



DEDUCTIONS FROM STATISTICS. 



This table represents 77 per cent of the railway mileage of the country, and shows 
that, on the space basis suggested by the Post Office Department, and for an equal 
space, or the same number of car foot-miles, for each class of service, the railroads are 
receiving from express companies 19 per cent more ($8,485,695 per annum) for carrying 
express matter than the Government pays them for carrying the mails, while the trans- 
portation of express is a much inferior and less expensive service; it also shows that 
railroads receive 37 per cent more ($16,524,744 per annum) for carrying passengers than 
the Government is paying them for carrying the mails. In other words, the railroads 
receive for carrying the mails, on the space basis selected by the Department only 84 
per cent of what they receive for an equal amount of space used for express, and only 
73 per cent of what they receive from passenger service on the same basis of space. 

Passenger service paid at the rate of 4.24 mills per car foot-mile. The average 
receipts for everything carried on passenger trains, except mails, are at the rate of 4.35 
mills per car foot-mile. If the Government were to pay for the handling of mail on 
passenger trains the average rate of 4.35 mills per car foot-mile it would in the month 
of November, 1909, have paid over $5,000,000, instead of $3,721,796, or $60,000,000 per 
annum, instead of $44,660,000 to the roads reporting as above. 

The inadequacy of railway mail pay illustrated by the foregoing statement is based 
upon train transportation service alone, but the railroads are required to do more than 
this, viz, to carry the mail between post office and stations at about six-sevenths of 
the offices adjacent to railway stations, rendering an extra service, which is not a 
proper transportation function, which, as estimated by a Postmaster General, would 
cost the Post Office Department $4,393,000 annually if the Government employed 
contractors to do this work. 

The statistics here presented, on the basis adopted by the Post Office Department, 
showing the relative space occupied by mail and express, the revenue car foot-miles, 
etc., fully answer all criticism made in regard to the receipts for hauling express as 
compared with the receipts for hauling mail. On the car foot-mile basis, the railroads 
receive more from express than from the mails, and there is absolutely no similarity 
between the two kinds of traffic except that they are both hauled on passenger trains. 

The statements showing the car foot-mile revenue from express embrace only the 
railroad companies' receipts from the transportation of the express, and do not include 
the portion of revenue accruing to the express companies (except in the case of one or 
two railroads operating their own express service), and still the revenue per car foot- 
mile of express space pays more than the mail. 



OTHER BURDENS PLACED ON THE RAILROADS. 

There are many details of service in connection with the handling of the mails for 
which the railroad companies feel that they are not adequately compensated, among 
which may be stated briefly the following : 

All postal clerks when on duty in railway post-office cars and mail apartment cars 
are carried free in accordance with the law, which reads as follows: 

"Every railway company carrying the mail shall carry on any train which may run 
over its road, and without extra charge therefor, all mailable matter directed to be 
carried, thereon, with the person in charge of same." 

In addition, however, the postal clerks are transported free between the ends of their 
runs and their homes on the line of the railroad and the commissions which are issued 
by the Post Office Department to officers and special agents of the department, post- 
office inspectors, officers of the Railway Mail Service, etc., are honored transportation 
by the railroads; and this transportation, outside of the requirements of the law, 
amounts to over $1,000,000 per annum. 

As it has been frequently decided that they have the same status as passengers, 
the railroads are therefore under legal obligation to these post-office employees in case 



RAILWAY MAIL PAY. 53 

of accident in the operation or management of their trains, and they receive no com- 
pensation whatever as an offset against this liability. The express companies assume 
such liability for their employees. 

Under the laws an allowance is made at a low rate for the handling of about 1,400 
railway post-office cars, which are equipped with conveniences for assorting and 
handling the mails. There are, besides these cars, about 3,800 mail apartment cars 
with apartments similarly fitted with conveniences for the assorting and handling of 
mails for which absolutely no payment is made to the railroads further than the 
allowance for the weight of mail actually carried. 

The railroads therefore receive no more for a ton of mail carried in a specially 
arranged apartment occupying one -half of a car than they do when a similar amount 
of mail is loaded in a small space in one end of a regular baggage car. 

No allowance is made for frequency of service by railroads. A railroad carrying a 
ton of mail on one train receives exactly the same compensation as a road which dis- 
tributes a ton of mail by a considerable number of trains. 

No allowance is made for speed, the rate paid for mail being the same whether it 
is 10 or 20 hours in transit between given points. 

The railroads are also from time to time required to introduce new and expensive 
devices for exchanging mails at local stations and to reconstruct' their railway post- 
office cars. 

Under the system of weighing mail once in four years, as previously mentioned, 
and which weighing constitutes the basis of payment for the following four years, the 
railroads receive absolutely no pay whatever for the increased wi ight per year through- 
out the four-year period. With an estimated increase of 6 per cent per year, the 
railroads are carrying this increased weight of mail at their own expense, thus fur- 
nishing to the Government nearly $3,000,000 worth of service per annum without 
compensation. 

In order to provide some measure of relief, legislation should be enacted for the 
payment for apartment cars at the rate now applying to full railway post-office cars. 

The Post Office Department in selecting the space basis in its requests for informa- 
tion from the railroads has disclosed the fact that the space furnished for carrying 
and handling the mails is of as great importance as the actual weight of mail, and 
should be given consideration in the adjustment of the railway mail pay. 

While 90 per cent of the pay to the railways is for the weight of mail and only 10 
per cent is for space, the actual necessities of the postal service, as met by the railway 
post-office cars and apartment cars, with the station service, including tracks, drive- 
ways, and other conveniences, place a burden upon the railroads very much greater 
than the actual cost of transporting the actual weight of mail carried. 

It has been estimated that about 85 per cent of the mails is now being carried in 
railway post office cars, or apartment cars; and in as much as the average weight carried 
in a full railway post office car is less than 6,000 pounds, it is obvious that the space 
furnished is used for the assorting and not for the mere transportation of mail matter. 

A case aptly illustrating this point has been noted where 58 railway post-office 
and storage cars (42 railway post office cars and 16 storage cars) are handled daily 
between two large and important cities, and carry only 192 tons of mail matter, an 
.average of 3.4 tons per car, yet the necessities of the department and the postal 
service demand this excessive space. The payment for this service on a weight 
basis can not possibly be compensatory. On the other hand, the Government would 
not be able to give the public its present service without such space for distributing 
the mails in transit. 

Weight is not the only thing to be considered; space must also be taken into 
account. 

The railroads should be relieved of the expense of handling mail between stations 
and post offices on short line routes. 

The mails should be weighed annually and the pay should be adjusted annually 
by the Postmaster General, who now has full authority to do so. 

REPORT OF THE WOLCOTT COMMISSION. 

The question of compensation to the railroads for carrying the mails has been 
under review before Congress at different times during the past 12 years. The sub- 
ject was exhaustively investigated by a joint commission of the Senate and House 
of Representatives in 1898 and 1899, which reached the following conclusions after 
full consideration and taking of a mass of testimony on all sides of the question: 

"Upon a careful consideration of all evidence and the statements and arguments 
submitted, and in view of all the services rendered by the railroads, we are of the 
opinion that the prices now paid to the railroad companies for the transportation of 



54 KAIL WAY MAIL PAY. 

the mails are not excessive, and recommend that no reduction thereof be made at 
this time." (See Rept. 2284, House of Representatives, 56th Cong., 2d sees.) 
This commission also concluded as to the pay for railway post-office cars: 
"Taking in view all these facts as disclosed by the testimony filed herewith, we are 
of the opinion that the prices paid as compensation for the postal-car service are not 
excessive, and recommend that no reduction be made therein so long as the methods, 
conditions, and requirements of the postal service continue the same as at present." 
Notwithstanding these recommendations, great injustice has since been done the 
railroads by the many reductions made, both by acts of Congress and by the action of 
the department, without hearing or investigation and notwithstanding the very prompt 
cooperation of the railroads in extending the facilities of the service. 

RECOMMENDATIONS. 

The committee therefore urgently recommend and request: 

(1) That authority be given the Postmaster General to allow compensation for apart- 
ment cars. 

(2) That relief be given for performing messenger service between the railroad sta- 
tions and the post offices on short-line routes. 

(3) That adjustment be made annually of the weight of mail carried per day and 
payments made accordingly. 

Respectfully submitted. 

The committee on railway mail pay, J. Kruttschnitt, chairman, director of 
maintenance and operation, Union and Southern Pacific systems; 
Ralph Peters, vice chairman, president and general manager Long 
Island Railroad; Charles A. Wickersham. president and general man- 
ager, Western Railway of Alabama; W. W. Baldwin, vice president, 
Chicago, Burlington & Quincy Railroad; Frank Barr, vice president 
and general manager, Boston & Maine Railroad; W. W. Atterbury, 
fifth vice president, Pennsylvania Railroad; C. E. Schaff, vice presi- 
dent, New York Central lines; C. R. Gray, senior vice president, St. 
Louis & San Francisco Railroad. 

[Exhibit A.] 

List of railroads supporting the committee on railway mail pay. 

Mileage. 

Alabama Great Southern R. R 309 

Arizona Eastern R. R 347 

Arkansas Central R. R 42 

Arkansas, Louisiana & Gulf Ry 62 

Atchison, Topeka & Santa Fe Ry 5, 564 

Atchison, Topeka & Santa Fe Ry . — Coast lines 1, 974 

Grand Canyon Ry. 

Atlantic Coast Line R. R 4, 554 

Charleston & Western Carolina Ry. 

Conway Coast & Western R. R. 

Baltimore & Ohio R. R 3,450 

Baltimore & Ohio Southwestern R. R 985 

Bangor & Aroostook R. R 628 

Bellefonte Central R. R 27 

Bessemer & Lake Erie R. R 209 

Boston & Albany R. R 392 

Boston & Maine R. R 2, 294 

Buffalo, Rochester & Pittsburgh Ry 573 

Carolina & Northwestern Ry 134 

Carolina, Clinchfield & Ohio Ry 249 

Cedar Rapids & Iowa City Ry 28 

Central Indiana Ry 127 

Central of Georgia Ry 1, 916 

Central R. R. of New Jersey. 598 

Central R. R. of Pennsylvania ^ 31 

Central Vermont Ry 586 

Chesapeake & Ohio Ry 1, 703 

Chesapeake & Ohio Ry. of Indiana 285 



RAILWAY MAIL PAY. 55 

Mileage. 

Chester, Perryville & Ste. Genevieve Ry 99 

Cape Girardeau & Chester R. R. 

Cape Girardeau & Thebes Bridge Terminal R. R. 

Saline Valley R. R. 

Chicago & Alton R. R 981 

Chicago & Eastern Illinois R. R 966 

Chicago & North Western Ry 7, 942 

Pierre, Rapid City & Northwestern Ry. 

Wyoming & Northwestern Ry. 

Chicago & Western Indiana R. R 50 

Belt Ry. of Chicago. 

Chicago, Burlington & Quincy R. R 8, 966 

Chicago Great Western R. R 1, 496 

Chicago, Indiana & Southern R. R 459 

Indiana Harbor Belt R. R. 

Chicago, Indianapolis & Louisville Ry 578 

Chicago, Milwaukee & St, Paul Ry . 7, 481 

Chicago, Peoria & St. Louis Rv. of Illinois 235 

Chicago, Rock Island & Gulf Ry 471 

Chicago, Rock Island & Pacific Ry ; 7, 549 

Cincinnati & Muskingum Valley R. R 149 

Cincinnati, Hamilton & Dayton Ry. 1, 036 

Cincinnati, New Orleans & Texas Pacific Ry 358 

Harriman & Northeastern R. R. 

Cincinnati Northern R. R 205 

Cleveland, Akron & Columbus Ry 194 

Cleveland, Cincinnati, Chicago & St. Louis Ry 1, 848 

Coal & Coke Ry 198 

Colorado Midland Ry 338 

Copper Range R. R 125 

Cornwall & Lebanon R. R. 26 

Cumberland & Pennsvlvania R. R 53 

Cumberland Valley EL. R 162 

Delaware & Hudson Co 780 

Delaware, Lackawanna & Western R. R 957 

Denver & Rio Grande R. R 2,778 

Rio Grande Southern R. R. 

Denver, Northwestern & Pacific Ry 214 

Duluth & Iron Range R. R 169 

Duluth, Missabe & Northern Ry 298 

Durham & Southern Ry 61 

Eastern Ry. of New Mexico 559 

Southern Kansas Ry. of Texas. 

El Paso & Southwestern system 843 

Erie R. R 2, 400 

Bath & Hammondsport R. R. 

New Jersey & New York R. R. 

New York, Susquehanna & Western R. R. 

Evansville & Terre Haute R. R 310 

Evansville & Indianapolis R. R. 

Farmers Grain & Shipping Co.'s R. R 66 

Fitzgerald, Ocilla & Broxton R. R 40 

Flint River & Northeastern R. R 25 

Florida Central R. R 48 

Florida East Coast Ry 583 

Fort Smith & Western R. R 259 

St. Louis, El Reno & Western Ry. 

Fort Worth & Denver City Ry 710 

Wichita Valley Ry. 

Galveston, Houston & Henderson R. R 50 

Georgia & Florida Ry 297 

Georgia R. R 303 

Georgia Northern Ry . of Georgia 68 

Georgia Southern & Florida Ry 395 

Grand Rapids & Indiana Ry 588 

Grand Trunk Ry 1, 159 

Great Northern Ry 7,274 



56 RAILWAY MAIL PAY. 

Mileage. 

Greenwich & Johnsonville Ry 31 

Gulf & Ship Island R. R 307 

Gulf, Colorado & Santa Fe Ry 1, 518 

Hocking Valley Ry 342 

Huntington & Broad Top Mountain R. R 71 

Illinois Central R. R 6, 142 

Indianapolis Southern R. R. 

Yazoo & Mississippi Valley R. R. 

International & Great Northern R. R 1, 106 

Iowa Central Ry 583 

Albia & Centerville Ry. 

Jamestown, Chautauqua & Lake Erie Ry 39 

Kanawha & Michigan Ry 158 

Kansas City, Clinton & Springfield Ry 155 

Kansas City, Mexico & Orient Ry 510 

Kansas City, Mexico & Orient Ry. of Texas. 

Kansas City Southern Ry 865 

Arkansas Western Ry. 

Texarkana & Fort Smith Ry. 

Kansas Southwestern Ry ! . 61 

Lake Shore & Michigan Southern Ry '. 2, 643 

Dunkirk, Allegheny Valley & Pittsburgh R. R. 

Fort Wayne, Cincinnati & Louisville R. R. 

Lake Erie & Western R. R. 

Lake Erie, Alliance & Wheeling R. R. 

Northern Ohio Ry. 

Laramie, Hahns Peak & Pacific Ry 55 

Las Vegas & Tonopah R. R 197 

Lehigh & Hudson River Ry 99 

Lehigh & New England R. R 135 

Lehigh Valley R. R 1,385 

Lexington & Eastern Ry 94 

Long Island R. R 392 

Louisville & Nashville R. R 4,590 

Macon, Dublin & Savannah R. R 92 

Maine Central R. R 932 

Manistee & Grand Rapids R. R 72 

Michigan Central R. R . 1,792 

Minneapolis & St. Louis R. R.. 1,027 

Minneapolis, Red Lake & Manitoba Ry 34 

Minneapolis, St. Paul & Saulte Ste. Marie Ry 3,765 

Mississippi Central R. R 164 

Missouri & North Arkansas R. R 335 

Missouri, Kansas & Texas Ry 2,852 

Missouri, Kansas & Texas Ry. of Texas. 

Missouri Pacific Ry 7,236 

St. Louis, Iron Mountain & Southern Ry. 

Mobile & Ohio R. R 1,206 

Southern Railway in Mississippi. 

Montana, Wyoming & Southern R. R 31 

Montour R. R 18 

Pittsburgh & Moon Run R. R. 

Morgantown & Kingwood R. R 48 

Munising Ry 160 

Lake Superior & Ishpeming Ry. 

Marquette & Southeastern Ry. 

Muscatine North & South Ry 42 

Nashville, Chattanooga & St. Louis Ry 1,230 

Rome R. R. 

Western & Atlantic R. R. 

Natchez, Columbia & Mobile R. R 29 

New Orleans & Northeastern R. R .' 509 

Alabama & Vicksburg Ry . 
Vicksburg, Shreveport & Pacific Ry. 

New Orleans Great Northern R. R 233 

New Orleans, Mobile & Chicago R. R 404 



RAILWAY MAIL PAY 57 

Mileage. 
New Orleans, Texas & Mexico R. R 305 

Beaumont, Sour Lake & Western Ry. 

Orange & Northwestern R. R. 

New York & Ottawa Ry 128 

New York, Auburn & Lansing R. R 35 

New York & Hudson River R. R 3, 295 

Fulton Chain Ry. 

Little Falls & Dolgeville R. R. 

Raquette Lake Ry. 

St. Lawrence & Adirondack Rv. 

Wallkill Valley R. R. 

West Shore R. R. 

New York, Chicago & St. Louis R. R 523 

New York, Ontario & Western Ry 493 

Norfolk & Western Ry 1, 951 

Norfolk Southern R. R 602 

Northampton & Bath R. R 7 

Northern Pacific Ry 5, 698 

Minnesota & International Ry. 

Northwestern Pacific R. R 408 

Oregon Electric Ry 69 

Oregon, Washington R. R. & Navigation Co 1, 561 

Oregon Short Line R. R 1, 595 

Otsego & Herkimer R. R .' 67 

Pacific & Idaho Northern Ry 76 

Pennsylvania Lines West of Pittsburgh 2, 756 

Pennsylvania Co. 

Pitts.,* Cin., Chicago & St. Louis Ry. 
Pennsylvania R. R * 5, 316 

Northern Central Ry. 

Phila., Bait. & Washington R. R. 

West Jersey & Seashore R. R. 

Peoria & Eastern Rv 338 

Pere Marquette R. R 2, 328 

Philadelphia & Reading Ry 1 490 

Atlantic City R. R. 

Gettysburg & Harrisburg Ry. 

Perkiomen R. R. 

Phila., Newton & New York R. R. 

Stony Creek R. R. 

Williams Valley R. R. 

Pittsburgh & Lake Erie R. R 191 

Pittsburgh. Shawmut & Northern R. R 240 

Prescott & Northwestern R. R 105 

Quincy, Omaha & Kansas City R. R 309 

Iowa & St. Louis Ry. 
Richmond, Fredericksburg & Potomac R. R 120 

Washington Southern Ry. 

Rutland R. R 415 

St. Joseph & Grand Island Ry 268 

St. Louis & Hannibal Ry 104 

St. Louis & San Francisco R. R 5, 080 

Fort Worth & Rio Grande Ry. 

Paris & Great Northern R. R. 

St. Louis, San Francisco & Texas Ry. 

St. Louis, Brownsville & Mexico Ry 456 

St. Louis, Rocky Mountain & Pacific Ry 106 

St. Louis Southwestern Ry .' 1, 415 

Eastern Texas R. R. 

Paragould Southeastern Ry. 

Pine Bluff Arkansas River Ry. 

St. Louis Southwestern Ry. of Texas. 

San Antonio & Aransas Pass Ry 724 

San Pedro, Los Angeles & Salt Lake R. R 983 

Sante Fe, Prescott & Phoenix Ry 364 

Seaboard Air Line Ry 3, 028 



58 BAIL WAY MAIL PAY. 

Mileage. 

Sierra Ry. of California 76 

Somerset Ry 94 

Southern Indiana Ry 320 

Chicago Southern Ry. 
Southern Pacific Co 6, 240 

Sunset R. R. 
Sunset Western Ry. 
Southern Ry 7, 235 

Augusta Southern R. R. 

Knoxville & Augusta R. R. 

Knoxville & Bristol Ry. 

Northern Alabama Ry. 

Tennessee & Carolina Southern Ry. 

South Georgia-West Coast Ry 77 

Spokane & Inland Empire R. R 184 

Spokane, Portland & Seattle Ry 516 

Astoria & Columbia River R. R. 

Staten Island Rapid Transit Ry 29 

Sunset Central Lines 3, 384 

Galveston, Harrisburg & San Antonio Ry. 

Houston & Shreveport R. R. 

Houston & Texas Central R. R. 

Houston, East & West Texas Ry. 

Iberia & Vermillion R. R. 

Louisiana Western R. R. 

Morgan's Louisiana & Texas R. R. 

Texas & New Orleans R. R. 

Tennessee Central R. R 294 

Texas & Pacific Ry ] , 885 

Toledo & Ohio Central Ry 482 

Zanesville & Western Ry. 

Toledo, Peoria & Western Ry 248 

Toledo, St. Louis & Western R. R 451 

Tonopah & Goldfield R. R 107 

Trinity & Brazos Valley Ry 459 

Ulster & Delaware R. R 129 

Union Pacific R. R 3, 473 

Vandalia R. R 827 

Virginia & Southwestern Ry 242 

Virginian Ry 474 

Wabash, Chester & Western R. R 65 

Wabash R. R 2, 515 

Wadley Southern Ry 90 

Washington County R. R 139 

Western Alleghany R. R 44 

Western Maryland Ry 576 

George's Creek & Cumberland R. R. 
Western Ry . of Alabama 225 

Atlanta & West Point R. R. 
Wheeling & Lake Erie R. R 543 

Wabash Pittsburgh Terminal Ry. 

West Side Belt R. R. 
Williamsport & North Branch R. R 56 

Eagles Mere R. R. 
Wisconsin Northern R. R 43 

Total (282 roads) 208, 526 

Mr. Peters. You already have our published pamphlet on the 
railways being underpaid, and that is in the record. I have here now 
our principal brief, that goes more into detail in the discussion of all 
these matters. I wouM like also to add this as a matter of record. 

The Chairman. We will be very glad to put it in the record. 



RAILWAY MAIL pay. 59 

Exhibit B. 

An Examination and Analysis of the Postmaster General'j Proposals Con- 
cerning Railway Mail Pay, Prepared Under the Supervision of the Com- 
mittee on Railway Mail Pay, by H. T. Newcomb, Statistician. 

COMMITTEE ON RAILWAY MAIL PAY. 

November, 1909. 

J. Kruttschnitt (chairman), vice president and director of maintenance and opera- 
tion, Union and Southern Pacific Systems. 

Lucius Tuttle, president Boston & Maine Railroad. 

Ralph Peters, president and general manager, Long Island Railroad. 

C. A. Wickersham, president and general manager, Atlanta & West Point Railroad 
and Western Railway of Alabama. 

W. W. Baldwin, vice president, Chicago, Burlington & Quincy Railroad. 

W. F. Allen, secretary. 

December, 1912. 

Ralph Peters (chairman), president, Long Island Railroad. 

C. A. Wickersham, president and general manager, Atlanta & West Point Railroad 
and Western Railway of Alabama. 

W. W. Baldwin, vice president, Chicago, Burlington & Quincy Railroad. 

W. W. Atterbury, vice president, Pennsylvania Railroad. 

Geo. T. Nicholson, vice president, Atchison, Topeka & Santa Fe Railway. 

E. J. Pearson, first vice president, Missouri Pacific Railway. 

E. G. Buckland, vice president, New York, New Haven & Hartford Railroad. 

C. F. Daly, vice president, New York Central Lines. 

W. A. Worthington, assistant director of maintenance and operation, Union and 
Southern Pacific Systems. 

W. F. Allen, secretary. 

Subcommittee of mail experts. 

E. T. Postlethwaite, assistant to president, Pennsylvania Railroad. 

S. C, Scott, assistant to the first vice president, Pennsylvania Lines West of Pitts- 
burgh. 

A. H. Rowan, assistant to the vice president, traffic department, Aew York Central 
Lines. 

H. P. Thrall, mail traffic manager, Union Pacific Railroad. 

J. P. Lindsay, manager mail traffic, Santa Fe System. 

H. E. Mack, manager mail traffic, Missouri Pacific Railway. 

V. J. Bradley, general supervisor mail traffic, Pennsylvania Railroad. 

W. W. Safford, general mail and express agent. Seaboard Air Line Railway 

H. M. Wade, supervisor of mails, Erie Railroad. 

THE MODIFIED EDITION OF DOCUMENT NO. 105. 

There are now extant two editions of Document No. 105. All the figures in the pam- 
phlet to which these pages are annexed are from the first and all references are to the 
same edition. The second or modified edition, published since this pamphlet was 
put in type, changes many of the figures in the original edition, but contains no ref- 
erence to the fact that it is a second edition or any intimation that any of the data have 
been modified. It is known, however, that the modifications were made necessary 
by attention which had been directed to numerous and serious errors in the first 
edition . 

The appearance and paging of both editions are identical, and the only way to dis- 
tinguish one from the other, except by comparing the figures, is to note that on the 
unnumbered page opposite the table of contents the first edition contains the seal of 
the Government Printing Office, while in the second edition the corresponding space 
is occupied by a copy of the resolution of the House of Representatives of March 26, 
1912, authorizing the printing of 2,000 copies for the use of the House Committee on 
the Post Office and Post Roads. 

In order to avoid confusion, on account of the dissimilar figures in these publications 
which bear the same title and an appearance of identity, it is necessary to call atten- 
tion to some of the more important changes and to their effect upon the calculations 
in the annexed pamphlet. 



60 



KAILWAY MAIL PAY. 



As fully demonstrated in this pamphlet, the controlling figure in the Postmaster 
General's calculations is that representing the percentage of the total car-foot mileage 
of passenger trains which he credited to the mail service. In the first edition this was 
stated as 7.16 per cent (Doc. No. 105, p. 59); in the same place in the modified edition 
7.18 per cent appears. Other changes on page 59 of Document No. 105 are as follows: 



Service. 



Mail 
Express 
ng( 

Total 



Car-foot mileage. 



First edition. Second edition. Increase 



926,164,458.83 

1,379,315,759.65 

10,634,749,746.71 



12,940,229,965.19 



932,371,285.37 

1,379,396,873.05 

10,676,112,464.36 



12,987,880,622.78 



6,206,826.54 

81,113.40 

41,362,717.65 



47,650,657.59 



Examining the details of the table the totals of which were changed as above in- 
dicated (Table 3, pp. 38-59) it is found that the changes relate to but two systems 
and that the addition of 6,206,826.54 to car-foot mileage made in the mail service is 
the sum of 500,749.20 car-foot miles added to the Atchison, Topeka & Santa Fe System 
(Doc. No. 105, p. 39) and of 5,706,077.34 miles added to the Pennsylvania System 
(Doc. No. 105, pp. 51-53). The latter item includes additions to the car-foot mileage 
of four of the lines of the system, as follows: Pennsylvania Co., 1,075,046.85; 
Philadelphia, Baltimore & Washington, 58,512.60; Pittsburgh, Cincinnati, Chicago 
& St. Louis, 3,170,586.08; Vandalia, 1,401,931.81. 

The following changes, among others, appear in the totals of Table 7 (Doc. No. 105, 
pp. 280-281). 



Expenses for November, 1909. 


First, edition. 


Second edition. 


rncrcase. 




$7,198,452.91 
2, 676, 503. 75 


$7,206,270.16 
2,682,797.92 


$7,817.25 
6, 291. 17 







The further scrutiny of this table (Doc. No. 105, pp. 272-281) shows that the addition 
in taxes was to the amount stated for the Louisville & Nashville Railroad (p. 274) and 
that the changes in the expenses assigned to the mail service included the effect of this 
addition and of the changes in the car-foot mileage of the Atchison, Topeka & Santa 
Fe (p. 272) and of the various companies of the Pennsylvania System (p. 276). 

Whoever wishes to check all the changes made by the new edition will be able to 
do so by referring to the pages indicated below: 



Changes affecting— 


Pages (both editions). 


Atchison, Topeka & Santa Fe 

Louisville & Nashville 

Pp.rmsylvarn'a C,n. . . . , 


38, 39, 60, 177, 263, 272, 273. 

274, 275. 

50, 51, 63, 191, 260, 261, 276, 277. 


Pennsylvania R. R 

Philadelphia, Baltimore & Washington 


191, 259, 276, 277. 

52, 53, 63, 191, 259, 276, 277. 


Pittsburgh, Cincinnati, Chicago & St. Louis 


52, 53, 63, 191, 193, 261, 276, 277. 


Vandalia 


52, 53, 63, 193, 263, 276, 277. 


Totals and averages 


58, 59, 65, 196, 197, 266, 267, 269, 270, 280, 




281. 



The fact that the important changes which have thus necessitated a revision of 
document No. 105 relate to only three systems suggests that an equally careful check- 
ing of the data reported for all other systems would require still more numerous and 
radical modifications in the Postmaster General's figures. This is especially evident 
when it is understood that the changes so far made have been in recognition of errors 
brought to the attention of the Post Office Department by the railways directly 
affected. Few railways have attempted the arduous task of examining the long and 
complicated computations of the department in order to detect specific errors. 

As already noted, the figures and quotations from Document No. 105 in this pamphlet 
are from the first edition. Some changes would be necessary in order to substitute the 



KAILWAY MAIL PAY. 



61 



figures of the new edition, and the result would not be wholly satisfactory, as both 
editions are in circulation, and, there being no plainly distinguishing mark on either, 
whoever uses a copy of either is likely to regard it as the authoritative and definitive 
issue. The following table indicates the more important changes that would be nec- 
essary to base the annexed pamphlet upon the second, instead of the first, edition of 
Document No. 105: 



Page. 


Line (if 
in text). 


Column 
(if in 
table). 


Instead of— 


To agree with 
the second edi- 
tion of Docu- 
ment No. 105, 
there should 
be— 


9 


10,13 

13-14 

14,19 

3 

6 




$2,676,503.75 

$2,837,093.98 

21.36 

$2,676,503.75 

14.99 

10, 634, 749, 747 

1,379,315,759 

926, 164, 459 

12,940,229,965 

82.18 

10.66 

7.16 

732,379,597 

59,207,170 

564,640,981 

6.89 

4.29 

$4. 36 

226,945,786 

24.50 

54,544 

7,074 

4,750 

66,368 

866 

313 

1,703 

2,882 

1.59 

4.42 

35.85 

4.34 

550,727,960 

14,966,609 

565,694,569 

17,494,235 

35,261,514 

681,670,711 

15, 789, 764 

20,223,120 

46,011,932 

47.44 

3G. 45 

6.32 

80. 79 

2.20 

82. 99 

11.84 

5.17 

210,320,652 

21.28 

23,288,845.22 

24,054,604.27 

10,908,799.55 

778,197,633.71 

5,458,291.78 

8,328,919.73 

3,918,612.45 

210,326,652.31 

18.99 

25. 72 

26.43 

21.28 

$97,186.52 

5.17 

$62,380.54 

$2,673,503.75 

$3,878,431.75 

$2,676,503.75 

$1,189,705.92 


$2,682,797.92 

$2,843,765.80 

21.18 


9 




9 




20 




$2,682,797.92 
14.95 


20 




29 


2 
2 
2 
2 
3 
3 
3 
6 
6 
6 
7 

7 
8 
9 
2 
2 
2 
2 
4 
4 
4 
4 
5 
5 
5 
5 
3 
3 
3 
3 
3 
3 
6 
6 
6 

9 

9 
9 
9 
9 


10,676,112,464 

1,379,396,873 

932,371,285 

12,987,880,622 

82.20 


29 




29 




29 




29 




29 




10.62 


29 




7.18 


29 




773, 742, 314 


29 




59, 238, 284 


29 




612,291,638 


29 




7.25 


29 




4.30 


29 




$4.71 


29 




220, 738, 960 
23.67 


29 




30 




54, 755 
7,075 
4,782 


30 




30 




30 




66, 612 
655 






30 




312 






1,671 


30 




2,638 
1.20 






30 




4.41 




8,21 


34.94 


30 


3.96 






585,923,233 
15,317,133 

601,240,367 
17,994,984 
35, 762, 263 

717,717,258 
15, 289, 015 
19,722,367 


31 








31 








31 








31 








9,965,385 
45.94 


31 








35.55 


31 . 




1.37 






81.64 


31 




2.13 






' 83.77 


31 




11.25 






4.98 


32 


12 
13 


204,079,088 
20.71 






32A 


3 
3 
3 
3 

4 
4 
4 
4 
5 
5 
5 
5 


24,363,892.07 






27,225,190.35 


32 A 




12,310,731.36 


32 A 




783.845,198.45 


32 A 




4,383,244.93 






5,158,333.65 


32A 




2, 516, 680. 64 






204,679,087.57 


32A 




15. 25 






15.93 


32 A 




16.97 






20.71 


36 


24,33 

29,30,31 

36 

33 

19 


$93,614.87 




4.98 


36 




$65,952.19 






$2, 682, 797. 92 


38 




$3,887,725.92 






$2,682,797.02 


47 




$1,192,503.67 



49396— 14- 



-12 



62 



RAILWAY MAIL PAY. 



Pape. 


Line (if 
in text). 


Column 
(if in 
table). 


Instead of— 


To agree w ith 
the second edi- 
tion of Docu- 
ment No. 105, 
there should 
be— 


47 


19 
19 

20 




$3, 866, 209. 67 

$258,430.54 

$3,101,238.48 

7.16 

$7. 16 

.70 

$5,812,277.49 

430,941,968.10 

364,033,119.64 

795,578,087.74 

84. 01 

$4,008,643.06 


$3,875,301.59 
$267, 528. 46 


47 


47 




$3,210,341.52 
7.18 


80 


2 
2 


80 


16,25,27 

8 
8 


' $7.18 


81 


.78 


81 


•2 
2 
2 


$5,905,232.16 

431,210,071.03 

304,370,259.04 

795,580,930.07 

84.50 


83 


83 




83 




83 


11,16 
17 


83... 




$4,003,431.49 







An Examination and Analysis of the Postmaster General's Proposals Con- 
cerning Railway Mail Pay. 

introduction. 



Tins examination and analysis of the recommendation and argument concerning 
railway-mail pay made by the Postmaster General and printed as Document No. 105 
of the Sixty-second Congress, first session, deals with a proposal to reduce the annual 
revenues of the railways by the sum of $9,000,000, which (capitalized at 5 per cent) 
would equal a reduction of $180,000,000 in the value of their property. This reduc- 
tion the Postmaster General proposes to accomplish by a diminution of mail pay 
without any compensatory reduction in the services and facilities demanded by the 
Post Office Department, and in a manner not enabling railway economies in any 
degree offsetting the loss of gross receipts. 

The extent and nature of this proposed reduction and the exceedingly large num- 
ber of errors and omissions in Document No. 105 to which it will be necessary to call 
attention are deemed fully to warrant the length of the paper. 

Especial attention is invited to the following errors which, among others, are found 
in Document No. 105: 

First. All the Postmaster General's calculations and conclusions rest upon data 
tor the single month of November, 1909, a month in which passenger traffic and ex- 
penses were relatively very light and freight traffic and expenses were relatively 
very heavy. (See pp. 43-50.) 

Second. The Postmaster General wholly ignored the necessity (industrial as well 
as constitutional) of a reasonable return upon railway investments, equitably pro- 
portioned to the fair value of railway property, and that this is an inevitable part of 
the cost of railway transportation, confining his attention to operating expenses and 
taxes, which make up only a part of the real cost. (See pp. 35-43.) 

Third. The Postmaster General apportioned joint expenses between the passenger 
and freight services in accordance with a method that does not give the full, real cost 
of the passenger-train services. (See pp. 33-35.) 

Fourth. The Postmaster General ignored important services and facilities rendered 
and supplied by the railways, such as station facilities and terminal services and the 
transportation of postal employees not accompanying the mails, and ignored the 
actual and direct expenditures of the railways for these purposes. (See pp. 9-18.) 

Fifth. The Postmaster General misconceived the nature of working space and 
temporarily unused space in cars carrying mail and not only refused to regard such 
space as required by the postal service, but actually added it to the passenger space. 
(See pp. 19-33.) 

All the foregoing errors and many others demonstrated and discussed in the follow- 
ing pages had the effect, separately and cumulatively, of making the Postmaster 
General's estimates of the cost to the railways of the mail services and facilities they 
supply too low. 



RAILWAY MAIL PAY. 63 

I. THE POSTMASTER GENERAL'S RECOMMENDATION BRIEFLY STATED. 

The Postmaster General's letter to the Speaker of the House of Representatives, 
printed under date of August 12, 1911, but not received by the representative of any 
affected railway until December 8, 1911, with the accompanying reports and tabula- 
tions contained in House Document No. 105 of the first session of the Sixty-second 
Congress, comprises: 

First. A recommendation for a revision of the basis of payment for the railway 
facilities and* services required in connection with the postal service, and, 

Second. A series of reports and tabulations apparently intended to illustrate the 
results which would follow the application of the revised basis of payment that is 
recommended. 

The system of railway mail pay which the Postmaster General thus seeks to have 
substituted for that now in force may, perhaps, be best stated by means of quotations 
from the " tentative draft of proposed law for regulation of railway mail pay " which 
appears on the fourth and fifth pages of Document No. 105. Thus stated, it is pro- 



First. (As to railways the construction of which was not aided by congressional 
grants of land). "The Postmaster General is authorized and directed to readjust the 
pay to companies operating railroads for the transportation and handling of the mails 
and furnishing facilities in connection therewith, not less frequently than once in 
each fiscal year, * - * at a rate of compensation per annum not exceeding the 
cost to the railroad companies of carrying the mails as ascertained by him, and 6 per 
cent of such cost: Provided, That when such ascertained cost and 6 per cent does not 
equal $25 per mile per annum, he may, in his discretion, allow not exceeding such 
rate," and, 

Second. (As to land-grant railways.) "Railroad companies whose railroads were 
constructed in whole or in part by a land grant made by Congress, on the condition 
that the mails should be transported over their roads at such price as Congress should 
by law direct, shall receive not exceeding the cost to them of performing the service." 

The "tentative draft" contains no definition of the manner in which the cost of 
carrying the mails would be or could be ascertained nor as to the elements of cost to 
be considered. Much less does it contain any language suggesting the exclusion from 
consideration of any element of cost. As, upon any_ fair and reasonable basis of ascer- 
tainment, the cost of the postal facilities and services supplied by the railways ex- 
ceeds the sums now paid therefor by the Government they could have no very prac- 
tical objection to the proposed system if it would, in fact, although abandoning the 
proper and customary standards of compensation, increase their mail revenues to an 
amount really in excess of the actual cost. But it is necessary to interpret the Post- 
master General's recommendations in the light of the whole report in which they are 
contained and especially in the light of the following claims which he makes : 

First. That the investigation reported in Document No. 105 discloses the real cost 
to the railways of carrying the mails, and, 

Second. That the enactment of his recommendations would effect a reduction of 
$9,000,000 from present railway-mail pay. 

In his annual report to Congress, dated December 1, 1911, the Postmaster General 
said, concerning this document: 

"During the year the department completed the investigation begun early in the 
administration with the object of determining- what it costs the railways to perform 
this service, and the report of the inquiry was submitted to Congress on the 12th of 
August last. The statistics obtained during the course of the investigation disclosed 
for the first time the cost of carrying mail in comparison with the revenue derived by 
the railways from this service. * * * If Congress gives the recommendation of 
the department in this regard its favorable consideration and authorizes a rt adjustment 
of railway-mail pay in the manner suggested, it is believed that the resulting saving 
to the Government will amount annually to about $9,000,000." (Annual Report of 
the Postmaster General, H. Doc. No. 559, 62d Cong., 2d sess., pp. 19-20.) 

Those portions of Document No. 105 which consist of reports and investigatious 
apparently intended to illustrate the results that would follow the adoption of the 
new basis of payment exclude from consideration, as will more fully appear herein- 
after, all services and facilities except the service of transportation on trains and the 
facility of space in cars occupied while such movement is in actual progress and all 
elements of cost save those of operation and taxes; that is to say, they exclude all the 
primary costs incident to securing the capital necessary to create the property operated. 
Therefore, the Postmaster General's recommendation, if it is not to be regarded as 
wholly inconsistent with the argument that he submits in its support, which is unthink- 
able, is to be held and considered to be a recommendation to reduce railway-mail pay 



64 RAILWAY MAIL PAY. 

below the cost of the facilities and services supplied by ignoring some services and 
fac ilitic s and making payment equal the sum of a part of the elements of cost (that is 
to say, the sum of operating and taxation costs, but not including interest cost) of 
transportation s rvices and train facilities. 

The Postmaster General calls this proposed reduction a "readjustment of railway 
mail pay on the basis of cost with 6 per cent profit" (Doc. 105, p. 3) and estimates, 
as has been seen, that the resultant diminution of mail pay would amount to approxi- 
mately 19,000,000 annually (Doc. 105, p. 3). As the aggregate sum^paid for the 
facilities supplied by the railways during the fiscal year 1911 was $5*0,099, 537. 02, 1 
it is evident that the proposed reduction amounts to about 18 per cent of the gross 
revenue which the railways now derive from this source. The detailed figures of 
Document No. 105, however, indicate that it would be higher. They show (pp. 280, 
281) that during the month of November of the year 1909, the railways included 
received 13,607,773.13 for the postal facilities and services they supplied, while, for 
the same period, the Postmaster General estimates that the train space they furnished 
cost them, in operating expenses and taxes alone, $2,676,503.75. As he does not 
propose to make a return for any other items of cost and proposes to add only 6 per 
cent to the total of these items, it is evident that if his "readjustment" had been in 
effect they would have received 106 per cent of $2,676,503.75, or $2,837,093.98. The 
last-named sum is 21.36 per cent less than $3,607,773.13, the sum these railways were 
paid, and this percentage, of course, approximates the reduction. In this calculation 
no allowance is made for the fact that some railways, that is, land-grant roads, would 
be denied the additional 6 per cent, so that the actual reduction would be somewhat 
more than 21.36 per cent. 

This brief statement discloses the fact that the Postmaster General's recommenda- 
tion really rests upon certain almost obviously incorrect and misleading conclusions 
which are, in part, as follows: 

First. He erroneously assumes that the train space occupied by the mails is a fair 
measure of the services and facilities supplied by the railways, whereas, in fact, they 
perform important terminal and delivery services, supply a vast aggregate of personal 
transportation, furnish extraordinary station facilities, and supply many and costly 
additional services and facilities of which he takes no account. 

Second. He erroneously assumes that expenses in the operation of a railway and 
taxes exacted from it constitute all the cost of the services it renders, thus overlook- 
ing and ignoring the fact that property has to exist before it can be operated and 
that its existence is evidence of the investment of capital, a reasonable return on 
which is a necessary and legitimate element of the cost of transportation, and that 
this element in the case of railways amounts to a very considerable fraction of the 
total cost. 

The foregoing misconceptions of fact are fundamental in character and importance 
and their destructive effect upon the argument of Document No. 105 will be further 
discussed herein. Attention is directed to them at this stage merely because any 
statement of the Postmaster General's plan which failed to note that it rests upon 
these basic inaccuracies would be seriously incomplete. It should also be noted 
at the outset that the second of these misconceptions leads to a rejection of that 
essential principle of fair treatment of the railway carriers of mail proclaimed by the 
Joint Commission to Investigate the Postal Service, which reported in 1901, in part, 
as follows: 

"We are of opinion that the true basis for payment to railroads for mail trans- 
portation should be such sums as will afford the railroads a fair compensation for the 
services rendered." (Fifty-sixth Cong., S. Doc. No. 89, p. 9.) 

And the Joint Postal Commission continued: 

"It seems to the commission that not only justice and good conscience, but also 
the efficiency of the postal service and the best interests of the country demand that 
the railway mail pay shall be so clearly fair and reasonable that while, on the one 

1 The sum reported by the Postmaster General (Postmaster General's Annual Report for 1911, H. Doc. 
No. 559, 62d Cong., p. 49), as the cost of "transportation of domestic mail by railroads," is $50,583,122.96, 
but not all of this sum was paid to railways. The sum so paid was actually $483,585.94 less. The cost, 
as reported, includes the cost of the quadrennial weighing of the mails in one of the four weighing sections. 
of tabulating the results of this weighing, and perhaps other expenditures. The railways actually received 
only $50,099,537.02. This fact was stated by the honorable Second Assistant Postmaster General in a 
letter dated on June 7, 1912, addressed to H. T. Newcomb, statistician to the Committee on Railway Mail 
Pay, which letter is as follows: "In reply to your letter of the 22d ultimo, asking for further information 
relative to the amount actually paid to the railroad companies during the fiscal year ended June 30, 1911, 
I have to advise you that out of the total of $50,583,122.96 there was expended a total of $483,585.94 for pur- 
poses other than railroad transportation." The average annual cost of weighing the mails for the purpose 
of readjusting railway mail pay t stated in Document No. 105 (p. 15) as $400,000. At least this sum should, 
therefore, be deducted from the reported annual cost of railroad services, previous to 1911, in order to 
ascertain the annual aggregates actually received by the railways. 



EAILWAY MAIL PAY. 65 

hand, the Government shall receive a full quid pro quo for its expenditures and the 
Public Treasury be not subjected to an improper drain upon its funds, yet, on the 
other hand, the Railway Mail Service shall bear its due proportion of the expensea 
incurred by the railroads in the maintenance of their organization and business as 
well as in the operations of their mail trains. 

"The transaction between the Government and the railroads should be, and in the 
opinion of the commission is, a relation of contract; but it is a contract between the 
sovereign and a subject as to which the latter has practically no choice but to accept 
the terms formulated and demanded by the former; and therefore it is incumbent 
upon the sovereign to see that it takes no undue advantage of the subject, nor imposes 
upon it an unrighteous burden, nor 'drives a hard bargain' with it." (Ibid., p. 10.) 

It is submitted that these extracts but express considerations that are obviously 
and fundamentally correct and that must prevail wherever justice is respected and 
maintained. But there can be no just compensation when a reasonable return upon 
invested capital is refused and the Postmaster General has confessedly considered 
none of the expenses necessarily incurred in order to procure capital, but only those 
of operation and for taxes. 

II. DETAILED ANALYSIS OF THE POSTMASTER GENERAL' S REPORT. 

Although the argument for a reduction in railway mail pay made by the Postmaster 
General (62d Cong., H. Doc. No. 105) is addressed to the Speaker "of the House of 
Representatives under date as of August 12, 1911, and the congressional order for 
printing was entered on August 15, 1911, the Postmaster General caused its publica- 
tion to be suspended, for the purpose, as it is stated, of making repeated changes and 
corrections, and it was not until December 8, 1911, that the committee on railway 
mail pay, or any of the railways which would be affected by the adoption of the 
recommendations of the report, were able to obtain copies or were advised of its con- 
tents. Soon after obtaining copies of the report, with the accompanying documents 
and tabular statements, and having given consideration to the whole document, the 
committee, by Mr. Kruttschnitt, its chairman, on December 20, 1911, addressed a 
letter to the Speaker, which was, in full, as follows: 

il To the honorable the Speaker of the House of Representatives, Washington, D. C: 

"My Dear Sir: Your attention is respectfully invited to the recently published 
letter from the Postmaster General to the Speaker of the House of Representatives 
(H.Doc. No. 105), submitting a report of his inquiry as to the operations, receipts, 
and expenditures of the raiiroad companies transporting the mails, and recommend- 
ing legislation concerning their compensation therefor. 

"This report has been so recently made public that there has not been sufficient 
time for its detailed examination and analysis, but such scrutiny as has already been 
possible, discloses that the data submitted are incomplete, the figures distorted, the 
presentation unfair, and the conclusions illogical and unwarranted. Among other 
things i it is grossly unjust to the railroads in that: 

"1. Data submitted by the railroads at the request of the Post Office Department, 
which are essential to a complete understanding of the subject, have been withheld 
and suppressed. 

"2. The Postmaster General has arbitrarily transferred to the passenger service 
much of the so-called 'dead' space in mail cars, although this space could not be 
utilized as passenger space, thus improperly increasing the apparent car-foot miles 
of passenger service, and correspondingly decreasing the car-foot miles of mail service. 

"3. The Postmaster General has apportioned expenses incurred for the joint pur- 
poses of the passenger and freight services between these services in accordance with 
a method never accepted by any one with practical experience in railway accounting 
or operation, and condemned by the courts in at least two important cases. In one 
of these cases the opinion of the court states that ' It was conceded that the method 
could be made to produce any desired result. ' 

"4. The Postmaster General has wholly overlooked the fact that a large part of the 
cost incurred by the railways in carrying the' mails, consists of interest on the capital 
they employ. By ignoring all capital expenses, confining his attention to mere 
operating costs, and proposing to return to the railways only the amount of these oper- 
ating costs, plus 6 per cent, he urges a method which, if applied generally to all 
their business, would render every railroad at once bankrupt. 

"In consideration of the foregoing and other errors and omissions in the report, we 
respectfully ask, for the railroad companies, a suspension of judgment and action 
until they have had time to present a complete and satisfactory analysis of the report, 



65 RAILWAY MAIL PAY. 

and of all material and relevant facts. Preparation of such a presentation has been 
undertaken and we request that, when completed, we be given an opportunity to 
place our conclusions before Congress in a suitable manner. 
Very respectfully, yours, 

"The Committee on Kail way Mail Pay, 
"By J. Kruttschnitt, Chairman." 

The next purpose of this report will be to present detailed and convincing evidence 
of each and every assertion in the foregoing letter, and they will be taken up in order. 

First. Data submitted by the railroads at the request of the Post Office Department 
which are essential to a complete understanding of the subject, have been withheld 
and suppressed. 

(a) station and terminal expenses directly incurred on account or mail. 

That the facilities and services supplied by the railways in connection with the 
postal service go far beyond the ordinary incidents of transportation is general ly 
understood, but the fact is substantially ignored in the Postmaster General's report. 
Some of these extraordinary services, being in the nature of terminal and station 
services, are covered by the following extracts from the Postal Laws and Regulations: 

Railroad companies, at stations where transfer clerks are employed, will provide 
suitable and sufficient rooms for handling and storing the mails, and without specific 
charge therefor. These rooms will be lighted, heated, furnished, supplied with ice 
water, and kept in order by the railroad company. (Sec. 1186, second paragraph.) 

The specific requirements of the service as to * * * space required * * * 
at stations, fixtures, furniture, etc., will at all times be determined by the Post Office 
Department and made known through the General Superintendent of Railway Mail 
Service. (Sec. 1186, third paragraph.) 

Railroad companies will require their employees who handle the mails to keep a 
record of all pouches due to be received or dispatched by them, and to check the 
pouches at the time they are received or dispatched, except that no record need be 
kept of a single pouch from a train or station to the post office or from the post office 
to a train or station which, in regular course, is the only pouch in the custody of the 
company's employees at that point while it is being handled by them. This is not 
to be construed as relieving railroad companies from having employees on trains keep 
and properly check a record of all closed pouches handled by them, without excep- 
tion. (Sec. 1187, first paragraph.) 

In case of failure to receive any pouch due, a shortage slip should be made out, 
explaining cause of failure, and forwarded in lieu of the missing pouch. Specific 
instructions in regard to the use of shortage slips will be given by the general superin- 
tendent of Railway Mail Service. (Sec. 1187, second paragraph.) 

Every irregularity in the receipt and dispatch of mail should be reported by the 
employee to his superintendent promptly, and if a probable loss of or damage to mail 
is involved, or if the cause of failure to receive a pouch is not known, the report should 
be made by wire, and the superintendent will notify the division superintendent of 
Railway Mail Service without delay. A copy of the employee's report should be 
attached to and become a part of the permanent pouch record. (Sec. 1187, third 
paragraph.) 

Train pouch records will be kept on file at the headquarters of division superin- 
tendents of railroad companies for at least one year immediately following the date 
the mail covered by them was handled, and shall be accessible there to post-office 
inspectors and other agents of the Post Office Department. Station pouch records 
will be kept on file at the station to which they apply for at least one year immediately 
following the date the mail covered by them was handled, and shall be accessible 
there to post-office inspectors and other agents of the Post Office Department. (Sec. 
1187, fourth paragraph.) 

Railroad companies will require their employees to submit pouch records for exam- 
ination to post-office inspectors and other duly accredited agents of the Post Office 
Department upon their request and exhibition of credentials to such employees. 
(Sec. 1187, fifth paragraph.) 

Every railroad company is required to take the mails from and deliver them into 
all terminal post offices, whatever may be the distance between the station and post 
office, except in cities where other provision for such service is made by the Post 
Office Department. In all cases where the Department has not made other provision, 
the distance between terminal post office and nearest station is computed in and paid 
for as part of the route. (Sec. 1191, first paragraph.) 

The railroad company must also take the mails from and deliver them into all inter- 
mediate post offices and postal stationsl ocated not more than 80 rods from the nearest 



RAILWAY MAIL PAY. 67 

railroad station at which the company has an agent or other representative employed, 
and the company shall not be relieved of such duty on account of the discontinuance 
of an agency without 30 days' notice to the department. (Sec. 1191, second paragraph.) 

At connecting points where railroad stations are not over 80 rods apart a company 
having mails on its train to be forwarded by the connecting train will be required to 
transfer such mails and deliver them into the connecting train, or, if the connection 
is not immediate, to deliver them to the agent of the company to be properly dis- 
patched by the trains of said company. (Sec. 1192.) 

At places where railroad companies are required to take the mails from and deliver 
them into post offices or postal stations or to transfer them to connecting railroads the 
persons employed to perform such service are agents of the company and not employees 
of the postal service, and need not be sworn; but such persons must be more than 16 
years old and of suitable intelligence and character. Postmasters will promptly re- 
port any violation of this requirement. (Sec. 1193.) 

Where it is desirable to have mails taken from the post office or postal station to train 
at a terminal point where terminal service devolves upon the company, in advance 
of the regular time of closing the mails, the company will be required to make such 
advance delivery as becomes necessary by the requirements of the service. (Sec. 
1194.) 

When a messenger employed by the Post Office Department can not wait for a de- 
layed train without missing other mails, the railroad company will be required to 
take charge of and dispatch the mails for the delayed trains, and will be responsible 
for the inward mail until delivered to the messenger or other authorized representa- 
tive of the department. (Sec. 1195.) 

Whenever the mail on any railroad route arrives at a late hour of the night the rail- 
road company must retain custody thereof by placing the same in a secure and safe 
room or apartment of the depot or station until the following morning, when it must 
be delivered to the post office or to the mail messenger employed by the Post Office 
Department at as early an hour as the necessities of the post office may require. (Sec. 
1196.) 

When a train departs from a railroad station in the nighttime later than 9 o'clock, 
and it is deemed necessary to have the mail dispatched by such train, the division 
superintendent of Railway Mail Service will, where mail is taken from and delivered 
into the post office by the railroad company, request the company, or where a mail 
messenger or carrier is employed by the Post Office Department will direct him, to 
take the mail to the railroad station at such time as will best serve the interest of the 
mail service. Such mail will be taken charge of by the agent or other representative 
of the railroad company, who will be required to keep it in some secure place until 
the train arrives, and then see that it is properly dispatched. (Sec. 1197, first para- 
graph.) 

The division superintendent of Railway Mail Service will give reasonable advance 
notice to the proper officer of the railroad company, in order that the agent or repre- 
sentatives of the company may be properly instructed. (Sec. 1197, second paragraph.) 

Railroad companies will be expected to place their mail cars at points accessible 
to mail messengers or contractors for wagon service. If cars are not so placed the 
companies will be required to receive the mails from and deliver them to the 
messengers or contractors at points accessible to the wagon of the messenger or con- 
tractor. (Sec. 1198.) 

A mail train must not pull out and leave mails which are in process of being loaded 
on the car or which the conductor or trainman has information are being trucked from 
wagons or some part of the station to the cars. (Sec. 1199.) 

At all points at which trains do not stop where the Post Office Department deems 
the exchange of mails necessary a device for the receipt and delivery of mails satis- 
factory to the department must be erected and maintained; and pending the erection 
of such device the speed of trains must be slackened so as to permit the exchange to 
be made with safety. (Sec. 1200, first paragraph.) 

In all cases where the department deems it necessary to the safe exchange of the mails 
the railroad company will be required to reduce the speed or stop the train. (Sec. 
1200, second paragraph.) 

When night mails are caught from a crane the railroad company must furnish the 
lantern or light to be attached to the crane and keep the same in proper condition, 
regularly placed and lighted; but if the company has no agent or employee at such 
station, the company must furnish the light, and the care and placing of same will 
devolve upon the department's carrier. (Sec. 1200, third paragraph.) 

The engineer of a train shall give timely notice, by whistle or other signal, of its 
approach to a mail crane. (Sec. 1200, fourth paragraph.) 

The foregoing extracts, all the requirements of which are enforced by fines and 
deductions, disclose the fact that many extraordinary and exaetins: services, involving 



68 BAIL WAY MAIL PAY. . 

responsibility and expense, are required of railway mail carriers in addition to the 
mere transportation of the mails. To transfer mail from stations to post offices railways 
are obliged to employ messengers and to supply vehicles; to furnish rooms for "hand- 
ling and storing the mails," they are obliged to enlarge their stations and to encroach 
upon space needed for yard purposes, and other extraordinary services obviously 
entail considerable expenditures, as well as interference with the orderly routine of the 
other business of the carrying companies. There are also certain requirements of the 
department which are not to be found in the regulations, although no railway feels at 
liberty to oppose or disregard them, such as the common demand that postal cars be 
placed for advance distribution and supplied with heat and light while so used. The 
existence of important elements of cost of this character was not overlooked by the 
Postmaster General at the time the investigation which culminated in his report was 
begun. On the contrary, one of the original set of blanks on which the railways were 
asked to report (Form 2602, see copy reprinted at pages 28 and 29 of H. Doc. No. 105) 
was so entitled as to indicate that it was intended to show the cost of supplying "Station 
service" and "Station and terminal facilities" in connection with the mail. Among 
other things, this form called for the following facts, to be reported separately as to each 
station, which were ignored and excluded in the Postmaster General's estimates of the 
cost of rendering the" service required by the Post Office Department: 

1. Amount of wages paid to messengers and porters employed exclusively in han- 
dling mails. 

2. Portion properly chargeable to mail service, prorated on basis of actual time 
employed, of wages paid to station employees a part of whose time is employed in 
handling mails. 

3. Amount expended for maintenance of horses and wagons and for ferriage, and so 
forth, in connection with mail service. 

4. Rental value, plus average monthly cost of light and heat, of room or rooms set 
apart for the exclusive use of the mail service. 

5. Rental value of tracks occupied daily for advance distribution of the mail. 

6. Average monthly cost of light and heat for postal cars placed daily for advance 
distribution of mail. 

7. Interest at the legal rate upon the value of cranes, catchers, and trucks required 
for mail service. 

8. Total of the previously enumerated items of cost of rendering mail service. 
Over the propriety of including every one of these items as elements in the cost of 

mail service, controversy is impossible. The Postmaster General recognized this 
fact by asking for data under all these heads, statements of all these facts were ren- 
dered by the railways in compliance with his request and the expenditure so reported 
were substantial in their amounts, but it seems subsequently to have been decided 
that the suppression of these data was not inconsistent with a purpose to present an 
accurate and truthful statement of the expenses directly incurred by the railways in 
serving the Post Office Department and all recognition of these expenses was denied 
in the tabulation of the data collected. There is not a figure derived from or rep- 
resenting these data in all of the 270 pages of tabulated statistics of the report. In 
the 18 pages of textual matter there is neither a total nor a conclusion based upon 
them. The summary statement signed by Second Assistant Postmaster General 
Stewart does, however, contain the following: 

"The data reported by the companies on Form 2602 as to expenditures for station 
service and station and terminal facilities furnished were carefully considered, and 
in view of the fact that it was found impossible to ascertain the totals of the accounts 
from which the amounts directly charged on this form should be deducted, and of 
the fact that such data were found to be unreliable in many instances, and of the further 
fact that it was determined that the mail service should participate in all of the station 
expenses upon a basis of car-foot miles, it was decided not to make use of such informa- 
tion in connection with the cost ascertainment." (H. Doc. No. 105, p. 6.) 

The foregoing states, in effect, that the Post Office Department preferred arbitrarily 
to assume that station expenses for mail bear the same relation to total station expenses 
that the car-foot mileage made in mail service bears to the total car-foot mileage of 
passenger trains, rather than to accept data which it had collected that showed a 
different result. The well-founded claim of the railways, a claim that no one acquainted 
with the methods and exactions of the postal service will dispute, is precisely 
to the contrary. Station service and facilities required for mail are greatly in excess 
of those which have been allowed for by the arbitrary method adopted by the Post- 
master General. The facts that the totals of the accounts from which these items 
were deducted were unknown to the department is attributable solely to the fact that 
it did not ask to have these facts reported, they could readily have been obtained 
by means of a supplementary inquiry as other facts were obtained, and the omission 
of the officers conducting the inquiry to ask for information certainly ought not to be 



RAILWAY MAIL PAY. 69 

regarded as a sufficient reason for their failure to tabulate the facts they did obtain. 
-The further suggestion that some of these data were "found to be unreliable," is 
without specification and it is unjust to the railways which at considerable expense 
to themselves, supplied the figures asked for. 

The original reports in the possession of the committee on railway mail pay make it 
possible, in part, to remedy this omission of the Postmaster General and to that end 
the data in these reports have been most carefully and accurately tabulated. The 
committee, dependent upon the voluntary cooperation of numerous tailway officers 
located in many and widely separated cities, was naturally unable to obtain copies 
of all the reports sent to the Postmaster General and its results are, therefore, neces- 
sarily and obviously incomplete. The following aggregates are submitted with 
the observation that they disclose portions only of the expenditures under these 
heads which were incurred by the railways on account of the mails. The reports 
available to the committee on railway-mail pay show that the railways complying 
with its request for copies expended the following sums and reported them to the 
Post Office Department on its Form No. 2602: 



Item. 



Amount of wages paid to messengers and porters employed exclusively in handling mails 

Portion properly chargeable to mail service, prorated on basis of actual time employed, of 

wages paid to station employees a part of whose time is employed in handling mails 

Amount expended for maintenance of horses and wagons and for ferriage, etc., in connection 

with mail service 

Rental value, plus average monthly cost of light and heat, of room or rooms set apart for the 

exclusive use of the mail service 

Rental value cf tracks occupied daily for advance distribution of the mail 

Average monthly cost of light and heat for postal cars placed daily for advance distribution of 

mail 

Interest at the legal rate upon the value of cranes, catchers, and trucks required for mail service. 



Total / i 401, 120. 00 



Amount. 



$79, 980. 84 

198,927.01 

5,040.98 

37, 258. 93 
47,029.12 

18, 400. 5? 
3,895.36 



1 This total includes S9.993.19 reported by four companies which gave totals for these items, but did not 
report the items separately. 

The Postmaster General reported the mail expenses of the railways included in 
Document No. 105, for the month of November, 1909, as $2,676,503.75. It appears, 
therefore, that the omitted expenditures of these railways, for the seven items just 
enumerated, which constitute only a part of the items, he arbitrarily omitted from his 
tabulations, was not less than $401,126 during that month, or 14.99 per cent of the total 
he reported. As this total of $401,126 covers less than 92 per cent of the mail-route 
mileage represented in Document No. 105, it is evident that the true percentage of 
omission is still higher. 

(b) PERSONAL TRANSPORTATION. 

The law enacted by Congress requires railways carrying mails to carry the persons 
in charge thereof without any additional compensation, but by a regulation, which the 
department assumes to have the force of law, the requirement has been extended to 
cover personal transportation for officers, agents, and representatives of the postal serv- 
ice, whether in charge of mails or otherwise. 

"Railroad companies are required to convey upon any train, without specific charge 
therefor, all mail bags, post-office blanks, stationery, supplies, and all duly accredited 
agents of the Post Office Department and post-office inspectors upon the exhibition of 
their credentials." (Postal Laws and Regulations, sec. 1184.) 

> As this personal transportation bears no definite relation to the volume of mail car- 
ried on any particular route, and, whether paid for in any sense or otherwise, its 
amount neither increases nor diminishes the expenses of the Post Office Department. 
As it is, to the persons receiving it, actually free transportation, it is not surprising that 
liberal use of these privileges is made. This travel is particularly extensive oncer- 
tain routes on which the through travel of the representatives and agents of the depart- 
ment is naturally in some degree concentrated, and on such routes it loses all relation 
or proportion to the volume of mail carried or to the amount of mail pay. Further, the 
department demands for postal employees, in both quantity and quality, free trans- 
portation far beyond that accorded to railway employees, and the former, although 
carried free, are in the same class, as regards responsibility for accidental injuries, as 
are paying passengers, a class involving much greater pecuniary liability than that to 
either railway or express employees. 



70 RAILWAY MAIL PAY. 

In the case of express employees the principal liability is assumed by the express 
companies as a part of their contracts with the railways. That, in many instances, 
this privilege of free transportation is so enforced as to deprive the railways of fares, 
both for through travel and for suburban transportation to which they are justly en- 
titled, is beyond denial. That the burden of supplying this extensive volume of 
personal transportation is an important element in the cost of rendering the services 
for which the railways are paid was fully admitted by the Postmaster General when 
he addressed his inquiries to the railways. Form 2602 (see H. Doc. No. 105, p. 28) 
requested the following facts as to each railway : 

1. Number of miles traveled by department officials, inspectors, etc., and railway 
postal clerks not actually in charge of mails. 

2. Value of above, at passenger rates not exceeding 2 cents a mile. 

These questions were answered by the railways and the data asked for are in the 
possession of the Post Office Department, but the report contains no evidence of that 
fact; no use has been made of these data; they have not been compiled, aggregated, or 
compared for the information of Congress; whatever light they would throw upon the 
activities of the postal service or the conditions under which it is aided by the railways 
has been withheld. The only allusion to this information in the report is as follows: 

"The information concerning the personal transportation of railway postal clerks 
and agents of the department when in charge of the mails and when not actually in 
charge of the mails * * * was not used. It was found impracticable to satisfac- 
torily and fully verify it. However, no similar information was given regarding 
travel of officials and employees of the passenger service, and it is believed that the 
omission of these items with respect to the three classes of service has not materially 
affected the results, because there was no specific expenditure for the personal trans- 
portation involved and the mail service participated in the apportioned expenses of 
the passenger service on the car-foot mile basis." (H. Doc. No. 105, p. 6.) 

These figures emanated from sources identical with those from which came all the 
data used by the department and possesses precisely equal reliability. The depart- 
ment has had no more opportunity to check; the other figures than it has to check these. 
Moreover, the suggestion that this omission is immaterial because the expenses of the 
passenger service have been apportioned on a car-foot mile basis is self-contradictory, 
as the apportionment which was made rests upon considering only the space actually 
occupied by mail as chargeable to mail service and charges all other space, including 
that occupied by_ officers and agents of the Post Office Department traveling without 
charge under this requirement, to the other services rendered by passenger trains. 
Surely, if the cost of mail service is to be determined by the space which it requires 
and, in addition to space occupied by mail pouches and postal clerks the department 
also demands and receives space in passenger coaches, dining cars, and Pullman 
sleepers and parlor cars for its officers and agents who pay no passenger fares, space 
which otherwise might be occupied by paying passengers, this space ought to be con- 
sidered as a part of the space chargeable to the mail service. The Postmaster General 
has suppressed the figures as to this travel, although before they were collected he 
obviously believed it to be an element of importance and arranged to ascertain the 
facts. With no intention to reflect discredit upon the purposes of the department it 
is asserted that it was, in fact, unfair to suppress these facts, that it would have been 
unfair not to add the space occupied in travel of this sort to the space occupied by the 
mails, but that the report is even more unfair than this, in that it not merely fails to 
include this space in the estimates of car-foot miles made in the mail service, it not 
merely ignores this travel, but it has actually added the space required for such travel 
to the space occupied by paying passengers. In this manner the free transportation 
accorded to the agents of the mail service has become a means of reducing the estimates 
of the cost of carrying the mails. In other words, this method leads to the absurd 
result that the larger the volume of free travel demanded by the agents of the Post 
Office Department and the more space required by them, the higher would be the pro- 
portion of the total passenger train space which would be assigned to passenger service 
and hence the smaller the portion of the total train cost which would be apportioned 
to the mails. The annual value of this personal transportation not required by law, 
but demanded by the department, exceeds $1,000,000. 

(c) RELATIVE RECEIPTS PROM PASSENGER, EXPRESS, AND MAIL TRAFFIC. 

Although the passenger train services are not proportionately profitable, any just 
comparison of the receipts of the railways from mail traffic with the returns from any 
other passenger train traffic which they carry will show that the mail service falls 
farther below the level of reasonable remuneration than any other among the services 
rendered on such trains. In order to make clear the fact that such a showing would be 
the natural consequence of a comparison made upon the basis chosen by the Postmaster 



KAILWAY MAIL PAY. 



71 



General, that of relative car-foot mileage, the committee on railway mail pay has care- 
fully tabulated data reported to the department in response to his requests, having 
been supplied for that purpose by many railways with duplicate copies of the reports, 
with the results shown by the table on page 20. 

The totals and averages on page 20 have been derived from a painstaking and accu- 
rate tabulation of returns made by 187 railways, operating 2,411 mail routes and 
178,709.96 miles of line, to the Post Office Department in compliance with its request 
and on the forms by its officers prepared. They doubtless epitomize the results which 
would appear from a complete tabulation of all the data received by the department. 

That information as to the relative returns resulting from the different services sup- 
plied by the railways is essential to sound judgment as to the reasonableness of charges 
is elementary and fundamental and it is respectfully submitted that Congress, in con- 
nection with any report concerning railway mail pay is entitled to all the pertinent 
information in the possession of the officer or department making the report. These 
omitted facts were in the possession of the Post Office Department, it had been con- 
sidered worth while to collect them, but again facts of primary significance were with- 
held. These suppressed data were collected on the Postmaster General's inquiry 
blank designated^ as Form 2G04, which is printed on page 30 of House Document No. 
105. No explanation of the reasons for this withholding of available, relevant, and 
important facts is to be found anywhere in the report. 

Second. The Postmaster General has arbitrarily transferred to the passenger service 
much of the so-called "dead" space in mail. cars, although this space could not be 
utilized as passenger space, thus improperly increasing the apparent car-foot miles 
of passenger service, and correspondingly decreasing the car-foot miles of mail service. 

(a) car-foot mileage defined. 

As will more fully appear later in this report (see p. 32 et seq.) the Postmaster General 
has made the relative " car-foot mileage" devoted, respectively, to passengers, to 
express, and to mail, the basis of apportioning operating cost and taxes, and has also 
used the same data as a means of comparing both the present gross receipts and his 
estimates as to net receipts from these different services. Before setting forth the 
manner in which his methods have unjustly diminished the assignment of space to the 
mails and correspondingly increased the assignment to passengers, it is desirable to 
explain clearly the meaning of a "car-foot" and a "car-foot mile," as those units are 
used in the report. Measuring the inside length of a car from end to end and stating the 
length in feet gives the number of "car-feet" for that car. Ascertaining the car-feet 
of each car in a train and aggregating them produces a total which is the number of car- 
feet for the train. In other words, each linear foot of space available for traffic or for 
the handling or service of traffic in a car or train is a "car-foot. " A car-foot combined 
with motive power and moved a mile becomes a "car-foot mile;" multiply the num- 
ber of car-feet in a train by a number equal to the number of miles traversed by the 
train and the product thus obtained measures the movement in terms of car-foot miles. 
Space is ordinarily measured in square feet, and it should be understood that the car- 
foot differs from a square foot in a car in that while the latter consists of 144 square 
inches the former is a linear foot measured clear across the car and, therefore, assuming 
the inside width of the car to be 9 feet, would contain 9 square feet, or 1,296 square 
inches. It should also be clearly understood that the concept of the "car-foot," as 
used by the Postmaster General and in this report, is confined exclusively to those 
portions of the car or train which are required for the occupation or accommodation of 
traffic while the train is in motion and excludes engine and tender lengths as well 
as vestibule and platform space. Another fundamental characteristic of this method 
of admeasurement is that it includes aislo space in passenger coaches, sleepers, and 
parlor cars, as well as smoking rooms, lavatories, toilet rooms, dining cars, and club 
and lounging cars or compartments. 



Item. 



Mail. 



Express. 



Car-foot miles 

Per cent of total 

Receipts 

Per cent of total 

Average receipts per car-foot mile, 

mills 

Average receipts per 1,000 car-foot miles. 

Per cent of average receipts per car-foot 

mile to average from mail 



1,153,110,245 

9 32 

S3, 721, 796^ 04 



3.228 
S3. 23 



100 



1,320,108,589 

10.67 

85,075,221.53 

9.66 

3.855 
S3. 86 

119 



Passenger. 



9,902,370,150 

70.01 

$43,738,722.85 

83. 20 

4.417 
$4.42 

137 



Total. 



12,375,588,984 
100. 00 

$52,535,740.42 
100.00 

4.245 
$4.25 

132 



72 KAIL WAY MAIL PAY. 



b) "dead space" defined. 



The term "dead space" as used by the Postmaster General, is seriously misleading.. 
An analysis of the transportation conditions which are involved readily discloses the 
fact that the space which he so designates belongs invariably to one of two classes. 
It is either (a) working space required for the accommodation of the persons or traffic 
actually in process of transportation, or (6) unused space necessarily provided in 
order to accommodate persons or traffic which may presently seek transportation and 
in such case must be cared.for. The aisles of a passenger car, used for the ingress and 
egress of passengers, the lavatories, the smoking rooms, all dining-car space, etc., con- 
stitute working space, but this space is not properly designated as "dead" space 
unless that term is understood to express neither absence of utility nor of productivity. 
Such space is an absolute necessity of the service. Trains in suburban passenger 
service leave the cities which they serve with the seats nearly all filled, unused space 
accumulates as, at each successive station, more passengers debark than are taken 
up; but this unused space is a necessity of the service and its cost ought unquestion- 
ably to be met by the receipts from this branch of the service. All such space is 
"dead space," as the term has been applied by the Postmaster General, but it is not 
in any sense useless or unnecessary space, much less is it space~ which can be provided 
without cost to the railways or that ought to go unrecompensed by their revenues. 

The obstacle to clear thinking involved in this misleading nomenclature having 
been removed, it is pertinent to observe that, using the term in the sense in which it is 
used in Document No. 105, "dead space," as well as "dead weight," is a universal 
incident of transpoitation upon almost any scale and by almost any means. The 
laborer with his wheelbarrow carries his load in but one direction; the weight of his 
wheelbarrow is "dead weight," the space occupied by the load during one-half of his 
round trip is "dead space "during the other half. The milk wagon making its morning 
rounds accumulates "dead space" as it distributes its "paying load." The grain- 
carrying trans-Atlantic steamers, being unable usually to obtain westbound cargoes 
equal in bulk to the fooelstuffs which they cany eastward, have much "d<~ad space" 
on their westward trips. Railway traffic affords no exception to the general rule. 

Although the genius of rate-making officers has for more than a generation been 
largely devoted to efforts to develop equality of loading in different directions, there 
is no considerable route over which the empty-car movement and the partially 
loaded car movement are not matters of continuing concern. More than this, it is 
not uncommon to have seasonal variations in volume of traffic so that a heavy empty- 
car movement in one direction is unavoidable at one season although during the 
balance of the year there is an equally heavy movement of unloaded cars in the 
reverse direction. "Dead space" is also of importance where, for any reason, the 
load is wholly or partially distributed while the train or car is en route, as, for example, 
in local less-than-car-lot movement of freight and, as already noted, in suburban 
passenger service. 

In the mail service so-called "dead space" of both varieties is unavoidable and 
important in its extent and cost. Closed mail pouches may occupy but a small amount 
of floor space in the end of a baggage car, but this is only a fraction of the space that 
must be provided in their service. In order that pouches may be taken on and put 
off at each mail station there must be "working space" in the car, aisles leading to 
the doors must be kept free and open, and no impediment to prompt and efficient 
handling can be permitted. Rarely, if ever, on any route is the volume of mail 
equal in both directions, and the delivery of mail at intermediate stations is seldom 
equaled by the mail taken up at the same stations. There are many^ cases in which 
larger postal cars, or apartment cars, or more storage cars are required in one direction 
than in the other. Obviously these cars must be returned or the service could not 
be maintained; it is equally obvious that the "dead space" in baggage cars carrying 
closed pouches of mail must equal the difference between the loading with mail at 
any particular time or point en route and the maximum quantity of mail at any time 
or point. Such temporarily unused space is palpably necessary. 

(C) RELATION OP "DEAD SPACE " TO COST OP ANY SERVICE. 

It is perfectly plain that if a car of part of a car must be returned empty or if it must 
be carried during any part of its necessary movement empty, the paying load which 
it has in the other direction or during the balance of the journey ought to bear the 
expenses of the empty movement. The justice of this principle is self-evident — it 
requires neither elaboration nor discussion. As a consequence of the foregoing there 
are, in practice, two < ways in which it would be reasonable to treat the dead space in 
passenger-train service if it should be considered practicable to ascertain the total 
cost of such service and to apportion that total among passengers, express, and mail 



RAILWAY MAIL PAY 



73 



in proportion to the space required. No criticism of the treatment of "dead space" 
would have been made herein had the Postmaster General adopted either of the 
following plans: 

First. Added the "dead space" incident to each branch of service to the paying 
space of that service, or, 

Second. Ignored "dead space" made in all services and made the apportionment 
on the basis of paying space only. 



(d) what the postmaster general did. 

The Postmaster General adopted neither of the foregoing plans. On the contrary, 
he unjustly deducted from the mail service much of the dead space necessarily inci- 
dent to that service and added it to the space attributed to the passenger traffic, although 
before the addition was made passenger space had included all the dead space actually 
incident to the transportation of persons. He insisted on the assignment to passengers 
of "working space" necessary for the mails in baggage cars, although if such space 
were taken away they could not be handled, he refused to regard as mail space reserve 
space where larger cars or compartments than were presently asked for by the de- 
partment were supplied, although the extra space was indispensable in the working 
of the mails, and he transferred to the passenger service unused space when the 
maximum mail movement in one direction exceeded that in the other or such maxi- 
mum was not reached during the period covered by his investigation. 

It may be noted, parenthetically, that even in the reports rendered by the railways 
the space occupied by officers, agents, and representatives of the Post Office Depart- 
ment not in charge of mails, who are furnished with transportation as an incident of the 
carnage of the mails and without any other compensation therefor, had been included 
in the space apportioned to passenger travel — plainly it ought to be considered as 
space assigned to mail service. Express space was made to include all "dead space" 
incident thereto, so that the mail service alone was singled out for exceptional treat- 
ment and in such a way as seriously to understate the demands which it makes upon 
passenger-train service and greatly to reduce the portion of the cost of such train service 
assigned to the mails. These modifications of the data correctly reported, not sus- 
ceptible of justification upon any sound transportation principle, were carried so far 
in the tabulations of the Post Office Department that its results, which are stated for 
railway routes having a total length of 194,977.55 miles (Doc. No. 105, p. 58), show a 
smaller car-foot mileage made in the mail service than was actually reported by the 
railways concerned for routes having a length of 178,709.96 miles. The table on page 
"25 compares the department's total figures for 194,977.55 route miles with the totals of 
reports which it received covering 178,709.96 route miles. 

As the difference between the route miles covered by the department's aggregate 
and by those of the routes whose reports were made available to the committee on 
railway mail pay amounts to 8.34 per cent of the former it would appear that the excess 
of the department's figures of car-foot miles ought, in every case, roughly to approximate 
the same percentage. But the foregoing shows that while the figures of the department 
as to car-foot miles made in the passenger and express service are able to support this 
test of their accuracy the same test demonstrates the inaccuracy of the department's 
figures as to car-foot miles made in the mail service. This may be shown in another 
way. 





Post Office 


Depart- 


Reported by rail- 


Differences. 




ment, 194.977.55 route 
miles. 1 


ways, 178,709.96 route 
miles. 


Excess of depart- 1 Excess of railway's 
ment's figures. figures. 




Car-foot miles. 


Per 
cent of 
total. 


Car-foot miles. 


Per 
cent of 
total. 


Car-foot 
miles. 


Per 
cent of 
depart- 
ment's 
figures. 


Car-foot 
miles. 


Per 
cent of 
depart- 
ment's 
figures. 


Passengers. . 
Express. 


10,634,749,747 

1,379,315,759 

926,164,459 


82.18 
10.66 

7.16 


9,902,370,150 
1,320,108,589 
1,153,110,245 


80. 01 
10.67 
9.32 


732,379,597 
59,207.170 


6.89 
4.29 










Mail 


226.945,786 


24.50 










Total.. 


12,940,229,965 


100.00 


12.375,588,984 


100.00 


564,640,981 


4.36 












______ 



Doc No. 105, pp. 58-59. 



74 



RAILWAY MAIL PAY. 



In the following table the average number of car-foot miles per mile of mail routes 
for each service, as reported by the Post Office Department, is compared with the 
averages resulting from the data reported to the department by the railways. 



Service. 



Average number of 
car-foot miles per 
mail route mile. 



Re- 
ported 

by Post 
Office 

Depart- 
ment. 



Calcu- 
lated 
from 
reports 
of rail- 
ways. 



Excess of aver- 
ages from rail- 
way reports. 



Car- 
foot 
miles. 



Per 

cent of 
depart- 
ment's 
figures. 



Passenger., 
Express... 
Mail 

Total 



54,544 
7,074 
4,750 



55,410 

7,387 
6,453 



806 

313 

1,703 



1.59 

4.42 

35.85 



66,368 



),250 



2,882 



4.34 



The foregoing shows that the extensive modifications of the data showing car-foot 
miles made in the mail service, reported by the railways, have resulted in an average 
for that service, per mile of the mail routes covered, that must be increased by 35.85 
per cent to equal the real average discoverable from the reports rendered by railways 
constituting 92.66 per cent of the mileage covered by the department's report. This 
percentage of difference is more than eight times the percentage resulting from compar- 
ing the department's figures for the express service with those compiled by the com- 
mittee on railway mail pay and more than twenty-two times the difference as to the 
passenger service. It is no doubt true that the omissions in the figures available to 
the committee on railway mail pay are principally those representing mail routes 
having a volume of traffic, in all services, more or less below the averages resulting from 
its tabulations, but while this is freely admitted it is plain that the omitted routes 
could not so greatly offset the average for the mail service as to overcome even a major 
fraction of the enormous difference of 35.85 per cent in the average of car-foot mileage 
for mail service. The omissions may, however, and probably do, account for the 
divergencies as to the other services. The manner in which the data reported by 
particular roads were modified in the Post Office Department, in order to obtain the 
results presented in the last two of the foregoing tables is illustrated by the compari- 
sons on page 27 between the figures reported to the department by the Atchison, 
Topeka & Santa Fe Railway system and those presented in document No. 105 (pp. 
38-39, 60) as representing the same system. 

These comparisons show that the department, without giving any explanation for 
its action, reduced the renorts of car-foot mileage of the Atchison, Topeka & Santa Fe 
Railway made in the mail service 36.45 per cent, while making no material change 
in the data for the other services. 



RAILWAY MAIL PAY. 



t O 





Car-loot miles. 


Per cent of 




As reported 

by the 
company. 


As stated by Post Office Department. 


total space. 


Item. 


Amount. 


Increase. 


Decrease. 


As re- 
ported 
by the 
com- 
pany. 


As 
stated 

by 
Post 
Office 




Amount. 


Per 
cent. 


Amount. 


Per 
cent. 


De- 
part- 
ment. 


Passenger service: 

Space utilized 




550, 727, 960 
14, 966, 609 












80.79 


Dead space 














2.20 


















Total 


592, 065, 162 


565, 694, 569 






26,370,593 


4.45 


81.36 


82.99 










Express service space . . 
Mail service: 

Postal cars space . . . 

Apartment cars 


80, 132, 841 

33, 283, 999 

16,227,758 
5, 190, 173 

782, 710 


80,714,628 

17,494,235 

16,315,089 

1,390,237 

61, 953 


581,787 


0.73 






11.01 

4.58 

2.23 
.71 
.11 


11.84 


15, 789, 764 

"3,799,936 

710, 757 


47.44 

"73.2f 
92.08 


2.57 


87,331 


.54 


2.39 


Closed pouch space . . 
Storage space 


.20 






.01 










Total 


55, 484, 640 


35,261,514 






20,223,126 


36. 45 7. 63 


5.17 










Grand total 


727, 682, 643 / 


681, 670, 711 






46,011,932 


6. 32 1 00. 00 


100.00 















Other changes by the Post Office Department in the car-foot mileage made in the 
mail service, reported in response to its request, are disclosed by the following table: 



Name. 



Atlantic Coast Line 

Baltimore & Ohio 

Bessemer & Lake Erie 

Boston & Maine 

Central of Georgia 

Central R. R. of New Jersey 

Central Vermont 

Chicago & Northwestern : 

Chicago, Burlington & Quincy 

Chicago, Milwaukee & St. Paul 

Chicago, Rock Island & Gulf 

Chicago, Rock Island & Pacific 

Cleveland, Cincinnati, Chicago & St. Louis 

Colorado Midland 

Delaware & Hudson Co 

Delaware, Lackawanna & Western 

Denver & Rio Grande 

El Paso & Southwestern 

Erie 

Fort Worth & Denver City 

Georgia, Southern & Florida 

Grand Rapids & Indiana 

Grand Trunk 

Great Northern 

Illinois Central 

International & Great Northern 

Lake Erie & Western 

Lake Shore & Michigan Southern 

Lehigh Valley 

Long Island 

Louisville & Nashville 

Maine Central 

Michigan Central 

Minneapolis, St. Paul & Sault Ste. Marie.. 



Car-foot miles made in mail service, including dead space. 



As reported by 
company. 



16,800, 

33, 134, 

424, 

14,820, 

6, 030, 

2,162, 

2,265, 

38, 620, 

62, 246, 

46,326, 

1,218, 

38,651, 

21,9.50, 

387, 

3,833, 

4,731, 

5,836, 

2,886, 

11,447, 

1,778, 

2,032, 

2,708, 

5,772, 

43, 456, 

37, 537, 

4, 601 , 

2, 457, 

43,477, 

5,713, 

1,210, 

20,770, 

5,081, 

8,586, 

12,484, 



427. 66 
016. 00 
741.00 
915. 00 
349. 00 
350. 00 
184.00 
970. 80 
130. 00 
237. 00 
058. 00 
162. 00 
549. 00 
863. 00 
87G. 00 
725. 00 
923. 00 
634. 40 
692. 00 
744. 42 
509. 00 
457. 00 
050. 71 
991.00 
425. 00 
135.00 
460. 00 
263.00 
/5S0. 00 
724. 00 
314.00 
903. 00 
016. 00 
886,00 



As reported by 

Postmaster 

General. 



13, 659, 

25,391, 

300, 

11,371, 

5, 245, 

1,530, 

1,907, 

32, 249, 

50, 760, 

35,471, 

1,098, 

30,188, 

17,610, 

294, 

2,270, 

4,387, 

4,710, 

1,5-54, 

10,333, 

1.644, 

1,277, 

2,272. 

4,82], 

30,889, 

25,683, 

3,694, 

1,465, 

40,868, 

4,054, 

953, 

18,191, 

4,472, 

7,176, 

9,286, 



Deducted by Postmaster 
General. 



Amount. 



616. 79 
705. 45 
775. 09 
921.93 
036. 62 
359.74 
204. 00 
574. 98 
723.99 
925. 00 
873. 96 
296. 09 
438. 37 
482. 91 
541.27 
502. 00 
380. 45 
584.86 
747.00 
222. 00 
000. 56 
776. 53 
869.70 
628. 00 
865. 00 
491 . 90 
023. 42 
448.16 
625.25 
315.87 
222. 62 
248. 00 
420. 36 
840.71 I 



3,140,810.87 

7,742,310.55 

123,965.91 

3,448,993.07 

785,312.38 

631,990.26 

357,980.00 

6,371,395.82 

11,485,406.01 

10,854,312.00 

119,184.04 

8,462,865.91 

4,340,110.63 

93,380.09 

1,563,334.73 

344,223.00 

1,126,542.55 

1,032,049.54 

1,113,945.00 

134,522.42 

755,508.44 

435,680.47 

950,181.01 

12,567,363.00 

ll,853,5f0 00 

906,643.10 

992,436.58 

2, 608, SI 4. 84 

1,658,954.75 

257,408.13 

2,579,091.38 

609,655.00 

1,409,595.64 

3,198,045.29 



Per cent. 



18.69 
23.37 
29.19 
23.27 
13.02 
29.23 
15.80 
16.50 
18.45 
23.43 

9.78 
21.90 
19.77 
24.08 
40.78 

7.28 
19.30 
35.75 

9.73 

7.56 
37.17 
Jfi.09 
1 fi. 46 
2b. 92 
31.58 
19.70 
40.38 

6.00 
29.04 
21.26 
12.42 
12.00 
16.42 
25. 62 



76 



EAILWAY MAIL PAY. 



Name. 



Missouri Pacific 

Nashville, Chattanooga & St. Louis 

New York Central & Hudson River 

New York, Chicago & St. Louis 

New York, Ontario & Western 

Norfolk & Western 

Northern Central 

Northern Pacific 

Oregon Railroad & Navigation 

Oregon Short Line 

Pennsylvania Co 

Pennsylvania Railroad 

Peoria" & Eastern 

Philadelphia & Reading and allied lines. . . 

Philadelphia, Baltimore & Washington 

Pittsburgh & Lake Erie 

Pittsburgh, Cincinnati, Chicago & St. Louis 

St. Louis, Iron Mountain & Southern 

St. Louis Southwestern 

San Antonio & Aransas Pass 

San Pedro, Los Angeles & Salt Lake 

Seaboard Air Line 

Southern 

Southern Pacific » 

Texas & Pacific 

Toledo, Peoria & Western 

Union Pacific 

Vandalia 

Virginian 

Wabash 

West Jersey & Seashore 

Wheeling & Lake Erie 

Wichita Valley 1 

Total. 



Car-foot miles made in mail service, including dead space. 



As reported by 
company. 



21,395, 

8,160, 

54,095, 

893, 

1,087, 

8, 707, 

2,894, 

29,073, 

8,411, 

11,588, 

28,747, 

57,819, 

1,814, 

5,226, 

8,336, 

765, 

32,383, 

15,109, 

2,041, 

1,286, 

2,962, 

12,914, 

37,191, 

39,376, 

7,429, 

1,139, 

37,228, 

14. 827, 

544, 

21,132, 

1,132, 

811, 

550, 



240. 00 
447.69 
823. 00 
792. 00 
251. 00 
177. 30 
693. 00 
240. 40 
872. 60 
199.00 
137. 00 
519. 00 
670.00 
386. 04 
728. 00 
207. 00 
524. 00 
450.00 
895. 00 
542.00 
260. 00 
121.00 
602. 00 
418. 00 
705. 00 
212. 00 
978. 00 
412.00 
599. 00 
209.00 
387. 00 
313. 00 
015. 00 



5,524,286.02 



As reported by 

Postmaster 

General. 



16,887, 

6,105, 

49,076, 

837, 

982, 

7,291, 

2, 606, 

19,814, 

5,636, 

7,635, 

23,288, 

46,974, 

1,381, 

3,270, 

7,439, 

674, 

24,054, 

12,382, 

1,611, 

1,155, 

1,878, 

10,403, 

28,983, 

31,010, 

6,271, 

527, 

23, 458, 

10, 908, 

430, 

16,232, 

693, 

577, 

324, 



104. 88 
558. 37 
804. 00 
040.38 
820. 94 

608. 89 
273. 64 
226. 98 
912.25 
493. 00 
845.22 
972. 68 
441.10 
478. 16 
833. 23 
064. 79 
604. 27 
363. 83 

046. 90 
679. 86 
241. 20 
436. 76 
910. 68 
229. 97 
189. 34 
598. 44 
659. 00 
799. 55 
671. 19 
004. 31 
987. 04 
055. 62 
988. 66 



778,197,633.71 



Deducted by Postmaster 
General. 



Amount. 



4,508,135.12 

2,054,889.32 

5,019,019.00 

56,751.62 

104,430.06 
1,415,568.41 

288,419.36 
9,259,013.42 
2,774,960.35 
3,952,706.00 
5,458,291.78 
10,844,546.32 

433,228.90 
1,955,907.88 

896,894.77 

91,142.21 

8,328,919.73 

2,727,086.17 

430,848.10 

130,862.14 
1,084,018.80 
2,510,684.24 
8,207,691.32 
8,366,188.03 
1,158,515.66 

611,613.56 
13,770,319.00 
3,918,612.45 

113. 927. 81 
4,900,204.69 

438,399.96 

234,257.38 

225,026.34 



210,326,652.31 



Percent 



21.07 
25.18 
9.28 
6.35 
9.60 
16.26 
9.96 
31.85 
32.99 
34.11 
18.99 
1-8.76 
23.87 
37.42 
10.76 
11.91 
25.72 
18.05 
21.10 
10.17 
36.59 
19.44 
22.07 
21.25 
15.59 
53.69 
36.99 
26.43 
20.92 
■23.19 
38.71 
28.87 
40.91 



21.28 



Nowhere in the Postmaster General's report is there any explanation of the rea- 
sons for these very extensive changes in the basic data utilized in his calculations, 
nor indeed, is there any intimation that any modifications of importance were made. 
There is no. admission that any changes at all, arbitrary or otherwise, were made save 
in the bare statement on page 6 that discrepancies and inaccuracies were cor- 
rected. It is submitted that this acknowledgment is utterly inadequate recogni- 
tion of changes which, as shown by the statement above, covering only the roads 
named, aggregate 210,326,652 car foot-miles, or an average of 21.28 per cent. Appar- 
ently it was thought to be proper that Congress should be left to understand that, 
barring minor and relatively unimportant corrections, the data reported had been 
obtained from the railways and were, therefore, presumably accepted by them as 
truthful statements of facts. Nothing could be more contrary to the real situation. 
As has been seen, the statements made by the railways were radically reduced in 
nearly every instance; the carriers ass rt and are prepared to sustain the essential 
accuracy of their reports. The units of the department's calculations are necessary 
if its results are to be satisfactorily checked and corrected and the Postmaster Gen- 
eral should be required to transmit the original data to Congress and thus to afford 
an opportunity to trace in detail the changes which he has felt authorized to make 
and for t r sting the validity of these changes and of the resulting averages and aggre- 
gates. By no other means can the true figure s be established with certainty nor can 
the railways otherwise be accorded a fair opportunity to demonstrate the complete 
accuracy of their original recurns. It can be demonstrated that scrutiny of these 
original data and computations would disclose numerous and serious clerical errors 
and omissions by the department, resulting in a further unjust reduction in the train 
space credited to the mails. Such errors have since been conceded by the depart- 
ment in the case of individual roads, the aggregate of the conceded corrections in 
the case of one system being about ] 9,000,000 car foot-miles, and these concessions 
by the department go far to discredit the entire value of Document No. 105. 



EAILWAY MAIL PAY. 



77 



(e) further proof of arbitrary treatment of space. 

The absence of any uniform or rational relation between the car foot-mileage for 
mail service reported in Document No. 105 and the services demanded by and sup- 
plied to the Post Office Department is made fully apparent by an examination of 
the figures given for some of the smaller routes and comparing them with the services 
rendered on those routes. The table on page 30, prepared from the Postmaster Gen- 
eral's Table 8A (Doc. No. 105, pp. 282-283), supplemented, as to the figures of one 
column only, by reference to the annual reports of the Second Assistant Postmaster 
General for the years 1908 to 1911, inclusive, amply demonstrates the truth of this 
statement. 



Route number. 


Length, 

in 
miles. 


Aver- 
age 
daily- 
weight, 

in 
pounds. 


Num- 
ber of 
single 
trips 
during 
Novem- 
ber, 
1909. 


Pound 
miles 
during 
Novem- 
ber, 
1909. 


Service 
miles 
during 
Novem- 
ber, 
1909. 


Car-foot 
miles 
during 
Novem- 
ber, 
1909. 


Pound 
miles 
per 
car- 
foot 
miles. 


Service 
miles 
per 
car- 
foot 
miles. 


139072 


15.23 

6.41 

20.30 

9.62 

17.39 

9.01 

20.38 

29.64 

8.08 

42.40 

16.46 

26.73 

13.15 

10.36 

10.84 

36.03 

61.29 

50.68 

23.22 

39.81 

19.77 

20.09 

21.19 

7.66 

9.66 

6.09 

12.00 

17.11 

36.14 

35.37 

20.09 

5.26 

12.62 

6.28 

3.58 

11.02 

23.60 


148 

94 

52 

74 

113 

65 

126 

82 

14 

98 

78 

37 

94 

205 

175 

152 

85 

53 

93 

130 

42 

67 

133 

169 

208 

128 

177 

96 

136 

192 

54 

148 

26 

88 

140 

112 

120 


50 

60 

60 

100 

50 

100 

100 

60 

100 

105 

100 

75 

50 

150 

100 

104 

5a 

73 

60 

60 

50 

75 

100 

100 

150 

118 

60 

50 

50 

60 

50 

170 

50 

110 

100 

100 

58 


62,621 

18,076 

31,668 

21,356 

58,952 

17,569 

77,036 

72,914 

3,394 

124, 656 

38, 516 

29,670 

37,083 

63,714 

56,910 

164,297 

156,289 

80,581 

64,784 

155,259 

24,910 

40,381 

84,548 

38,836 

60,278 

23,386 

63,720 

49,277 

147,451 

203,731 

32,546 

23,354 

9,844 

16,579 

15,036 

37,027 

84,960 


762 

385 

1,218 

962 

870 

901 

2,038 

1,778 

808 

4,452 

1,646 

2,005 

658 

1,554 

1,084 

3,747 

3,064 

3,700 

1,393 

2,389 

988 

1,057 

2,119 

766 

1,449 

719 

720 

856 

1,807 

2,122 

1,004 

894 

631 

691 

358 

1,102 

1,369 


1,134.90 

194. 06 

1,010.94 

488. 80 

750.98 

449.28 

1,759.20 

1,593.60 

416. 00 

2,280.44 

832. 00 

1,176.07 

604.24 

780.00 

749. 80 

2,830.89 

2, 632. 76 

2,319.52 

1,142.42 

4,867.20 

783.36 

786. 50 

1,544.00 

819. 85 

805. 19 

725.34 

380.70 

582. 40 

3,246.48 

1,810.19 

726. 18 

443.70 

327. 00 

514.60 

179.56 

540.80 

1,013.40 


55 
93 
31 
44 
79 
39 
44 
46 
8 
55 
46 
25 
61 
82 
76 
58 
59 
35 
57 
32 
32 
51 
55 
47 
75 
32 

167 
85 
45 

113 
45 
53 
30 
32 
84 
68 
84 


0.67 


168021 


1.98 


168023 


1.20 


118051 


1.97 


114057 


1.16 


110093 


2.01 


126041 


1.16 


149050 


1.12 


110224 


1.94 


139091 


1.95 


114072 


1.98 


107010 


1.70 


118075 


1.09 


121028 


1.99 


107165 


1.45 


176115 


1.32 


137030 


1.16 


137128 


1.60 


147028 


1.22 


147039 


.49 


114068 


1.26 


126038 


1.92 


107182 


1.37 


107054 


.93 


120034 


1.80 


116077 


.99 


169019 


1.89 


110197 


1.47 


176064 


.56 


168020 


1.17 


127048 


1.38 


114030 


2.01 


114071 


1.93 


120052 


1.34 




1.99 


116021 


2.04 




1.35 







Note.— Columns 2, 3, and 7 are from Document No. 105, Table 8A; column 4 is based on annual reports 
of the Second Assistant Postmaster General for 1908-1911; column 5=2X3X30 days; column 6=column 
2X4; column 8= column 5 -h 7; column 9= column 6-=- 7. 



The foregoing table includes every route having closed-pouch service only and for 
which the data contained in the second, third, and seventh columns are given, rep- 
resented in Table 8 A of the report. The figures in the second, third, and seventh 
columns are taken from that report, and those in the fourth are based upon facts 
shown in successive annual reports of the Second Assistant Postmaster General. The 
figures in the fifth column, headed "Pound miles during November, 1909," are the 
product of those in the second and third columns multiplied by 30; those in the sixth 
column, headed "Service miles during November, 1909," are the product of those 
in the second and fourth columns; those in the eighth are quotients of those in the 
fifth divided by those in the seventh; and those in the ninth are quotients of those 
in the sixth divided by the same divisors. The wide range in the relations disclosed 
by the figures in the last two columns of this table points plainly to the unreliability 



49396—14- 



-13 



78 



KAIL WAY MAIL PAY. 



of the method adopted in assigning car-foot miles, and it is clear that if such incon- 
sistent results are found as to these smaller routes divergencies from the facts at least 
equal in proportions must vitiate the more elaborate and difficult calculations neces- 
sary in connection with the more important mail routes. It is startling, therefore, to 
find that the Postmaster General has assigned a car-foot mile to every 8 pound miles 
in one instance (route No. 110224), while in another the proportion is one car-foot 
mile to 167 pound miles (route No. 169,019). Equally surprising is the variation in 
the relation between service miles and car-foot miles, the range shown by the table 
being from 0.49 service miles (route No. 147039) per car-foot mile to 2.04 (route No. 
116021). 

A particularly strange contrast appears in the Postmaster General's Table 8A be- 
tween route 176064, operated between Plumas Junction and Clio, Cal., by the Sierra 
Valleys Railway, and the route immediately following in the table, which is 168020, 
operated by the Arizona & Colorado Railroad, of the Southern Pacific Co.'s system, 
between Cochise and Gleason, Ariz. These routes are 36.14 and 35.37 miles in length, 
respectively, thus showing a difference in length of only three-quarters of a mile, or 
2.13 per cent. Both routes have closed-pouch service only. Both are now paid at 
the minimum per mile rate, the difference in length giving a difference in annual 
compensation of $32.92. Reference to page 256 of the Annual Report of the Post 
Office Department for the year 1910 shows that on route 176064 the service is six 
times per week in both directions, while page 238 of the same report shows that on 
route 168020 the service is seven times per week. The average daily weight of mails 
given in Document No. 105 for these routes is 136 and 192 pounds, respectively. 
Here, then, are two routes that present no wide or marked difference of any sort; they 
carry about the same distance very similar quantities of mail, in the same manner, 
and with little difference in frequency of service. It would be reasonable to suppose 
that the car-foot mileage assigned to these routes would not vary more than these 
controlling conditions of service, but such is not the case. The route carrying only 
136 pounds of mail daily (176064) has been assigned 3,246.48 car-foot miles, and the 
route carrying 192 pounds has been assigned only 1,810.19 car-foot miles. Thus an 
excess of 79.34 per cent in the car-foot miles assigned to route 176064 over those 
assigned to route 168020 rests upon no more substantial basis than 16.67 per cent more 
frequent service and 2.13 per cent greater length of haul and is, despite an excess of 
average daily weight, on the latter route of 41.18 per cent. Curiously enough, the 
vagaries of the methods followed by the department provide an offset for this assign- 
ment of 80 per cent more car-foot miles to one route than to the other, and Table 8A 
further shows that the Postmaster General estimates the cost incurred in its mail 
service of the route which, he says, made 3,246.48 car-foot miles as $15.25 and that 
of the route which made 1,810.19 car-foot miles as $20.71. These figures give an 
average car-foot mile cost of 11.441 mills for the Arizona & Colorado, which is a part 
of a great system, as compared with an average of 4.69 mills for the Sierra Valleys 
Railway, a difference of 243.94 per cent of the smaller average. 

The following statement demonstrates still more vividly the inequalities resulting 
from the application of the Postmaster General's method of assigning space: 



Route 
No. 


Length 
in miles. 


Average 
daily 

weight, 
1909. 


Car-foot 
miles 
made 

in closed 
pouch 

service. 1 


Number 
of trains 
per day. 


Number 
of car-foot 

miles 
reported 

•i by 
railway. 


107,074 
110,024 


12.64 
12.25 


291 
989 


2,679 
2,521 


10 
10 


4,790 
6,734 



Reported in Document No. 105. 



These two routes have only closed pouch service and are about the same length* 
have the same number of trains carrying mail and similar conditions in every way, 
except No. 110,024 carries about three and one-half times as much mail as 107,074 
nevertheless the Postmaster General credits 107,074 with 158 car-foot miles in excess 
of the number credited to No. 110,024. Such inconsistencies as these counteract 
any superficial plausibility that the report might otherwise possess and destroy all 
confidence in the accuracy of its conclusions as to space or cost of service. 



EAILWAY MAIL PAY. 79 

(f) the effect of these arbitrary methods. 

Under the methods applied by the Postmaster General, and by reason of the recom- 
mendation which he bases upon these figures, the facts as to relative space devoted, 
respectively, to passengers, express, and mail become of the first importance. They 
are the facts which control the estimates of cost, and, therefore, the recommendation 
as to compensation. By arbitrarily reducing the car-foot mileage made in the mail 
service of any company the Postmaster General reduced the estimate of cost of carry- 
ing the mail for that company because by his method cost is largely a deri\ r ative of car- 
foot miles, and he also reduced his proposal as to its compensation, for he asks to be 
authorized to base payment upon his alleged costs. Using the data as to the Atchison, 
Topeka & Santa Fe system, in the table on page 27, it is possible to ascertain just how 
much the changes affected the results claimed by the Postmaster General as represent- 
ing the mail operations of that system . Turning, first, to pages 272 and 273 of the report 
it appears that in his table 7 the Postmaster General reports the "operating expenses 
and taxes chargeable to passenger traffic" of the Atchison, Topeka & Santa Fe as 
11,964,620.10, that no part of this was directly charged to mail, and that $97,186,52 
was apportioned to mail. A simple arithmetical calculation supplies the omitted 
element in this statement and discloses the fact that $84,803.47 of the $1,964,620.10 
was directly charged to passengers and express and that the balance, $1,879,816.63, 
was apportioned on the car-foot mileage basis. 

As the department had allowed only 5.17 per cent of passenger-train space to the 
mails it assigned only 5.17 per cent of this total expense to the mails. But the com- 
pany reported 7.63 per cent of its passenger-train space as devoted to mail and not 
5.17 per cent, the figure used by the Postmaster General. If the latter had used the 
company's figure the cost apportioned to mail by his method would have been 
$143,430.01 instead of $97,186.52, as stated in Table 7. The revenue from mail of 
this system is given in the same table as $159,567.06, so that if the department had 
used the accurate figures reported by the company it would have found a moderate 
surplus over operating cost and taxes of but $16,137.05 instead of the surplus of 
$62,380.54, which it claimed to find. And this result would have been inevitable, 
except for the arbitrary changes in the data as to space, in spite of the fact that the 
reported operating cost of the whole passenger-train service is very much too low. 
What is true as to the effect of these changes with respect to the Atchison, Topeka & 
Santa Fe's figures is true as to substantially every company included in the report. 

(g) conclusion necessary from these facts. 

The inevitable conclusion from these necessarily destructive criticisms drawn 
from the figures of the report and the public records of the postal service is that all 
the elaborate tables prepared in the Post Office Department, so far as they purport 
to show car-foot mileage made in the mail service, are based upon radical modifica- 
tions of the data reported at its request and upon arbitrary and undisclosed estimates, 
with the result that they throw no light whatever upon the real or relative extent or 
cost of the services and facilities supplied by the railways. On the contrary, they 
destroy the value of every calculation in which they are an element, and as they 
enter into the most fundamental computations which document No. 105 contains 
they deprive the whole report of whatever value it might otherwise possess. Until 
these data are carefully checked and fully corrected and the modifications which 
these corrections would entail extended to the figures that are dependent upon or 
result from the use of car-foot mileage the use of document No. 105 as a basis or guide 
in the formulation of legislation would be unfair, unwise, and indefensible. 

Third. The Postmaster General has apportioned expenses incurred for the joint 
purposes of the passenger and freight services between these services in accordance 
with a method never accepted by anyone with practical experience in railway account- 
ing or operation. 

The fairness of railway mail pay can be tested by apportioning operating expenses 
between passenger and freight traffic, and then making a secondary apportionment of 
the passenger expenses between mail and other kinds of traffic carried on passenger 
trains. This method involves charging directly to each kind of traffic all expenses 
pertaining exclusively thereto and the apportionment on some fair basis of those 
expenses which are common to more than one kind of traffic. 

In accordance with the request of the Postmaster General the railways estimated 
the cost of conducting the mail service in the manner just explained and reported 
the results to the Postmaster General. After first charging to each service the ex- 



80 KAIL WAY MAIL PAY. 

penses wholly due to it they apportioned the common expenses between the passen- 
ger and freight services, following (with inconsequential exceptions) the method most 
generally employed for that purpose, namely, the apportionment of these expenses 
in the proportions of the revenue train mileage of each service. Having estimated 
in this way the operating expenses attributable to passenger trains the railways assigned 
to the mails the portion of this aggregate indicated by the proportion of the total 
passenger-train space required for the mails. Using this method 186 railways, oper- 
ating 2,370 mail routes, with a total length of 176,716 miles, ascertained and reported 
that for November, 1909, the operating expenses (not including taxes) for conducting 
the mail service were $4,009,184. The Postmaster General states (Doc. 105, p. 281) 
that all the railways represented in the foregoing, and enough others to increase the 
mileage represented to 194,978 miles, were paid for the same month only $3,607,773.13. 
It thus appears that the pay was far below the operating expenses, without making 
any allowance for taxes or for a return upon the fair value of the property employed. 
While different methods are in use for ascertaining the cost of passenger-train service 
and the results produced by such methods may show considerable variation, yet the 
mail pay is so far below reasonable compensation, from the standpoint of the cost of 
the service and a return upon the value of the property, that no method can be reason- 
ably urged which would not demonstrate the noncompensatory character of the 
present mail pay. This is illustrated by the method which the Postmaster General 
himself employed, as the character of that method is such that it necessarily produces 
the very lowest estimate of cost for the passenger-train service. 

The Postmaster General, by his method of apportionment, arrived at a 

cost of $2, 676, 503. 75 

But this must be increased on account of his erroneous apportionment 

of car space by 800, 802. 00 

And also on account of his refusal to assign expenses directly incurred 

in the mail service (p. 15) 1 401, 126. 00 

Total, according to the Postmaster General's method of apportioning 

costs between passenger and freight traffic 3, 878, 431. 75 

Thus even the Postmaster General's method of apportioning costs between freight 
and passenger traffic produces an operating cost in excess return upon the fair value 
of the property or necessary but nonincome of the total pay received by the railroads, 
leaving nothing whatever for producing improvements. 

There is no allowance in any of these estimates of cost for the large volume of free 
transportation supplied to officers and agents of the Post Office Department when not 
in charge of mail, although this amounts to over 50,000,000 passenger miles annually, 
and at the low average rate of 2 cents per mile would cost the Post Office Department 
more than $1,000,000 per year. 

Fourth. The Postmaster General has wholly overlooked the fact that a large part 
of the costs incurred by the railways in carrying the mails consists of interest on the 
capital they employ. By ignoring all capital expenses, confining his attention to 
mere operating costs, and proposing to return to the railways only the amount of 
these operating costs, plus 6 per cent, he urges a method which, if applied generally 
to all their business, would render every railroad at once bankrupt. 

(a) postmaster general admits that some items op expense were omitted. 

Attention has already been called herein to the admissions in Document No. 105 
that neither the expenditures on account of station services and terminal facilities 
(see pp. 9-16) nor the cost of personal transportation furnished without special charge 
therefor to the officers and agents of the postal service (see pp. 16-18) were Included 
in its estimates of cost. Attention has also been directed to the specific admission 
that only two kinds of cost were considered, which admission was made in the following 
words: 

"It is shown that, upon this basis of calculation, the information furnished and the 
assignment of operating expenses and taxes (the factors of expense considered), the 
performance of mail service at the present rates is profitable to many companies and 
unprofitable to others * * *." (Doc. No. 105, p. 14.) 

1 There may be some duplication in this item, but to eliminate it would require an elaborate computa- 
tion, which in view of the broad margin of expenses over receipts, is wholly superfluous. Whatever 
duplication exists must be small in comparison with this margin. 



KAILWAY MAIL PAY. 81 

(b) the postmaster general ignores the fact after his admission. 

Yet after this admission the report, curiously and inconsistently enough, proceeds 
to assert that the figures show the relation between actual cost to the railways and their 
present mail pay. The sentence last above quoted continues, in the very next words, 
as follows: "But that the net result shows that the Government is paying more for 
the service than it costs the railroad companies to perform it; furthermore, that this 
excess over cost and 6 per cent profit is about $9,000,000 a year; that in cases where rail- 
road companies are carrying the mails at a profit the per cent of profit over the cost 
of performing the service varies in almost every instance, ranging frorn a low to a high 
rate, and that in cases where railroad companies are carrying the mails at a loss the 
per cent of loss compared with the cost of performing the service varies in the same 
manner." (Doc. No. 105, pp. 14-15.) 

Referring, over his own signature, to the foregoing, the Postmaster General says: 

"The committee estimates that through a readjustment of railway mail pay on the 
basis of cost with 6 per cent profit a saving to the Government could be made of about 
$9,000,000." (Doc. No. 105, p. 3.) 

And in his annual report to the President, dated December 1, 1911: 
^ "The statistics obtained during the course of the investigation disclosed for the first 
time the cost of carrying mail in comparison with the revenue derived by the railways 
from this service. * * * If Congress gives the recommendation of the department 
in this regard its favorable consideration and authorizes a readjustment of railway mail 
pay in the manner suggested, it is believed that the resulting saving to the Govern- 
ment will amount annually to about $9,000,000." (Annual Report of the Postmaster 
General for the fiscal year 1911, pp. 19-20.) 

The Second Assistant Postmaster General makes substantially the same statement, 
but in words which point definitely to a source which discloses the incomplete nature 
of the estimates of alleged cost. He says: 

"A computation has been made, based on Table 7, of the amount of revenue the 
companies or systems reporting would receive if their compensation for mail service 
were based on the cost of carrying the mails and 6 per cent of such cost. The results 
indicate that the companies represented in the computation would receive annually 
under such method of payment about $9,000,000 less than at present." (Doc. No. 
105, p. 7.) 

Turning to Table 7 (Doc. No. 105, pp. 272-281) there is no difficulty in verifying the 
facts already stated as to the factors of cost included and as to those ignored. The 
truth is disclosed by the table headings. Thus, as to the Abbottsford & Northeastern 
Railroad, the first company shown, the table headings and the entries under them, on 
page 272, are as follows: 



Table heading. 


Entry. 


Total operating expenses (passenger and freight) 


11,522.10 


Taxes 


90.49 


Total operating expenses and taxes 


1,612.59 


Total operating expenses and taxes chargeable to passenger traffic 


268. 19 


Passenger traffic, operating expenses, and taxes chargeable to mail service: Apportioned 


5.20 


Total 


5.20 







It will, of course, be noted that the items of expenses shown in the foregoing are 
those of operation and taxation only. All other expenses are absolutely ignored. 
Yet the next page shows that this obviously incomplete item of $5.20 was compared 
with the company's mail pay receipts for the month, $54.25, and the whole excess, 
$49.05, shown as "gain from mail service." That the company had any other ex- 
penses than those enumerated is wholly ignored. And the same is true as to every 
other company and as to the whole of the Postmaster General's report. 

(c) THE FACTORS IN COST OF PRODUCTION. 

The science of political economy may be almost said to begin with the classification 
of the factors of production under the three heads of labor, land, and capital, and the 
explicit recognition that each of these factors entails a distinct element of cost of 
production. Thus labor receives wages, which constitute an element of cost of 
production; land receives rent, which is another element; and capital receives interest, 
which is a third element. The term "interest" as thus used is the exact equivalent, 
in economic nomenclature, of the term "reasonable return on investment," as used 



82 BAIL WAY MAIL PAY. 

in ordinary parlance to denote the cost directly and properly occasioned by the use 
of capital. Where a Government is supported in whole or in part by taxes on pro- 
duction the sums so paid may not improperly be treated as an additional element in 
cost of production and, under modern conditions, in which the whole process of pro- 
duction is rarely under unified control, the cost of materials is also in the nature of an 
item of such cost, at least from the point of view of any separate enterprise or estab- 
lishment. Every one of these items of cost must be satisfied or there is loss; until they 
are all fully met there can be no such thing as profit. Railways have capitalized the 
rents of their rights of way and other land holdings, and it is sufficient therefore to 
speak of the cost of production of the services they supply as including only the four 
elements of (a) reasonable return on investment or interest, (6) wages, (c) cost of mate- 
rials, and (d) taxes. Operating expenses include wages and cost of materials (i. e., 
fuel, rails for replacement, etc.). So the Postmaster General has actually included 
three of the four factors and excluded the other; that is to say, he has ignored the rec- 
ognized right of investors to a fair return upon the fair value of the property necessarily 
employed to render the services. 

To speak of "6 per cent profit," as the Postmaster General has (Doc. No. 105, p. 3), 
when there has been no allowance for any return to investors, an essential and inevita- 
ble part of the cost of production, is a gross and misleading misuse of terms that have 
definite and established meanings. Railways are much less able to ignore the rights 
of investors to proper and regular returns than some other undertakings, because, with 
very few exceptions, their entire property holdings are pledged by mortgages given 
to secure interest payments. To be unable to pay interest therefore spells bank- 
ruptcy. From the point of view of the traveling and shipping public a reasonable 
recognition of the right of the owners of railway property to receive returns upon their 
investments reasonably proportioned to its fair value is equally important. The 
rapidly growing industries of the United States continually require the services of 
more and better railway facilities and their urgent demands can be met only by the 
annual addition of very large sums to the capital invested in American railways. 
This needed capital can not be obtained unless the promise of reasonable returns 
thereon is supported by evidence that capital already invested, under competent 
management, is able to earn fair returns. If Congress should now adopt the attitude 
of the Postmaster General, as developed in Document No. 105, and ignore all capital 
expenses in fixing rates of payment for the mail facilities and services supplied by the 
railways, it would be notice to all potential investors in railway property that the 
policy of the Federal Government had been so formulated as to deny their right to 
reasonable compensation for the use of their capital. 

(d) railway investors are constitutionally protected in the right to 

reasonable returns. 

The Postmaster General appears to have overlooked the fact that the Constitution 
of the United States protects the owners of railway property against such a congres- 
sional confiscation of the right to use their property as he proposes. In recommending 
a plan of payment which excludes any return whatever upon the value of the property 
used in rendering the services required by the Post Office Department he has proposed 
a plan that would be absolutely repugnant to the following well-known provisions 
contained in Article V of the amendments: 

"No person shall * * * be deprived of * * * property, without due 
process of law; nor shall private property be taken for public use, without just 
compensation." 

It is not proposed or in any way necessary to enter upon an elaborate constitu- 
tional argument, for everyone knows that the foregoing and the similar prohibition 
contained in the fourteenth amendment have repeatedly been applied to prevent 
action similar in character, albeit much less drastic, to that now proposed by the 
Postmaster General. One citation, and that from a decision of the Supreme Court 
of the United States, will suffice: 

"The corporation may not be required to use its property for the benefit of the 
public without receiving just compensation for the services rendered by it. * * * 

"We hold, however, that the basis of all calculations as to the reasonableness of 
rates to be charged by a corporation maintaining a highway under legislative sanc- 
tion must be the fair value of the property being used by it for the convenience of 
the public. * * * What the company is entitled to ask is a fair return upon the 
value of that which it employs for the public convenience." (Smyth v. Ames, 169 
U. S., 466, 546-547; 42 L. Ed., 819, 849.) 

In the case from which the foregoing is quoted the Supreme Court affirmed a 
decision preventing the enforcement of a schedule of maximum rates enacted by the 



RATT.WAY MAIL PAY. 



83 



Legislature of Nebraska as to two companies (among others) with regard to which the 
court had found that they would have earned, in the years under consideration, 
more than their operating expenses, because, as said in the opinion: 

"The receipts or gains, above operating expenses, would have been too small to 
affect the general conclusion that the act, if enforced, would have deprived each of the 
railroad companies involved in these suits of the just compensation secured to them 
by the Constitution." (Smyth v. Ames, 169 U. S., 466, 547; 42 L. Ed., 819, 849.) 

Although the fourteenth amendment in particular has repeatedly been invoked to 
prevent the enforcement of rates prescribed under legislative authority which the 
courts have held would amount to a confiscation of the use of railway property by 
depriving its owners of a return on its fair value, that is to say, of interest, no legis- 
lature has ever yet acknowledged an intention to fix rates so low as to have that 
result. Until the Postmaster General made the recommendation embodied in 
Document No. 105 no public officer had ever avowed a purpose to refuse to any 
railway carrier a fair return on the fair value of any property used to render any 
service, no legislature had ever enacted a law which it admitted would have that 
effect, no State or national railroad commission had ever claimed that power exists 
to ignore the right of property to a reasonable return, and, therefore, no court has 
ever yet been required to pass upon the validity of law-made rates in the light of a 
frank admission that they would do no more than provide for operating expenses and 
taxes, leaving nothing, or substantially nothing, to the owners of the property. That 
such a contention will ever be made in any court is beyond belief. 

(e) amounts of expenses ignored by the postmaster general. 

The Interstate Commerce Commission has just published the report of its statistician 
for the year which ended with June 30, 1910, from which it appears (p. 70) that the 
gross receipts of the railways, amounting to $3,005,112,836 (this sum includes operating 
revenues, $2,750,667,435; net revenue from outside operations, $2,225,455; and other 
income, $252,219,946, and thus obviously represents duplications in such instances 
as the payment of rent for leased railway out of operating revenues when all or part 
of the amount so paid becomes, in turn, "other income" through receipt of interest 
or dividends on securities of the leased lines held by the lessee. These duplications 
are unavoidable, however, if on the expense side are properly to be set up such inter- 
corporate payments as those of rentals of leased railways) during that year were dis- 
posed of as shown by the table on page 41. 

Omitting all expenses, included in the foregoing table, that are not absolutely 
necessary to avoid bankruptcies and the disruption of operating systems, the expenses 
shown in the table at the top of page 42, in addition to those allowed for by the Post- 
master General, at the very least, must be provided for out of earnings; 



Item. 


Amount. 


Per cent 
of total. 


Per cent 
of total 
of oper- 
ating 
expenses 
and 
taxes. 


Operating expenses 


$1, 822. 630, 433 
198,034,593 

133,881,409 

27, 625, 077 

28, 811, 031 
2, 933, 067 
1,466,897 

i 349. 092, 709 
13, 207, 243 
5,355,416 
5,480,239 

1283,411,828 

55,061,675 

2, 640, 893 

175,480.326 


60.65 
3.26 

4.45 
.92 
.96 
.10 
.05 
11.62 
.44 
.18 
.18 
9.43 

1.83 
.09 

5.84 


94.90 
5.10 

6.97 


Taxes 


Deductions from gross corporate receipts: 

Rents for lease of other roads 


Hire of equipment, debit balances 


Paid for use of joint facilities 


1.50 
15 


Miscellaneous rents 


Loss on account of separately operated properties 


08 


Interest on funded debt 


18 17 


Other interest 


.69 
.28 


Sinking and redemption funds chargeable to income 


Other deductions 


.28 
14.76 

2.87 
13 


Dividends 


Appropriations for additions and betterments and for new lines" and 
extensions 


Appropriations for reserves 


Credit to profit and loss 


9 14 






Total 


3,005,112,836 


100.00 


156.46 



i These items do not include payments made under these heads by leased lines, as such payments are made 
out of the proceeds of the item entitled " Rents for lease of other roads." 



84 



KAILWAY MAIL PAY. 





Omitted expenses. 


Item. 


Amount. 


Per cent 
ofexpenses 
considered 

by Post- 
master 

General. 


Rents for lease of other roads 


$133,881,409 

27,625,077 

28,811,031 

2,933,067 

349,092,709 

13,207,243 

5,355,416 


6.97 


Hire of equipment, debit balance 


1.44 


Payments for joint facilities 


1.50 


Miscellaneous rents 


.15 


Interest on funded debt , 


18.17 


Other interest 


.69 


pinlring and redemption funds 


.28 






Total 


560,905,952 


29.20 







The Postmaster General's plan, however, if applied to all railway traffic, would 
allow the railways to receive for the services they render only the amount of their 
operating expenses and taxes; that is, 11,920,665,026, plus 6 per cent of that amount, 
which is $115,239,922. Thus, instead of the $560,905,952 absolutely necessary, as 
has been seen, to maintain their systems and keep them out of the hands of receivers 
they would have only $115,239,922, or 20.55 per Cent, about one-fifth of the necessary 
amount. Of course, every reasonable person realizes also that the item of "dividends," 
as well as most of the other items in the table next but one above, is a necessary item 
and must be met if the railways are to be fairly treated — if they are to be protected 
in their constitutional right to receive just compensation for their services and if they 
are to be enabled to render proper and adequate services as common carriers. The fact 
that the Postmaster General's plan could not be generally applied without destructive 
effect should deprive it of any support whatever. There is nothing in the character 
of the mail traffic which suggests that it ought to be treated exceptionally or carried 
for so low a figure as to require rates on other transportation to be kept at a higher 
level in order to prevent the insolvency of the carriers. Such treatment would make 
the mail service a tax on every other service rendered by the railways. 

(f) even on the basis of the unfairly low estimates of operating costs made 
by the postmaster general, allowance for the omitted expenses would 
make the mail pay higher than it is now. 



The following figures are deduced from 
105, pages 280-281: 

Railway mail pay for November, 1909 

Operating expenses and taxes, same month. 



those contained in Table 7, Document No. 



$3, 607, 773. 13 
2, 676, 503. 75 



By reference to page 41 of this statement, it will be seen that the 
gross receipts of all railways for the year ended June 30, 1910, as 

reported by the Interstate Commerce Commission were 3, 005, 112, 836. 00 

Deducting therefrom — 

Operating expenses and taxes $1, 920, 665. 026. 00 

Appropriations to additions and betterments 

and for new lines and extensions 55, 061, 675. 00 

Credit to profit and loss 175, 480, 326. 00 

— 2, 151, 207, 027. 00 



There remains 853, 905, 809. 00 

Equals 44.45 per cent, which must be provided for before a proper return on invest- 
ment shall have been secured. 

If you add to the operating expenses and taxes, as shown by the Postmaster Gen- 
eral, $2,676,503.75, for November, 1909, 44.45 per cent, or $1,189,705.92, it will give a 
total of $3,866,209.67, or $258,436.54 (equivalent to $3,101,238.48 per annum), more 
than document No. 105 shows was paid for mail service in November, 1909, and 
consequently, even on the basis of the unfairly low estimates of operating costs made 
by the Postmaster General, an allowance for the omitted expenses, which must be met 
would make the railway mail pay higher than it is at present. 



KAILWAY MAIL PAY. 



85 



Fifth. In confining his investigation to the month of November, the Postmaster 
General selected a month that is not a fair average or typical portion of the year but, 
in connection with the methods he employed, greatly reduced the apparent cost of 
the passenger train services, resulting from his calculations. 

There can be no contradiction of the assertion that, if in every other respect the basis 
of railway pay proposed by the Postmaster General were reasonable and fair, the validity 
of his calculations would depend upon whether the period selected for his investigation 
could be considered fairly typical of an entire year. All his computations are based 
upon data obtained by him which represent only the single month of November in 
the year 1909. If that month was a reasonably typical month, particularly with respect 
to passenger train traffic and expenses calculations based upon these data would be 
entitled to all the weight which the methods of computation employed would warrant. 
But, however accurate these calculations and methods, the results could rise no higher 
than their source, and the most perfect system of computation most accurately applied 
would be wholly vitiated if the basic data can not be regarded as fairly typical and rep- 
resentative. If the month of November varies from the whole period of the year from 
which it was selected, and particularly of the differences are such as unfairly to dimin- 
ish the apparent cost of the passenger train services, results based only on date for that 
month must be inconclusive and worthless. Now, this is precisely the case. 

It may fairly be questioned whether the year contains any single month that could 
be properly denominated an average, typical, or representative month, but if there 
is such a month it is certainly not the month of November. The Interstate Commerce 
Commission has published the receipts and expenditures of the railways of the United 
States for each month of the fiscal year that ended with June 30, 1910, and includes 
the month of November, 1909, and these data conclusively prove that that month was 
very far from a representative one and that the seasonal and other variations to which 
it was subject were such as to render the results of any calculations based upon it 
exceedingly unfair to the passenger train services. 1 The figures in the second and 
fifth columns of the table on page 45 are from that bulletin, the figures in the other 
columns have been derived from them. 





Gross operating receipts per mile of line. 


Per cent of 
passenger 
receipts to 

receipts 
from both 
passengers 
and freight. 




Passengers. 


Freight. 




Total. 


Daily 
average. 


Per cent 
of daily 
average 
for year. 


Total. 


Daily 
average. 


Per cent 
of daily 
average 
for year. 


1909, July 


$251. 66 
269. 70 
254. 95 
231.80 
206.69 
211.55 
187. 42 
171.92 
202. 61 
203. 84 
218. 47 
233. 25 


$8.12 
8.70 
8.50 
7.48 
6.89 
6.82 
6.05 
6.14 
6.54 
6.79 
7.05 
7.78 


112.15 

120.17 

117.40 

103.31 

95.17 

94.20 

83.56 

84.81 

90.33 

93.78 

97.38 

107.46 


$608. 67 
653. 97 
704. 51 
781.91 
752. 69 
640.59 
618. 06 
603. 76 
716. 76 
658. 93 
682. 96 
674. 97 


$19. 63 
21.10 
23.48 
25.22 
25.09 
20.66 
19.94 
21.56 
23.12 
21.96 
22.03 
22.50 


88.46 

95.00 

105.81 

113.65 

113.07 

93.11 

89.86 

97.16 

104.19 

98.26 

99.28 

101. 40 


29.25 


1909, August.. 


29. 20 


1909, September 

1909, October 


26.57 
22.87 


1909, November 

1909, December 

1910, January 


21.54 
24.83 
23.27 


1910, February 

1910, March 


22.16 
22.04 


1910, April 


23.63 


1910, May 


24.24 


1910, June 


25.68 






Total 


2 2,643.86 


7.24 


100. 00 


2 8,097.78 


22.19 


100.00 


24.61 







1 Interstate Commerce Commission, Bureau of Statistics and Accounts, Bulletin of Revenues and 
Expenses of Steam Roads in the United States, compiled from monthly reports covering the years ending 
June 30, 1910 and 1909. 

* The totals stated differ very slightly from those stated by the commission, as they are the exact sums of 
the averages given, while the commission's totals include also small unclassified receipts. 



86 



EAILWAY MAIL PAT. 



Gross Receipts per mile per day 

Per Cent Deviation From Average 



JULY190Q 
AUG.I909 
SEPT 1909 
OCT 1909 
NOV 1909 
DE C.I909! 
JAN. 1910 
FEB. 1910 
MAR. 1910 
APRILI9I0 
MAY 1910 
JUNEI9I0 



ABOVE AVERAGE BELOW AVERAGE 

1 



12 16 za 




1 Passenger 



| I] Freight 



EAILWAY MAIL PAY. 



87 



The most accurate comparisons permitted by the data on page 45 are those between 
the per diem averages in the third and sixth columns, as such comparisons are not 
affected by the varying numbers of days in the different months. These compari- 
sons show that the average gross receipts per mile of line from the passenger service 
during the month of November, 1909, amounted to but 95.17 per cent of the daily 
average for the year, while the average gross receipts from freight service amounted 
to 113.07 per cent of the daily average for the year. In the whole year there were but 
four months that showed smaller gross receipts from passengers than the month selected 
by the Postmaster General, while there was but one month in the entire year which 
showed as high receipts from freight service. More conclusive still is the fact, shown 
by the last column in the table, that of all the months in the year the percentage of 
gross passenger receipts to receipts from both passengers and freight was absolutely 
the lowest in November. In that month the passenger service earned, in gross, but 
$21.54 in each $100 of receipts from both the passenger and freight services, while the 
average for the year was $24.61, and in one month it was as high as $29.25. It is 
perfectly obvious that if any direct charges to the different services are warranted 
the amounts of the accounts so chargeable must fluctuate, if not in exact proportion 
to the respective volume of traffic in the passenger and freight services, at least with 
some relation to such volume. And it is undeniable that the fluctuations in average 
gross receipts per mile of line roughly measure fluctuations in volume of traffic . Hence 
it is plain that in selecting the month of November, and making it the exclusive 
basis of all his calculations and estimates, the Postmaster General shows, unwittingly, 
it is believed, the one month in the year that, if the balance of his case were sound, 
would appear to sustain the largest possible reduction in railway mail pay and that 
is actually the most unfavorable to the railways. He assigned directly $34.40 in 
each $100 of operating expenses, and every^ apportionment so made to the passenger- 
train services was diminished by the selection of a month in which freight movement 
is much heavier and passenger movement much lower than the average for an entire 
year, he assigned $36 in each $100 of operating expenses in the proportions of the 
accounts he had charged directly and thus extended the error to these nnlocated or 
joint expenses; he assigned $13.60 in each $100 in proportion to locomotive mileage 
and $9.80 in each $100 in proportion to revenue train mileage, and as these apportion- 
ments were made on the basis of a month in which passenger traffic was very light 
and freight traffic very heavy these apportionments also were unduly to the disad- 
vantage of the passenger- train services. And these apportionments account for 93.80 
per cent, or $93.80 in each $100 of all operating expenses. 

In the wide range of climatic conditions in the United States it happens that the 
month of November is, throughout a large section and as to many railways, a month 
in which substantially winter conditions prevail and characterized by much more than 
the average difficulty of operation. Under such conditions it becomes necessary to 
suspend certain repairs, renewals, and replacements, which entail expenditures 
chargeable to the operating accounts while the cost of moving trains is enhanced. 
The results of these facts are shown by the table on page 48. 





Fiscal year 1910. 


Class. 


Average per mile of line. 


Average per mile of 
line per day. 


Per cent of total. 




No- 
vember. 


Other 
eleven 
months. 


Total. 


No- 
vem- 
ber. 


Other 
eleven 
months. 


Total. 


No- 
vem- 
ber. 


Other 
eleven 
months. 


Total. 


Maintenance of way and 
structures 


$124. 04 

148. 48 

18.85 

327. 78 

23.10 


$1,438.84 

1,597.56 

201. 76 

3,565.93 

264. 61 


$1,562.88 

1,746.00 

220. 61 

3, 893. 71 

287. 71 


$4.13 

4.95 

.63 

10. 93 

.77 


$4.30 

4.77 

.60 

10.64 

.79 


$4.28 
4.78 

.61 
10. 67 

.79 


19.31 
23.11 

2.94 
51.04 

3.60 


20.36 
22.60 

2.85 

50.45 

3.74 


20.27 


Maintenance of equipment. 
Traffic expenses 


22.64 
2.86 


Transportation expenses . . . 
General expenses 


50.50 
3.73 






Total 


642. 21 


7, 068. 70 


7, 710. 91 


21.41 


21.10 


21.13 


100.00 


100. 00 


100.00 







88 



RAILWAY MAIL PAY. 



Operating Expenses 

per mile of line per day 



Transportation Expense 

Maintenance of Equipment 

Maintenance of Way and 
Structure 

General Expense 
Traffic Expense 




\ H NOVEMBER 

1 1 OTHER II MONTHS 



RAILWAY MAIL PAY. 89 

The figures in the table on page 48 fully corroborate the conclusions inevitably to be 
drawn from the one next preceding. Thus it appears that while the average daily 
operating expenses of November are, in the aggregate, a little higher than those of the 
balance of the year, their distribution among the various accounts is very different from 
the average distribution. The maintenance of way and structures expenses, which do 
not fluctuate with traffic fluctuations, averaged but $4.13 per mile of line per day during 
the period selected by the Postmaster General, while during the balance of the year 
these expenses averaged $4.30 per mile per day. But expenses for other purposes 
averaged $17.28 per mile per day during the former period and only $16.80 during the 
latter. These differences result from the fact that the severe weather conditions of 
November render necessary the suspension of much of the ordinary maintenance work 
upon roadbed and structures and, at the same time, tend to enhance the operating 
expenses that do fluctuate with the volume of traffic. Consequently, as all the traffic 
fluctuations that find expression in November tend to diminish the total expense 
apportioned, by the Postmaster General's method, to the passenger-train services, the 
fact that the expenses that do vary with traffic are relatively heavier in the month he 
selected had a further and strong tendency to reduce the apparent cost of the passenger- 
train services resulting from his computations. It follows, as surely as the night fol- 
lows the day, that, if every other feature of Document No. 105 were utterly beyond 
criticism, the fact that it rests wholly upon the single month of November would render 
its results illusory, misleading, and grossly unjust to the railways. 

III. Recent Reductions in Railway-Mail Pay. 

A. PRELIMINARY SURVEY AND COMPARISONS. 

No consideration of the reduction proposed in Document No. 105 would be adequate 
which did not make appropriate allowance for the fact that during the period of 
advancing railway expenses subsequent to June 30, 1907, the mail revenues of the 
railways have been subjected to repeated and drastic decreases brought about by 
legislative action and by administrative orders. 

The volume of the American mails, the revenue of the American postal service, and 
its demands upon the railways for services and facilities are constantly increasing. 
The costs of supplying railway transportation are also increasing. Capital costs 
(interest) have increased through the higher standards of service demanded and the 
higher value of real estate required for extended and necessary terminal plants, labor 
costs have grown by means of repeated advances in the rates of wages paid to employees 
in every grade, other operating expenses have increased as prices of materials and 
supplies have mounted upward, taxes have increased with the growing exactions of 
State and local governments which have been rapidly augmenting their expenditures 
and forcing an increasing share of the total burden upon railway carriers and by the 
creation of an entirely new Federal corporation tax. But the aggregate railway-mail 
pay has remained substantially stationary for several years and has not at any recent 
aate advanced in proportion to the increased facilities and services required, the 
increased profit on the use of these facilities and services made by the Post Office 
Department or the increased expense to the railways. The pay per unit of service 
rendered has been greatly reduced. The table on page 52 shows some of these facts. 



90 



KAILWAY MAIL PAY. 





Postal re- 
ceipts. 1 


Postal expenditures. 


Fiscal year. 


All purposes. 2 


Railway mail pay. 3 


Other expenses.' 




Amount. 


Per $100 
of re- 
ceipts. 


Amount. 


Per $100 
of re- 
ceipts. 


Amount. 


Per $100 
of re- 
ceipts. 


1901 


$111,631,193 
121,848,047 
134,224,443 
143, 582, 624 
152,826,585 
167,932,782 
183, 585, 005 
191, 478, 663 
203, 562, 383 
224, 128, 657 
237,879,823 


$115,554,921 
124, 785, 697 
138,784,487 
152,362,116 
167,399,169 
178,449,778 
190,238,288 
208,351,886 
221,004,102 
229,977,224 
238,507,669 


$103. 51 
102. 41 
103. 40 
106. 11 
109. 54 
106. 26 
103. 62 
108. 81 
108. 57 
102. 61 
100. 26 


$38,158,969 
39,518,817 
41,377,184 
43,971,848 
45,040,564 
46, 953, 439 
49,758,071 
48, 458, 255 
49,869,375 
49,405,311 
50,583,123 


$34. 18 
32.43 
30.83 
30.62 
29.47 
27.96 
27.10 
25.31 
24.50 
22.04 
21.26 


$77,395,952 
85,266,880 
97, 407, 303 
108,390,268 
122,358,605 
131,496,339 
140,480,217 
159,893,631 
171,134,727 
180,571,913 
187,924,546 


$69.33 
69.98 


1902 


1903 


72.57 


1904 


75.49 


1905 


80.07 


1906 


78.30 


1907 


76.52 


1908 


83.50 


1909 


84.07 


1910 


80.57 


1911 


79.00 







1 Postmaster General's Annual Report for 1911 (H. Doc. No. 559, 62d Cong., p. 47). 

a The amounts given are those reported by the Postmaster General (Annual Report for 1911, H. Doc. 559, 
62d Cong., pp. 48-49) except that for the year 1911 the total expenditures are stated as shown by the later 
and corrected figures reported by the Committee on the Post Office and Post Roads of the House of Represent- 
atives (H. Rept. No. 388, 62d Cong, 2d sess., p. 2), but they are too low. The report of the Commission 
on Second Class Mail Matter, consisting of Hon. Charles E. Hughes, Associate Justice of the Supreme Court 
of the United States; Dr. A. Lawrence Lowell, President of Harvard University; and Mr. Harry A.Wheeler, 
President of the Association of Commerce of Chicago (published in the document already cited, which 
also contains the Postmaster General's Annual Report for 1911); shows that the accounting methods of the 
Post Office Department are misleading in that they exclude actual expenses of the postal service that are 
considerable in the aggregate. Figures given in the commission's report (p. 77) show that for the fiscal 
year 1908 the expenses (given in this table as $208,351,886) do not include the following: "Amount expended 
under legislative act for the Post Office Department, $1,622,564.24; amount appropriated under legislative 
act for the office of the Auditor of the Post Office Department, $824,870; amount expended under legislative 
act for the office of the Assistant Attorney General for the Post Office Department, $5,000; transportation 
accounts certified to the Secretary of the Treasury for credit of aided Pacific roads not charged to postal 
revenues, $70!, 099.69"; total, $3,203,533.93. The item on account of bond-aided roads has ceased to exist 
(Postmaster General's Annual Report for 1911, p. 49), but the other omissions still impair the accuracy of 
of the accounts. Assuming that these other items were the same in 1911 as in 1908, it follows that the actual 
cost of the postal service in the later year was $240,960,103 instead of $238,507,669, and that instead of a surplus 
of $219,118.12 in postal receipts over expenditures (Annual Report of the Postmaster General for 1911, p. 15) 
there was actually a deficit of $3,080,280. The statements of cost of the postal service supplied by the Post- 
master General are also defective, in that they contain no allowance for rental of buildings owned by the 
Federal Government and occupied by the department, as post offices or otherwise, or for interest or depre- 
ciation on any capital or property owned and utilized in the postal service. See also House Report No. 388, 
Sixty-second Congress, second session, being a report of the Committee on tbe Post Office and Post Roads of 
the House of Representatives, which shows that items chargeable to the fiscal year 1911, but audited after 
its close, more than offset the small surplus claimed by the Postmaster General and leave an actual deficit 
of $627,845.94 for that year— this, exclusive of the omitted items to which attention was directed by the 
Commission on Second Class Mail Matter. 

s These figures represent cost of railway transportation but are approximately 1 per cent too high. They 
are not changed, as the exact data necessary are not available. See footnote on page 5 (page 64 of these 
Hearings). 



KAIL WAY MAIL PAY. 



91 



Postal. Receipts and Expenditures 



MILLIONS' OF DOLLARS 

40 60 80 100 IgO 140 (60 180 giOO 



210 340 




I907J 
1908 



[Postal Receipts Festal. Expenditures 



Railway mnl pay 



Da 



LL OTHER EXPENSED 



92 



RAILWAY MAIL PAY. 



Reduced to percentages, the figures in the table on page 52 show the following 
increases for the last 10, 5, and 2 years, respectively: 



Item. 



Ten 


Five 


years, 
1901 to 
1911. 


years, 

1906 to 

1911. 


113. 09 


41.65 


106. 40 
32.56 
142.81 


33. 66 

7.73 

42.91 



Two 
years, 
1909 to 

1911. 



Postal receipts, per cent increase 

Postal expenditures: 

All purposes, per cent increase 

Railway mail pay, per cent increase 

All other expenditures, per cent increase 



16.86 

7.92 
1.43 
9.81 



These percentages disclose what has happened too plainly to admit of much com- 
ment. It appears that for either the 10 or 5 year periods just closed the postal 
expenses exclusive of railway mail pay have grown much more rapidly than postal 
business, as fairly measured by receipts, while railway mail pay increased during 
the longer period less than one-fourth as fast as other expenses, and during the 5-year 
period less than one-fifth as fast. The 2-year period covered by the percentages 
in the last column covers the administration of the present Postmaster General, 
and although during that period the enormous increase in postal business (amounting 
to $34,317,440 in revenue, or nearly one-third as much as the entire postal receipts 
of the year 1901) has outstripped the growth of expenditures and the real postal deficit 
has been greatly reduced, expenses other than for railway facilities have increased 
9.81 per cent, while railway mail pay has grown but 1.43 per cent, or about one-seventh 
as rapidly as other expenditures and about one-twelfth as rapidly as postal receipts. 1 
The averages in the table under discussion are even more significant than the aggre- 
gates. They show that between 1901 and 1911 the cost of the postal service, reported 
by the Postmaster General, per $100 of receipts therefrom, declined from $103.51 to 
$100.26, while the cost for railway mail pay declined from $34.18 to $21.26, and that 
for other purposes increased from $69.33 to $79. That is to say, the net decrease of 
$3.25 per $100 of revenue is the difference between a saving in railway mail pay 
of $12.92 and an increase in other expenses of $9.67. In other words, not only is the 
whole reduction in postal expenses attributable to the reductions in railway mail pay, 
but an additional reduction in this item has been absorbed by increases in other items. 

Effective illustrations of the relation of railway mail pay to other postal expenses 
are found in the table on page 55, which shows the annual increment of revenue for 
each year of the last decade and the cost per $100 at which it has been earned, the cost 
of railway mail pay and the expenses for other purposes being stated separately. 

The table on page 55 shows that while the additional cost of earning the portion 
of total postal revenue added since 1901 has been, for railway facilities, $9.84 per $100 
of receipts, the cost for other purposes has been $87.55 per $100 of added receipts. 
Thus the revenue added since 1901, which exceeds the entire revenue for that year, 
has cost, for railway mail pay, but 28.79 per cent of the average of 1901; it has cost, 
for other purposes, 126.28 per cent of the average at the beginning of the period. These 
figures give additional emphasis to the conclusion that much more than the entire 
decrease in postal expenses has been taken from the revenues of the railways which 
transport the mails. The fact that the yearly averages show that each yearly incre- 
ment of postal business has been taken up at a cost, for railway facilities, lower than 
the average cost therefor in 1901, while in 6 of the 10 years the cost for other pur- 

Eoses has exceeded the average of 1901, in one year being more than three and one- 
alf times that average, is most significant. These data again demonstrate the truth 
of the assertion that for a decade at least reductions in railway mail pay have consti- 
tuted the solitary source of savings in postal expenditures. 

1 It may, of course, be suggested that the fact that nearly the whole recent saving in expense appears to 
be in railway mail pay is attributable to the increase in the cost of rural free delivery, but this explanation 
would be inaccurate. The cost of rural free delivery reported by the Postmaster General for the fiscal year 
1909 was -135,586,780; for 1910, $37,073,733; and for 1911, $37,145,757. These figures give a percentage increase 
for the two years of the present administration of 4.38 ? which is much lower than the percentage increase 
of all expenses other than railway mail pay. Excluding the reported cost of rural free delivery and the 
payments for railway facilities, the increase in all other postal expenditures was from $135,547,947 in 1909 
to $150,778,789 in 1911, or 11.24 per cent. Expenditures for rural free delivery are not, however, wholly for 
an additional service, as might superficially be conceived. In part they represent the substitution of a new 
method of delivery for delivery through the post offices, which has permitted a decrease in the number of 
post offices, and therefore the expenses which would have been necessary to maintain the abandoned offices 
should be deducted from the apparent cost of rural free delivery before calculating its real cost. At the 
close of the fiscal year 1901 there were 76,945 post offices in the United States; at the corresponding date in 
1906 there were 65,600; in 1909, 60,144; and in 1911, 59,237. The number of fourth-class post offices in 1901 
was 72,479; in 1906, 59,690; in 1909, 52,944; and in 1911, 51,260. Erom 1901 to 1911 the reduction in the number 
of post offices of all classes amounted to 23.01 per cent and that in fourth-class post offices to 29.28 per cent. 



RAILWAY MAIL PAY. 



93 



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94 



RAILWAY MAIL PAY. 



Looking at the problem from the point of view of railways revenues it is not sur- 
prising, in view of the foregoing, to find that the transportation of the mails constitutes 
the single exception to the rule that their gross receipts from different elements of 
traffic have increased, albeit not in full proportion to the augmented volume of work 
they have done, at least with some rapidity. Comparing the years 1909 and 1911, 
and omitting express receipts for which official figures are not yet available, the figures 
are as follows: 



Kailway receipts from- 



1909 



1911 



Increase 
(per 
cent). 



Freight i.. 
Passenger 1 
Mail* 



$1,677,614,678 

563,609,342 

49,869,375 



$1,929,335,457 
658,772,786 
50,583,123 



15.00 
16.88 
1.43 



i Data compiled by Interstate Commerce Commission. 
2 As reported by the Postmaster General. 

During the two years covered by the foregoing the receipts of the Post Office De- 
partment increased, as already shown, 16.86 per cent and the operating expenses of 
the railways of the United States increased from 11,599,443,410 to $1,935,511,581, or 
21.01 per cent. 

The successive reports of the statistician to the Interstate Commerce Commission 
show that the receipts of interstate railways from freight, passengers, express, and mail, 
respectively, have been during each year from 1901 to 1911, inclusive, as shown on 
page 57: 






KAILWAY MAIL PAY. 



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yb KAIL WAY MAIL PAY. 

That the relatively slow expansion of mail receipts shown by these tables is the 
result of reductions in the rates of pay and not of a slower rate of growth of mail busi- 
ness is apparent from the following: 





1901 


1911 


Increase 
(per cent). 


Freight, tons carried 1 mile: 

Number * 


147, 077, 136, 040 
1,895 

17,353,588,444 
224 

2 7,424,390,329 
96 


255,016,910,451 

2,767 

32, 338, 496, 329 
351 

3 16,900,552,138 
161 


73.39 


Per capita of population 


46.02 


Passengers carried 1 mile: 

Number 1 


86.35 




56.70 


Mail: P PP 

Pieces handled 


127. 64 




67.71 







i Interstate Commerce Commission, Twenty-third Annual (1910) Report on the Statistics of Railways, 
p. 58. 

2 Annual Report of the Postmaster General for the fiscal year 1910, p. 47. 
s Statistics published by the Third Assistant Postmaster General. 

Figures showing the volume of express business in 1901 and 1911 are not available, 
but as the amounts paid to the railways for the facilities with which they furnish 
the express companies are proportioned to the receipts of the latter it may be con- 
cluded that the growth in the railways' revenues from express at least roughly meas- 
ures the growth of this traffic. The last foregoing table shows that of the three services 
included, the business of the mails has grown with far the greatest rapidity, yet by 
the other tables it has been shown that the railways' revenues from mail have increased 
most slowly. 

Various elements have combined to produce this decline in the mail pay of the 
railways, but in this statement reference will be made only to the more important 
reductions that have taken place within the past five years. These are: 

First. The natural operation of the law of 1873 by which the basis of mail pay is 
fixed. 

Second. The action of the Post Office Department in stimulating competition for 
mail where its power to divert part of the movement from any route or routes could 
be exercised for that purpose. 

Third. The statutory reductions provided for in the appropriation act of March 2, 
1907. 

Fourth. The reduction accomplished by including Sundays in the divisor used to 
establish the average daily weight of the mails, in accordance with the executive 
order known as Postmaster General's Order No. 412 of June 7, 1907. 

Fifth. The withdrawal of all payments for special facilities, and, 

Sixth. The withdrawal from the mails of stamped envelopes, postal cards, mail 
bags, and postal equipment. 

(b) reductions due to natural operation op the law or 1873. 

Pay for the services and facilities supplied by railways is now fixed by the law of 
March 3, 1873 (17 Stat., 558), subject to the deductions provided for by the acts of 
July 12, 1876 (19 Stat., 78); June 17, 1878 (20 Stat., 140): March 2, 1907 (34 Stat., 1212); 
and May 12, 1910 (36 Stat., 362). The act of 1876 effected a reduction to 90 per cent 
of the sums that would have been paid under the unmodified statute of 1873, and the 
act of 1878 made a further reduction of 5 per cent. The reduction effected by the act 
of 1907, as modified by that of 1910, will be discussed in a subsequent paragraph. 
The constant reduction due to the normal operation of the law from 1873 to 1898 was 
shown as one of the results of the investigations undertaken for the Joint Postal Com- 
mission by Prof .Henry C. Adams. The figures show in ton-miles rate in the following 
table are from his report. 1 



Fifty-sixth Cong., Sen. Doc. No. 89, pt. 2, p. 253. 



RAILWAY MAIL PAY. 



97 





Railway mail 

pay per ton per 

mile. 


Year. 


Railway mail 

pay per ton per 

mile. 


Year. 


Railway mail 

pay per ton per 

mile. 


Year. 


In cents. 


Per 
cent of 
rate in 

1873. 


In cents. 


Per 
cent of 
rate in 

1873. 


In cents. 


Per 
cent of 
rate in 

1873. 


1873 


26,420 
23, 732 
23,866 
23,979 
23,960 
23, 167 
21,522 
20,598 
18,969 


100 
90 
90 
91 
91 
88 
81 
78 
72 


1882... 
1883... 
1884... 
1885... 
1886... 
1887... 
1888... 
1889... 
1890... 


17,886 
17, 828 
17,670 
17,182 
16,487 
16,567 
16,268 
15, 656 
14,968 


68 
67 
67 
65 
62 
63 
62 
59 
57 


1891... 
1892... 
1893... 
1894... 
1895... 
1896... 
1897... 
1898... 


14,787 
14,453 
13,973 
13,323 
13, 109 
12,964 
12,665 
12,567 


56 


1874 


55 


1875 


53 


1876 


50 


1877 


50 


1878 


49 


1879 


48 


1880 


48 


1881 









Considerably less than one-third of the reduction of 52 per cent shown in the fore- 
going table is to be attributed to the statutory changes of 1876 and 1878, the entire 
balance is attributable to the natural operation of the law. From 1879 to 1898, 19 
years, during which there were no changes in the law, the average rate per ton per 
mile declined from 21.522 cents to 12.567 cents or 41.61 per cent. This diminishing 
effect of the law of 1873 upon the rates of railway mail pay is due to the fact that it 
fixes the rates on a sliding scale by which they automatically decrease as the volume 
of the mail increases and so, on every route, constantly approach toward the statutory 
minimum. The Post Office Department has unfortunately failed to continue the 
tabulations showing the rates paid per ton per mile for railway mail facilities, begun 
by the Joint Postal Commission, and it may still be said, as was said by Prof. Adams 
in 1900: 

"The Post Office Department has been at considerable expense and trouble to 
determine the aggregate tonnage of mail matter, but has never thought it of advan- 
tage to compute the ton mileage of mail carried. This is a little strange, because not 
only is ton mileage the only true measure of traffic, but it is the unit of traffic made 
the basis of compensation under the law of 1873." (Prof. Henry C. Adams, Report 
to the Joint Postal Commission, 56th Cong., S. Doc. No. 89, pt. 2, p. 208.) 

Although statistics measuring the reduction since 1898 due to this automatic action 
of the law fixing railway mail pay do not exist, there can be no intelligent denial 
of the fact that the law still operates and will continue, as long as it stands unrepealed, 
to operate in this way. Had there been no other changes its operation would un- 
doubtedly have produced a material reduction in the average rate of payment per 
ton per mile from 1898 to the present time and such a reduction has actually taken 
place and is a part of the notable decline already evidenced herein. 

(C) EFFECT OF COMPETITION STIMULATED BY POST OFFICE DEPARTMENT. 

Although the rates of pay fixed by the present law are in many instances far below 
the level of just compensation and there are few, if any, separate routes on which 
they are fully remunerative, the method of calculation provided in the statute so 
operates that wherever a railway mail route exists and carries any mail it becomes 
desirable for the railway operating it, from the point of view of its mail revenue, to 
secure for that route the greatest possible volume of mail. During recent years the 
Post Office Department has seized upon the potential advantage springing from this 
condition and has pressed it vigorously and effectively in its negotiations with the 
railways. The existence and nature of this advantage were concisely stated by Post- 
master General von Meyer in his annual report for the year 1907, as follows: 

"Where through mails are concerned, the department often has the choice of com- 
peting routes. A competing route may be shorter than another, it may be more 
economical by reason of being a land-grant route, or it may perform important ter- 
minal or transfer functions which must otherwise be provided for by the department. 
* * * Where the department has the opportunity of dispatching mails by com- 
peting routes, one of which is shorter or otherwise less expensive than the other, it 
appears to be but just to the Government, when such mails are allowed to remain 
with the longer or more expensive route, to reduce the compensation paid therefor 
by the amount which the Government would save if the mails in question were dis- 
patched by the shorter or less expensive route. 



98 



KAIL WAY MAIL PAY. 



"Accordingly the policy has been inaugurated of effecting such a saving in cases 
of this character arising at the beginning of a contract term, and has been applied in 
some prominent instances in the readjustments in the third contract section. " (Post- 
master General's Annual Report for 1907, p. 24.) 

This policy, to which no exception is here taken, has been continued and the extent 
in which it has been effective, up to the present time, in reducing railway mail pay 
may be traced, at least in part, in the successive annual reports of the department. 
The annual reports of the Second Assistant Postmaster General for 1908, 1909, 1910, 
and 1911 contain figures which show that the reduction in annual railway mail pay 
accomplished by this means amounts, at present, to not less than $174, 544. 51. * It is 
not probable that this policy of the department will be abandoned or that its possi* 
bilities have been wholly exhausted. 

(d) reductions made by the act op march 2, 1907. 

The postal appropriation act of March 2, 1907, provided for a reduction, beginning 
with Julv 1, 1907, of 5 per cent in the pay for all railway routes on which the average 
daily weight ascertained at the weighing period was over 5,000 and not to exceed 
48,000 pounds and on the excess over 5,000 pounds up to 48,000 pounds on routes 
having more than 48,000 pounds average daily weight. For the excess over 48,000 
pounds the act provided that land-grant roads should be paid at the rate of $17.10 per 
mile for each 2,000 pounds of such excess and other roads at the rate of $19.24 per mile. 
By a subsequent act (approved May 12, 1910, 36 Stat. 362), the rate of $17.10 for land- 
grant roads, was further reduced, the reduction to take effect on July 1, 1910, to $15.39 
for each 2,000 pounds in excess of 48,000 pounds. The rates thus specified are 90 per 
cent of those previously in force and hence the reduction on this portion of the weight 
carried on the heavy routes was at the rate of 10 per cent. The act of March 2, 1907, 
also reduced the rates of payment per mile per annum for postal cars 45 feet long or 
longer (cars or compartments less than 40 feet long are not paid for) as follows: 



Length of car. 


Former 
rate. 


Reduced 
rate. 


Reduc- 
tion (per 
cent). 


45 feet 


$30. 00 
40.00 
50.00 


$27.50 
32.50 
40.00 


8.33 


50 feet 


18.75 


55 feet or longer 


20.00 







The Post Office Department has stated the annual amount of these reductions, not 
including the change made by the amendment of May 12, 1910, affecting the land- 
grant routes, and on the basis of the weighings of the years 1904-1907, inclusive, as 
follows: 

[Annual Report of the Second Assistant Postmaster General for 1907, p. 140; same for 1908, p. 154.] 



Weighing section. 


Reduction 
in pay com- 
puted on 
weight of 
mails. 


Reduction 
in pay for 
postal cars. 


Total reduc- 
tion. 


First 


$547,909.01 

70,192.45 

759,145.88 

363,247.29 


$239,670.49 

85,196.86 

442,755.76 

168,350.98 


$787,579.50 

155,389.31 

1,201,901.64 

531,598.27 


Second 


Third 


Fourth 




Total 


1,740,494.63 


935,974.09 


2,676,468.72 





Doubtless the foregoing figures are smaller, as to each section and as to the aggre- 
gate, than those which would represent the effect of the same law calculated upon 
the weighings of the years 1908-1911 and representing the rates of payment now in 
force, but the Post Office Department has either failed to make these calculations 

1 For all the information on this subject that has been made public see the Annual Reports of the Second 
Assistant Postmaster General as follows: 1907, p. 143; 1908, p. 156; 1909, p. 141; 1910, p. 131; 1911 (pamphlet 
print), pp. 9-11. 



RAILWAY MAIL PAY. 99 

or has seen fit not to make their results public. It has stated, however, that the 
amendment of May 12, 1910, to the act of March 2, 1907, when applied to the weigh- 
ings in force on July 1, 1910, when it became effective, resulted in a further reduc- 
tion of $47, 190. 18. x Adding the last-named sum to the,total of $1,740,494.63, repre- 
senting the reduction in transportation pay, as distinguished from pay for railway 
post office cars shown in the table, gives $1,787,684.81, which, in the absence of later 
and more complete information, and with the observation that it is unquestionably 
too low, must be accepted as the nearest approximation of the actual reduction in 
transportation pay alone effected by the act of March 2, 1907, as amended on May 12, 
1910, which has the sanction of officially published figures. Railway mail pay for 
transportation in 1911 was fixed, subject to certain deductions, at the annual rate of 
$46,172,472.93. The reduction of $1,787,684.81, now under consideration, amounted, 
therefore, to 3.87 per cent of the annual rate of pay computed on average daily weight 
of the mails. The annual rate of pay_ for postal cars at the close of the fiscal year 
1911 was $4,737,788.75 and on this basis the department's statement of the reduction 
in postal-car pay, $935,974.09, amounts to 19.76 per cent. 

(e) reduction by administrative order. 

It is well known that the reduction imposed by the act of March 2, 1907, was adopted 
as a substitute for the reduction which would have resulted had Congress, by its 
statutory enactment, required the whole number of days of the weighing period 
(including Sundays), instead of the number of week days or "working days " in that 
period, to be used as the divisor in determining the average daily weight fixing the 
basis of payment for each railway route. Both proposals were submitted to Congress, 
both were fully considered, and throughout this consideration they were regarded 
as alternatives; it was never by any one contemplated or suggested that more than 
one of them should be adopted. After full consideration Congress adopted the former 
alternative and rejected the latter. Notwithstanding this decision of Congress, the 
Postmaster General then in office, on the very day that the alternative reduction 
received the signature of the President — that is to say, on March 2, 1907 — but not until 
the legislative act had passed beyond the control of Congress, entered an order, known 
as " Order No. 165," which read as follows: 

"That when the weight of mail is taken on railroad routes the whole number of 
days the mails are weighed shall be used as a divisor for obtaining the average weight 
per day." 

Three months later, another Postmaster General having come into office, the fore- 
going was rescinded and the following substituted : 

"That when the weight of mail is taken on railroad routes the whole number of 
days included in the weighing period shall be used as a divisor for obtaining the 
average weight per day." 

Explaining his action in substituting order No. 412 for order No. 165, Postmaster 
General Meyer said of the earlier order: 

"Its enforcement according to its terms would have worked an injustice to those 
mail routes which afford the most efficient service; that is to say, those lines which 
carry the mails seven days in every week should receive less compensation for trans- 
porting the same amount of mail than would those which give a service of only six 
days in each week. In order to correct this defect, I issued order No. 412, dated 
June 7, 1907, * * * " (Postmaster General's Annual Report for 1907, p. 28.) 

The difference between order No. 165 and order No. 412 is that the former would 
have reduced the mail pay of those routes only which had seven-day service, while 
the latter reduces the pay of all routes whether they have service seven days per week, 
or six days, or a still smaller number of days each week. It is a little difficult to com- 
prehend how an injustice to some routes arising from a reduction in their pay could be 
remedied by reducing the pay on some other routes, and the difficulty is enhanced 
when it is realized that in many cases both seven-day and six-day (or less) routes are 
operated by the same railways and the pay for facilities on those of both classes goes 
in effect into the same pocket. 

This is not the place in which to discuss the propriety, the legality, or the wisdom 
of the change effected in 1907 by Executive order, but attention may properly be di- 
rected at this time to the indisputable fact that had Congress been advised of the pur- 
pose of the Postmaster General to issue an order increasing the number of days taken 
as the divisor, the statutory reductions of March 2, 1907, would not have been adopted. 

But reversing the declared purpose of Congress, the administrative order changing 
the divisor was issued and has been enforced, and this report is concerned with it no 

» Annual Report of the Second Assistant Postmaster General for 1910, p. 131. 



100 



KAILWAY MAIL PAY. 



further at present than to ascertain, as nearly as may be, how much it has reduced 
the mail revenues of the railways. The following official estimates are from the 
Annual Report of the Second Assistant Postmaster General for the year 1910: 



Weighing section. 


Date order 
No. 412 be- 
came effect- 
ive. 


Reduction 
in annual 
rate of pay. 


First 


July l, 1909 
July 1, 1908 
July 1, 1907 
July 1, 1910 


11, 100, 951. 44 
434, 730. 82 


Second 


Third 


1, 787, 378. 10 


Fourth 


1, 618, 879. 98 






Total 


4,941,940.34 







There has been a later weighing than that represented above in one section, the 
third, and it is probable that, as the normal increase in weights from weighing to 
weighing tends to increase the amount representing any such change, the figures as to 
that section are, at present, somewhat too low, but data for their correction are not 
available. 

Thus both, instead of one, of these heavy reductions were made, and instead of the 
congressional determination to reduce the railway pay only $2,723,658.90, as com- 
pared with $4,941,940.34, had the effect of combining both and reducing the pay 
$7,665,599.24 or nearly three times the amount which Congress determined was an 
adequate reduction, or based upon the total of transportation and railway post-office 
car pay for 1911, $50,099,537.02, 15.30 per cent. 

(f) withdrawal of payments for special facilities. 

From a date soon after the 10 per cent statutory reduction in the rates of mail pay 
effected by the act of July 12, 1876 (19 Stat., 78), the Post Office Department, under 
authority obtained from Congress, instituted a system of special additional payments 
for extra or expedited train service upon railway routes on which the statutory pay- 
ments would have been insufficient to secure the quality of service regarded as desirable 
by the Postmaster General. By the year 1901 the number of routes to which extra 

Eayments of this character were accorded, as well as the annual sum so expended, 
ad been considerably reduced and on July 1, 1907, the last of these allowances was 
discontinued. The additional facilities and expedited services obtained in considera- 
tion of these payments have not, however, been withdrawn or diminished. The an- 
nual rates of payment of this character for the fiscal years 1901 to 1907, inclusive, were 
as follows: 



Fiscal year — 


Annual rate 
of pay for 
special rail- 
way facilities. 


1901 


$195,682.50 


1902 


195, 636. 25 


1903 


167, 175. 00 


1904 


167,175.00 


1905 , 


167,175.00 


1906 


167,005.00 


1907 


167,005.00 







The rate for 1907 will be accepted, for the purposes of this report, as measuring 
the present reduction due to the cessation of these payments. 

(q) withdrawal of envelopes, postal cards, and mail equipment from madls. 

Congress has, by legislation on successive appropriation acts, provided the Post- 
master General with funds for the payment of freight or express charges on postal 
cards, stamped envelopes, newspaper wrappers, empty mail bags, furniture, equip- 
ment, and other mail supplies for the postal service, except postage stamps, and has 
directed the withdrawal of such articles from the mails, wherever practicable, dur- 
ing and after the weighing period. This withdrawal has, of course, decreased the 



RAILWAY MAIL PAY. 101 

weight at the successive weighing periods and, therefore, diminished the pay for 
mail transportation. It was completed for the whole country with the weighing 
in 1910 in the fourth weighing section. 1 Unlike all the other reductions herein 
referred to, this one does involve a reduction in service as_ well as in payments. The 
Second Assistant Postmaster General has stated that it is impossible accurately to 
estimate the reduction in railway-mail pay due to these withdrawals, 2 and for the 
purposes of this brief there will be substituted for such an estimate the sum which 
the department has asked to have appropriated to pay, during the fiscal year 1913, 
freight and expressage on the articles so withdrawn. This sum is $525, 000, 3 and 
to use it is to place the reduction at the lowest conceivable minimum. 

(h) forwarding periodicals by freight. 

Incidentally mention may be made of the recent action of the Postmaster General 
in withdrawing certain periodicals from the mails and substituting freight service 
for that formerly given on passenger trains. 4 This action has resulted in a large 
reduction in gross revenue to the railways with little or no opportunity for reduction 
in the cost of their operations. 

(i) SUMMARY OF RECENT REDUCTIONS. 

This report has now reached the point at which a summary of the recent reductions 
should be presented. No attempt has been made or will be made to estimate in 
dollars and cents the effect of the natural decrease of the rate per ton per mile for 
the services rendered which, as has been shown, must result from the normal opera- 
tion of the system of payment inaugurated by the law of 1873. Approximations of 
the effect of the other changes, all of them doubtless too low, have been given and 
are repeated, as follows: 



Cause of reduction. 



Natural operation of law of 1873 

Competition stimulated by Post Office Department 

Act of Mar. 2, 1907, and amendment of May 12, 1910 

Postmaster General's divisor order 

Withdrawal of pay for special facilities 

Withdrawal of mail supplies from mails 

Total (with no allowance for the first item above) . 



Amount of 
reduction. 



No estimate. 

8174,544.51 

2,723,658.90 

4,941,940.34 

167,005.00 

525,000.00 



8,532,148.75 



Therefore, with no allowance for the natural downward tendency due to the slid- 
ing scale of payment so wisely provided for in 1873, the mail pay of the railways in 
1911 was at least 38,532,148.75 less than it would have been under the laws and prac- 
tices in vogue prior to 1907. Compared with . transportation pay of $46,172,472.93, 
this reduction amounts to 18.48 per cent, and on the basis of $50,099,537.02, the sum 
which includes both the transportation pay and railway post office car pay of 1911, 
it amounts to 17.03 per cent. 

A method of estimating the contribution of the railways to the reduction of the 
postal deficit which is at once more simple and more comprehensive and more ade- 
quate is by ascertaining what the railway mail pay of 1911 would have been had it 
continued to absorb, as it did in 1901 — that is but 10 years earlier — $34.18 per $100 of 
postal receipts (see table on p. 52). Postal receipts in 1901 aggregated $237,879,823, 
and, as already shown, even with the enormous increase in business of the decade 
1901-1911, expenses for other purposes than railway mail pay increased proportion- 
ately faster than receipts, so that in 1911 these expenses consumed $79 for each $100 
of receipts, as against but $69.33 in 1901. Fortunately for the Post Office Department, 
railway mail pay moved in the opposite direction. Had it merely remained station- 
ary in its relation to receipts, the mail pay of 1911 would have been $81,307,323, or 
$30,724,200 more than it actually was. -The postal deficit never amounted to more 
than twenty-one or twenty-two millions, and the Post Office Department never admit- 
ted as much as eighteen millions. 

i Annual Report of the Second Assistant Postmaster General for 1910, p. 145. 

* Annual Report for 1910, p. 130. 

s Annual Report of the Second Assistant Postmaster General for 1911, p. 6. 

* This change is described by the Postmaster General in his Report for 1911 (H. Doc. No. 559, 62d Cong., 
p. 19) and, more fully, by the Second Assistant Postmaster General on pp. 21 to 23 of his Annual Report 
for the same year. 



102 KAIL WAY MAIL PAY. 

The table next to follow merits more than ordinary attention. It serves, at once 
to illustrate with marked clearness, first, the reductions in railway mail pay, exclusive 
of payments on account of postal cars, due to (a) the change in the divisor and (b) 
the statutory reductions of March 2, 1907, and May 12, 1910, and, second, the reduc- 
tions which, without any changes in the law or in the method of its application, result 
from the progressively decreasing sliding scale of payment. This natural downward 
movement is illustrated both with reference to the old divisor and rates and with 
regard to the rates and the divisor now in force. In considering the table it is neces- 
sary to remember that the principle of adjustment crystallized in the law of 1873 
has never been modified although the rates have been several times reduced, the 
application of the sliding scale of payment has been extended, and the method of 
applying the law has been changed so as to produce a further reduction . This principle 
of progressive reduction with augmented volume of service was applied at the outset, 
and is still applied, by means of naming a series of specific rates for a series of specific 
services, each successive rate showing a lower average per unit of service than the rate 
named for the next lower volume of service that is specified. After the maximum 
service so specified is attained the law further specifies a still lower rate to be applied 
to each additional 2,000 pounds in the average weight carried daily over the entire 
route. It is obvious that under this plan increasing service produces a progressive 
lowering of the average rate and that the limit of this downward movement is fixed 
by the rate applied to the final increment. Originally this final rate was applied to 
each 2,000 pounds in excess of 5,000 pounds of average daily weight but since July 
1, 1907, under the law of March 2, of that year, a further reduction has been applied 
to the excess over 48,000 pounds of daily weight. Beginning in 1876 (act of July 12, 
1876), routes or parts of routes, the construction of which was aided by congressional 
grants of land, have received but 80 per cent of the amounts paid for the same services 
when rendered by other routes. Prior to July 1, 1907, the rate for each 2,000 pounds 
in excess of 5,000 pounds was $21.37 per mile per annum, or 6.827 cents per ton per 
mile for other than land-grant routes and $17.10 per mile per annum or 5.463 cents 
per ton per mile for land-grant routes. 

The present rates on the excess over 5,000 pounds, up to a total of 48,000 pounds, 
are 5 per cent lower; that is to say, $20.30 per mile per annum or 5.562 cents per ton 
per mile for other than land-grant routes or $16.24 per mile per annum or 4.451 per 
ton per mile for land-grant routes. Beyond 48,000 pounds the act of March 2, 1907, 
now in force, provides rates of $19.24 per mile per annum or 5.271 cents per ton per 
mile for each increment of 2,000 pounds for other than land-grant routes and, as 
modified by the amendment of May 12, 1910, $15.39 per mile per annum or 4.216 
cents per ton per mile for land-grant routes. In calculating the averages per ton 
per mile stated in this paragraph proper allowance has been made for the fact that 
under the Postmaster General's Order No. 412, the divisor order, a route has annually 
to carry an average of 365 tons per mile of its length to obtain an average daily weight 
of 2,000 pounds while prior to 1907 the same average daily weight represented an aver- 
age annual service of 313 tons per mile of route. The reduction thus applied to the 
excess over 48,000 pounds average daily weight, as indicated by these average rates 
per ton per mile, amounts to 22.79 per cent for other than land-grant routes and to 
22.83 per cent for land-grant routes. 



BAILWAY MAIL PAY. 



103 



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BAILWAY MAIL PAY. 105 

An important consequence of this scheme of payment is that of itself it should 
enable the Post Office Department to show a decreasing ratio of expenses to receipts 
resulting from the progressive expansion in the volume of the mails. Postage rates 
have not been diminished as postal business has increased, and hence the average 
receipts of the postal service per unit of business have remained constant, while the 
plan of payment for railway transportation, as has been seen, provides a steadily de- 
creasing expense per unit for the element of cost represented by railway facilities 
and services. 

An understanding of the manner in which the rates are applied is also necessary to 
a complete comprehension of the table. Thus the minimum rates nominally applica- 
ble to an average daily weight of 200 pounds are in practice applied whenever the 
average is 211 pounds or less, because no account is taken of an increment of weight 
that would not have been sufficient before the reductions of 1876 and 1878 to warrant 
an additional payment of $1. At present this minimum rate (for other than land- 
grant routes) is $42.75, and the additional sum of 85.5 cents is paid for each 12 pounds 
above 200 pounds of average daily weight up to 500 pounds, when another rate is 
applied, but nothing is paid for any fraction of 12 pounds. Under this system the 
rate for 211 pounds average daily weight is $42.75, while for 212 pounds it is $43.60. 
In the same manner the 500 pounds rate is extended to apply to 519 pounds, the 
1,000 pounds rate to 1,019 pounds, the 1,500 pounds rate to 1,519 pounds, the 2,000 
pounds rate to 2,059 pounds, the 3,500 pounds rate to 3,559 pounds, the 5,000 pounds 
rate to 5,079 pounds, the 48,000 pounds rate to 48,103.95 pounds. It is this plan of 
applying the rates which produces the notable fluctuations in the percentages of 
reductions as disclosed in the upper half of the last column. 

The headings in the table referred to indicate the significance of the figures it con- 
tains, but they deserve all the emphasis that can be given. Each horizontal line in 
the table represents the results accruing, or that formerly would have accrued, to a 
railway route for an actual service measured, so far as these postal services can be 
measured in terms of weight and distance, by the figure at the extreme left of that 
line in the first column. Thus, the last fine represents an annual service equivalent 
to carrying 86,075 tons over each mile of a particular route. Prior to' July 1, 1907, 
the effective date of Postmaster General's Order No. 412, this volume of service would 
have resulted in stating the average daily weight on which payment is calculated as 
550,000 pounds; now it gives an average daily weight one-seventh less, or 471,429 
pounds. This change in the method of applying the statute alone and had there been 
no other change adverse to the railways affected would have reduced the pay of a 
route having this volume of service no less than $839.61 for each mile of its length. 
But there have been additional reductions, so that it appears that if this volume of 
mail is now carried on other than a land-grant route the annual pay per mile is $4,679.81, 
or $1,315.45 less than $5,995.26, which would have been the rate prior to July 1, 1907. 
This is a reduction of 21.94 per cent, as stated in the last column at the right of this 
line. Similarly, if the route were a land-grant route its pay would have been $4,796.20 
per mile prior to July 1, 1907, and now would be $3,743.03 per mile, also a reduction 
of 21. 94 per cent. Prior to July 1, 1907, the pay of this route, if not a land-grant 
route, would have been at the rate of 6.965 cents per ton per mile; it would now be at 
the rate of 5.437 cents per ton per mile. The corresponding ton-mile rates for land- 
grant routes are 5.572 cents and 4.349 cents, respectively. 



106 



RAILWAY MAIL PAY. 



NUMOCP OF TONS 

CARRIFD ONE MJLF. 
PER MILE OF ROUTE 



3/.3 
53.CZ/ 
38.499 
4693 
626 
78£5 
8/.2Z4 
959 

94682 £ 
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860753 



Average rate per ton per mile in cents 
wAm 




RAILWAY MAIL PAY. 107 

These average ton-mile rates deserve especial attention. Considering the fifth 
column from the right, which contains the standard rates now in force, it shows that for 
the lowest weight stated the rate is considerably over $1 per ton per mile and that the 
subsequent decrease in the average is very rapid until it approaches the lower end 
of the column when, although the decrease continues, the rate of decrease is more 
moderate. Of course, the highest rates are in recognition of the character and cost of 
service on routes having very small quantities of mail and represent a small aggregate 
of railway mail pay and a relatively meager portion of the total paid to the railways for 
mail services and facilities. The average daily weight tends on all routes, or at least 
on nearly all routes, to become greater as an incident to the development of the country, 
its growth in population, industry, and wealth, and the progressive increase in the 
utilization of postal facilities. Hence, in the normal course, every route tends to 
pass from a class having higher pay per ton mile to a class having lower pay and to 
continue downward, each route thus constantly approaching the minimum, although 
the rate of approach varies greatly with different routes. Commenting upon this 
fact in his report to the joint postal commission in 1900, Prof. Henry C. Adams as- 
signed it as ground for the assertion that " the law of 1873 is drawn in harmony with the 
fundamental law of transportation" which, he declared, is that "a reduction in rates 
is a normal result of an extension of traffic" and, he said, "justifies a relatively more 
rapid reduction in the rate per ton per mile for a route whose traffic increases, let us 
say, from 50 pounds to 1,000 pounds daily, than for a route whose traffic increases 
from 5,000 pounds to 10,000, or 50,000 to 100,000 pounds." * 

The percentages of reduction in the last column of the table are very significant. 
Those corresponding to annual service of less than to 939 tons per average mile of route 
represent reductions effected by means of Order No. 412, only, for below this volume 
of service the statutory change of 1907 had no effect. The curious fluctuations in 
the percentages of the reductions so produced, ranging from 3.85 per cent to 10 per 
cent, and the highest percentage representing a smaller volume of service than the 
lowest percentage, indicate the complicated nature of the change, apparently so 
simple, brought about by that order. Beyond 939 tons the percentages progress 
steadily until they reach the maximum, 21.94 per cent, in the last line, which rep- 
resents the heaviest mail movement. 

The figures in the last foregoing table are general in their significance. The table 
which follows shows precisely what has happened to particular routes, taking for 
illustrative purposes, those routes, with a few exceptions, on which mail was weighed 
in the years 1910 or 1911 and having, under the present mode of calculation, an average 
daily weight in excess of 20,000 pounds. All routes of this class are included except 
a few having lap service or in which other extraordinary conditions might have been 
thought to impair the value of the comparisons. 

i .Fifty-sixth Cong., Doc. No. 89, pt. 2, pp. 204-205. 



108 



RAILWAY MAIL PAY. 



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110 RAILWAY MAIL PAY. 

The table just indicated represents 63 routes on which mail was weighed during the 
years 1910 and 1911, with a total length of 17,645.72 miles. Although this represents 
but 7.88 per cent in length of the railway mailroutes of the country, these routes receive, 
under present adjustments, $14,276,600.84 per annum of railway mail pay, exclusive 
of any pay for postal cars which they may receive, or 30.92 per cent of the total trans- 
portation pay of all the railway routes. Their present proportion of the transportation 
pay of the third and fourth weighing sections, in which weighing took place in 1910 and 
1911, is 41.99. Other routes weighed in those years and having average daily weights 
of 20,000 pounds or more, but excludedfrom the table because, for one reason or another, 
they might have been thought to impair the accuracy of the comparisons, receive, 
under the adjustments of those years, $4,552,414.49 per annum. Adding this sum to 
the total of present transportation pay of the routes in the table gives $18,829,015.33, 
which is 55.38 per cent of the transportation pay of the third and fourth weighing 
sections. These data serve to demonstrate the- importance of the fact, disclosed by 
the table, that the average reduction in transportation pay alone for these 63 heavy 
routes, since the close of the first half of the calendar year 1907, is 18.97 per cent. A 
tabulation of the postal car pay for these routes would show a still greater rate of re- 
duction. 

J. — CONCLUSION DRAWN FROM THESE REDUCTIONS. 

This report does not assume to base any final conclusion as to the wisdom or justice 
of a further reduction upon the fact that within less than five years railway mail pay 
has been thus heavily reduced. Such a record as that disclosed in the foregoing pages 
does, however, create a presumption that is strongly adverse to any plan which would 
immediately require further large sacrifices of revenue on the part of the railway 
instrumentalities of the postal service. When this presumption has been supple- 
mented by proof, which will presently be adduced (see pp. 74-75), that the railways 
were not overpaid prior to July 1, 1907, the gross injustice of adding to the series of 
reductions begun on that date and still in progress must be conceded. It is now 
generally recognized that present railway revenues are, at the most, but barely 
adequate to provide for the requirements of increased wages, higher prices of materials 
and supplies, progressively augmented standards of service, and the reasonable return 
upon investments that is necessary to attract the capital needed for improvements and 
extensions. There is no valid reason for singling out the mail service and making it 
the especial subject of reductions that ought not to be and can not be extended to other 
kinds of traffic. All the economies of the postal service certainly ought not to be at 
the expense of the railways. It is fair to inquire whether it has become a habit of postal 
administration to look to decreases in the item of railway mail pay as the sole means 
of accomplishing an equation between postal receipts and postal expenditures and, if 
such seems to be the case, to inquire, further, whether it is reasonably consistent with 

Eublic policy to insist that this item of postal expense shall continue to be diminished 
y the force of public authority, even if such exercise of this authority is not repugnant 
to the guaranties of the Federal Constitution, in order that expenses for other purposes 
may be progressively increased. It is reasonable that the railways should ask that 
the recommendations of the Postmaster General, contained in Document No. 105, be 
considered in the light of a complete understanding of the heavy and rapid reductions 
inposed upon them during recent years. 

IV. Reduced Railway Mail Pay Is Now Below the Level op Just Com- 
pensation. 

(a) points already demonstrated in this report. 

The following facts are believed to have been fully established in this report: 

First. That the Postmaster General's argument in favor of the reduction he now 
recommends is based upon such fundamental misconceptions of principles and facts, 
upon such incomplete and erroneous computations, and upon such fragmentary data 
and incorrect and misleading figures as to be totally unreliable and unworthy of seri- 
ous consideration by the Congress. 

Second. That (a) the Postmaster General neither fully nor correctly tabulated nor 
forwarded to Congress the original reports which he obtained from the railroads, and 
(b) in so far as comparisons canbe made with the figures which he did submit, they 
do not warrant but are destructive to the conclusions and recommendations which he 
makes and tend strongly to demonstrate the inadequacy of the present payments for 
railway-mail facilities and services. 

Third. That the Postmaster General's present recommendation of a further reduc- 
tion of approximately $9,000,000 in annual railway mail pay follows a series of re- 



KAILWAY MAIL PAY. Ill 

ductions brought about by legislation or by departmental orders that have in less 
than five years diminished railway mail pay $8,532,148.75. 

The committee on railway mail pay having therefore demonstrated that there is 
before Congress no showing entitled to serious consideration in favor of the further 
reduction recommended by the Postmaster General asserts that he should be required 
to make a complete disclosure of the facts in his possession and that the railways are 
entitled to demand, as of right, that before going further an at least plausible and 
prima facie case should be presented by the Post Office Department or that its unsup- 
ported proposal should be withdrawn or ignored. 

The railways welcomed the inquiry into this commonly misunderstood subject and 
cooperated in obtaining the data sought because they believed, and still believe, that 
any investigation, conducted wisely and fairly, with due recognition of the established 
principles of transportation economics and with reasonable regard for the just guar- 
antees of the Federal Constitution would leave no vestige of doubt that within the 
past five years the process of reduction in railway mail pay has been forced so far as to 
constitute an injustice to an industry upon which almost one-fifth of the population 
of the country is directly or indirectly dependent, and in the successful operation of 
which the entire country is concerned. 

In the subsequent pages of this report the committee will seek to demonstrate the 
just right of the railways to receive^ from the Government that fair and reasonable 
relief which they had hoped it would be the pleasure of the Postmaster General to 
recommend and initiate. 

(b) railway mall pay not excessive before recent series op reductions began 

Having described, defined, and measured the extensive series of reductions to 
which the Postmaster General now seeks to add a still further reduction, it follows that 
the fact that these reductions have taken place is proof that the present railway mail 
pay is too low: 

First. Unless such pay was too high before the reductions were effected, or, 

Second. Unless the whole series and aggregate amount of these reductions were 
fully justified by changes in conditions that occurred during the period in which 
they took place. 

The congressional Joint Commission to Investigate the Postal Service, which 
reported on January 14, 1901, is sufficient authority for the fact that on that date rail- 
way mail pay was not excessive. The late Senator William B. Allison, of Iowa; the 
late Senator Edward 0. Wolcott, of Colorado; Senator Thomas S. Martin, of Virginia; 
the late Representative Eugene F. Loud, of California; former Representative W. H. 
Moody, of Massachusetts; and former Representative T. C. Catchings, of Mississippi, 
six of the eight members of the commission, united in the following: 

"Upon a careful consideration of all the evidence and the statements and arguments 
submitted, and in view of all the services rendered by the railroads, we are of opinion 
that ' the prices now paid to the railroad companies for the transportation of the mails ' 
are not excessive, and recommend that no reduction thereof be made at this time." 
(56th Cong., 2d sess., S. Doc. No. 89, pp. 19, 22, 25, 29.) 

This expression was the result of prolonged, patient, and intelligent investigation 
by men whose patriotism, fidelity, and capacity has never been questioned. Their 
conclusions were sanctioned by the Congress to which they reported and the authority 
of their judgment has not been and can not now be impaired or diminished. 

(c) CHANGED CONDITIONS SINCE 1901 WOULD JUSTIFY INCREASED RATHER THAN 
REDUCED RALLWAY MAIL PAY. 

No one will for one moment contend that there has been any net reduction in the 
cost of supplying railway mail services and facilities since the year in which the 
report of the Joint Commission to Investigate the Postal Service was rendered. In 
fact all changes, save possibly those in efficiency of organization and management 
have been in the opposite direction and it is well known that the economies effected 
by this means extend in but the smallest degree to the mail service. Consider, for 
example, that the large proportion of railway gross receipts from operation which 
goes to railway labor. Every item of cost of that character has greatly increased 
since the year 1901. In 1901 the railways reporting to the Interstate Commerce 
Commission received in gross from their operating sources the sum of $1,588,526,037 
and expended in wages and salaries the sum of $610,713,701; in 1910 the corresponding 
totals were $2,750,607,435 and $1,143,725,306. Computations from these totals show 
that in 1901 the railways expended in wages and salaries $38.45 out of each $100 of 
gross operating receipts, while in 1910 the proportion had increased to $41.58, a differ- 



112 



KAILWAY MAIL PAY. 



ence of $3.13 in each $100 of gross receipts. This difference does not seem small, but 
it is hardly realized, except when the calculation is made, that on the basis of the 
gross receipts of 1910 it could amount, as it does, to an additional expense of $86,095,- 
890.72. It is to be borne in mind that this largely increased payment to labor is in 
spite of the fact that a part of the increase in wage rates has been offset by higher 
efficiency in methods and facilities. Comparisons of rates of wages, from the annual 
statistical reports of the Interstate Commerce Commission, follow: 



Class of employees. 



Average wages per day 



1901 



1910 



Increase 
(percent). 



General office clerks 

Station agents 

Other station men 

Enginemen 

Firemen 

Conductors 

Other trainmen 

Machinists 

Carpenters 

Other shopmen 

Section foremen 

Other trackmen 

Telegraph operators and dispatchers . . . 
Employees, account floating equipment 
All other employees and laborers 



$2.19 
1.77 
1.59 
3.78 
2.16 
3.17 
2.00 
2.32 
2.06 
1.75 
1.71 
1.23 
1.98 
1.97 



$2. 45 
2.14 
1.91 
4.34 
2.57 
3.73 
2.72 
3.03 
2.39 
2.20 
1.99 
1.57 
2.16 
2.10 
1.96 



11.87 
20.90 
20.13 
14.81 
18.98 
17.67 
36.00 
30.60 
16.02 
25. 71 
16. 37 
27.64 
9.09 
6.fi0 
Jo. 98 



Figures like the foregoing require no comment — they plainly show that in their 
relations with labor the railways could find evidence supporting a contention for higher 
railway mail pay, that this large element of cost supplies no justification whatever 
for any reduction. 

During the year 1901 the railways reporting to the Interstate Commerce Commis- 
sion expended $104,926,568 for locomotive fuel, in 1910 their expenditures for the same 
purpose aggregated $217,780,953. Comparing these figures with gross receipts from 
operation it is found that the cost in locomotive fuel of each $100 of gross receipts was 
$6.61 in 1901 and $7.92 in 1910, an additional cost of supplying railway services amount- 
ing, on the basis of the receipts of 1910, to $36,033,743.40. A further analysis of the 
supplies that must be purchased in order that railways may be maintained and oper- 
ated would show that in the great majority of instances, and those affecting the largest 
aggregate of expenses, the upward tendency in prices has been as marked as in the case 
of fuel for locomotives. It is apparent, therefore, that in the matter of the cost of neces- 
sary materials and supplies, no justification for the recent reductions in railway mail 
pay, but rather reasons for a movement in the other direction, can be found. 

If there are any facts in the transportation or industrial events of the last decade 
that have warranted reductions in railway mail pay below the reasonable level that 
existed, in the year 1901, those facts have not, it is respectively submitted, been 
brought to the attention of Congress by the Postmaster General or in any other way, 
nor are they matters of public or general notoriety. No such facts are within the 
knowledge of the committee on railway mail pay nor have the members of that commit- 
tee been informed that there is any claim that such facts do exist. 



(d) the passenger-train services are not reasonably remunerative. 

Railway managers have long realized that their passenger services are not directly 
productive in most cases of returns equal to their cost. In order to arrive at this con- 
clusion as to the railways of the United States as a whole it is not necessary to resort 
to any plan of problematical accuracy for the apportionment of joint expenses. On 
the contrary, the discrepancies between average train-mile expenses for all classes of 
revenue-producing trains and the aggregate of the average train-mile receipts from all 
of the passenger- train services is so vast that it is at once apparent that it can not be 
bridged by any conceivable difference between the respective train-mile expenses 
of passenger and freight trains. The annual statistical report of the Interstate Com- 
merce Commission for the fiscal year 1910 shows (p. 60) that the average receipts per 



RAILWAY MAIL PAY. 



113 



train-mile from all of the passenger-train services rendered during that year amounted 
to $1.30, while the average cost for operating expenses alone of running trains of all 
classes was $1.49 per mile. The latter average includes nothing whatever for taxes 
or for any return to investors. The available data indicate that reasonable allowances 
for these purposes would raise the average cost to approximately $2.25 per train-mile. 

These figures must satisfy any candid inquirer that whatever difference a complete 
and detailed investigation might prove to exist between the cost of running the differ- 
ent classes of trains over equal distances, that difference can not equal the difference 
between the average train-mile cost of all trains and the average train-mile receipts 
of passenger trains. The averages thus amount to a demonstration of the truth that 
the passenger- train services as a whole are relatively unprofitable. It will presently 
be shown that of the three passenger-train services those rendered on behalf of the 
mails fall farthest below the standard of reasonable remuneration. 

Document No. 105, however, itself contains convincing evidence of the unprofit- 
ableness of the passenger-train services as a whole. It is only necessary to supplement 
the Postmaster General's estimates of passenger-train expenses for operation and taxes, 
incomplete, inadequate, and far below the truth as they are, by figures showing the 
receipts from those services and the receipts and expenses of all railway services in 
order to demonstrate this fact. An accurate computation representing the month of 
November, 1909, made up wholly from Document No. 105 and the official reports 
of the Interstate Commerce Commission covering every railway for which the former 
shows an estimated operating and taxation cost of handling the mails of $10,000 or 
more (except the Grand Trunk system, for which the Interstate Commerce Commis- 
sion does not report comparable data, and the Atchison, Topeka & Santa Fe, for which 
the Postmaster General used figures for January, 1910, instead of November, 1909, 
and also used different mileage from that covered by the reports of the Interstate 
Commerce Commission) affords this demonstration. The details of this computation 
are shown in Appendix A; the following are the results: 

The foregoing aggregates are simply the totals of official figures including under 
that designation the Postmaster General's estimates of the amounts of operating 
expenses and taxes chargeable to the passenger-train services. Those in the column 
headed "All services" are the totals of figures found in Bulletin of Revenues and 
Expenses No. 10 issued by the Interstate Commerce Commission and No. 18 of the 
same series. The aggregate given for gross receipts of the passenger-train services is 
the total of the receipts from passengers reported by the Interstate Commerce Com- 
mission in the same bulletins plus the mail revenues of the same railways reported by 
the Postmaster General in Document No. 105 (Table 7, pp. 272-281) and plus one- 
twelfth of the express revenues of the same railways for the fiscal year containing the 
month of November, 1909, as reported by the Interstate Commerce Commission in its 
statistical report for 1910. The aggregate cost for operation and taxes for the passen- 
ger-train services is the total of the Postmaster General's estimate for these railways 
as shown by his table 7 (Document No. 105, pp. 272-281). The significance of these 
aggregates will be appreciated when it is noted that the railways which they repre- 
sented earned, according to the Postmaster General's statement, in the month of 
November, 1909, $3,109,160.32 of mail pay, or 86.18 per cent of $3,607,773.13, the total 
represented in Document No. 105. As has been demonstrated herein, the Postmaster 
General's plan of apportioning expenses tends most strongly to understate the cost of 
the passenger-train services, yet even the misleading and inadequate estimates which 
he put forth in Document No. 105, when compared with the receipts, show that these 
services are so excessively costly that, if any allowance whatever is made for interest 
on the investment, they are unmistakably productive of much less than the fair 
average return necessary for the adequate remuneration of railway employees and a 
reasonable return upon railway investments. 



Item. 



All services. 



Passenger- 
train services. 



Gross receipts '. 

Operating expenses and taxes 

Percentage of gross receipts required to meet operating expenses and 
taxes 



§170,042,915.51 
$109,960,722.73 



C4. C7 



$43,719,689.67 
$32,300,818.99 



114 RAILWAY MAIL PAY. 

If the Postmaster General's method of apportionment had assigned its full and 
proper cost to the passenger department, the percentage of expense to receipts would 
have been much higher than 73.88 and the difference between such higher percentage 
and 64.67 per cent, which expresses the ratio of all expenses to all receipts, would 
have measured with accuracy the extent of the losses of the passenger-train services. 
With this qualification in mind, it is sufficient to repeat that the totals for the 46 
railways represented disclose the fact that total operating expenses and taxes con- 
sumed 64.67 per cent of the gross receipts from all services, while 73.88 per cent of the 
aggregate receipts from all the passenger-train receipts only equals the inadequate 
portion of operating expenses and taxes assigned to those services by the Postmaster 
General. As the usual requirement for an aggregate sufficient to afford a reasonable 
rate of return on railway investments is approximately one-half of the total operating 
expenses, it is evident that where it is admitted that 73.88 of receipts is required to 
meet operating expenses and taxes there must be a very heavy total loss. 

The situation which exists, under which the passenger business of almost all rail- 
ways is conducted without adequate compensation, is not one with which the railways 
are satisfied nor has it arisen through their volition. It will certainly be admitted 
that they are warranted in asking that they be not required to accept relatively less 
for mail transportation than they receive from the other services rendered on their 
passenger trains. 

(e) railway gross receipts from mail transportation lower than from any 
other passenger-train services. 

By adopting the car-foot mileage basis, which is substantially a space basis, for the 
apportionment of such passenger train expenses as he has seen fit to consider, the 
Postmaster General has, in effect, argued that car-foot mileage made in the mail 
service ought justly to produce as much revenue per unit thereof as the average unit 
of car-foot mileage made in the other passenger services. Present mail pay is seen 
to be inadequate when it is subjected to this test. Even the grossly reduced figures 
of car-foot mileage made in the mail service contained in Document No. 105, figures 
obtained, as hereinbefore fully shown, only after ignoring a great deal of space actually 
required for the mails and transferring a large quantity of other space so required to the 
passenger service, reveal this fact. Thus in Document No. 105, on page 59, all of the 
following figures are to be found: 

Car-foot mileage made in all passenger train services, total 12, 940, 229, 965. 19 

Car-foot mileage made in the mail service, total 926, 164, 458. 83 

Proportion of car-foot mileage made in the mail service to car-foot 

mileage made in all passenger-train services, percentage 7. 16 

Therefore, upon the Postmaster General's own showing, unless the railways earn 
$7.16 out of each $100 earned by their passenger trains by carrying the mails, their mail 
pay is too low. For the facts it is necessary to turn to the statistical reports of the 
Interstate Commerce Commission. The latest of these contain figures for the fiscal 
year 1910, and is appropriate for the purpose because that year includes the month 
covered by the Postmaster General's inquiry. On page 510 of this report it appears that 
the gross receipts from passenger-train services of the railways reporting to the com- 
mission for the fiscal year that ended with June 30, 1910, were as follows: 



Item. 


Amount. 


Per cent 
of total. 


From the mails 


$48, 946, 052 
715,827,302 


6.40 




93.60 






Total 


764,773,354 


100. 00 







Thus, while the Postmaster General admits that 7.16 per cent of the car-foot mileage 
of passenger trains is required for the mail, and by inference that they ought to g( t 
7.16 per cent of their passenger-train revenue from the same source, the official sta- 
tistics, compiled by the great Federal agency that is especially charged with the 
duties of railway supervision, show that they derive only 6.40 per cent of their passen- 
ger-train revenues from the mails. The difference in thes t percentages may seem 
inconsequential, but it is not so to the railways which invariably find differences 






RAILWAY MAIL PAY. 115 

between reasonable returns to their owners and actual losses expressed in the smallest 
ratios. In dollars and cents, based on the actual gross passenger-train receipts shown 
above, this difference of little more than three-quarters of 1 per cent (actually 0.76 per 
cent) amounts to $5,812,277.49, and it would have required an increase in the mail pay 
of 1910 of that amount to place the mail service on a parity with the other passenger- 
train services. And this figure results from using the much too low estimates of car- 
foot mileage made in the mail service adopted by the Postmaster General. The less 
complete but far more accurate figures compiled from the copies of the reports to the 
Postmaster General which are in the possession of the committee on railway mail pay 
and previously given in this report (see p. 20) compare with the Interstate Commerce 
Commission's figures as to gross receipts as follows: 





Service. 


Percentages. 




Car-foot 
mileage. 


Gross 
receipts. 


Passenger 


80.01 

10.67 

9.32 


84.81 




8.79 


Mail 


6.40 








Total 


100.00 


100.00 







The same compilation (see p. 20) also shows that during the month covered by the 
Postmaster General's investigation each 1,000 car-foot mile made in the mail service 
produced, on the average, $3.23 in gross receipts; each 1,000 in express service, $3.86; 
and in the transportation of passengers, $4.42. These data absolutely establish the fact 
that the mail services rendered by the railways are the lowest paid of all their passenger- 
train services, and passenger-train services as a whole have already been shown to be 
commonly rendered without adequate return. It is fully believed that any candid 
consideration of the foregoing must lead to conviction that not only is the Postmaster 
General's recommendation of a further reduction in railway-mail pay unwarranted, 
and that any further reduction would be a gross injustice but also that reasonably 
fair treatment of the railways, their employees and owners, and the traveling and ship- 
ping public demands an increase in the total pay until it shall be somewhat com- 
mensurate with the pay for other and similar services. 

(f) railways should be paid for apartment cars. 

The system of railway-mail pay provided by law recognizes that railways ought not 
to be required to supply train space for distribution of mails en route without special 
compensation. It is obviously quite a different thing to provide a traveling post office, 
in which postal clerks are supplied with facilities for their duties identical with those 
performed in important distributing offices, from carrying the same bulk and weight 
of mail in closed and locked pouches. Yet while this difference is recognized in the law 
it is but imperfectly and inadequately recognized, for an arbitrary distinction is made 
between those traveling post offices which are 40 feet or more in length and those which 
are shorter, the former being specifically paid for and the latter being required to be 
supplied without special compensation. This injustice is admitted by the Postmaster 
General in Document No. 105, as follows: 

"The laws now in force relative to railway mail pay provide * * * that an 
additional amount may be allowed for railway post-office cars when the space for dis- 
tribution purposes occupies 40 feet or more of the car length. No additional com- 
pensation is allowed for space for distribution purposes occupying less than 40 feet 
of the car length. This distinction is a purely arbitrary one and without any logical 
reason for its existence." (Doc. No. 105, p. 3.) 

The annual report of the Second Assistant Postmaster General for the fiscal year 1911 
shows (p. 43) that on June 30, 1911, the railways, under this plan, were supplying 
1,464 full postal cars, which were paid for, and 3,819 apartment cars, whiqii were not 
paid for. Of the former 1,213 and of the latter 3,204 were in constant daily use, the 
remainder constituting the necessary reserve. Together these classes of cars were the 
working places of 15,461 postal clerks, and while being so used during the fiscal year 



116 



RAILWAY MAIL PAY. 



they traveled in the aggregate 313,383,045 miles. The following shows the distribu- 
tion of this mileage between the different classes of cars, the payments on account of 
the class of cars paid for, and the average rate per mile of payment: 



Kind of car. 



Full postal cars . 
Apartment cars. 



Miles run. 



94,010,689 
219,372,356 



Payment to railways. 



Amount. 



$4,737,788.75 
None. 



Average 

per mile 

run, in 

cents. 



5.04 
None. 



The foregoing shows that the railways receive for the use of a car, which in every 
relation is to them the full equivalent at least of a standard passenger coach, only 
about the fares of two and one-half passengers at the low rate of 2 cents per mile. But 
even if they were paid one-third as much per mile run by apartment cars as they are 
per mile run by full postal cars, the 219,372,356 miles run by the former, for which 
they now receive nothing, would have produced $3,685,455.58 gross revenue in 1911. 
In Document No. 105 (Table 4, p. 65) the Postmaster General gives the following figures 
of car-foot mileage, which are exclusive of all spaces that he defines as "storage space " 
and "deadhead" space. 



Kind of car. 


Car-foot miles 
during Novem- 
ber, 1909. 




430,944,968.10 
364, 633, 119. 64 


Postal cars - 








Total 


795,578,087.74 





jjH.lt has already been shown (see pp. 19-33) that these figures are too low, but, leaving 
that fact aside, they show that the space utilized in apartment cars amounted to 
84.61 per cent of the space utilized in full postal cars. There can be no valid reason 
why the railways ought not to be paid as much for a car-foot mile, placed at the dis- 
posal of and utilized for the postal service, in an apartment car as for similar space 
in a full postal car. If they were so paid they would receive for apartment cars, on 
the basis of the Postmaster General's figures, 84.61 per cent of $4,737,788.75, their 
postal-car pay, or $4,008,643.06. Neither of these figures is offered, as indicating 
the precise rate of payment for apartment cars which would be reasonable and just, 
but both serve approximately to suggest the lowest possible limit of the minimum 
payment which substantial justice would permit. 

In this connection it must not be overlooked that the furnishing of traveling post 
offices is not a natural function of railway carriers nor one that is undertaken by them 
without reluctance. These cars, whether full postal cars or apartment cars, are not 
essential to the transportation service which is the normal purpose for which railways 
exist, but they are required by the Post Office Department in order that the labor 
of distribution may be performed while the mails are undergoing transportation. 
This is an obligation not assumed with relation to any other element of railway traffic. 
If the department could evolve a different method of serving the public the railways 
would welcome relief from the requirement to supply traveling post offices of any 
sort; would willingly surrender the meager compensation now received for the fraction 
of these offices which is paid for and would gladly confine their mail services to those 
of transportation only. But if such cars are necessary in order that the public may 
receive the service which it demands, the railways ought to be adequately and fairly 
paid for all of them. 



RAILWAY MAIL PAY. 



117 



(g) the weight basis of railway mail pay should be ascertained annually. 

There is no pretense, under the present system, that the railways are paid for all 
the mails which they carry. The weight basis is ascertained only once in four years 
and the weight resulting from these weighings of one year becomes the basis of payment 
for a period of four years beginning with the fiscal year which commences next 
after the year of the weighing. But the weight of mail carried never remains sta- 
tionary; it is the exception that on any important route it does not increase during 
the whole four-year period. This is shown by the following table, which compares 
the results of the weighings of 1907 and 1911 on the first 40 routes shown in the reports 
for those years of the Second Assistant Postmaster General, for which comparable 
data are given: 





Length, 
in miles. 


Average daily weight, in pounds. 


Number of route. 


1907 


1911 


Increase. 


Decrease. 




Pounds. 


Per cent. 


Pounds. 


Per cent. 


131001 


190. 07 
468. 43 

46.99 
144.59 

49.35 
148.38 

80.10 

32.26 
116.57 

28.85 
131.00 


12,584 

155,503 

1,721 

2,655 

18,623 

9,784 

4,681 

577 

1,287 

881 

a. ooa 


11,802 

211,644 

1,483 

4,776 

21,758 

12,448 

5,497 

437 

1,641 

584 

4,283 

59.824 






782 


6.21 


131002 .. 


56,141 


36.10 




131003... 


238 


13.83 


131004 


2,121 

3,135 

2,664 

816 


79.89 
16.83 
27.23 
17.43 




131005 






131006 






131007 






131008 


140 


24.26 


131009 


354 


27.51 




131010 .. 


297 


33.70 


131012 


1,274 

8,931 

28, 872 

30, 826 


42.34 
17. 55 
43.91 
23.14 




131013 


263. 34 50, 893 






131014 


119.74 65,754 94,626 
188.06 133,211 164,037 
448.59 34.763 32.502 






131015 






131016 


2,261 
101 

287 


6.50 


131017 


21.91 

428. 32 

415.49 

15.45 

47.08 

202.89 

99.04 

300. 87 

19.20 

195.35 

148. 80 

331.17 

22.14 

190.92 

18.04 

316. 18 

30.14 

76.82 

33.95 

44.04 

95.59 

110.89 

162.41 

50.00 

84.77 


1,158 

43, 694 

1,261 

117 

1,286 

21, 708 

26, 0-16 

16, 821 

1,012 

30, 631 

1,310 

574 

169 

217, 029 

388 

11,574 

46 

3,628 

946 

634 

545 

1,345 

2,159 

528 

8,256 


1,057 

43, 407 

1,479 

129 

1,982 

21,095 

21,135 

20,029 

5,876 

24, 854 

1,208 

474 

154 

295, 564 

397 

12,048 

57 

3,801 

404 

952 

642 

1,240 

1,918 

586 

13, 729 






8.72 


131019 






.66 


131020 


218 

12 

696 


17.29 
10.26 

54.12 




131021 






131022 






131023 




613 


2. 82 


131024 






4,911 


18.86 


131025 


3,208 
4,864 


19.07 
480.63 




131027 






131028 


5, 777 

102 

100 

15 


18.86 


131029 






7.79 


131030 






17.42 


131031 






8.88 


131032 


78, 535 

9 

474 

11 

173 


36.19 
2.32 
4.10 

23.91 

4.77 




131033 






131034 






131035 






131036 






131037 


542 


57.29 


131038 


318 
97 


50. 16 

17.80 




131039 






131040 


105 

241 


7.81 


131041 






11.16 


131042 


58 
5,473 


10.98 
66.29 




131043 














It should be noted that the routes illustrated in this table are 40 of the first 43 routes 
shown in the annual report for 1907, it having been necessary to omit routes 131011, 
131018, and 131026, as the termini of 131011 and 131018 were changed between 1907 
and 1911 and 131026 was vacant in the earlier year. Of the 40 routes shown, 24, or a 
little more than half, show increases and 16 stow decreases. But from July 1, 1907, 
to June 30, 1911, inclusive, all payments were adjusted upon the basis of the weights 



118 KAILWAY MAIL PAY. 

of 1907, so that during the entire period of four years whatever weights may have been 
carried there was no change in compensation. If there is a decrease in volume during 
the quadrennial period this system is unfair to the Government; if there is an increase 
it is unfair to the railways; but owing to the increase in national wealth, in business 
activity, and in population, it has always happened that the balance of unfairness has 
operated to produce a loss to the railways. The only rectification of this situation 
reconcilable with justice is to provide for more frequent — that is to say, for annual — 
weighings and readjustments of pay. No common carrier would be required or even 
permitted to contract to transport the entire output of any private enterprise during 
a four-year period for a fixed annual sum regardless of diminution or expansion in its 
volume. A contract covering so long a period at an unchanging aggregate payment 
is indefensible from every point of view and unjust alike to the public and to the 
railways. 

(h) terminal services on light routes should be paid for. 

Two or three generations ago, when mail transportation was principally by stages, 
and railways were in their early infancy, it was not considered a hardship that, where 
the stage terminal was within 80 rods of a post office, the stage should be asked to make 
a sufficient extra journey or detour to take up and deliver the mail pouches at the post 
office. It is a curious consequence of the feeble beginnings of the rail way industry 
that when the mails began to be carried over tracks of iron, in vehicles which could 
not deviate from their rights of way, this requirement was extended and the railway 
required to receive and deliver mails at all post offices located within 80 rods of any 
station. And it is irresistible proof of the persistent force with which the Post Office 
Department has continually imposed its will upon the railways that the practice still 
continues, although in many instances, on the lighter routes, the cost of performing 
this service exceeds the entire mail pay for the route. This abuse is most frequent 
on those railways which are the least adequately paid, and it would be but reasonable 
to ask that they either be relieved of this burden or that the compensation of the lighter 
routes be readjusted on a basis enough higher than that now in force to eliminate these 
heavy losses. 

V. Conclusion. 

This report of the committee on railway mail pay has discussed, as fully as a proper 
regard for the time of its members and the extraordinary importance of the subject 
warrant, the conditions under which the railways serve as auxiliaries to the postal 
service and their compensation for the indispensable services and facilities which 
they render. 

It has been shown that the recommendations of the Postmaster General contained 
in Document No. 105 are not founded in justice or based upon accurate statements 
of fact or sound transportation principles. 

It has been shown that, in the course of the investigation reported in that document, 
the Postmaster General collected illuminative data which he finally withheld from 
Congress as to (a) cost to the railways of supplying extraordinary station services and 
terminal facilities for the mails (see pp. 66-69); (b) cost of furnishing a large volume 
of personal transportation, not in postal cars, to officers and representatives of the 
Post Office Department (see pp. 69-70); and (c) relative returns from passenger, 
express, and mail traffic (see pp. 70-71). 

It has been shown that the most fundamental data as to train space occupied re- 
spectively by the mails and by passengers, accurately reported by the railways, were 
arbitrarily changed and modified for the report so as greatly to diminish the former 
and to augment the latter and that these changes operated so as to diminish the esti- 
mated cost of the mail service (see pp. 71-80). 

Further, it has been shown that the data used as the basis of Document No. 105, 
relating to the single month of November, represent a month in which passenger 
expenses are actually far below the average or normal level and are abnormally low 
as compared with freight expenses (see pp. 85-89). 

And still further, it has been shown that railway mail pay has been reduced fully 
20 per cent within the period of about 10 years which began with the declaration of 
the Joint Commission to Investigate the Postal Service that it was not excessive," while 
during the same period substantially all the expenses of rendering these postal serv- 
ices have greatly increased per unit of such services (see pp. 89-110). 






RAILWAY MAIL PAY. 119 

Finally, that railway mail pay is plainly and demonstrably inadequate at the present 
time (see pp. 110-115). 

And reasonable measures for providing more adequate and reasonable compensation 
have been pointed out (see pp. 115-118). 

As a final word, the committee on railway mail pay urges that, in justice to the great 
interests which it represents, in justice to millions of railway employees whose arduous 
and responsible services are not overpaid, in justice to hundreds of thousands of de- 
positors in savings banks and owners of policies of insurance and frugal investors 
everywhere, in justice to millions of workers in thousands of industrial enterprises 
whose prosperity depends upon services which only solvent railways can suitably 
render, that, if any doubt remains, as to the propriety of the relief herein recommended 
an effort be made to have the voluminous data in the possession of the Postmaster Gen- 
eral laid before Congress, to the end that the facts herein set forth may be fully substan- 
tiated. When those data are completely, accurately, and fully tabulated, with such 
other facts as may be necessary to illuminate and explain them, no scintilla of doubt 
as to the urgent necessity of substantial relief can remain. 

All of which is respectfully submitted. 



120 



KAIL WAY MAIL PAY. 



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122 EAILWAY MAIL PAY. 

Mr. Peters. You will find some very valuable information in that 
brief. Our committee, in closing that brief, as a final word urges : 

That in justice to the great interests which it represents, in justice to millions of 
railway employees whose arduous and responsible services are not overpaid, in jus- 
tice to hundreds of thousands of depositors in savings banks and owners of policies of 
insurance and frugal investors everywhere, in justice to millions of workers in thou- 
sands of industrial enterprises whose prosperity depends upon services which only 
solvent railways can suitably render, that if any doubt remains as to the propriety of 
the relief herein recommended, an effort be made to have the voluminous data in the 
posession of the Postmaster General laid before Congress, to the end that the facts 
herein set forth may be fully substantiated. 

The Chairman. You want that in the record in addition to what 
we already have ? 

Mr. Peters. Yes; that is in addition. 

The Chairman. Could you furnish for the information of the com- 
mission your data and your method of deduction on which you make 
your statement on page 11 that the car-foot mile return from mail is 
3.21 mills and from other service 4.35 mills. 

Mr. Peters. That is set forth here in our preliminary report. 
(Exhibit A.) 

The Chairman. All the data and information on which you draw 
that deduction is not contained in this preliminary report ? 

Mr. Peters. No; it was taken from the reports that went to the 
Post Office Department. 

The Chairman. Have you copies of those ? 

Mr. Peters. Only part of them. They are with the department, 
and I have no doubt most of that information was tabulated and 
could readily be worked out. You asked for some information as to 
the relative pay received by the railroads for the transportation and 
hauling of express matter as compared with hauling and transporta- 
tion of the mail per ton-mile. I had that worked out by Mr. Bradley, 
and I would like to read his letter, which was addressed to me. I 
have not addressed it to you, but I can do so. 

ton-mile rate for express and united states mail. 

The Pennsylvania Railroad Co., 
General Office, Broad Street Station, 

Philadelphia, January 25, 1913. 
Mr. Ralph Peters, 

Chairman Committee on Railway Mail Pay, 

Pennsylvania Station, New York, N. Y. 

Dear Sir: At our recent interview in Washington, Senator Bourne requested l 
statement showing the pay received by the railroad companies per ton-mile for the 
transportation of express matter as compared with the rate per ton-mile for the trans- 
portation of the United States mail in connection, with my verbal statement that the 
two rates were not materially different. I have assembled some facts and references 
in regard to the matter aud submit them herewith: 

Express traffic, ton-mile rate. — The First Annual Report of the Interstate Commerce 
Commission on the Statistics of Express Companies for the year ending June 30, 1909, 
contains a table on page 19 which shows that the average tonnage revenue per pound 
received by the railroad companies from the express companies is 0.74 cents, or about 
three-fourths of a cent. This rate per pound is equivalent to>$14.80 per ton carried 
the average distance. It is only necessary to divide this by the average haul of ex- 
press matter to get the rate per ton-mile. 

In the Interstate Commerce Commission's report, opinion 1987, In re Express 
Rates, Practices, Accounts and Revenues, page 429, third paragraph, it is stated, 
"the average distance which a package of any size is now hauled by the express 
company is about 200 miles." Dividing $14.80 by 200 we obtain the rate of 7.4 cents 
per ton-mile. The Bureau of Railway Economics in its study of the parcel post 
quoted the results of calculations as 7.7, and 7.5 cents per ton-mile, but I do not 



RAILWAY MAIL PAY. 123 

know what data they used. However, all three rates quoted above, 7.4, 7.7, and 7.5 
cents per ton-mile are not materially different. 

United States mail, rate per ton-mile— I am informed that the Post Office Depart- 
ment reported to the Hughes Commission for the Investigation of Second Class Post- 
age Rates that the ton-mileage of the mails carried on the railroads as of July 1, 1908, 
was 489,150,814 ton-miles. The average rate of expenditure for the transportation 
of the mails on railways on that date, as given in the report of the Post Office Depart- 
ment, was §44,718,948.26, or 9.1 cents per ton-mile. About the same time Mr. 
Kruttschnitt had the mail ton-mileage on railways computed for use in his pamphlet 
on railway mail pay and published the figures as 484,683,135 ton-miles as of June 30, 
1908. The annual rate for railway mail transportation on June 30 was $44,722,985.47, 
thus giving a rate of 9.22 cents per ton-mile. 

These rates per ton-mile for mail can be computed as of June 30, 1912, by using the 
ratios of the year 1907 in relation to the weight of paid second-class mail matter which 
is published by the department in the annual report. 

Observing that the ton-mileage of all the mails carried by the railroads on July 1, 
1908, was 489,150,814 and that the weight of paid second-class matter for the year 
ended June 30, 1908, was 347,432 tons, it is evident that the ratio was 1,408 ton-miles 
for all mail and equipment to each ton of second-class matter mailed. Applying this 
ratio to the weight of paid second-class matter for the fiscal year 1912, which was 
469,957 tons, we obtain a ton-mileage for all mail and equipment of 661,000,000 ton- 
miles. Dividing this last amount into the railroad pay for the transportation of the 
mails which on June 30, 1912, was at the rate of §46,336,293.86, we arrive at a rate of 
7.01 cents per ton-mile. 

Further, if the ton-mileage had been based upon a simultaneous weighing in 1912 
of the mails all over the United States instead of upon four sectional weighings in 
portions of the country from 1909 to 1912, inclusive, the ton-mileage would naturally 
be higher and the rate per ton-mile lower than the figures just quoted. 

During the last investigation of railway mail pay by a joint commission of Congress 
in 1900, Prof. Adams shows (vol. 2, p. 253) that the rate per ton-mile for mail transpor- 
tation on railroads declined from 20.195 cents in the year 1880 to 11.254 cents in 1898. 
The above illustrations show that the reduction has continued in accordance with the 
automatic downward scale prescribed in the law. 

The legal rate of pay to a railroad carrying above 5,000 pounds average daily weight 
is $20.30 per ton per mile per year, or 5.561 cents per ton-mile. After the weight 
becomes 48,000 pounds the ton rate per mile' per year for additional weights is $19.24, 
which is equivalent to 5.271 cents per ton-mile. The automatic reduction in the 
scale of rates as prescribed in the existing law brings the current rate constantly 
toward these minima accordingly as the tonnage increases. 

Assembling for close comparison the rates alluded to above, we have the following: 

Transportation rate per ton-mile. 

United States mails for the year — Cents. 

1880 20. 1 

1898 11. 2 

1908 9. 1 

1912 7 

United States mails, legal minimum 5. 27 

Express traffic, 1909 7. 4 

Congressman Lewis frequently quotes the rate paid the railroads for transporting the 
mails as 13.2 cents per ton-mile excluding the weight of equipment, and matches this 
against the rate for express traffic of 7.4 cents per ton-mile, which he says also excludes 
the weight of the equipment. Possibly he does not understand that in the case of the 
mails the term "equipment" means the pouches and sacks which inclose the mail in 
transit and which not only protect the mail against abrasion and from exposure to the 
weather, but also (and most important) preserve the identity of the separations and 
sortations that have been made at a heavy cost for expert clerical labor of post-office 
clerks and railway postal clerks. The mail bags are, therefore, a necessary and com- 
ponent part of the mail traffic, just as are the postage stamps on the letters or the strings 
that tie up the package of letters or any other auxiliaries that might be considered as 
"equipment." The mail bags compose about 35 per cent of the total weight of mail 
traffic carried by the railroads according to estimates of the Second Assistant Postmaster 
General, but are an essential and indispensable part of the weight to be transported. 

In the express traffic the situation is entirely different. The equipment may be 
said to consist of only a few trunks and safes, which are used to inclose very small 
packages and valuable packages. Those who are familiar with the express traffic 



124 KAIL WAY MAIL PAY. 

estimate that the relative weight of these trunks and safes to the total tonnage of 
express matter transported would be much less than 1 per cent. 

Consequently, the comparisons above made are in substantial conformity with the 
weights carried by the railroad companies, both for mail and express, while the 
method used by Congressman Lewis reaches a result by excluding a large item neces- 
sarily associated with the mail service and matching it with a similar item in the 
express service which does not exist in anything like the same proportion. 

Mr. Lloyd. Does not that mean this, that in a matter of the 
mail the pouch is to be returned as an empty. In the matter of 
express, that which incloses the thing transported is not returned, 
if it is in a box or a crate, but it is retained by the individual. It 
is true that he has paid for it in transit but the Government has also 
paid for the mail sacks in transit, but it has to pay for the transit 
back because it is empty equipment ? 

Mr. Peters. That is right. 

Mr. Stewart. You must not overlook the fact that we are sending 
the empties back by freight. 

Mr. Lloyd. I understand, but I think the distinction Mr. Bradley 
is undertaking to make is the fact that with the express you do not 
return the case in which the goods are shipped, while in the case of 
the mail you do return the sack in which it is fox'warded. 

Mr. Stewart. I assumed that you estimated that the mails 
increased in the same ratio between 1908 and 1912 ? 

Mr. Bradley. I tested that by reference to the ratios in previous 
years, and while I haven't that in there it was thoroughly depend- 
able. I think if the postal car is added it would add not quite 1 
cent; I think about eight-tenths or nine-tenths of a cent. 

Mr. Stewart. I think you would find it a little more than that. 
For instance, our figures for 1908 were made on both bases, and my 
recollection is that adding the postal-car pay brought it up to nearly 
11 cents — 10 and some fraction of a cent. 

Mr. Bradley. I do not think it would be as much as that. 

Mr. Peters. I attached to that letter of Mr. Bradley's a chart 
showing the rate per ton per mile in cents showing automatically 
how it goes down with the increased weight. On the small roads 
with 300 pounds it is about $1.50 per ton-mile, and it goes down to 
around 7 cents per ton-mile on the very heavy weights. That is fully 
set forth in our principal brief. The last paragraph of the letter is 
as follows: 

The data quoted above would be serviceable, I think, in enabling the Interstate 
Commerce Commission in conjunction with the Post Office Department to certify to 
the approximate rate per ton-mile obtained by the railroad from express or mail 
traffic transported. 

Yours, truly, V. J. Bradley. 

Mr. Stewart. I would like to call attention to the further fact that 
the figures for 1912 include the cheap rate for freight shipments. 

Mr. Peters. That was merely to reach a basis for a calculation. 

The Chairman. You were present before we took a recess when 
an extract was read from Postmaster General Vilas's report of 1887 
in reference to the R. P. O. cars, and I requested you to present a 
statement so that the committee might have such information as 
would have a bearing upon that particular subject. Would you be 
able to prepare such a statement and file it with the committee in 
order that we might insert it in the record by to morrow morning ? 



RAILWAY MAIL PAY. 125* 

Mr. Bradley. I think we can have it for you by to-morrow morning. 

I will do my best to have that. 

Thereupon, at 10.05 o'clock p. m., the commission adjourned until 

II o'clock a. m. Wednesday, January 29, 1913. 



WEDNESDAY, JANUARY 29, 1913. 

Joint Committee on Second-Class Mail Matter, 

Washington, D. C. 
The joint committee met, pursuant to adjournment, at 11 o'clock 
a. m. 

Present: Senator Jonathan Bourne, jr. (chairman), Senator Harry 
A. Richardson, Senator John A. Bankhead, Representative James W. 
Lloyd, Representative William E. Tuttle, jr., and Representative 
John W. Weeks. 

STATEMENT OF MR. RALPH PETERS— Continued. 

The Chairman. Mr. Peters, yesterday we requested that as soon 
as practicable you prepare a statement to file with the commission 
in reference to your comments on the extracts read and included in 
the hearing from ex-Postmaster General Vilas's report of 1887. How 
soon do you think you will be able to have that statement prepared 
and submitted to the committee ? 

Mr. Peters. It will take at least two weeks. 

The Chairman. That will be satisfactory to the members of the 
commission, I take it. Now, to sum up your views, and, as I under- 
stand, not only your own but the views of your associates, represent- 
ing practically 214,000 out of 250,000 miles of railway in the United 
States, you are greatly opposed to the enactment of either of the bills 
suggested by the department, the effect of which would be to sub- 
stitute space for weight as the basis of the service rendered, are you 
not? 

Mr. Peters. Our committee is practically united on that. The 
position of the railways in regard to the space basis is united. The 
New England roads were willing to take a space basis, or some basis 
that would give them full compensation for the service performed, so 
that they would get back a little more than a dollar for every dollar 
that they spent in the service. They felt that their loss was $1 ,000,000 
a year, and they were unable to figure out on the weight and space 
combined, or the space alone, how they would get that full return, but 
they wanted to consider those points. The authorities in the rail- 
roads who have studied this question most carefully for the past 30 
years all agree that weight must be the gauge and space merely an 
incidental. 

Mr. Weeks. Do you think the position taken by the New England 
railroads from their standpoint is sound? 

Mr. Peters. I think they are sound in wanting to be fully com- 
pensated. The question is how to get that, and that is the case with 
all of us. We only want what is fairly compensatory for the service 

49396—14 16 



126 RAILWAY MAIL PAY. 

rendered and the weight may not always bring it. The difficulty 
seems to be in this point that it is a universal service under universal 
conditions, alike everywhere. Every contractor must be paid as 
fairly as every other. You can not make a different rate for each 
different road in the country, as is proposed under this space basis, 
out of cost rates. 

Mr. Weeks. Will you point out how the conditions which relate to 
the New England road differ from those of other roads ? 

Mr. Peters. Relating to our own roads ? 

Mr. Weeks. Yes. 

Mr. Peters. Or to the small roads ? 

Mr. Weeks. Yes. 

Mr. Peters. The very large roads have a concentrated or heavy 
load of mail and may get a fairly reasonable compensation for the 
volume that they have and the ability to carry the mail in con- 
centrated quantities. A road like the Long Island, with 250 trains 
carrying more or less mail every day, has its energies so scattered 
that it is hard to fix any basis that will fairly compensate it. The 
New England roads are very much like the Long Island, or like the 
West Jersey & Seashore, or your other roads in dense population 
where you have frequency of service. It is very doubtful if the 
space basis could be fixed or arranged so as to give them the complete 
compensation there, but you have to take the country as a whole in 
this and take the railroads as a whole to fix a basis that can not be 
manipulated and left entirely in one man's power. 

Mr. Weeks. Would it be possible in a segregated section like 
Long Island or New England to have a separate arrangement or 
different arrangement from that which obtains in other parts of the 
country? The Long Island Railroad is the only railroad on Long 
Island, is it not ? 

Mr. Peters. Yes; barring a few rapid transit trolley lines, but our 
case can probably be cared for under the rate for electric railroads, 
or at least portions of it can be. 

Mr. Weeks. That can be done in New England, in your opinion? 

Mr. Peters. As they electrify their railroads they can to a certain 
extent; but I do not think it could cover all the rates. The difficulty 
is when you get to making different rates for each section, you have 
more complications in the matter, and you have to legislate for each 
particular section in establishing rates for those sections, and they 
have to be carefully worked out. I know we have not studied that 
point. We feel that we should not be absolutely in the power of a 
Government officer. Under the space basis law, as is proposed, the 
Government officer allots the space, he makes the regulations, and those 
regulations are most burdensome, and they are the instrumentalities 
that make so much difficulty in all relations with the Government in 
the handling of the mails. He makes a regulation as to the carriage 
of his postal clerks to and from their homes, and for the free trans- 
portation of the postal inspectors and he makes various regulations, 
as shown in our testimony, which we have submitted. Under the 
space basis he will fix the space and then he will fix the rate at which 
that space is to be paid for, as based on cost. The power is taken 
from Congress, the railroads have no recourse except an appeal, indi- 
rectly to the Commission through the Postmaster General. The 
thought in our minds is that it should not be the province of the do- 



RAILWAY MAIL PAY. 127 

partment to force a maximum service for a minimum pay, but get the 
best service for the Government in the handling of the mails at a 
reasonably fair compensation to its contractors. 

Our committee have offered its services to this commission to go 
into the very bottom of this thing, to study it in all its light, and if 
we can get something better than the weight and space basis, to do 
it, but from our experience in the past 40 years, and from the experi- 
ence of all those who have studied the matter, we feel that the weight 
and snace basis with relief from the side service, together with annual 
weighing and pay for the apartment cars is the best and fairest basis. 
President McCrea, of the Pennsylvania Railroad, made a very thorough 
study of this matter and appeared before one of the commissions 
some 16 years ago. His conclusion then was that the weight, with 
additional compensation for the space, like a post-office car, would 
be the proper basis. In talking to him a short time ago he said he had 
seen no reason to change his views. Mr. Krutschnitt, who appeared 
before the commission about 10 years ago, reached the same con- 
clusion. All of the gentlemen who are associated with me have been 
either in the Government employ or the railroad employ for the last 20 
years in connection with the handling of the mails, and they all have 
the same view. 

Mr. Lloyd. Your objection to the space basis is not so much 
directed to that as a means of determining compensation as it is to 
the administrative methods by which the amount of space is deter- 
mined. In other words, you do not wish to place yourselves in the 
position that the Government itself will absolutely control the amount 
of your compensation. 

Mr. Peters. Not only that, but we object to being loaded down 
with double the amount of service in a limited space. There is the 
whole object of this bill. 

Mr. Lloyd. Suppose that the -law was so fixed as to protect you 
from the department's regulations and at the same time furnish you 
with reasonable compensation. You would not then object to the 
space basis, would you ? 

Mr. Peters. I think we certainly would object to it because we 
can see no possible way of having our revenues grow with the growth 
of the business. 

Mr. Lloyd. Under the space system would not your compensation 
grow with your business ? 

Mr. Peters. Very, very slowly. 

Mr. Lloyd. You would get twice as much for carrying two cars as 
you would for carrying one ? 

Mr. Peters. Perhaps. 

Mr. Lloyd. And ^ve times as much for carrying &Ye cars as you 
would for carrying one ? At the present time you do not get that, 
under the weight basis ? 

Mr. Peters. But if you concentrate your loads into your cars and 
reduce your space 

Mr. Lloyd. No. Here is the problem I am trying to disabuse you 
of. If the objectionable features of the space basis were removed and 
you were assured of fair treatment, then you would not object to the 
space basis, would you ? The thing, as I understand it, with all your 
views, is that you fear you are not going to be fairly treated by the 
Government; that the Government is going to require too little space 



128 RAILWAY MAIL PAY. 

for the accomplishment of that which must be done. In other words, 
they are going to compress the business into too small a space, thereby 
saving expense to the Government and causing you just as much 
trouble if they did not press it into so small a space. 

Mr. Peters. "\\ e handle all other business, except the passenger 
business, on a weight basis. Everything that the Government sends 
through the mail or parcel post is on a weight basis. 

Mr. Lloyd. I appreciate that, but, on the other hand, that is not 
an answer to the space basis, because the mail is a different proposi- 
tion from anything else. You would not want to say that freight 
should be carried exactly like a letter ? 

Mr. Peters. No; we do not say that. We do say that the weight 
is the gauge of the service; that we must be compensated for the 
weight we haul. We are hauling the weight in addition to hauling 
the space. 

Mr. Lloyd. After all, Mr. Peters, it is not the weight of the mail for 
which you really receive compensation, for you furnish a great big car 
and you only have two or three tons in a great big car, which would 
have the capacity otherwise of carrying possibly 20 tons, and you 
have onl} r two or three tons of mail. 

Mr. Peters. But we have a storage car alongside of it with the 
other 20 tons. 

Mr. Lloyd. That is a separate car ? 

Mr. Peters. That is a separate car, but they rim together, so that 
the mail is sorted from one car to the other and handled. 

Mr. Lloyd. That is true only on trunk-line railroads. 

Mr. Peters. On trunk-line roads. That is true on the heavy mail 
routes, and the storage cars will increase as the parcel-post business 
increases, the same way that the apartment cars are increasing. 

The Chairman. Ten-elevenths of your compensation now comes 
purely from your weight and one- tenth from R. P. O. cars ? 

Mr. Peters. Yes; practically so. 

Mr. Lloyd. And the more the storage cars carry the more benefit 
it is to you, looking at it from the standpoint of the railroad com- 
panies ? 

Mr. Peters. If they are loaded, yes; but we count the weight in 
those cars. It is the weight that goes with them. 

Mr. Lloyd. No. You get paid now for the weight, but if you got 
the same pay on the space basis 

Mr. Peters. We do not see how you can put a space factor there 
that you can rely upon, like you can on weight, that will fully protect 
the railroads in that matter. 

Mr. Lloyd. There would not be any trouble in determining that on 
a full car. The trouble in determining that is in the apartment car, 
is it not ? 

Mr. Peters. It is not only in the apartment car and the full 
R. P. O. car, but also in the storage car and likewise in the ordinary 
baggage or combined car, for closed pouches. 

Mr. Lloyd. The objection that you urge does not apply to the 
storage car, nor to the full R. P. O. car, does it ? It only applies to 
the apartment car and the car in which you carry small pouch mail ? 

Mr. Peters. It applies to all of those. That is right. We have felt 
mat a joint inspection should be made by the commission and repre- 
sentatives of the department and of the railroads going to some main- 



EAILWAY MAIL PAY. 129 

line roads and to some branch-line roads, and to some main-terminal 
post offices, so that you may see exactly what service is performed by 
the railroads. In St. Louis I think there are from 60 to 65 porters 
employed specially to meet these mail trains to make the transfer 
from one road to the connection. In Kansas City I think there are 
85. In Chicago there are from 60 to 65 in one station alone. There 
is this immense force employed for handling these mails from the cars 
on one line to the connecting lines. There is that same sort of condi- 
tion at every one of the trunk-line junction points, and there is a large 
force at intermediate points. We have a main transfer station just 
out of Brooklyn and New York called Jamaica, where all of our trains 
from three terminals concentrate and then disseminate at that point. 
We employ a force there in handling the mails from one train to 
another — some 250 trains a day. Records are kept of those mail 
pouches. There are all sorts of services being performed by the rail- 
roads that only a personal inspection of the commission, with those 
who are able to point out these things, will determine. 

The Chairman. As I sum up your views, as represented in corre- 
spondence, conferences, and in the hearings, the desideratum from 
your viewpoint is the* adoption of a plan that will be universal. 

Mr. Peters. I think it has to be. It is a universal service. 

The Chairman. Your contention is that space could not be made 
universal but under the substitution of space for weight it would be 
necessary to have separate contracts with the 795 railroads with 
whom the Government now has mail contracts ? 

Mr. Peters. Separate rates of pay. 

The Chairman. Separate rates of pav. That is fundamental. It 
is also fundamental that no transportation company has yet evolved 
a yardstick that will remain the same in its measuring capacity, that 
will be applicable to all the railroads, always, as the measure of the 
service rendered, that fundamentally all rates of railroads are based 
primarily on the weight measure of the service rendered. 

Mr. Peters. Right. 

The Chairman. Your second objection is, as I glean it, you feel 
that you would be left to the personal equation of the individual who 
happened to be Postmaster General at the time, as to the determina- 
tion of the space used. 

Mr. Peters. Yes. 

The Chairman. Which you believe is eliminated by using weight 
primarily as the measure of the service rendered. 

Your third objection is that the Government, in dollars, would 
make no saving by the substitution of space for weight, but on the 
contrary, under the figures you have presented and in accordance 
with the last bill suggested by the Postmaster General, you would, 
on a 4 per cent basis, probably receive $10,000,000 more compensa- 
tion than was worked out by the department in its original bill. In 
other words, that the $9,000,000 apparent saving, with a 4 per cent 
interest on the capital invested, would result in the Government 
paying a million dollars more than they now pay under the existing 
conditions ? 

Mr. Peters. Yes. 

The Chairman. On a 6 per cent basis that the Government would 
pay $6,000,000 more than they now pay. You feel that under the 
existing system there are certain injustices done the transportation 



130 RAILWAY MAIL PAY. 

companies, first, that you should be relieved of the burden of the side 
service, which, as I understand under your calculations, would rep- 
resent four million and odd dollars ? 

Mr. Peters. A little more than $4,000,000. 

The Chairman. Second, that you should have compensation for 
all space in the apartment cars. 

Mr. Peters. Where there are postal clerks. 

The Chairman. Where postal clerks are carried, which would rep- 
resent an additional compensation to you over what you now receive 
of practically four and one-half million dollars ? 

Mr. Peters. Yes. 

The Chairman. Third, that you are entitled to annual weighing 
for the reason that now, under the quadrennial weighing, you get no 
compensation for any increased weight or service rendered for a 
period of four years % 

Mr. Peters. That is correct. 

The Chairman. That, according to your calculations, it is your 
opinion that you are thus deprived of a compensation which, from 
your viewpoint, you are entitled to of how many millions annually ? 

Mr. Peters. I have no exact figures on that. There have been 
estimates varying from one and a half millions a year to four million 
and a half. It might be between two and three millions. I do not 
know whether Mr. McBride or Mr. Stewart ever figured that point. 

The Chairman. That you are entitled to a special weighing, in view 
of the enlargement of the fourth-class mail matter going into operation 
the 1st of last January, in order that you may get compensation for the 
increased business incident to that increased activity on the part of the 
Government ? 

Mr. Peters. That is right; and that an adjustment under those new 
weights should be made at the beginning of the fiscal year July 1, 1913, 
and that we should have a weighing each year thereafter until this 
matter is finally adjusted. 

The Chairman. That practically covers it, does it? 

Mr. Peters. The position of the railroads; yes. You have stated 
it so clearly that I have nothing more to say, Mr. Chairman. 

Mr. Weeks. I want to refer to the suggestion I made yesterday and 
ask Mr. Peters why he and those associated with him do not draw a 
bill embodying their visws and reasons for each item in the bill, so 
that we may have that before us ? 

Mr. Peters. We have drawn four or five, which went to the waste- 
basket; all coming back to the conclusion that the present basis of 
weight and coupled with the extra compensation for the space [like 
the post-office car] was the only reliable accurate gauge for the 
service. We would be glad to try that again and see if we can not 
draw one. 

Mr. Weeks. How do you expect us to do it if you can not ? 

Mr. Peters. That is just the point; but, we say, let the principle 
of the present law stand. Everybody who has investigated this 
question, and every commission tHat has gone through it, says that 
you get nearer to making a fair basis of pay under the present law, 
provided you will give the relief that we ask for — for an annual 
weighing, pay for the apartment post office, and relief from this 
terminal and messenger service. 

The Chairman. I thank you, on behalf of the committee, for pre- 
senting your views to us. 



KAIL WAY MAIL PAY. 131 

STATEMENT OF MR. W. W. BALDWIN. 

The Chairman. Mr. Baldwin, it will be necessary that you be 
sworn. 

Thereupon the witness was duly sworn by the ch airman. 

The Chairman. Kindly state your age, residence, and occupation. 

Mr. Baldwin. I am 67 years of age. I live in Burlington, Iowa, 
and I am vice president of the Burlington road. 

The Chairman. How long have you been in the railroad service? 

Mr. Baldwin. Since 1879, for the Burlington Co. 

The Chairman. You are connected with these gentlemen who 
have been before this committee in reference to the readjustment of 
railway mail pay, and your roads with which you are identified are 
in the association of which Mr. Peters is the cnairman, representing 
some 214,000 out of 250,000 miles of railroad in the United States, 
are you ? 

Mr. Baldwin. Yes, sir. 

The Chairman. You concur in the views expressed by Mr. Peters 
in reference to the attitude of the railroads in that association, do 
you? 

Mr. Baldwin. I do; and I especially concur in the statement or 
the summary brought out as just expressed by yourself. 

The Chairman. Has any bill of recent date been introduced in 
Cougress representing the railroad views, in the adoption of which, 
in your opinion, justice would be done the transportation companies 
of this country? 

Mr. Baldwin. I think for several years the railroads have felt that 
they were very unjustly treated by the operation of the divisor and the 
reductions that have taken place in the rates of pay in recent years, 
partly on account of that and partly on account of the regulations of 
the department. They have been very much impressed with the 
complaints which have been made by the short-line roads, specifically, 
and they have felt that some sort of reimbursement of their loss 
should be made. They have cooperated with the short-line roads in 
the presentation of what is called the Talbott bill as furnishing a sub- 
stantial measure of relief to the New England roads, and roads like 
the Long Island Co., and the short-line roads. They have believed 
under the present conditions that that is probably as much in the 
way of relief as they could get, and that it would go far toward 
doing justice, especially to the short-line roads and to such roads as 
the Long Island and the New England roads, with a measure of 
justice to the roads that carry the bulk of the mails, also, because we 
have a great many branch roads upon which there is apartment-car 
service which would be affected by it. 

The Chairman. Particularly the allowance for apartment cars; 
that would be a relief? 

Mr. Baldwin. There is an element of great injustice of paying the 
railroads upon the weight that they carried four years ago. There 
ought to be an annual weighing. Those" two things would be sub- 
stantial measures of justice which they are entitled to. It seems to 
us, particularly in view of the fact that probably based upon the 
investigations of the Post Office Department and the concessions 
which the department itself has just made, it would appear that the 



132 RAILWAY MAIL PAY. 

roads are underpaid quite as much as they would be reimbursed by 
the operation 01 the Talbott bill. 

The Chairman. Instead of " concession/' I would say "modi- 
fication." 

Mr. Baldwin. I will use the word "modification." 

The Chairman. I would use that word, because the department 
can not do other than simply submit its views. It can not legislate. 

Mr. Baldwin. No. 

The Chairman. Do you concur, according to your experience in 
railroading, with the statement that, so far as you are aware, no 
transportation company has ever used space as the basic principle 
on which your rate charges are founded as the measure of the service 
rendered ? 

Mr. Baldwin. So far as I know. 

The Chairman. In the systems with which you are identified and 
have been connected, weight is the basic measure? 

Mr. Baldwin. It is. 

The Chairman. And all your calculations are based upon that ? 

Mr. Baldwin. Except for passengers. The express companies 
charge on a basis of weight ana we receive our compensation for car- 
rying express matter through them. 

Mr. Weeks. If the time of weighing the mail were modified so 
that the mails were weighed every year, do you think it would be fair 
for the railroads to pay three-fourths of the expense — that is, leaving 
it so that the expense which the Government would pay would not 
be any greater than it is now? 

Mr. Baldwin. Well, I have no authority to represent the roads 
in a matter of that importance. Our impression, Mr. Weeks, has 
been that the weighing every year, for 35 days, properly organized, 
will cost very little more than weighing quadrennially for 105 days. 
I think the railroads ought to be willing, speaking for myself, to share 
in any increased expense. 

The Chairman. You certainly would be willing to pay $300,000 
for the privilege of getting from one million and a half to four millions 
a year, I should think ? 

Mr. Baldwin. That is undoubtedly good financing. 

Mr. Weeks. Do the trunk lines make large profits from the trans- 
portation of mails ? 

Mr. Baldwin. They do not. 

Mr. Weeks. Do you know any railroad that makes a large profit? 

Mr. Baldwin. In the carriage of the mails ? 

Mr. Weeks. Yes. 

Mr. Baldwin. I do not, as compared with any other business that 
they perform. 

Mr. Weeks. Do you know any railroad that makes a larger profit 
in carrying the mails that it makes in carrying express ? 

Mr. Baldwin. I do not. 

Mr. Weeks. Do you think there are such ? 

Mr. Baldwin. There are a good many railroads in the country and 
I would not want to say that there is no road that has only a small 
amount of express and a larger amount of mail. That question of 
volume would affect the question of the total returns. 

Mr. Weeks. I do not mean volume, but I mean per ton per mile. 



KAILWAY MAIL PAY. 133 

Mr. Baldwin. I can not say that I do know of any such road. 
That is the only way I would be able to answer that. 

Senator Bankhead. You said just now that you got compensation 
for carrying the express, from the express companies. 

Mr. Baldwin. Yes, sir. 

Senator Bankhead. Now, if it should turn out that the parcel 
post is going to reduce the receipts of the express companies mate- 
rially, as everybody supposes it will, it will reduce your revenues to 
that extent ? 

Mr. Baldwin. It will to the extent of 57 per cent. 

Senator Bankhead. At the same time it will increase your burden 
by putting more weight into the mail service ? 

Mr. Baldwin. That is true. 

Senator Bankhead. And for that increased weight in the mail 
service you get no pay, unless there is an annual weighing or unless 
there is a weighing at the latter part of this year ? 

Mr. Baldwin. We get no pay until there is a weighing. 

Senator Bankhead. And therefore you contend they are cutting 
you at both ends ? 

Mr. Baldwin. They certainly are, in that respect. 

The Chairman. Will you elucidate a little more on the 57 per cent 
proposition which you just stated ? 

Mr. Baldwin. All I meant was that the express companies pay us 
57 per cent of their earnings from the business which they transmit 
over our roads. 

Senator Bankhead. They pay that for hauling their cars ? 

Mr. Baldwin. That is our compensation for conducting that 
business. 

The Chairman. Is it possible to evolve any system in rate making 
in the transportation business that will be absolutely equitable to all 
lines, trunk and short lines as well 1 In other words, will not the trunk 
lines always have the advantage of doing a wholesale business as 
against a retail business performed by the short or branch lines ? 

Mr. Baldwin. In the case of the mails where concentration takes 
place, you will recall that the rate goes down tremendously; it goes 
down to where it is not more than one- twentieth of the rate on the 
very small routes. Another thing, where the greatest concentration 
of the mails occur, you have special train service, special fast mail 
trains, which are very expensive, and that element comes in and has 
to be considered in determining not only the value of the service to 
the Government, but the expense of the service to the company that 
performs it. 

The Chairman. Is this not true: That under your existing rates 
as your volume of business increases your revenue per pound de- 
creases, but your net revenue as a whole increases on the activity of 
the service rendered ? 

Mr. Baldwin. It depends on how^ much it costs to perform the 
business. In the case of the Great Northern they recently put on a 
special service to the Pacific coast. That is an unusually expensive 
service on account of the peculiar condition of snow on the mountains, 
etc., and the deductions that are made on account of delays and all 
that. To show that they get adequately compensated because of 
the increase in weight is something that has to be studied pretty 
carefullv. 



134 RAILWAY MAIL PAY. 

The Chairman. -If there are three railroads running to a com- 
petitive point, say, for instance, "A," "B," and "C," if "A" chooses 
to put on extra service in order to get the contract, believing that the 
possession of the contract is an advantage in its competition with ' l B " 
and "C," is there any reason why the Government should pay the 
cost of a loss that "A" makes in his transaction? 

Mr. Baldwin. I should say not, if such a condition exists any- 
where. 

Mr. Weeks. How many competitive lines are there running solid 
mail trains between Chicago and San Francisco ? 

Mr. Baldwin. We run two trains weekly from Chicago to Omaha. 
Just what the mail service is on the Union Pacific or the Santa Fe I do 
not know. 

Mr. Weeks. For instance, between Chicago and Omaha, how much 
competition is there in solid trains ? 

Mr. Baldwin. In solid trains we have what is called the fast-mail 
service from Chicago to Omaha on the Burlington. Just what serv- 
ice is put on by the Illinois Central and by the Great Western, the 
Rock Island, and the Northwestern, and the Milwaukee, I arn not 
prepared to state- 
Mr. Weeks. Could that service be segregated from the other mail 
service if the department asked for bids to conduct the service as it 
would a star-route service — that is, as a result of competition? 

Mr. Baldwin. I would not be able to answer that question. I do 
not know. I know that if the mail as now concentrated upon the 
fast-mail route from Chicago to Omaha was divided up among all the 
roads there would be no fast-mail service, because there would not 
be enough of it to justify it. 

Mr. Weeks. I do not mean to divide it up, but I mean one road 
conduct all the service under conditions that would be imposed by 
the department, only do that as a result of bids for two or three 
years ? 

Mr. Baldwin. That is purely a theoretical question which Iwould 
not be able to answer. 

Mr. Weeks. It has not been considered by anyone ? 

Mr. Baldwin. It has never been considered by us. 

Mr. Weeks. Would it be possible, in your opinion, to do that to 
the advantage of the Government and perhaps to the advantage of 
the railroads, too ? 

Mr. Baldwin. My opinion upon that subject would be purely theo- 
retical and of no value. 

Mr. Weeks. Would not that leave the rest of the service which the 
Burlington road, for instance, performs similar to the service per- 
formed by any railroad — that is, a short-line railroad ? 

Mr. Baldwin. You mean if we lost the fast mail ? 

Mr. Weeks. Yes. 

Mr. Baldwin. I presume it would. 

Mr. Weeks. It is an entirely distinct service from the rest of the 
service which you perform ? 

Mr. Baldwin. It is, and a very expensive service in many ways. 

Mr. Weeks. If the cost were arrived at, as a result of competition, 
would that be unfair ? 

Mr. Baldwin. I do not see how my answer to a question of that 
kind would be of any consequence. 



KAIL WAY MAIL PAY. 135 

Mr. Weeks. The reason I am asking the question is because it 
seems to me the greatest difficulty to be met with in this whole mat- 
ter is preparing a general proposition which will not do injustice to 
somebody or pay somebody more than they should be paid. The 
service is so dissimilar in different sections of the country and even 
on the same road. 

Mr. Baldwin. Mr. Scott had some figures here yesterday with 
regard to earnings between Chicago and St. Louis upon their con- 
centrated service which I thought were quite impressive. They 
were not put into the record. We are entirely willing to have that 
question investigated as to whether or not we are being paid too 
much or too little for the service that we are rendering. I mean by 
the company as a whole on its route from Chicago to Omaha. 

Mr. Weeks. Do you run a solid train beyond Omaha? 

Mr. Baldwin. No, sir. 

Mr. Weeks. Who takes the mail at Omaha now? 

Mr. Baldwin. The Union Pacific. 

Mr. Weeks. Mr. Chairman, I would suggest that those figures 
which Mr. Scott had yesterday which have been referred to several 
times be put in the record in some form as relating to the detailed 
cost of service on the roads with which he is familiar. 

The Chairman. I think that is a most excellent suggestion. Mr. 
Scott, will you prepare a statement and file it with the committee ? 

Mr. Scott. I will do that, Mr. Chairman. 

Mr. Baldwin. In answer to Mr. Weeks's question as to whether we 
would submit a bill, I will answer that we will be very glad to submit 
such a bill. 

The Chairman. How soon, in your opinion, could such a bill be 
prepared and submitted to the committee ? 

Mr. Baldwin. We will say within two weeks' time. 

The Chairman. I wish you would kindly do so. 

Mr. Weeks. I want to suggest that these gentlemen consider that 
proposition which I have been inquiring about, the possibility of 
segregating through-train service from the rest of the mail service as 
a question of compensation. I do not know whether it is possible — I 
have never given it any serious consideration — but it seems to me to 
be a distinct service, in a way, that might be handled in a different 
way from the way the rest of the service throughout the country is 
handled, and it would possibly make it easier getting together a bill 
which would apply to all kinds of roads and all forms of service other 
than that. There may be something in it, but I would like for you 
gentlemen to consider that. 

The Chairman. Mr. Baldwin, I want to thank you very much on 
behalf of the committee for giving us your views on this matter. 

STATEMENT OF WILLIAM WALTER SAFFORD. 

The Chairman. Mr. Safford, it will be necessary that you be sworn. 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you kindly state your full name, residence, 
occupation, and official position ? 

Mr. Safford. William Walter Safford, general mail and express 
agent, Seaboard Air Line Railway, Norfolk, Va. 



136 E AIL WAY MAIL PAY. 

The Chairman. Have you any further information to offer to the 
committee bearing on the subject we have under discussion other 
than that presented in the letter of Mr. Capps, vice president of your 
road, under date of October 1, 1912, addressed to me? 

Mr. Safford. The matter that I was interested in particularly 
was the suggestion that the rates be based upon cost, ana if you will 
refer to our letter, paragraph 2, at the top of page 84 in this docu- 
ment Railway-mail pay, you will see that we object to that plan 
in our letter. In that connection I might say, gentlemen, that the 
cost is only incidental in rate making. It never has been used to 
my knowledge, except in cases where rates have been attacked. In 
connection with the present express rate case now under considera- 
tion by the Interstate Commerce Commission, we were called upon 
a very short time ago, and in a hurried way, to make computations 
showing the comparative cost and revenue of the service, with 
expense segregated to the express service, for the year 1912. This 
call was made by a committee of railroad and express officials hav- 
ing the matter in charge, and they suggested four methods of appor- 
tionment of unassigned — and some people think unassignable — 
expense. The first was the Buell method, which is also known as 
the Wisconsin method, and which was used in modified form by the 
Postmaster General. 

The Chairman. In document 105 ? 

Mr. Safford. In document 105; yes, sir. The second was the 
method used by the Postmaster General. The third was the method 
proposed by the express companies and the fourth was a selective 
method by the company which it might think best suited to its own 
conditions. 

The Chairman. All the railroads having any interest in express 
companies were asked to perform the same service in these different 
computations that your company was ? 

Mr. Safford. I presume so. I have no knowledge as to that, 
except as to my own company. 

The Chairman. What was the result of your computations ? 

Mr. Safford. These figures are not actual, they are simply com- 
parative; that is to say, they are actual as to individual calculations, 
but they are not actual as to the relative mail revenue at this time, 
because I did not have any car-foot-mile figures for the year 1912, 
but for the purpose of illustration the calculations are just as accurate 
as though they represented actual figures because the same elements 
were used. 

The Chairman. You take hypothetical figures and they are the 
same in all of your computations ? 

Mr. Safford. Every one of them, and to be exact about it, I took 
the car-foot miles made in mail service which we reported to the 
Post Office Department for November, 1909, and I took the car-foot 
miles as ascertained by the Post Office Department at the same time 
and applied them to our revenue for the year 1912. The computa- 
tion will produce the same relative results as to these different 
methods of apportionment. I found from that that the variations ran 
from a profit to us of $48,117.78 under the Buell method, as under- 
stood and used by our accounting department, to a loss of $289,147.84 
on the basis of apportionment prescribed by the express companies. 
I deduce from that result that when you undertake to adjust any 



KAIL WAY MAIL PAY. 137 

matter of this kind on a basis of cost, it makes just as much difference 
what method of apportionment for unassigned expenses you use as 
almost any other factor that would be employed in the case. For 
instance, if you start out to accomplish a given result, you can adopt 
a method of apportionment that will most nearly bring about the 
result you started for. 

The Chairman. You mean the result most favorable to you ? 

Mr. Safford. The result most favorable to the end in view. Yes, 
sir. There is no generally accepted method of apportionment at the 
present time. I think there is a committee of accounting officers 
working to that end now, probably in connection with the Interstate 
Commerce Commission officers, but as yet no definite, ascertained, 
and accepted method has been arrived at. 

The Chairman. There is no universal method that has yet been 
evolved % 

Mr. S afford. No. 

By permission, Mr. Peters asked a question of Mr. Safford as fol- 
lows : 

Mr. Peters. Has not the revenue train mileage been used by all the 
railroads throughout the country generally in comparing their 
their expenses? 

Mr. Safford. It has been and it is generally accepted by railroads 
as the best and most acceptable method, but it is not accepted by 
accounting officers as an absolute proposition, and it is in question 
now as between the methods used by the Postmaster General and 
the methods used by the railroads in order to have a uniform method 
and to present uniform figures to the Postmaster General, so that 
there might not be a great many different opinions about this thing. 
The railroads already, in making their segregation of expenses, use 
the revenue train-mile basis in their assignment of expenses to pas- 
senger-train service, and that has been most frequently used and 
perhaps is the best because it represents more nearly the use of the 
property. 

The Chairman. In the request received from these gentlemen rep- 
resenting certain railroads and express companies to make these 
computations, did the request contain an outline of the four compu- 
tations to be made, or were the selections made by you ? 

Mr. Safford. They contained an outline of the form to be used in 
each method designated. 

The Chairman. Designating specifically the four methods ? 

Mr. Safford. Yes, sir; and explaining and describing them. 

The Chairman. And the limitations on the same figures on the 
results obtained were from a gain of $48,000 on one side to a loss 
of two hundred and eighty-nine thousand and odd dollars on the 
other. Those were the limits ? 

Mr. Safford. Yes, sir. 

Mr. Lloyd. Can you give the four right together ? 

The Chairman. Will you leave with the committee this table of 
computations which you made, in order that we may insert it in the 
record ? 

Mr. Safford. Yes, sir; with the understanding that it is an ex- 
hibit and not an actual situation. 



138 KAILWAY MAIL PAY. 



SEABOARD AIR LINE RAILWAY. 



Comparative cost and revenue for mail service for the year 1912 by various methods of 

apportionment. 



Cost of mail service, Buell method, on basis of car-foot miles reported 

by company $515, 185. 44 

Revenue for mail service 467, 522. 26 

Loss, Buell method 47, 663. 18 



Cost of mail service, Buell method, on basis of car-foot miles as stated 

by department 419, 404. 48 

Revenue 467, 522. 26 

Gain, Buell method, on basis of car-foot miles stated by department 48, 117. 78 

Cost of mail service, Postmaster General's method, on basis of car-foot 

miles reported by company 598, 015. 61 

Revenue 467, 522. 26 

Loss 130, 493. 35 

Cost of mail service, Postmaster General's method, on basis of car-foot 

miles stated by department 486, 835. 24 

Revenue 467, 522. 26 

Loss 19, 302. 98 

Cost, express company method, on basis of car-foot miles reported by 

company 756, 670. 10 

Revenue 467, 522. 26 

Loss 289, 147. 84 

Cost, express company method, on basis of car-foot miles stated by 

department 615,993.40 

Revenue 467, 522. 26 

Loss 148, 47L 14 

Cost, Seaboard Air Line method, on basis of car-foot miles reported by 

company 638, 079. 81 

Revenue 467, 522. 26 

Loss 170, 557. 55 

Cost, Seaboard Air Line method, on basis of car-foot miles stated by 

department 519, 450. 89 

Revenue 467, 522. 26 

Loss 51, 928. 63 

The Chairman. I think your explanation is in the record that the 
figures were hypothetical, but your deductions are illustrative of the 
expert, given certain figures, of arriving at the same deduction by 
different individuals, except where one general plan of computation 
is in vogue. Is that right ? 

Mr. S afford. That is right. 

By permission, Mr. Peters asked a question of Mr. Safford, as 
follows : 

Mr. Peters. Is it not a fact that the railway accounting officers' 
association is now cooperating with the representatives of the Inter- 



RAILWAY MAIL PAY. 139 

state Commerce Commission in endeavoring to work out a uniform 
method of assigning cost ? 

Mr. Safford. I stated that in my testimony, Mr. Peters. 

Mr. Peters. They are engaged in that now ? 

Mr. Safford. Yes, sir. I stated that in my testimony. 

Mr. Lloyd. In your judgment, which of these four methods is the 
most equitable method? I am not asking you as a railroad man, 
but I am asking you now which is the most equitable method, as if 
affects the country at large ? 

Mr. Safford. Well, the most equitable method to my mind is th 
revenue train -mile method. 

Mr. Lloyd. Why ? 

Mr. Safford. Because that more nearly represents the use of all 
the elements that enter into these unassignable expenses. 

Mr. Lloyd. What is the objection to the department's method ? 

Mr. Safford. Well, it has a good many elements of direct charge 
in it — items that have not necessarily any relation to each other, as 
I understand. 

Mr. Lloyd. Can you mention some of those charges ? 

Mr. Safford. Not from memory; no, sir. I furthermore want to 
state that I am not an expert accountant. I am deducing these 
things from figures that I get from expert accountants and I would 
not like to go into the question of railroad accounting, because there 
are men so very much more competent to do that than I. 

Mr. Lloyd. I am very anxious that you people who object to the 
department's method of accounting shall show the objections to that 
method and show why some other method is better. 

Mr. Safford. That I think would be best ascertained from the 
expert accountants who handle these figures. 

Mr. Lloyd. Then for the commission to get the information it 
ought to have, it should have these expert accountants ? 

Mr. Safford. I tliink so, sir. I think they are more competent 
than anyone else to give }^ou that. We rely upon them and I think 
they should be the people for the commission to rely upon. 

Mr. Lloyd. Then you would not wish to criticize, if I may use that 
expression without offense, the method of the department? 

Mr. Safford. No, sir. I am not sufficiently statistical to do 
that. I will say this for the department. The modification of the 
Buell system which they used in part was favorable to the railroads. 
They seem to have been trying to get at something fair from their 
point of view. 

The Chairman. By "favorable," you mean fair to the railroads? 

Mr. Safford. Yes, sir. I do not mean to suggest any favoritism, 
but I mean to say the results were more equitable to the railroad 
than they would have been if the Buell system had been used pure 
and simple, as understood by our accounting department. 

The Chairman. The Buell system- is a system well known, is it, 
in the accounting world in this country, at least ? 

Mr. Safford. I do not think it was ever used except in the Wis- 
consin rate case. 

The Chairman. It originated, did it, in Wisconsin ? 

Mr. Safford. I think it did. 

The Chairman. But it is something that is well known now in the 
railroad world distinctively as the Buell system ? 



140 KAIL WAY MAIL PAY. 

Mr. Safford. I presume it is well known now since this commis- 
sion has taken it up as one of the bases for arriving at the information 
they wanted. 

The Chairman. I want to thank you very much, Mr. Safford, for 
your views. 

Thereupon, at 12.45 o'clock p. m., the hearing adjourned until 
Friday, February 7, 1913, at 11 o'clock a. m. 



FRIDAY, FEBRUARY 7, 1913. 

Joint Committee on Second-Class Mail Matter. 

Washington, D. C. 

The hearing was resumed, according to adjournment, at 11 o'clock 
a. m. 

Present: Senator Jonathan Bourne, jr. (chairman), Representative 
James T. Lloyd, Representative William E. Tuttle, jr., and Repre- 
sentative John W. Weeks. 

STATEMENT OF MR. HENRY S. LYONS. 

The Chairman. Mr. Lyons, it will be necessary for you to be sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Kindly state your name, age, residence, and occu- 
pation ? 

Mr. Lyons. Henry S. Lyons, secretary of the Boston Elevated 
Railway Co., Boston, Mass. 

The Chairman. How long have you been connected with the 
Boston Elevated Electric Railway Co. ? 

Mr. Lyons. I have been secretary for about three years. 

The Chairman. You appear before the committee this morning, 
as a number of other gentlemen do, representing the electric lines of 
New England and of the West ? ; 

Mr. Lyons. Yes; and of New York State. A committee appointed 
by the American Electric Railway Association will appear before this 
committee. 

The Chairman. Does that association represent practically the 
bulk of the electric lines in the country? 

Mr. Lyons. It does. 

The Chairman. All of them ? 

Mr. Lyons. Practically all of them; yes. 

The Chairman. You are familiar with the bill suggested by the 
Postmaster General proposing the substitution of space for weight as 
the determining factor in arriving at compensation for transporta- 
tion of the mails ? 

Mr. Lyons. I am not. We have some gentlemen here who are 
familiar with it. 

The Chairman. Will you give the committee your views relative 
to railway mail pay ? 

Mr. Lyons. I prefer to have that given to the committee by those 
gentlemen who have been appointed as a committee of the associa- 
tion. They are familiar with that subject. 

The Chairman. Will you give me the name of the first gentleman ? 



BAIL WAY MAIL PAY. 141 

Mr. Lyons. The first gentleman who will furnish you with infor- 
mation will be Mr. J. H. Neal. 

The Chairman. Have you any information, or viewpoints that you 
are able to submit to the committee which would be of benefit in our 
study of this question ? 

Mr. Lyons. I have not. We have gentlemen here with us who are 
experts on the subject under investigation and I do not wish to take 
up their time. 

STATEMENT OF MR. J. HENRY NEAL. 

The Chairman. Mr. Neal, it will be necessary for you to be sworn. 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you please state your name, age, residence, 
and occupation? 

Mr. Neal. J. Henry Neal; residence, Boston; age 40; I am general 
auditor of the Boston Elevated Railway Co. 

The Chairman. How long have you been connected with the 
Boston Elevated Railway Co. ? 

Mr. Neal. About 25 years. 

The Chairman. How long have you been auditor ? 

Mr. Neal. Nearly five years. 

Mr. Lloyd. Do you represent any railways, except the elevated 
railways of Boston ? 

Mr. Neal. Yes; I am chairman of the committee appointed by 
the American Electric Railway Association to take this matter up 
with this committee. 

Mr. Lloyd. What kind of railways does that committee include ? 

Mr. Neal. It includes electric railways operated in cities and also 
interurban lines. 

Mr. Lloyd. Whether they are elevated, subway, or surface ? 

Mr. Neal. Yes, sir. The Boston road in itself is composed of 
elevated, subway, and surface combined. 

Mr. Lloyd. Does it carry mail in the subway ? 

Mr. Neal. Not that I am aware of. I think we usually run the 
mail cars on the surface lines, but we may, if we please, run them in 
the subway. 

The Chairman. You are familiar, are you, with the bill prepared 
and suggested to Congress by the Post Office Department substitut- 
ing space for weight as the basis of compensation for the service 
rendered, in the adjustment of railway mail pay ? 

Mr. Neal. No; because thus far the compensation which we have 
received has been on a different basis. We have been paid 1 cent 
per linear foot for each car mile that a car ran. That is to say, if a 
car was 15 feet 6 inches long we would be paid at the rate of 1 cent 
per foot for each linear foot the car was long for every mile it ran. 
We also have the pouch service, for Which we are paid so much per 
mile. 

The Chairman. Then, what is the purpose of he request of you 
gentlemen, representing the electric lines of the United States, for a 
hearing before the committee ? 

Mr. Neal. Mr. Chairman, we have been operating on our road 
cars which we call 16-foot box cars, but which measure a little less 

49396—14 17 



142 BAIL WAY MAIL PAY. 

than 16 feet on the inside and we have been receiving 15.58 cents per 
car-mile for the work that we have been doing for the Government. 

The Chairman. That is on the basis of 1 cent per linear foot per 
mile? 

Mr. Neal. Yes, sir. For years it has been well known, I think, to 
various committees and to various postmasters, and certainly to all 
the railways, that this rate of compensation was absolutely inade- 
quate, and for years the railways have been pointing it out in various 
ways, but up to the present time they have not been able to do so so 
that they have been able to get any increased compensation. It 
may be that the matter has not been presented sufficiently in detail, 
but it is a very easy matter for us to show, without any question 
whatsoever, that this is causing a loss to my road alone of $18,000 a 
year. 

The Chairman. The $18,000 loss you claim your road suffers from 
the present rate is what per cent of the total amount of compensa- 
tion that you receive from the Government for mail service ? 

Mr. Neal. On ihis particular kind of service it is a matter of about 
50 per cent. 

The Chairman. Answer my question, kindly. What is the total 
amount you receive in compensation from the Government for this 
particular line of service on which you say you can demonstrate that 
you make an $18,000 loss? 

Mr. Neal. Substantially $30,000 to $35,000 a year. 

The Chairman. And you can demonstrate that you lose $18,000. 
Are you obliged to carry this mail ? 

Mr. Neal. No, sir; we are not. 

The Chairman. Why do you assume a burden by which, according 
to your own statement, you can demonstrate an $18,000 loss out of 
$35,000 gross receipts? 

Mr. Neal. Speaking for the American Electric Railway Associa- 
tion, their executive committee made this statement: 

It may be asked why the electric roads undertook to perform the service at rates 
which were not remunerative. The answer is: 

First. Many roads undertook to carry United States mail at unremunerative rates 
with the mistaken idea that it would help them in cases of labor trouble to keep their 
cars running. 

Second. Operating expenses formerly were less than they are at present, but the 
carriers have continued from year to year in the hope that the Government would 
recognize the value of the services rendered and increase the rates to an equitable 
basis. The electric carriers now realize that the business is unprofitable and unde- 
sirable at the present rates, and ask that the Government equalize the existing rates 
paid for the different classes of mail transportation so that the electric lines can con- 
sistently obtain a reasonable proportion of the business on a fairly remunerative 



That was their vote. As far as my own road is concerned (the 
Boston Elevated), our feeling has been that we, without doubt, 
would be able, eventually, to get an increased appropriation. We 
have taken the matter up year after year, hoping it would be granted, 
and we have felt that it would perhaps be inflicting some hardship to 
withdraw the service, and we hoped that whatever it was that inter- 
posed between existing conditions and our getting proper compensa- 
tion, would be overcome, but I think it has now reached a point 
where we should not be asked to carry the burden any further, a 
burden as great as this. 



RAILWAY MAIL PAY. 143 

Mr. Lloyd. Have any of your number examined, and are they 
able to speak on the pending bill, the Post Office bill, or the pending 
recommendation of the Post Office Department with reference to 
pay? 

Mr. Neal. The only bill we supposed we had any interest in was 
the one which limited the compensation to 1 cent. 

The Chairman. That is before the Post Office Committee. That 
is not before this general committee. 

Mr. Lloyd. The general committee are investigating railway mail 
pay. If we find that we can put the steam and electric railroads on 
the same basis of pay, that would make simplicity in payment which 
might be useful to you and useful to the Government as well. We 
supposed that you had examined the particular bill. At the present 
time the steam railroads are paid by weight. Now the proposition 
of the Government is that the railroads should be paid by space, 
and we are especially considering the question as to whether we shall 
substitute the space basis for a weight basis. You have the space 
basis ? 

Mr. Neal. Yes; substantially a space basis. 

Mr. Lloyd. If you take the figures that are proposed in the pending 
bill, you might find the substantial relief that you are claiming, and 
it seems to me that you would do well to carefully examine that 
subject before you leave here and put yourelves in position of saying 
whether this bill would be beneficial to you or whether it would be 
practicable for you, and urge what objections you may want to urge 
against the proposed space basis system. This committee now has 
to investigate the whole subject. We are not wedded to anything, 
but our purpose is to investigate and find out if something better 
can not be done than that which is now done, some better system 
which might be adopted than the present one. 

Mr. Neal. I think the practice of the past would show that if the 
compensation were increased to 1J cents, instead of 1 cent, that you 
would meet the conditions, so far as the street railroads themselves 
are concerned. 

Mr. Lloyd. That is not the question which we have under consid- 
eration and that would only answer this question, that it would pro- 
vide you a sufficient compensation under the present system. The 
question we are investigating is to find out whether some other sys- 
tem of accounting could not be adopted, a uniform system so far as 
the steam railways and the electric railways are both concerned. 
We have one system for the steam railways and one for the electric at 
the present time. Why should we have one for each of the different 
kinds of railways ? 

Mr. Neal. That phase of the question would require some further 
study on our part, without a doubt. 

The Chairman. You have a prepared statement, have you ? 

Mr. Neal. Yes, sir. 

The Chairman. Do you care to make any remarks elaborating the 
statement you have ? We would be glad to file your statement and 
insert it in the record. 

Mr. Neal. I might say at the present I think it would be almost 
impossible to compare the carrying of mails in city service with 
steam railroad practice. 



144 RAILWAY MAIL PAY. 

The Chairman. For what reason ? 

Mr. Neal. Because the difference between train operation and 
individual car operation is so great and there are no precedents, that 
I know of, that I could base any statements on to permit me to make 
a comparison that we would dare to stand on to make a contract. 
On the other hand, this practice of paying according to the length of 
a car which has been in use for years and years, gives a greater com- 
pensation for a long car and a lesser compensation for a short one, 
and involves, in that way, the payment by space. As a matter of 
practice it is shown that if we had received 50 per cent more com- 
pensation, it would have been just to the company, therefore it 
seems to me that we are in position to state to your committee that 
there is a basis for payment for the city service which would be satis- 
factory and which is perhaps the best all around. 

The Chairman . Then, as I understand, you are perfectly satisfied 
with space being the determining factor as to the compensation for 
the service rendered, but you are dissatisfied with the rate that you 
receive for the space? 

Mr. Neal. Yes, with one modification: That we would add, if we 
were paid a cent and a half per linear foot, that we should be granted 
not less than 30,000 miles for a car. 

The Chairman. Regardless of the mileage you actually travel? 

Mr. Neal. Yes, sir. Because if the Government says that we 
must set aside a certain number of cars, the fixed charges, the crews, 
and other incidentals are putting the roads to a considerable expense. 
Our road last year averaged something like 25,000 miles per car. 

The Chairman. Let me ask you, in that connection, in your con- 
sideration of the advisability of the extension of any of your electric 
lines, do you take into consideration the returns you are to receive 
from the Government for the carriage of the mail ? 

Mr. Neal. Only indirectly. 

The Chairman. How indirectly, if under the present rate you are 
assuming a loss of 50 per cent on the return ? 

Mr. Neal. If I understood your question correctly, it is that if we 
are contemplating an extension into one of our suburbs, would we, 
in figuring the possible revenue on it, include anything for mail cars ? 

The Chairman. Would mail pay be one of the factors, from the 
financial standpoint, determining the advisability of going to the 
expense of making that extension ? 

Mr. Neal. Yes and no. Yes, if there were post offices in that 
neighborhood, and no, if it appeared to be away from any post-office 
district or any place where we could handle the mail. 

The Chairman. Then the mail pay is really a by-product in electric 
line operation? 

Mr. Neal. Yes, sir. 

The Chairman. Whatever you get is just so much found? 

Mr. Neal. Well, no; I should not say that, because electric rail- 
way operations to-day involve the carrying of mail, newspapers, 
passengers, and express. 

The Chairman. But you would not extend any electric lines for 
the purpose of carrying the mail under the mail contracts at the 
present rate of 1 cent per linear foot per mile. That would not be 
any consideration in your calculations as to the advisability of the 
extension. 



BAILWAY MAIL PAY. 145 

Mr. Neal. When we calculate an extension we take the probable 
gross revenue into consideration and, of course, in that way, it would 
affect it. 

Mr. Weeks. That is not especially a practical question as applied 
to Massachusetts, because in that State railroad extension is hedged 
around by so many obligations that most people do not want to put 
money into extensions, and we are not making them. 

The Chairman. The point, of course, is well taken, but what I 
want to draw out is that no railway extensions are made on account 
of mail contracts — that the mail contracts is a by-product, if you 
please. It is not that I am personally or individually putting myself 
in a position or attitude of saying that the transportation companies 
are not entitled to compensation for the service rendered, but it is 
simply that I want to get this viewpoint in the record. 

Mr. Lloyd. I do not believe I understand Mr. Neal. If you are 
going to extend a road and pass two or three little post offices, you 
would figure what you would probably receive from passenger 
receipts, you would figure what you would probably receive from 
trolley freight service, you would figure what you would receive 
from the mails and from the express, would you not ? 

Mr. Neal. Yes; we would try to calculate the revenue from all 
sources. 

Mr. Lloyd. Then, did you not answer incorrectly a while ago when 
you said "No" in reply to the question of the chairman? 

Mr. Neal. I said, " Yes and no," because, unless I knew that there 
were post offices on a particular extension, I could not tell. 

Mr. Lloyd. You would know. 

Mr. Neal. If the extension was in a district where there were no 
post offices, then I say no. It may be either one way- or the other, 
but as a matter of fact, we would include all the other incidentals 
that go with the street railway service. 

Mr. Lloyd. If you are going to have to do something you are going 
to figure on that ? You take the receipts that will come from it and 
you will figure off on the other side the expense on account of it ? 

Mr. Neal. The matter is so small in proportion to the whole that 
it would be very difficult to use the mail as a calculation on extension. 
For instance, with our gross revenue — as it probably will be this 
year — of sixteen and one-half million of dollars, the money which 
we will receive from the Government for carrying the mails will 
probably be about $36,000, and the percentage is so small it would 
not be noted one way or the other. 

Mr. Lloyd. That corroborates fully the statement of the chairman 
that it is an inconsequential matter either way '? 

Mr. Neal. No; it is an inconsequential percentage, but this $15,000 
a year is not an inconsequential matter. 

The Chairman. Inconsequential as a determining factor as to the 
advisability of the expenditure. That is the point I wanted to make. 

Mr. Weeks. As a matter of fact', how long has it been since the 
Boston Elevated Railway has extended its mileage even a mile ? 

Mr. Neal. We are all the time making little alterations involving 
slight changes, but it has been about three years since we made any 
extension, other than the Cambridge subwa}^, which was authorized 
prior to that time, and the East Cambridge viaduct. 



146 RAILWAY MAIL PAY. 

The Chairman. In your statement, in which you think you demon- 
strate that you are carrying mail at a loss of 50 per cent, have you a 
clear presentation as to what your apportionment of expense is ? 

Mr. Neal. Yes, sir. I have divided it up into many parts, show- 
ing exactly what it costs us for each subdivision; for instance, the 
investment in a car, maintenance of the car, the wages of the 
men who operate it, the cost of the power, and various elements 
that go to make up this cost. 

The Chairman. And of your total operating expenses what per- 
centage do you charge to the carriage of mail ? 

Mr. Neal. We charge to the carriage of mail ? , 

The Chairman. Have you worked it down to a percentage, or a 
fractional part of a certain per cent ? 

Mr. Neal. No. We keep accounts on a basis similar to that pre- 
scribed by the Interstate Commerce Commission, which requires 
cost of power to be kept in one account, track repairs in another 
account, etc. In this statement we have taken parts of accounts 
that apply to mail cars. 

Mr. Weeks. Does it take the same amount of power to operate a 
mail car as it does a passenger car ? 

Mr. Neal. No; I do not think it does. 

Mr. Weeks. You do not figure the same? 

Mr. Neal. I took the actual power the mail cars were using. We 
had a meter put on the cars and found they were using 16 kilowatts. 

Mr. Weeks. And how much does a passenger car take? 

Mr. Neal. According to their speed and size. They vary from 56 
kilowatts down to, say, 24. 

Mr. Weeks. How about the cost of the equipment? Do you put 
in the actual cost, the average cost of all kinds of cars ? 

Mr. Neal. If I were granted time enough I could explain just how 
I made up this statement, so you can understand each item. 

Mr. Tuttle. Is this mail carried in special cars ? 

Mr. Neal. Yes, sir. We carry mail in pouches besides, but the 
point of issue at present is that we are operating independent cars 
at a loss of 50 per cent. 

Mr. Tuttle. Is the mail which is in pouches carried on passenger 
cars? 

Mr. Neal. Yes, sir. 

The Chairman. What do you figure your net compensation on 
that? 

Mr. Neal. I do not remember, Mr. Chairman. The gentlemen 
from the other roads have that, but I have not from my road, because 
I was confining myself to this particular case. Would it be taking 
too much of your time if I should explain the items, provided I go 
over them rapidly ? 

Mr. Tuttle. Is this system similar to the systems in other large 
cities, like Chicago, New York, and others? 

Mr. Neal. It is generally applicable. The other cities would 
vary in different items of expense, according to the real estate and 
various differences in cost of labor and one thing and another, but 
in the main this would be representative. 

The Chairman. Go ahead with your statement. 

The statement is as follows : 



RAILWAY MAIL PAY. 147 

Statement giving estimated cost of operation of present type of United States mail cars on 
system of the Boston Elevated Ry. Co. 

Type and number of cars now used, nine 16-foot box. 1 
Mileage operated year ending June 30, 1912, 225,695 miles. 

Cents per car-mile. 

A. Car investment, taxes, interest, depreciation, and insurance 1. 338 

B. Car-house storage, taxes, interest, depreciation, and insurance . 187 

C. Power station, taxes, interest, depreciation, and insurance 1. 229 

D. Power transmission, taxes, interest, depreciation, and insurance. . . . 198 

E. Track investment 2. 441 

F. Cost of power used 1. 350 

G. Wages on car crews 8. 422 

H. Maintenance of car bodies . 482 

I. Maintenance of car trucks . 200 

J. Cost of maintenance of track 1. 500 

K. Wages of other transportation and car service employees and other 

expenses 1. 680 

L. Maintenance of line equipment, buildings, and electric equipment 

of cars 1.320 

M. General expenses 2. 790 

Total 23.137 

Pay for 16-foot box car (15 feet 11 inches inside) 15. 58 

A. Car investment: 

Original car body $500. 00 

Rebuilding car body 640. 13 

Heaters without wiring 23. 00 

Harrison racks 25. 00 

Wire guards. 28. 12 

Fire extinguishers 14. 50 

Electric equipment and equipping 117. 96 

K-2 controllers 168. 00 

G 58 motors (2 at $455) 910. 00 

Peckham truck ." 220. 00 

Vestibuling , 167. 75 

Investment per car 2, 814. 46 

For nine cars 25, 330. 14 

Taxes and insurance, $9.25 per $1,000 (assuming capital be com- 
posed of one-half stock and one-half bonds) 234. 30 

Interest, at 5 per cent (the average amount paid on W. E. and B. 

E. capital is 5.09 per cent) 1, 266. 51 

Depreciation, 6 per cent 1, 519. 81 

3, 020. 62 
Investment charges per mile (on mileage operated year ending 
June 30, 1912), 1.338 cents. 

B. Car house investment: • 

Length of car from bunter to bunter, 25 feet; 300 square feet 

required for housing, at $1.75 for land and buildings 525. 00 

For nine cars 4, 725. 00 

Taxes and insurance, at $9.25 per 1,000 (as above) 43. 71 

Interest, 5 per cent 236. 25 

Depreciation, 3 per cent 141. 75 



Per car mile (on mileage operated year ending June 30, 1912), 
0. 187 cent. 

i Not including one 25-foot box. 



421. 71 



148 RAILWAY MAIL PAY. 

C. Power investment. 

Power station investment, 16 kilowatts per car, at $175 per 

kilowatt $2, 800. 00 

For nine cars 25, 200. 00 

Building (30 per cent), $7,560; interest at 5 per cent 378. 00 

Building (30 per cent) ; depreciation 3 per cent 226. 80 

Equipment (70 per cent), $17,640; interest, 5 per cent 882. 00 

Depreciation of equipment 1, 058. 40 

Taxes and insurance, $9.25 per $1,000 (as above) 233. 10 

2, 778. 30 
Per mile (on mileage operated year ending June 30, 1912), 
1.229 cents. 

D. Power transmission lines: 

16 kilowatts per car, at $45 per kilowatt — 

For 1 car 720. 00 

For 9 cars 6, 480. 00 

Interest, 5 per cent 324. 00 

Depreciation, 1 per cent 64. 80 

Taxes, $8.98 per 1,000 (assuming our capital to be composed 

of one-half stock and one-half bonds) 58. 19 

446. 99 
Per car-mile (on mileage year ending June 30, 1912), 0.198 
cent. 

E. Track investment: 

Charges taken at the average cost per mile for the entire sur- 
face system — 

Investment 9, 300, 000. 00 

Car mileage 45, 427, 857. 00 

Interest, at 5 per cent 465, 000. 00 

Depreciation, 6 per cent ♦. 558, 000. 00 

Taxes, $9.25 86,025.00 

1, 109, 025. 00 
Per car-mile (on mileage year ending June 30, 1912), 2.441 
cents. 

F. Cost of power used: 

Cost of power taken, at 0.0075 kilowatt hour. 
Car uses 1.8 kilowatt hours per mile. 
Cost per mile, 1.350 cents. 

G. Wages of car crews: 

Year ending June 30, 1912 . # 18,032.29 

Add for effect of 9-hour law (figures which are not yet ob- 
tainable) 1,000.00 

19,032.29 

Mail-car mileage, 225,695 miles. 
Cost oer car mile, 8.422 cents. 
H. Cost of maintenance of mail-car bodies: 

33 months, ending June 30, 1912 2, 244. 35 

Add proportion of cost of painting to be done later 750. 00 

2, 994. 35 

Average cost for 1 year 1, 088. 88 

Cost per car mile, 0.482 cent. 
I. Maintenance of car trucks, including wheels and axles, brake shoes, 

etc., taken at the average cost of 4 years for the type of trucks used Cents. 

on mail cars, per car-mile 0. 2 

J. Cost of maintenance of tracks per car-mile, estimated by Mr. Hile. . 1. 500 



KAILWAY MAIL PAY. 149 

Wages of other transportation and car service employees and ex- 
penses (taken at the average cost per car-mile for about 46,000,000 
car miles on the entire surface system) : 

Superintendence of transportation, including division clerks, Cents. 

starters, street inspectors, etc 0. 55 

Switchmen .12 

Lamps, lubricants, waste, etc .15 

Car-house employees and expenses. .53 

Wrecking expenses .01 

Miscellaneous car-service expenses .07 

Labor, cleaning, and sanding track .15 

Oil, grease, sand, etc .01 

Snow expenses .09 

1.68 



Maintenance of line equipment, building and electrical equipment 
of cars (taken at the average cost per car-mile for about 46,000,000 
car-miles on the entire surface system) : 

Maintenance of line equipment .34 

Maintenance of buildings .22 

Maintenance of electrical equipment of cars .60 

Superintendence of equipment .16 



1.32 



M. General expenses (taken at the average cost per car-mile for about 
46,000,000 miles on the entire surface system, and about 8,600,000 
miles on the entire elevated system): 

Salaries, office, and general expenses .53 

Law expenses .23 

Pensions and gratuities .04 

Miscellaneous expenses .39 

Injuries and damages 1 . 43 

Stationery and printing .16 

Rent of tracks, terminals .01 



2.79 

Mr. Neal. In trying to find out what the service costs, I first looked 
to see how many cars we had, and I found we had 10, one of which 
was a 25-foot box car, as we call it. The other 9 cars were 16- 
foot cars; so in order to make this statement plain I eliminated the 
25-foot box car. For the nine 16-foot box cars I found the invest- 
ment to be $2,814.46 per car. These figures I can show on the books 
of the Boston Elevated Railway Co. They are the orignal and abso- 
lute figures. The 9 cars made an investment of $25,330.14. In fig- 
uring the taxes I did not put on the full tax rate on the whole $25,000, 
because bonds are not taxable ; and I assumed, because we have half 
of our capital in bonds and half in stock, that it was only fair to apply 
one-half of the tax rate, so I put down $9.25. Then, the interest is 
figured at 5 per cent. The Boston Elevated and the West End Street 
Railway Co.'s have been very fortunate in thsir financing, and the 
basis on which they are financed stands at 5.09 per cent. That is all 
we pay to our stockholders and bondholders. I do not think you can 
find many other roads that can afford to do business on that basis. 
We are not asking for profit, but only ask that we get this particular 
rate of interest, because that is what we are paying our stockholders 
and bondholders. That interest was $1,266.51, as indicated here. 
Then, I ^k. the item of depreciation at 6 per cent, and that is assum- 
ing on those cars a life of 16§ years. We will grant, if you please, that 
the bodies of those cars will last longer than that; but, of course, as 



150 RAILWAY MAIL PAY. 

you know, the motors will not last as long. There are very few motors 
m operation to-day that will last more than 10 years. Some parts of 
the cars may last only 8 or 10 years, so the average 16§ years for the 
total life, we believe to be perfectly fair. That shows on the car 
investment interest, taxes, and depreciation, 1.338 cents per mile. 

The question of housing a car comes up next. The car-house 
investment on our road costs us per car, $525; that is, for a car 
requiring the number of square feet that these do. 

The Chairman. On your car-mile basis, on your estimate of June 
30, 1912, those 9 cars traveled an aggregate of 225,695 miles? 

Mr. Neal. Yes; a person carefully analyzing this statement might 
challenge the fact that I included both land and buildings when I put 
on a depreciation of 3 per cent, but I was well aware of the fact that 
the land was included. I might have put on a slightly different per 
cent on the building alone. I know exactly how much the land cost, 
on the average, and this 3 per cent applied to the value of both the 
land and buildings together gives us the proper rate of depreciation 
to apply to buildings alone. 

The Chairman. Do you allow for depreciation of the land in the 
depreciation of the building ? 

Mr. Neal. I have reviewed our figures for many years and find 
that depreciation on the buildings happens to equal about 3 per cent 
on the value of land and buildings taken together. I found that that 
was the easier way to get at it, and that makes an item of 0.187 cent 
per car mile. 

With regard to the power investment, as I have said, we measured 
the amount of power these cars were using and we found that to be 16 
kilowatts per car mile. That requires an investment in power stations 
of 16 kilowatts per car. Our power station investments have cost us 
from $187 up to $227 per kilowatt; and in order to be perfectly con- 
servative, recognizing the fact that some of our stations are not 
right up to date, we have taken the figure of $175, which is less than 
the very latest power station we built — a big turbine power station in 
South Boston, which has just been constructed by Stone & Wester. 
We have taken the taxes and the depreciation on power stations on 
the same basis as I have mentioned. 

The power transmission lines are the overhead feeders and the 
underground feeders and we have allowed, per car, $45 per kilowatt, 
which is a conventional figure used by most railroad men in estimating 
the cost of power. 

For the track investment we have taken the total number of 
car-miles run on the whole system last year, all the surface miles. 
We took the value of the track at $9,300,000 and we figured the 
interest at 5 per cent. We took the depreciation at 6 per cent and 
the taxes at one-half the State rate, again assuming that one half 
was bought with bonds and the other half of it stock. So far as 
the depreciation of the track is concerned, I know from actually 
checking up our accounts that all of the track which we have taken 
up for the last 10 years has averaged 12.4 years; that is, the life of 
the track has been 12.4 years. Yet, I am assuming a life of 16§ years, 
on the theory that the track which we have been putting in within 
the last 10 years will last still longer. In other words, every figure 
is as conservative as we know how to make it, and yet it shows this 
loss of over $15,000 a year. 



KAILWAY MAIL PAY. 151 

On the cost of the power used, we have taken the cost of the power 
at 0.0075 cent per kilowatt, and that will stand by comparison with 
any other electric-light or power rate in the country where used for 
similar purposes. 

The cost of wages of car crews is absolute. We have crews set aside 
for this purpose and we know positively what wages we pay. It cost 
us, last year, 8.422 cents per mile. 

The cost of maintenance of mail-car bodies I have taken the 
absolute amount we have spent in 33 months and have allowed $750 
for painting which is about to be done. That shows 0.482 cent per 
car-mile. The cost of the maintenance of the car trucks we simply 
took from our regular account. 

The cost of maintenance of tracks per car-mile we estimated, for 
the reason that we felt that it was not right to charge as much for the 
maintenance of tracks where these mail cars are so light and so small 
as we would have to charge for an ordinary passenger car. We have 
some very heavy passenger cars in Boston, as well as light ones. 

The Chairman. What do you charge for the heavy passenger cars ? 

Mr. Neal. Last year the cost of maintenance of track was a little 
over 2 cents and we took three-fourths of that as being a fair amount 
for the lighter car. 

On the matter of miscellaneous transportation, car-service em- 
ployees and expenses, I have enumerated there the items which are 
put in. It goes without saying the cars use lamps, lubricants, waste; 
they have the use of switchmen, car-house employees in shifting 
cars, cleaning them, greasing, sanding tracks and removal of snow, 
and I have shown just exactly what it is per car-mile. Taking all of 
those items in a group, they amount to 1.68 cents per car-mile. 

We distribute the expense according to the number of miles that 
each car ran; that is, we ran 46,000,000 service miles last year. 

The Chairman. The total? 

Mr. Neal. Yes. 

The Chairman. Then your percentage is worked down on 225,695 — 
forty-six millionth of that amount ? 

Mr. Neal. Yes. Of course, they may use more or less switchmen, 
but we have taken this as the average, which is the best that can be 
found. 

With regard to our general expenses, salaries, stationery, printing, 
and miscellaneous expenses, we put them at 2.79 cents. 

The Chairman. Why do you allow that — on the same system ? 

Mr. Neal. Yes. That shows a cost to us of 23.137 cents per car 
mile and we are receiving 15.58. If these figures were compared 
with those of the Postmaster General there would be apparently a 
slight difference because I have thrown out the 25-foot box car. 

The Chairman. His figures would be more in your favor than those 
figures, according to your own judgment ? 

Mr. Neal. It depends on how he -figured them. It would make 
very little difference, but for the 25-foot car they are allowing us 20 
cents per mile, because it is a large car and if that mileage is added 
to this other mileage it would appear we were getting 16.1 cents per 
car mile, whereas, as a matter of fact, we are not for cars of the 
standard size. 



152 KAIL WAY MAIL PAY. 

The Chairman. As I understand, under the law applicable to lines 
of your nature, there is a maximum of 1 cent per linear foot per car 
miie ? 

Mr. Neal. Yes, sir. 

The Chairman. Do you receive the maximum all the way through ? 

Mr. Neal. We do not on the 25-foot car, but we do on those others. 

The Chairman. On the nine 16-foot cars? 

Mr. Neal. Yes. 

The Chairman. Under the plan under which the electric lines are 
operating space is the determinate factor as to the measure of the 
service rendered ? 

Mr. Neal. Yes; it is. 

The Chairman. Have you any suggestions to make for the infor- 
mation of the committee as to how that measure could be improved ? 
I am not speaking of the rate, but I am speaking of the yard stick, 
as you might say. 

Mr. Neal. I would not suppose offhand that the factor of weight 
would be the base in this case for the reason that a car may be half 
filled, and it is expensive business running cars in a large city, and 
where the distances are short it makes a very marked difference in 
the compensation. For instance, you might cut down compensation 
one-half on all the evening mail, or any light mails, because the mails 
only weigh half as much, whereas the company would be put to sub- 
stantially the same expense whether the car was filled or half filled. 
While I have not studied that phase of the question, I should say for 
such service you ought to pay by space. 

Mr. Lloyd. Do you understand the present system of compensa- 
tion by weight for carrying the mail on steam railroads ? 

Mr. Neal. I do not; no, sir, 

Mr. Lloyd. It is a complex S3^stem unless you know something 
about it. 

Mr. Neal. Well, I do not, but I do know you can substantially 
measure the space of a street railroad car by taking its length, for the 
reason that the gauges are pretty nearly alike in most cities; there 
may be some narrow-gauge roads I do not know anything about, but 
you do not find them in the big city service we are talking about. 
Therefore, if you pay for the length of a car for every mile it runs 
you have a reasonable basis on which to make the payment, and that 
it is possible to determine a fair rate is indicated by this paper, as I 
have analyzed the different elements that enter into it. 

The Chairman. What percentage of your total mail business is 
handled by these full cars the nine 16-foot cars and the one 25-foot 
car? 

Mr. Neal. I think that was a question that came up a few minutes 
ago. The actual mileage, or amount that we should have received 
from the Government, if accounts for the year had been adjusted, 
should be $36,312.53 for car service and $536.34 for pouch service. 

The Chairman. About 1| per cent for your pouch service, or a 
little less than 2 per cent ? 

Mr. Neal. Yes. 

The Chairman. How do you determine the compensation you 
receive on your pouch service ? 

Mr. Neal. We have so far taken what has been given to us. There 
is another matter that the American Electric Railway Association 



KAILWAY MAIL PAY. 153 

had already taken up before the Committee on Post Offices and Post 
Roads, when they had the hearings back in May sometime. That 
matter, however, is not the one which they are trying to bring up 
to-day. 

The Chairman. You say you take what is given you by the depart- 
ment. Do you know how the department determines what they 
shall give you for your pouch service ? 

Mr. Neal. No. But I know that the American Electric Railway 
Association states the present rate to be, for 2,000 miles or less, $150 
per annum, for closed-pouch service; for more than 2,000 miles and 
not more than 3,500 miles, $175 per annum; for 3,500 and up to 5,000 
miles, $200. 

The Chairman. The point I want to bring out is whether the 
compensation you do receive is determined by weight or by space ? 

Mr. Neal. They do not seem to base it on either. It seems to be 
according to mileage and does not say anything about the size of the 
pouch or the space it occupies, or how much it weighs. 

The Chairman. Is that all you have to present to the committee, 
Mr. Neal ? 

Mr. Neal. I think that is all; yes, sir. 

The Chairman. We thank you very much for your views. 

STATEMENT OF ALEXANDER R. PIPER. 

The Chairman. Mr. Piper, it will be necessary for you to be sworn. 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you kindly state your name, residence, and 
occupation ? 

Mr. Piper. Alexander R. Piper, general freight agent of the South 
Brooklyn Railroad, in charge of mail of the Brooklyn Heights Rail- 
road Co. My age is 47; residence 7522 Second Avenue, Brooklyn. 

The Chairman. How long have you been connected with the 
Brooklyn Railroad ? 

Mr. Piper. Nine years, sir. 

The Chairman. In your present official capacity? 

Mr. Piper. Five years. 

The Chairman. Are you also a member of the association of the 
electric lines ? 

Mr. Piper. I am a member of the American Railway Association. 

The Chairman. Representing practically all of the electric and 
elevated lines of the United States? 

Mr. Piper. Yes, sir; city and interurban. 

The Chairman. Have you an official position with that association 
or committee ? Has it made an organization ? 

Mr. Piper. I am a member of the committee on compensation for 
the carrying of the United States maij. 

The Chairman. For this association? 

Mr. Piper. Yes, sir. 

The Chairman. Will you favor the committee with such views as 
you have to suggest relative to that service ? 

Mr. Piper. The Brooklyn Rapid Transit System has for a number 
of years been carrying both pouch mail and operating independent 
mail cars. 



154 KAIL WAY MAIL PAY. 

The Chairman. How many independent mail cars ? 

Mr. Piper. Eleven independent mail cars. 

The Chairman. Their length ? 

Mr. Piper. There are two sizes — 15^ feet and 19.58 feet. That is 
the inside- dimension of the cars. 

The Chairman. What do you get for the 15i~foot cars per car- 
mile ? 

Mr. Piper. Fifteen and one-half cents per car-mile. 

The Chairman. What for the other ? 

Mr. Piper. Nineteen and fifty-eight one-hundredths cents per car- 
mile. 

The Chairman. You get a maximum in both cases allowed under 
the law ? 

Mr. Piper. Yes. I believe Mr. Neal did not state, under the Post 
Office Regulations, in connection with the appropriation, they can 
not pay for over 20 feet on an independent car. That is the reason 
whv he is operating a 25-foot car and is paid only at the rate of 
20 feet. 

The Chairman. Are there any other cases you know of in the elec- 
tric service where they operate over a 20-foot car ? 

Mr. Piper. I know of one case in Philadelphia of a new car that has 
just been built at the request of the Post Office Department. That 
is 25 feet in size. 

The Chairman. And all the compensation they can receive is for 
a 20-foot car ? 

Mr. Piper. Twenty cents per car-mile; yes, sir. 

The Chairman. And this car was built at the request of the Post- 
master General, was it ? 

Mr. Piper. Yes, sir. 

The Chairman. Will you kindly continue ? 

Mr. Piper. To explain the pouch service, which was asked Mr. Neal; 
that is based upon the shipment over a route, regardless of the number 
of pouches or the weight of the pouches. It is simply a number of 
pouches placed upon the front of a passenger car. The shipments may 
be from a railroad station or from a main post office to a number of 
substations along this line. There may be a number of throw-ofTs 
and take-ons in that route, but the compensation is based only upon 
the total run from one end of the route to the other; i. e., between 
the- post offices at the ends of the line. 

The Chairman. Is the measure an assumed average weight for the 
pouch, if loaded, and that taken as the determining factor on the 
number of pouches ? 

Mr. Piper. No, sir. The number of pouches or the weight of the 
pouch is not taken into consideration at all. It is simply 3 cents per 
mile for the distance traveled between the post offices. 

The Chairman. Regardless of the number of pouches carried? 

Mr. Piper. Yes, sir. 

The Chairman. It is just a lump sum? 

Mr. Piper. Yes, sir. 

The Chairman. Determined how? On the average of business? 

Mr. Piper. I do not know how that was originally determined. 
We have some cases in which we will receive one pouch to carry the 
entire distance and in other cases we will have from 14 to 15 pouches 
to carry. 



KAILWAY MAIL PAY. 155 

Mr. Lloyd. You receive the same for carrying one pouch as you 
do for carrying 15? 

Mr. Piper. Absolutely. 

Mr. Tuttle. What is the average? 

Mr. Piper. From five to six. That will depend a good deal on the 
route and the number of substations on the route. 

Mr. Tuttle. You never have more than you can throw on the front 
platform of a car ? 

Mr. Piper. We had an instance a short time ago in which the sub- 
station attempted to put 14 pouches on the front of the car and the 
motor man refused to receive them. He was notified that he would 
have to receive them, and he said he would not because he could not 
operate his car with that amount of mail. He stopped and held the 
car until an inspector came, but he was told by the inspector he had 
to take what was given him, regardless of the number of pouches, and 
he took them. On the strength of that we discontinued the carrying 
of pouch mail. Yesterday was the last day we carried pouch mail, and 
we gave the Post Office Department 60 days' notice. 

The Chairman. The 60 days expired yesterday? 

Mr. Piper. Yes, sir. 

The Chairman. How was this 3 cents per car-mile determined ? 
Have you any knowledge of that ? 

Mr. Piper. No, sir; I do not know. 

The Chairman. You were simply notified that that allowance 
woul d be granted you by the Government ? 

Mr. Piper. Yes, sir. 

Mr. Tuttle. Is that a special compensation for your line? 

Mr. Piper. No, sir. I tnink you will find in the bill authorizing 
the compensation for mail an allowance of 3 cents per mile. Then 
there is, I think, $25,000 extra allowed in the appropriation to pay 
for extra service at the rate of 4 cents per mile, where the amount 
of service is very great and the number of throw-off s very great. 

Mr. Weeks. Your charter, I suppose, authorizes you to carry pas- 
sengers, freight, mail, and express ? 

Mr. Piper. Yes, sir. 

Mr. Weeks. Do you think under that charter you can refuse to 
carry mail ? 

Mr. Piper. Our attorneys believe so. I do not believe I am com- 
petent to speak on that. 

Mr. Weeks. Do you think you could refuse to carry a passenger? 

Mr. Piper. No, sir. 

Mr. Lloyd. Could you refuse to carry freight ? * 

Mr. Piper. We never have. I doubt if we could refuse to carry it, 
as we are under the Interstate Commerce Commission. 

Mr. Lloyd. Why could you not refuse to carry passengers and not 
refuse to carry freight and refuse to carry mail ? 

Mr. Piper. We decline to carry it -at the compensation given us. 

Mr. Lloyd. Could you not decline to carry a passenger at the 
compensation ? 

Mr. Piper. I do not think so, because the compensation is duly 
fixed by the public-service commission. 

Mr. Lloyd. Suppose the public-service commission would fix a 
rate that you would say was not compensatory. Do you think you 
could refuse to carry passengers ? 



156 RAILWAY MAIL PAY. 

Mr. Piper. No, sir. 

Mr. Lloyd. Why did you refuse to carry mail if it is not com- 
pensatory ? 

Mr. Piper. The only reason is because the principal business of 
these trolley lines is the carriage of passengers and any interference 
with that should be avoided as far as possible. 

Mr. Lloyd. Anything that interferes with the Government ought 
to be avoided, as far as possible, ought it not ? 

Mr. Piper. I agree with you thoroughly on that. 

Mr. Lloyd. Then you think that private individuals have rights 
that the Government has not ? 

Mr. Piper. I think that the primary duty of the trolley service is 
to accommodate the public they are carrying. 

Mr. Lloyd. If the public is benefited by the carriage of mails, can 
you refuse that ? 

Mr. Piper. I believe, if I may not answer directly yes or no 

Mr. Lloyd. I should not press you on that because you say you 
have acted under advice of counsel and you are simply giving your 
own opinion. 

Mr. Piper. It would simply be my own opinion. 

Mr. Tuttle. Did the Government contest your right to carry this 
mail? 

Mr. Piper. No, sir; they merely asked for additional time until 
they could make the proper wagon or automobile arrangements for 
the service. 

Mr. Tuttle. They did not claim they could compel you to carry 
the mail ? 

Mr. Piper. No, sir. 

By permission Mr. Neal asked a question as follows : 

Mr. Neal. Did not your contract specify you had a right to 
terminate the carrying of the mail upon the giving of certain notice, 
and is not that the basis on which you discontinued it ? 

Mr. Pd?er. That is the basis on which we discontinued it. We 
entered into a contract for that matter. 

The Chairman. Suppose the Government should to-morrow stop 
carrying any mail. What would be the effect on all the business of 
the country ? 

Mr. Piper. I am afraid it would be very disastrous. There is no 
question about that. To show that we do not want to interfere with 
the Government, we gave the Government 30 days' notice, as required 
by the agreement, and a representative of Mr. Stewart's office came 
to us and asked if we could not extend that time until they found they 
could put in automobile service, and I said "Yes," and I further 
extended it six days after that because they had some trouble in 
putting the proper racks on the wagons. We did not want to interfere 
with the mail, but we did not want to interfere with the passenger 
business. 

The Chadiman. Do you feel that the advantages incident to the 
mail service are such that the transportation of mail should be figured 
from an entirely different viewpoint from what you would ordinarily 
take in the transportation of general business — freight and passengers ? 

Mr. Piper. Yes; because it is a special service. 



KAILWAY MAIL PAY. 157 

The Chairman. Then your opinion is that the Government should 
not pay as high a rate for mail transportation as you would expect 
from the citizen in ordinary business ? 

Mr. Pd?er. You mean as to the transportation of freight or pas- 
sengers ? 

The Chairman. Both combined; the general transportation busi- 
ness. In other words, that mail transportation is an advantage on 
account of the benefits the railways receive due to the extension of 
business incident to the mail f acuities ? 

Mr. Piper. I should say it is a special service and it should be paid 
for on the basis of special service, just exactly as we give special 
service in the carrying of passengers. 

The Chairman. Then you deal with the mail as you do with ordi- 
nary business and make no allowance for indirect benefit incident to 
mail f acuities ? 

Mr. Piper. No, sir; I do not say that. I say that, while it is a 
special service, I do not think we could expect to receive as much for 
it as we would either for the express, freight, or passenger service, 
nor do we. 

The Chairman. But you do feel you are certainly entitled to com- 
pensation that will at least remunerate you for the cost of the service ? 

Mr. Piper. That is precisely our position. 

Mr. Lloyd. I think probably the record would be misleading as to 
your answer to Senator Weeks's question. The reason that you said 
a while ago that you are not required to carry the mail was because of 
the contract which the Government had entered into with you, and 
it was not because of the general proposition which governs in the 
carriage of passengers, carriage of mail, and carriage of express ? 

Mr. Piper. That is correct. We have a contract with the Govern- 
ment. 

Mr. Lloyd. And you do not have the contract with reference to 
carrying the passengers and carrying the freight ? 

Mr. Piper. No, sir. In that respect we are under the control of 
the public service commission as to what we shall charge. 

Mr. Lloyd. You are not liable in the other case because of the 
contract? 

Mr. Piper. No, sir. 

Mr. Lloyd. You simply had to carry out the provisions of the 
contract, and your contract provided that 30 days' notice should be 
given to terminate it ? 

Mr. Piper. Yes, sir. 

Mr. Lloyd. And all you had to do to carry out the contract was to 
give 30 days' notice ? 

Mr. Piper. Yes. 

Mr. Lloyd. But that does not apply to the general proposition 
with reference to your liability to carry mail ? 

Mr. Piper. No, sir. 

Mr. Lloyd. If it was insisted, you' would carry it ? 

Mr. Piper. Yes, sir. If the question were brought up by the 
Government as to whether we would have to carry the mail or not, 
my opinion is that we would have to carry it. Then we would 
simply have to appeal to Congress to adjust the rate so that we would 
not be carrying it at a loss. 
49396—14 18 



158 RAILWAY MAIL PAY. 

Mr. Lloyd. I am glad to hear you say that, because it is different 
from what you said a while, ago. 

The Chairman. Under the contract, you were required to give 30 
days' notice. As a matter of fact, you gave the Government 60 days' 
notice ? 

Mr. Piper. Sixty-six days. 

The Chairman. At the request of the department for an extension 
of time ? 

Mr. Piper. Yes. 

Mr. Weeks. What would you say to this proposition: Suppose we 
rescinded all of the law applying to the rates which you should 
receive and you made your contracts direct with the department for 
carrying this mail. Would you be satisfied with the rate which the 
department was willing to pay, or would you rather have it left with 
the Interstate Commerce Commission ? 

Mr. Piper. I would be willing, as far as I am concerned, to leave it 
with the Interstate Commerce Commission, because the deals I have 
had with the Interstate Commerce Commission I have thought just 
and fair. 

Mr. Weeks. Do you think that would be a judicious way, from the 
standpoint of the Government, to handle this question on trolley 
Imes ? 

Mr. Piper. Yes, sir. 

Mr. Weeks. Are the conditions such on different lines that differ- 
ent rates would necessarily have to be paid, or do you think a general 
rate could apply ? 

Mr. Piper. I think a general rate would apply, sir. 

Mr. Lloyd. You would not have that apply to interstate roads 
only, would you ? 

Mr. Piper. I was going to bring up the question. I do not know 
that the Interstate Commerce Commission would have power in a 
great many of those cases; in fact, in most cases they would not 
have. I was addressing the general question. 

Mr. Weeks. I am not assuming that they have the power but 
Congress could give them the power in such cases if it saw fit to do so. 

Mr. Piper. The carriage of mail, apparently, is an interstate 
business. 

The Chairman. So far as the electric fines of the country are con- 
cerned, according to your understanding would they be satisfied to 
carry the mail at cost to them ? 

Mr. Piper. Apparently not, from the answers that I have had. 
I have communicated with practically every road in the United 
States on the question of compensation, and the replies received 
from them all indicated that they expected to be paid the cost plus 
some percentage as a profit. 

The Chairman. What percentage as a profit and how would that 
percentage of profit be ascertained ? 

Mr. Piper. That I could not answer. They have simply given 
me bulk figures. I tried to ascertain what figure would be 
satisfactory. 

The Chairman. My question was based on the result of informa- 
tion submitted by Mr. Neal, who preceded you, in which, if I under- 
stood him correctly he took the position that at the rate of 1 cent 



RAILWAY MAIL PAY. 159 

per linear foot-mile they were losing 50 per cent in actual cost of 
the service on the system that he is connected with and that he 
hoped that Congress would increase that rate from 1 cent to 1J cents, 
in which event, in his opinion, his company would receive from the 
Government what the actual cost to the company was for the activity. 

Mr. Weeks. Have you examined these figures to analyze them ? 

Mr. Piper. Not very carefully; no, sir. 

Mr. Weeks. You do not know whether they would be applicable 
to your road, do you ? 

Mr. Piper. I had them given to our auditor and he said they 
were substantially in accordance with the figures that he had. There 
were some slight differences. 

Mr. Weeks. Did he mention any particular difference ? 

Mr. Piper. No, sir; but I have a statement from our own road 
as to the operations for the year ending June 30, 1912, but it is not 
given in detail as Mr. Neal's here. I can procure it if you desire it 
in that form. 

The Chairman. Is there a general form among the electric lines 
of the country followed in the way of apportionment of operating 
expenses ? 

Mr. Piper. Yes, sir; as prescribed by the public service commis- 
sions, and they are practically the same throughout. 

The Chairman. So that if you tried to work out on your line the 
information worked out by Mr. Neal's statement you would probably 
adopt the same system in coming to your conclusions ? 

Mr. Piper. Yes, sir; except that all auditors would have differ- 
ent ideas as to the valuation of property and the percentages which 
should be given to certain classes of property, and the way in which 
to divide it, so that there might be a slight difference in that way, 
but I think the general figures would turn out very close to what 
Mr. Neal has. 

The Chairman. You heard Mr. Neal's presentation and explana- 
tion of the figures that he submitted ? 

Mr. Piper. Yes, sir. 

The Chairman. Is it your opinion, with your technical and prac- 
tical experience, that that is a fair presentation, dealing fairly with 
both sides, namely, the Government and the transportation com- 
panies ? 

Mr. Piper. Yes, sir; I think it is more than conservative. 

The Chairman. By "conservative" you mean that it is rather 
against the transportation companies ? 

Mr. Piper. Yes, sir. 

The Chairman. It would be giving the Government the benefit of 
all doubt 1 

Mr. Piper. The benefit of all doubt. Our figures show 24.88 cents 
per car mile as our operating cost for the mail cars. 

Mr. Weeks. You cars are a little larger? 

Mr. Piper. They are a little larger and I do not think that we 
have made, as I recollect it, the allowance for the difference in the 
size of the cars as to the amount of power used. I noted Mr. Neal 
has not taken the average I have taken. 

The Chairman. Have you any statement to present to be inserted 
in the record ? 



160 RAILWAY MAIL PAY. 

Mr. Piper. Yes, sir; I would like to hand you this letter from our 
auditor: 

Brooklyn, N. Y., February 4, 1913. 
Capt. A. R. Piper, 

85 Clinton Street, Brooklyn, N. Y. 

Dear Sir: In answer to your inquiry as to cost of operating mail service, fiscal 
year ending June 30, 1912, the actual operating results for the year are shown in the 
accompanying statement. 

Of course, you are aware that this exhibit, if anything, understates the operating 
expenses, for the reason that we have never attempted to burden this division with 
items of a general administration character, including with the general expenses for 
the mail division only such items as are directly connected therewith. To attempt 
to give you the taxes and fixed charges applicable to mail service, as such, would 
involve too many arbitrary conclusions, and I think it preferable and much more 
equitable to give you the unit of taxes and fixed charges per car-mile for the entire 
Brooklyn Rapid Transit system for the period in question. These are: Taxes, 0.021; 
fixed charges, 0.065 per car-mile. 

Reducing the expenses shown on the accompanying exhibit to a mileage basis, 
the actual expense, exclusive of taxes and fixed charges, is 0.1628 per car-mile, and 
inclusive, 0.2488 per car-mile. Taking the Government's allowance for the small car, 
viz, 0.155, there is an apparent loss of 0.0938 per car-mile, and on the larger car, on 
which the Government's allowance is 0.1958, the apparent loss is 0.0530 per car-mile. 
Yours, very truly, 

Howard Abel, Comptroller. 

Brooklyn rapid transit system — Actual result of operating United States mail cars, year 

ending June SO, 1912. 

Revenue from transportation, freight revenue $40, 441. 23 

Total street railway operating revenues $40, 441. 23 

Operating expenses: 

Maintenance of way and structures 5, 159. 02 

Maintenance of equipment 3, 757. 85 

Transportation expenses 28, 273. 41 

General and miscellaneous 1, 134. 86 

Total operating expenses 38, 325. 14 

Net revenue from operation 2, 116. 09 

Mileage, 235,393. 

Expenses per car-mile, $0.1628. 

Correct: Howard Abel, 

Comptroller. 
February 4, 1913. 

The Chairman. You have no statement on the line of that pre- 
pared by Mr. Neal ? 

Mr. Piper. No, sir; I have not, but I would be very glad to have it 
gotten up, if you desire it, in that form. 

The Chairman. Would it be much trouble and expense ? 

Mr. Piper. No, sir; it can be very readily gotten out. 

The Chairman. I think it will be interesting to show the similarity 
and I will be glad if you will, at your convenience, send it to us. 

(This statement will be found at the close of Mr. Piper's testimony.) 

Mr. Weeks. Did you say the Public Service Commission of New 
York prescribes this form of preparing the cost ? 

Mr.JPiPER. Yes, sir. 

Mr. Weeks. Does a railroad commission or a similar commission 
in other States prescribe the same form ? 

Mr. Piper. I think their statement is based upon the Interstate 
Commerce Commission's statement. 



EAILWAY MAIL PAY. 161 

Mr. Weeks. I would like to ask Mr. Neal if the form he has used 
in the statement he submitted is a form which is approved by State 
railroad commissions, the Interstate Commerce Commission, or of 
public service commissions ? 

Mr. Neal. No. It is no special form. It just happens to be the 
way in which I made that statement, but it is possible from the 
account prescribed by the commission to make up the statement in 
that way. 

Mr. Weeks. Substantially that would be the form that would be 
required by the Interstate Commission ? 

Mr. Neal. They never have a reason to ask a question in this form; 
that is, as to how much it would cost to perform the mail car service. 
They simply have an account for the maintenance of equipment; 
under the head of that there will be an item that treats of mail cars, 
surface cars, etc.; they do not ask for it specifically in this way. I 
have lifted it out from a mass of certain information and condensed 
it into this form in my own way, but it is possible for any other road, 
because of the way in which the accounts are kept, to make a state- 
ment in just that form. 

The Chairman. There is a general form then, standardized by 
the approval of different public-service commissions and the Inter- 
state Commerce Commission, and you have simply elaborated your 
statement upon that form and made it specifically applicable to 
pouch and mail transportation on your line ? 

Mr. Neal. Yes. 

The Chairman. Is the general standard form an elaborate lot of 
questions, or is it merely made up of a few general heads ? 

Mr. Neal. It is quite a voluminous affair, and it does not specially 
mention mail cars, except here and there. For instance, out of 88 
operating expenses there are some 24 that are subdivisions of the 
maintenance of track, account No. 1, ballast and account No. 2, 
ties, etc. 

The Chairman. How many items in the standard form would 
there be ? 

Mr. Neal. There are 88 operating accounts. Then there are several 
revenue accounts of which only one is mail-car earnings. Then there 
are fixed charges, taxes, and things of that sort. In order to arrive 
at those taxes we have to value the cars and take the tax rate on 
them. 

The Chairman. The particular point I want is whether it would 
be worth while to take this standard form approved generally by 
the public-service commissions and the Interstate Commerce Com- 
mission and put it into the record here in this connection ? 

Mr. Neal. I think not. 

Mr. Lloyd. Mr. Piper, what was your total compensation last 
year? 

Mr. Piper. $40,271. 

Mr. Lloyd. What was the expense? 

Mr. Piper. About $58,000. 

Mr. Lloyd. That would make about 43 or 44 per cent? 

Mr. Piper. Yes, sir. In that $40,271 there is about $2,300 for 
pouch service. 

The Chairman. You received $40,271 ? 



162 RAILWAY MAIL PAY. 

Mr. Piper. Yes, sir. 

The Chairman. You estimate that your expense for the service 
was $58,000 ? 

Mr. Piper. About $58,000; yes sir. 

The Chairman. Do you think if you carried no mail whatever 
that your cost of operation would have been $58,000 less than your 
actual cost? 

Mr. Piper. No, sir. 

The Chairman. How much less ? 

Mr. Piper. That is a pretty hard thing to figure, Senator. You can 
sometimes, under your organization, put in additional divisions, as, 
for instance, putting in a small amount of freight or a small amount 
of mail, and practically operate under the same o*perating officers and 
supervision that you had before. Therefore you might remove this 
without being able to materially decrease the amount of your operat- 
ing expenses. The exact amount of that would be pretty hard to 
state. There is a certain amount that would come out immediately 
upon the taking out of the mail service. 

The Chairman. Based upon your experience and familiarity with 
the operation and accounting of your line, what, in your judgment, 
would have been the decrease in operating expenses of your line in 
dollars if it carried no mail whatever, as against the $58,000 which 
you think carrying the mail cost you ? I realize the difficulty, but 
I do not know but what you might give some information that would 
be illuminating on that particular point. 

Mr. Piper. I should say, roughly speaking, in the neighborhood 
of $45,000. I would have to check that pretty closely to make that 
statement positively. 

The Chairman. In your computations you made no allowance for 
loss of efficiency of service, so far as schedules were concerned, any 
accidents, or anything of that kind ? 

Mr. Piper. No, sir; that is not taken into consideration at all. 
There is one other thing I would like to have stated in the record in 
regard to the mail carriage. We are paid from post office to post 
office, regardless of the additional mileage we may have to make to 
get a cross-over to run back on our line or to house our cars. This 
dead mileage amounts to considerable and also in the schedules that 
are sometimes put up to us by the Post Office Department requiring 
unnecessary delays. So far as we are concerned, often our men are 
standing idle, for which we are getting no compensation, but we 
must pay them. Often a schedule will be so arranged that a man 
will stand idle for two hours before he goes out on a run. In those 
cases we have tried to get the department to help us and they have 
have tried to help us, but they have to take into consideration the 
way the mail comes to them, how they pouch it. I would like to 
further state, in reference to those independent cars, it is not merely 
the carriage of the mail that the Government gets out of. The cars 
are all racked "and they carry the clerk who racks the mail and puts 
it up in packages while he is en route and has it ready to go directly 
into the pouches at the terminal when he arrives. 

The Chairman. The racking and fitting up of the cars you do at 
your own expense? 

Mr. Piper. Yes, sir. 



KAILWAY MAIL PAY. 163 

The Chairman. Under directions or specifications supplied by the 
department ? 

Mr. Piper. Under their directions, and we are required to submit 
plans for their inspection and approval. 

Mr. Weeks. What kind of employees do you use on the mail cars ? 

Mr. Piper. We select the best motormen in the service. 

Mr. Weeks. How about the conductors ? 

Mr. Piper. We use a cheaper man, what we call a trolley holder. 
We do not call him a conductor. Pie is a cheaper man than a con- 
ductor. 

Mr. Weeks. Are they not, practically, pensioned men? 

Mr. Piper. No; we use young boys. Pensioned men can not 
handle that. The mail service is faster than the passenger service on 
the same line because they start out and catch up on the schedule 
ahead of them, so our mail service all over Brooklyn is faster than the 
passenger service on the same line. 

The Chairman. Do you know of any general plan by which you 
could improve the present method of ascertainment of your compen- 
sation ? Your criticism is that the amount of compensation received 
is insufficient to repay you for the cost of the activity. Could the 
present system of calculation by space be improved upon ? 

Mr. Piper. I do not think so. I think the only thing to be taken 
into consideration is, if you mean by your measure of space linear foot 
mile, then if you are basing your linear foot upon the width of a steam 
car, which is wider than the surface or tolley car 

The Chairman. My question refers specifically to the electric lines 
and the elevated lines. 

Mr. Piper. The clearance is practically the same in both instances. 

The Chairman. So there can be no improvement on the measure 
of the service. 

Mr. Piper. No, sir; I think that is the best method. 

The Chairman. Has there been any irritation or difference of 
opinion between the department and yourselves as to the number of 
feet used ? 

Mr. Piper. No, sir; that is absolute. That is fixed by the inside 
measure from post to post. 

Mr. Lloyd. Do you agree with the gentleman who preceded you, 
Mr. Neal, that there ought to be a fixed charge as a basis on which to 
start ? In other words, that you ought to have so much per car-foot 
mile, whether you render the service or not. 

Mr. Piper. You mean that there should be a minimum of mileage 
per car ? 

Mr, Lloyd. Yes. 

Mr. Piper. Yes, sir; because your investment must stand, and you 
must be ready for the service. 

Mr; Lloyd. Then you agree with Mr. Neal in that ? 

Mr. Piper. Yes. 

Mr. Lloyd. Then you make that exception in the statement ? 

Mr. Piper. Yes, sir; I did not understand that that was not con- 
sidered. 

Mr. Lloyd. Can you think of anything else that might be done to 
better the service and equalize the pay? 

Mr. Piper. No, sir. 



164 RAILWAY MAIL PAY. 

The Chairman. We are very much obliged, Mr. Piper, for the 
information submitted. 

Brooklyn Heights R. R. Co. — Statement giving estimated cost of operation of mail cars. 

11 mail cars now owned, 9 in actual commission. 

Mileage operated year ending June 30, 1912, 235.393 miles. 

Cents per car-mile. 

A. Car investment, taxes, interest, and insurance 1. 122 

B. Car house and shop facilities, taxes, interest, and insurance 386 

C. Power station investment, taxes, interest, and insurance 000 

D. Power transmission investment, taxes, interest, and insurance 1. 132 

E. Track investment, taxes, interest, and insurance 2. 714 

El. Overhead investment 433 

F. Cost of power, including interest on power station investment 1 2. 580 

G. Wages of car crew 6. 040 

H. Maintenance of car bodies 560 

I. Maintenance of car trucks 400 

J. Maintenance of track ■. 1. 840 

K. Wages of other transportation and car service employees and other expenses 1. 870 
L. Maintenance of line equipment, buildings, and electrical equipment of cars 1. 690 

M. General expenses 2. 410 

N. Taxes, other than property taxes included in items "A " to "E " 1. 397 

Total 24.574 

Note. — These figures are exclusive of any charge for theoretical depreciation, super- 
cession, or obsolescence, or any element of profit beyond the legal rate of interest. 
Approved. 

Howard Abel, Comptroller. 
February 14, 1913. 

A. Car investment: 

Car body, including cost of equipping $1, 469. 00 

Vestibuling. 123. 28 

2 W. H. No. 68 motors, at $375 750. 00 

2 K-ll controllers, at $130 260. 00 

1 Dupont truck 300. 00 

2, 902. 28 
For 11 cars 31, 925. 08 

Taxes, at $18.70 per $1,000 597. 00 

Insurance, at $4 per $1,000 127. 70 

6 per cent on investment 1, 915. 50 

2, 640. 20 
Investment charges per mile (on mileage operated year ending 
June 30, 1912), 1.122 cents. 
P>. Car house investment and shop facilities: 

$1,000 per car 11, 000. 00 

Interest at 6 per cent 660. 00 

Taxes, at $18.70 per $1,000 205. 70 

Insurance, at $4 per $1,000 44. 00 

909. 70 
Per car-mile (on mileage operated year ending June, 30, 1912), 
0.386 cent. 
C. Power station investment (included in cost of power). 

1 Power purchased at switchboard of producer. 



EAILWAY MAIL PAY. 165 

D. Power transmission lines: 

Cost $7, 095, 300. 00 

Mileage surface lines, $49,322,535. 

Interest, at 6 per cent 425, 718. 00 

Taxes, at $18.70 per $1,000 132, 682. 11 

558, 400. 11 
Per car-mile (on mileage operated year ending June 30, 1912), 
1.132 cents. 

E. Track investment : 

Charges taken at the average cost per mile for the entire surface 
system — 
542.602 miles, at $31,352 per mile 17, 011, 657. 90 

Mileage surface lines, $49,322,535. 

Interest, at 6 per cent 1, 020, 699. 47 

Taxes, at $18.70 per $1,000 318, 118. 00 

1, 338, 817. 47 
Per car-mile (on mileage operated year ending June 30, 1912), 
2.714 cents. 
El. Overhead investment: 

Charges taken at the average cost per mile for the entire surface 
system — 
542.602 miles, at $5,000 per mile 2, 713, 010. 00 

Mileage surface lines, $49,322,535. 

Interest, at 6 per cent 162, 780. 60 

Taxes, at $18.70 per $1,000 50, 733. 29 

213, 513. 89 
Per car-mile (on mileage operated year ending June 30, 1912), 
0.433 cent. 

F. Cost of power used, 2.58 cents. 

G. Wages of car crews: 

Year ending June 30, 1912 $14, 217. 74 

Mail-car mileage, 235,393. 
Cost per car-mile, 6.04. 

H. Cost of maintenance of mail-car bodies 1, 318. 20 

Mail-car mileage, 235,393. 
Cost per car-mile, 0.56. 

I. Cost of maintenance of car trucks 941. 57 

Mail-car mileage, 235,393. 
Cost per car-mile, 0.40. 

J. Cost of maintenance of tracks 4, 331. 23 

Mail-car mileage, 235,393. 
Cost per car-mile, 1.84. 

K. Wages of other transportation and car-service employees and expenses: Cents. 

Superintendence of transportation 0. 84 

Switchmen, couplers, flagmen, etc .35 

Car supplies , .21 

Car-house employees and expense .27 

Wrecking expenses ; .01 

Cleaning and sanding track .08 

Removal of snow, ice, and sand .06 

Operation of signal and interlocking systems .03 

Operation of telephone and telegraph systems .02 

1.87 



166 RAILWAY MAIL PAY. 

L. Maintenance of line equipment, buildings, and electrical equipment 

of cars, and miscellaneous equipment: Cents. 

Maintenance of line equipment . ' 0. 28 

Maintenance of buildings .13 

Maintenance of electrical equipment of cars .83 

Superintendence of equipment .05 

Miscellaneous equipment .40 

1.69 

M. General expenses: 

Salaries, office and general expenses .44 

Law expenses .10 

Pensions and gratuities .04 

Miscellaneous expenses .25 

Injuries and damages 1. 54 

Stationery and printing .04 

2.41 

N. Taxes: 

Special franchise $200, 930. 33 

Bridge tolls 60,731.48 

State tax on earnings 79, 444. 16 

Federal tax 40, 427. 49 



381, 533. 46 

The Brooklyn Heights R. R. Co., total car-revenue miles, 27,301,459. 

Cost of taxes per car-mile, 1.3975. 

Mail-car miles, 235,393. 

235,393 miles, at 1.3975 cents $3, 289. 62 

STATEMENT OF MR. F. C; HAMILTON. 

The Chairman. Mr. Hamilton, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you please state your full name, residence, 
age, and occupation ? 

Mr. Hamilton. F. C. Hamilton, Chicago, III.; age, 29; occupation, 
statistician, Chicago railways. 

The Chairman. How long have you been with the Chicago rail- 
ways. 

Mr. Hamilton. One year. 

The Chairman. Occupying the same position that you do now ? 

Mr. Hamilton. Yes, sir. 

The Chairman. You have had other experience, have you, in the 
railroad business similar to the Chicago railways ? 

Mr. Hamilton. Only as an accountant. 

The Chairman. How long experience have you had as an account- 
ant? 

Mr. Hamilton. Five years. 

The Chairman. You have heard the testimony of Mr. Neal and 
Mr. Piper? 

Mr. Hamilton. Yes, sir. 

The Chairman. Have you any viewpoints or comments to make 
regarding the operation of the lines with which you are connected 
and the differences in experience, other than they have testified to 
concerning their own lines ? 



RAILWAY MAIL PAY. 167 

Mr. Hamilton. Nothing, except to say that in Chicago our oper- 
ation is entirely under the supervision of the board of supervising 
engineers. We are under municipal direction, and their require- 
ments in the way of right of way and equipment have been strict, to 
an extent that our cost will be more than either of the other two 
roads whose representatives have testified. 

The Chairman. What do you estimate your cost, as compared 
with those submitted by Mr. Neal and Mr. Piper ? 

Mr. Hamilton. Our cost for the 11 months has been 25.75 cents 
per car mile. 

The Chairman. You carry mail for the Government ? 

Mr. Hamilton. Yes. 

The Chairman. What is the gross amount you received from the 
Government in compensation for mail carriage last year ? 

Mr. Hamilton. The gross amount received for the year ending 
January 31 ? 

The Chairman. The calendar year? 

Mr. Hamilton. No. The year ending January 31. The gross 
amount is $36,427. 

The Chairman. What do you figure it cost you to perform the 
service for which you received that amount ? 

Mr. Hamilton. About $55,744. 

The Chairman. Had you carried no mail at all, would your oper- 
ating expenses have been $55,744 less than they were ? 

Mr. Hamilton. No, sir. 

The Chairman. How much less than they were, do you figure 
they would be? 

Mr. Hamilton. I have not figured that out carefully. It would 
have been probably from 85 to 90 per cent. 

Mr. Lloyd. You mean from 85 to 90 per cent less or 10 to 15 per 
cent less ? 

Mr. Hamilton. Eighty-five to 90 per cent less; if we were not 
required to perform the service, we could do away with all expense 
except that due to supervision. 

The Chairman. If I understand -your answer, if you had not 
carried mail your operating expenses would have shown $53,383 less 
than they have shown ? 

Mr. Hamilton. As an estimated figure, of course. 

The Chairman. That is on the basis of 15 per cent, or 85 per cent 
reduction of what the actual operating expenses were for carrying 
the mail, according to your calculation ? 

Mr. Hamilton. Yes, sir. 

The Chairman. How do you account for that difference of from 
10 to 15 per cent in your estimated cost of operating expenses and 
the decrease in operating expenses if you had not carried any mail ? 

Mr. Hamilton. It is entirely due to the fact that the mail service 
is so small a part of our total service that we would be unable to 
reduce our supervision expenses by taking off the mail service. In 
other words, we could not divide a high-priced man's salary or take 
off a portion of it. 

The Chairman. Then the deduction of from 10 to 15 per cent is 
the charge to the mail of the overhead charge ? 

Mr. Hamilton. Yes, sir. 



168 RAILWAY MAIL PAY. 

The Chairman. The committee would be very glad to hear such 
views as you may have to express and any information you have to 
impart in this matter. 

Mr. Hamilton. Our cars at the present time are slightly over 20 
feet in size. We are being paid on a 20-cent basis. 

The Chairman. You say slightly over 20 feet. Do you mean 
inside measurements ? 

Mr. Hamilton. Yes. 

The Chairman. How much over? 

Mr. Hamilton. About 7 J inches. The department at the present 
time is requesting us to give them larger cars and better service. 

The Chairman. Do they specify how much larger cars, whether a 
25-foot car ? 

Mr. Hamilton. They wanted a 25-foot car, inside measure. 

The Chairman. What reasons did they assign ? 

Mr. Hamilton. I am unable to answer that question. 

The Chairman. Have you complied with that request at all ? 

Mr. Hamilton. No, sir; we have not up to the present time. It 
has not been made in the way of a formal request, but there is an 
intimation that the request is to be made. 

Mr. Weeks. Do you know of any reason for maintaining that 20- 
cent limit ? 

Mr. Hamilton. No, sir. I believe it was the limit fixed at a time 
when all cars used by the street railroad companies were considerably 
under 20 feet,, inside measurements. The increase of length of cars 
on the street-car lines for the last few years has been out of propor- 
tion to the increase on other roads. 

Mr. Weeks. 'Why should there be any limit at all ? 

Mr. Hamilton. There should not be any limit at all. 

Mr. Weeks. Have you heard any reasons for placing a limit ? 

Mr. Hamilton. No, sir. The limit is unfair, under the present 
conditions. I did want to call to the attention of the committee, if 
I may be permitted, the mileage for which we are paid and which we 
have to run. We are paid on the basis of 188,000 and some odd car 
miles and we were obliged to run 216,000 car miles to get that 
mileage. 

The Chairman. Explain that a little, please. 

Mr. Hamilton. It is due to the way Chicago is built up. The 
property down near our post office is entirely too expensive for car 
barns and we therefore must locate our car barns at places away from 
the post offices and all runs for which we are paid begin at the post 
office. This service back and forth must be done at our own expense. 

Mr. Weeks. Would not that be true in any place ? 

Mr. Hamilton. No. Our passenger cars would start from the 
barn and carry passengers at once. 

Mr. Weeks. Yes, but it would be true, so far as the mail service 
was concerned, in Boston, and New York, and elsewhere ? 

Mr. Hamilton. Yes, sir; it would be true in almost any city. The 
location of such stations from which the routes start would have 
some bearing on that. 

Mr. Weeks. Did you arrive at your cost in substantially the same 
way as Mr. Neal ? 

Mr. Hamilton. Yes, sir. The accounts which we use in Chicago 
are divided practically on the same lines as are the accounts of the 



KAIL WAY MAIL PAY. 169 

other street railway companies, with some few changes which the 
board of supervising engineers insists on our keeping, and every fig- 
ure we submit here is made from figures audited by the board of 
supervising engineers. 

Mr. Weeks. What is that board? Is it similar to the public- 
service commissions in other States ? 

Mr. Hamilton. Yes. 

Mr. Weeks. Is that a State board, or does it apply to the city 
only? 

Mr. Hamilton. It is a municipal board. 

The Chairman. Have you any statement to put into the record? 

Mr. Hamilton. I have no statement, nor is it the policy of the 
company to submit any statements, except those made up by the 
board of supervising engineers, and we have asked them to make a 
statement of this, which we hope you will allow us to submit. 

The Chairman. As I understand, they occupy the same position 
that the public-utility commissions do in the other cities ? 

Mr. Hamilton. Yes, sir. 

The Chairman. That is the board of engineers . for the city of 
Chicago ? 

Mr. Hamilton. Yes, sir. This statement has been made up from 
the same figures that they use, but we prefer that they make the 
statement. 

The Chairman. We will be very glad to receive that statement. 
We thank you very much for your expression. 

STATEMENT OF W. F. HAM. 

The Chairman. Mr. Ham, it will be necessary for you to be sworn. 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Kindly state your full name, age, residence, and 
occupation and the capacity in which you appear before the com- 
mittee. 

Mr. Ham. William F. Ham, vice president and comptroller of the 
Washington Railway & Electric Co., Washington, D. C. Age, 42. 
I have been connected with that company since 1899 in the capacity 
of comptroller and as vice president for about a year and a half. I 
appear as a member of the committee of the Electric Railway Asso- 
ciation on the matter of compensation and am also a member of the 
committee of the Electric Railway Accountants Association that has 
to do with the classification of accounts in connection with the 
Interstate Commerce Commission. 

The Chairman. You have heard the testimony submitted by 
Messrs. Neal, Piper, and Hamilton. Have you any testimony to 
offer showing experience or conditions on your lines different from 
those on lines operated by the gentlemen I have named ? 

Mr. Ham. The company with which I am connected does not 
operate individual mail cars, and therefore I can not give any figures 
in respect to that service. 

The Chairman. Your service is all a pouch service ? 

Mr. Ham. Ours is all a pouch service. I was furnished some 10 
days ago with a statement that was prepared by Mr. Neal and asked 



170 RAILWAY MAIL PAY. 

to go over it, criticize it, and I have made quite a careful examina- 
tion of it and would arrive at substantially the same results. I 
think his allowance for depreciation and interest would be considered 
such as would be called for by good practice. I want particularly to 
call attention to one thing which has been suggested to me by the 
questions asked by the chairman, and that is, if the carriage of mail 
were looked upon as a by-product, what effect it might have upon the 
figures that are prepared by Mr. Neal. I would say that out of his 
total expense of 23.13 cents per car mile, it would be proper to elimi- 
nate the item of track investment if it is looked upon as a by-product, 
because I do not assume that ordinarily a track would be built where 
the carriage of mail would affect it one way or the other. Therefore 
I would consider that that item should be ehminated. Also under 
the general expense as described by Mr. Hamilton, there could be a 
very small expense saved if the mail were not carried. In other 
words, the conclusion that I come to is that out of the expense of 
23.13 cents per car mile, even looking at it as a by-product, you could 
only take off about 3 cents; that the other costs are there whether 
you look upon it as a by-product or not. 

The Chairman. Have you a prepared statement presenting your 
views ? 

Mr. Ham. No, sir; I have not. 

The Chairman. What do you receive from the Government for 
the service you render, in the way of mail transportation ? 

Mr. Ham. Three cents a mile on the pouch service. 

The Chairman. What does it amount to per annum ? 

Mr. Ham. I do not recall. It is a matter of minor consequence 
and I am not appearing here particularly on behalf of my company. 

Mr. Lloyd. You appear as a member of the General Electric Rail- 
way Association ? 

Mr. Ham. Yes, sir. 

Mr. Tuttle. You have not had any of this trouble that Mr. Piper 
referred to in Brooklyn with respect to interference with }^our 
service by carrying pouch mail ? 

Mr. Ham. Not of that kind, but this is a much smaller city than 
Brooklyn. The compensation which is given for the carriage of 
pouches seems to me is on an entirely wrong theory. It stands to 
reason that we should be better compensated for carrying a number 
of pouches through this city than we should for only one pouch on 
a suburban line. The number of pouches that we carrv is proba- 
bly on an average very small compared with that carried by the 
Brooklyn Rapid Transit Co., yet we are given the same compensa- 
tion that they are. 

Mr. Tuttle. Could you suggest some system of making some 
better or different arrangements? 

Mr. Ham. I think it would be hard to lay down a rule which could 
be universally applied. You would come nearer to it by making 
some sliding schedule in cities of different sizes, because I presume 
the volume of mail would correspond to the size of the city. I also 
think that the basis of compensation on the length of a car should 
also have modifications, because the expense of operating a 25-foot 
car is not greater in the same proportion to the expense of operating 
a 16-foot car. There ought to be some standard or sliding scale, 



BAILWAY MAIL PAY. 171 

varying according to the different lengths of cars if you want it on 
a cost that would nearly represent the cost of the service. 

The Chairman. Haven't you a sliding scale where you have a 
system of 1 cent a mile ? 

Mr. Ham. That does not represent the difference in cost of opera- 
tion. For instance, if we said that it cost 16 cents to operate a 
16-foot car, it would not be true that it would cost 25 cents to oper- 
ate a 25-foot car. Certain costs would remain the same and others 
would vary. 

The Chairman. On the pouch service your position is that the 
greater the volume of business the less necessary compensation for 
the unit of business; that is, per pouch, if the pouch were a fixed 
measure.. In other words, it would be cheaper per pouch to carry 
50 pouches than it would be to carry one pouch ? 

Mr. Ham. Certainly. 

The Chairman. The greater the volume of business, the less it 
would be, in the inverse ratio. Is there any further information, 
Mr. Ham ? 

Mr. Ham. No, sir. 

The Chairman. We thank you very much. 

STATEMENT OF MR. JOHN WILSON BROWN. 

The Chairman. Mr. Brown, it will be necessary that you be sworn. 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will }^ou please state your name, age, residence, 
and occupation and the official position which you occupy with 
transportation companies ? 

Mr. Brown. John Wilson Brown, Baltimore, Md.; president of the 
Maryland Electric Eailways Co.; age, 76. 

The Chairman. How long have you been identified with trans- 
portation lines ? 

Mr. Brown. Continuously for some twenty-odd years. I really 
began when I was a young man, some fifty-odd years ago. 

The Chairman. There is an association here in the United States, 
is there not, known as the Short Line Association? 

Mr. Brown. Yes, sir. 

The Chairman. Have you an official position with that ass ociation ? 

Mr. Brown. I think I am vice president of it, but I am not certain. 
There is not much honor to it. 

The Chairman The Short Line Association represents, as I under- 
stand, a number of the short steam railroads, the shorter lines ? 

Mr. Brown. I am president also of the Maryland and Pennsylvania 
Steam Railroad. I thought your inquiry here to-day was alto- 
gether concerning the electric lines ? 

The Chairman. We would like as much information as possible 
and we desire to avail ourselves of an opportunity to get the views 
of the gentlemen before the commission. 

Mr. Brown. I came to-day rather as a listener than as a talker. 
I do not see, so far as I am concerned, that the testimony here this 
morning has been any but from the line of city delivery. My road 
is an interurban road. We just carry the mail the same as a steam 



172 RAILWAY MAIL PAY. 

road does at present and we are getting the steam railroad com- 
pensation. 

The Chairman. What criticisms or suggestions have you to make 
relative to the present method of compensation, so far as your lines 
are concerned. 

Mr. Brown. The particular criticism is that it is too low. On the 
Maryland & Pennsylvania Railroad I have had it worked up, but I 
have not had it worked up on the electric line. They are possibly 
the same. We are carrying mail at about 5 cents per hundred. 
That is not a very high rate of freight — a very low rate ol freight — 
especially when you consider that in addition to the space occupied 
by the mail you have the space occupied by the mail clerk and his 
apparatus. Then we have to furnish various other things in con- 
nection with that. 

The Chairman. Then on your lines, Mr. Brown, or those repre- 
sented by you, weight rather than space is the determining measure 
of the service rendered ? 

Mr. Brown. It is altogether that. 

The Chairman. You have no R. P. O. cars? 

Mr. Brown. We get paid nothing whatever for the operation of the 
car fitted up as a post office. 

The Chairman. Because you have no regular R. P. O. cars 40-foot 
or greater ? 

Mr. Brown. No. But that is what we claim, we short-line people, 
where we have not mail enough to put in to require a whole car. If 
a 40-foot car is worth so much money, the 20-foot part of it is worth 
a proportionate amount. 

The Chairman. Then your contention is, as I understand it, that 
the present system of compensation, a dual system of the R. P. O. 
cars for space and the general mail compensation for weight, is an 
injustice against the short lines because, on account of the 40-foot 
legal limitation, you receive no compensation whatsoever on the 
cars which you handle ? 

Mr. Brown. Yes. The road that runs a full postal car gets paid by 
the weight of the mail and the car besides. We get paid by the 
weight of the mail. 

The Chairman. Do you think if Congress enacted legislation that 
would give you compensation for the car space on the basis of the 
allowance made in your R. P. O. cars that the short-line roads would 
then get a fair compensation for the total service rendered. 

Mr. Brown. We are not satisfied under the present rate of com- 
pensation. 

The Chairman. Have you had any statistics prepared by any of 
your subordinates demonstrating accurately what your cost is? 

Mr. Brown. No, sir; I have not. Here is a statement which I 
furnished that is printed in this record. This was made up by Mr. 
Sullivan Smith, president of the Short Line Railroad Association, 
and it goes into details. 

The Chairman. Then the information contained in the prelimi- 
nary report on pages 67, 68, 69, 70, and at the top of page 71 in the 
communication by Mr. Frank Sullivan Smith, president of the Short 
Line Railroad Association, gives your views and those of the Short 
Line Association, so far as you understand them ? 



KAIL WAY MAIL PAY. 173 

Mr. Brown. Yes, sir. There is also a communication in the earlier 
part of this pamphlet by Mr. Drake, secretary of the association. 
There is a copy of the Talbott bill, which we think would be an equit- 
able bill. 

The Chairman. You think what is known as the Talbott bill would 
be a fairer treatment to the short line roads than the existing legis- 
lation ? 

Mr. Brown. That would give us fair treatment; yes. 

The Chairman. Then the Talbott bill has the approval of the Short 
Line Association, so far as you know ? 

Mr. Brown. Yes. There is one thing I would like to say in view 
of some matters that transpired here this morning. There seems 
to be an idea afloat that the United States is in a different position 
from any other shipper as regards the mail. I do not see that it is. 
The United States say they will not give more than so much money 
to the railroads, but on the other hand the railroads can say they 
will not take it at that rate, but the United States can not say that 
we must take it. 

The Chairman. Do you not think that the United States can com- 
pel the railroads to carry the mails, provided the rate determined is 
not confiscatory ? 

Mr. Brown. No, sir; I think not, sir. They have no right to come 
in ahead of everybody else, for the very fundamental principle of the 
interstate law is that every shipper is on the same basis. As a shipper 
the United States do not come as a paramount landlord. 

The Chairman. Then, eliminating the legal question, do you not 
think as a matter of policy the transportation companies should 
take the mail at less compensation than they conduct the ordinary 
business ? 

Mr. Brown. They might do that, but not take the mail as a grati- 
tuity to the United States; not take it if they do not pay them. 

The Chairman. Have you seen any expression from anybody 
indicative that it would be advisable, if possible, to get the trans- 
portation companies to carry the mail for nothing ? 

Mr. Brown. Well, that is what they are doing. 

The Chairman. Carrying it for notning ? 

Mr. Brown. These gentlemen who testified here this morning said 
they were carrying it for nothing. 

The Chairman. I hardly think the testimony we heard this morn- 
ing is capable of that deduction. 

Mr. Brown. The expenses are more than they receive. Is not 
that carrying it for notning ? 

The Chairman. No. 

Mr. Brown. Well, we may differ in terms, but if I put a dollar 
into one pocket and take out of the other pocket $2 for the same 
business, I am doing that business for nothing. My position is that 
the railroad is a partner with the country that it serves, and I have 
ordered things carried for nothing when 1 had a disputation of rates 
with a contesting line, because I thought it was for the good of the 
country. I never let the farmer wait for the matter of a settlement 
of rates. Take manure, for example, and I will cite an illustration: 
I was once carrying a lot of manure for the farmers in Anne Arundel 
County. They were getting it by the Pennsylvania Kailroad and the 
Pennsylvania "Railroad suddenly raised the rate to the junction 
49396—14 19 



174 RAILWAY MAIL PAY. 

point to the amount of the rate at the delivery point. I directed 
our people to carry it for nothing for the farmer, but we got the rate 
fixed all right, and we never said anything to the farmer about it. 

The Chairman. There were two" reasons for that, competition 
with the Pennsylvania Railroad for one ? 

Mr. Brown. No; there was no competition. 

The Chairman. The reason was that it would pay you to carry it 
for nothing because you would get an indirect benefit"? 

Mr. Brown. That is another matter, but that is where the part- 
nership comes in. 

Mr. Weeks. What are the terminals of the steam railroad with 
which you are connected ? 

Mr. Brown. Baltimore and York, Pa. 

Mr. Weeks. And the trolley line ? 

Mr. Brown. Baltimore and Annapolis. 

Mr. Weeks. Are the services exactly similar? 

Mr. Brown. Substantially similar so far as the mails are concerned. 
I do not see any reason to draw any distinction between them. 

Mr. Weeks. On which road can you carry the mail the cheaper? 

Mr. Brown. We can carry them cheaper on the steam roads. You 
can carry anything cheaper on a steam road. 

Mr. Weeks. Why? 

Mr. Brown. Because it is more expensive to operate trolley lines. 
If you would give many steam roads in the country for their income — 
that is, their gross receipts — what the trolley lines are paying for their 
gross expenses, per mile, they would be very glad to get it. It is 
shown in statistics. 

Mr. Weeks. Why did you change ? 

Mr. Brown. That is another matter. I did not do it. 

Mr. Weeks. Why did you change the service from steam from 
Baltimore to Annapolis ? 

Mr. Brown. On account of competing lines. They do better by 
steam. These electric people tell you that if you turn a road into 
an electric line you will multiply your receipts three or four times. 
That may be so in some cases. 

Mr. Lloyd. How does it happen, if it costs more to run an electric 
road than a steam road, that the passenger rate is usually about one- 
half on the trolley road of what it is on the steam road ? 

Mr. Brown. Well, I do not know that that is a fact where they are 
under the same conditions. You are speaking now of the trollev 
road being a city road where there is a great concentration of travel. 

Mr. Lloyd. No ; I do not mean that. Take, for instance, Indian- 
apolis — you can go out from that city for 100 miles in almost any 
direction on a trolley for about two-thirds of what you pay on a 
steam road. 

Mr. Brown. I know some trolley fines that do that same thing 
that come out short in the end. 

Mr. Weeks. Is not that pretty nearly universal? 

Mr. Brown. I do not know. 

Mr. Weeks. Would you be satisfied if you were paid the same 
compensation on the road from Baltimore to York that you receive 
for the service on the Annapolis road ? 

Mr. Brown. We are charging the same rate between Baltimore 
and Annapolis on the trolley road that we did on the steam railroad. 



RAILWAY MAIL PAY. 175 

Mr. Weeks. I am talking about the mail. 

Mr. Brown. I do not know. What was your exact question ? 

Mr. Weeks. My exact question was: Would you be satisfied if 
you would receive the same compensation for carrying the mail 
between Baltimore and York on the steam road that you receive for 
carrying it on the trolley between Baltimore and Annapolis? 

Mr. Brown. Well, we are under the same basis on that, the same 
scale. We have never changed since we changed into a trolley road. 
We give an apartment on the car and run it the same way. 

Mr. Weeks. I supposed you were receiving a compensation on the 
Baltimore & Annapolis Railroad? 

Mr. Brown. The basis you have been talking about this morning 
is a city basis where you run cars frequently and pretty much all of 
the time. As to this bill submitted by the Postmaster General, that 
strikes us as being wrong all the way through. The general principle 
of the bill, in the first place, is that it puts the whole matter of deter- 
mining the question in the hands of the Postmaster General. It 
gives a maximum above which he can not go, but it does not require 
him to pay that maximum, but he can dicker with every railroad in 
the country under the terms of that bill. 

Mr. Weeks. Why shouldn't he? 

Mr. Brown. That ought to be fixed by law. It ought not be put 
in the hands of any Government servant. 

Mr. Weeks. Then why not hx freight rates by law? 

Mr. Brown. You do. The Interstate Commerce Commission 
fixes them so far as the interstate trade is concerned. The State 
commissions fix the rates so far as the States are concerned. 

Mr. Weeks. Is there any other reason why you should carry the 
mails on exactly the same basis that you carry the freight ? 

Mr. Brown. Put them in in the same way. 

Mr. Weeks. Suppose you went to the Postofnce Department and 
tried to make an agreement for carrying the mails between Baltimore 
and York and you made one that was satisfactory to you. You wall 
go ahead and conduct that service. Suppose it is not satisfactory 
to you and it is submitted to the Interstate Commerce Commission. 
Would that be a satisfactory method of procedure, from your view- 
point ? 

Mr. Brown. Well, that is exactly what this bill calls for. 

Mr. Weeks. That is what would happen in the case of freight, 
or if you are doing business with anyone else than the Government. 

Mr. Brown. It is hardly right that the executive Government 
should be the shipper and the judge of the freight rate at the same 
time, for the Government is an interested party. 

Mr. Weeks. It is impossible to avoid that, and I think we could 
trust the Interstate Commerce Commission to be fair. 

Mr. Brown. You could give us a chance to go to the courts on it. 
I suppose the courts would have a chance, anyhow? 

Mr. Weeks. You can go to the courts now under the railroad rate 
law? 

Mr. Brown. Not under this bill. The Interstate Commerce Com- 
mission is final. 



176 KAIL WAY MAIL PAY. 

Mr. Weeks. What I am trying to ask you is, do you see any rea- 
son for a difference of method in carrying the mail and carrying the 
freight ? 

Mr. Brown. It is a different class of carriage. If you dump your 
mail pouches into a freight car it will go as freight. 

Mr. Weeks. I mean in the manner of reaching a proper compen- 
sation. 

Mr. Brown. Well, you can not reach it on a freight rate when you 
are carrying it not only as a passenger but as a passenger in an apart- 
ment. 

Mr. Weeks. I am not talking about passengers, but I am talking 
about freight. If you and a shipper in Baltimore do not agree on a 
freight rate between Baltimore and York the case goes to the Inter- 
state Commerce Commission ? 

Mr. Brown. Yes. 

Mr. Weeks. Why should you not do the same thing with the mail ? 

Mr. Brown. Oh, I do not know. Because the Government wants 
you to make a contract for it. 

Mr. Weeks. Suppose the Government did not want a, contract, but 
wanted to proceed in the same way, as, for instance, say it wanted 
some guns carried from an arsenal to the coast. Then it makes an 
arrangement with the railroad companies to conduct the service? 

Mr. Brown. Yes; and the rate is made according to the require- 
ments of that particular service. 

Mr. Weeks. Would it not be so in the carrying of the mail ? 

Mr. Brown. I do not know but what it would be proper to submit 
it to the commission if you gave the railroads a chance to go before 
the commission, too. In this bill of the Postmaster General there 
is no chance for the railroads to appear before the commission. I 
noticed that some of the replies to the circular issued by Senator 
Bourne talked about an appeal, but there is nothing there of an ap- 
peal in this bill. 

Mr. Weeks. Well, you have an appeal under the general law, so 
far as the Interstate Commerce Commission is concerned ? 

Mr. Brown. But this does not come under the Interstate Commerce 
law. Post-office matter is different matter. There never , has been 
any business in that line that came under the ordinary railroad busi- 
ness. 

The Chairman. Are there any other viewpoints that you would 
like to present ? 

Mr. Brown. There seems to be nothing provided in the law, as 
it stands, to pay the railroads for the parcels post for these six 
months. 

The Chairman. There is nothing in the present law, of course, 
with reference to that. 

Mr. Brown. How are you going to pay them by a subsequent law? 
I have written to the Second Assistant Postmaster General in answer 
to a circular, with reference to our quadrennial weighing, asking him 
if they could not make a provision for a separate weighing of the 
parcels post, because from the weighing that takes place this winter 
the rate begins from the 1st of July. If you do not take some weigh- 
ing of the parcels post, you do not get any pay for that for these six 
months, and unless you have a weight, how would Congress know? 
They would have nothing to base it upon for subsequent legislation. 



KAILWAY MAIL PAY. 177 

It would require a special appropriation. Since that time I know of 
one postmaster on our line who has been directed to weigh the parcels 
post, but I think that is the only one. 

The Chairman. What is the size of that office ? 

Mr. Brown. It is the Largest office on the line. I assume that that 
was for information as to what the probable increase in business would 
be due from what is known as the parcels post bill in fixing the weight 
limit and decreasing the average of rates on fourth-class mail matter. 
This January the express business has been increasing, so the parcels 
post has not hurt them whether it has taken anything away from 
them or not. 

The Chairman. I will say that the Senate committee have that 
^ery question under consideration now, in the study of the post office 
appropriation bill. What the action of the committee and the action 
of Congress will'be, I will not assume to state. 

Mr. Brown. Just as I said awhile ago, with regard to commodities, 
sometimes they carry them for nothing. I told Mr. Stewart we would 
not make any trouble, that we would carry it and render the service 
to our patrons whether we go paid for it or not, but we are breaking 
the Interstate Commerce law by doing it. 

The Chairman. We thank you very much for your views. 

Thereupon, at 1.15 o'clock p. m., the hearing was adjourned until 
Wednesday, February 12, 1913, at 11 o'clock a, m. 



WEDNESDAY, FEBRUARY 12, 1913. 

Joint Committee on Second-Class Mail Matter, 

Washington, D. G. 
The hearing was resumed, according to adjournment, at 11 o'clock 
a. m. 

Present: Senator Jonathan Bourne, jr., (chairman); Senator 
Harry A. Richardson; Representative James T. Lloyd; Represen- 
tative William E. Tuttle, jr. ; and Representative John W. Weeks. 

STATEMENT OF MR. RALPH PETERS. 

The Chairman. Mr. Peters, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. You have, as I understand, some supplemental 
statements to make before the committee, in accordance with the 
understanding we had at our last meeting. 

Mr. Peters. In view of the information that you have asked for, 
Mr. Chairman, we have endeavored to prepare these statements. 
The first is in regard to the value of the railroad property used in 
connection with the mails and I have a brief statement here which 
I will read in that regard showing the allowance that should be put 
into cost to cover the interest on the property. 

Although the Postmaster General's estimates of the operating 
expenses and taxes chargeable to mail transportation are too low 
further consideration of Document No. 105 may be based upon the 



178 



RAILWAY MAIL PAY. 



hypothesis that they are correct. On this assumption railway mail 
pay is too low if a reasonable return upon the fair value of the prop- 
erty used would exceed $11,253,866.15. 

First. The Postmaster General's computations led to the follow- 
ing (Doc. No. 105, revised issue, pp. 280-281): 

Railway mail pay in November, 1909 . $3, 607, 773. 13 

Operating expenses and taxes chargeable to mail transportation, same 
months 2, 682, 797. 92 

Balance, available for return on investment 924, 975. 21 

There are 30 days in November so that $924,975.21 for the month 
is equivalent to $30,832.51 per day. Multiplied by 365 this gives 
$11,253,866.15 as the annual sum available for a return upon the 
fair value of the property used. 

Second. No valuation of the railway property used in the mail 
service has ever been made nor has there ever been any general 
valuation of all the railway property of the United States. Valua- 
tions made under State authority support the conclusion that the 
real value of railway property exceeds the par value of all the out- 
standing stocks and bonds. The following table was originally 
published by Mr. Slason Thompson, of Chicago : 



State. 



Value, as 
stated by com- 
mission or tax 
board. 



Capitalization. 



Minnesota j $411, 735, 194 



South Dakota 
Wisconsin . . 

Texas 

Washington 



Total. 



Excess of total valuation over total capitalization. 



106, 494, 503 
284,066,000 
413,000,000 
186,007,490 



$334,979,691 
108,911,000 
249,299,060 
412, 465, 743 
153,493,940 



1,401,303,187 1,259,049,434 



142, 253, 753 



Mr. Weeks. Has that valuation in each of those cases been by 
careful appraisal of the property, or is it an estimate based on stock 
and bonds ? 

Mr. Peters. I do not know. This statement of valuation was 
published by the commissions or tax boards of the States named, 
but whether they were a full, complete valuation or an estimated 
valuation, it is the valuation as fixed by those five States — Minne- 
sota, South Dakota, Wisconsin, Texas, and Washington. 

The Chairman. Your idea in inserting this is to show the difference 
in the valuation placed by different boards or commissions on prop- 
erty as compared with the capital and bonded indebtedness. 

Mr. Peters. It is to back up the statement made at the beginning 
of the second paragraph to the effect that values, as a rule, where 
they have been made, show that they exceed the par value of the 
outstanding stocks and bonds. While the information for Washing- 
ton is given in the same way, the total valuation for the five States, 
as stated by the tax board, is $1,401,303,000, while the capitaliza- 
tion given for those States is $1,259,000,000. 

Mr. Weeks. You take the capitalization as the par value of the 
stocks and bonds ? 



RAILWAY MAIL PAY. 179 

Mr. Peters. It is taken as the par value of the stocks and bonds. 

It is therefore reasonable to assume that the present value of the 
railway property of the United States exceeds its net capitalization. 
The Interstate Commerce Commission has stated (Report on Sta- 
tistics of Railways for 1910, p. 52) that the aggregate net capitaliza- 
tion of the railway property of the United States on June 30, 1910, 
was $14,338,575,940. 

Third. Assuming, then, that $14,338,575,940 was the true value of 
American railway property at the time covered by the investigations 
reported in Document No. 105, it is reasonable to conclude that the 
mail revenues of the railways ought to have afforded them a fair 
return on such proportion of their property as the total of those 
revenues bears to the total receipts from operation. The operating 
revenues of 1910 amounted to $2,750,667,435 (Statistics of Railways 
for 1910, p. 69) and the mail revenues to $48,913,888, or 1.78 per 
cent of that amount (Statistics of Railways for 1910, p. 71). Hence 
it may be concluded that the mail service ought to produce, in addi- 
tion to operating expenses and taxes, a fair return upon 1.78 per 
cent of $14,338,575,940; that is to say, upon $255,226,651.73. Cer- 
tainly no one would suggest a lower rate of return than 5 per cent per 
annum. This minimum rate would, however, require $12,761,332.59, 
or a sum considerably larger than the $11,253,866.15 which, even 
accepting the unreasonably low figures of the Postmaster General as 
the true cost of operation and taxes, is all that is left from present 
mail revenues after paying those out-of-pocket expenses. Six per 
cent would require $15,313,599.10 annually, 7 per cent would require 
$17,865,865.62, and 8 per cent would require $20,418,132.14. 

Fourth. The Postmaster General estimated (Document No. 105, 
p. 280) that, out of total railway expenses for operation and taxes of 
$137,355,150.79, the mail service should be charged with $2,682,797.92, 
or 1.95 per cent. It would certainly be reasonable to conclude that 
the portion of the total value of the property on which the mail 
revenues should produce a fair return is the same. But on this 
hypothesis the mail pay would have to bring in a return on more 
property value than that ascertained by the calculation in the third 

Earagraph herein, and the present deficiency in mail revenues would 
e still greater. 

These are merely illustrations showing what should be included as 
the proper interest return on the value of the road. 

The Chairman. In your opinion. 

Mr. Peters. In our opinion, and we have put it in this shape so 
that it could be easily read and understood. 

Fifth. If it should be assumed that property value should be 
assigned to the passenger-train services in the proportion that the 
mileage of passenger trains bears to the mileage of all revenue trains 
and the property so assigned distributed among the passenger, express, 
and mail services in accordance with the space required on such trains, 
a still high proportion of the property would appear to be entitled to 
a fair return out of mail revenues. This would be so, even if the 
Postmaster General's erroneous allotment of space to the mail 
service were accepted as sufficient for the purposes of such a calcu- 
lation. 

Sixth. It has been stated herein that no one would suggest a lower 
rate of return than 5 per cent per annum. It is not believed that 5 



180 RAILWAY MAIL PAY. 

per cent would be considered high enough if the matter were to be 
submitted to the United States courts. Six per cent is the common 
rate of interest allowed upon judgments throughout the United States 
although in some States it is as high as 8 and even 10. Real estate 
mortgages, having absolute security, are rarely written at less than 5 
per cent, even in the largest eastern centers of wealth and population; 
7, 8, and 10 per cent are common in large sections of the country. 
The railroad commission of the State of Washington has recently 
allowed 8 per cent on property subject to its jurisdiction. 

In Wilcox v. Consolidated Gas Co., decided on January 4, 1909, the 
Supreme Court of the United States, in a unanimous opinion delivered 
by the late Mr. Justice Peckham, said : 

There is no particular rate of compensation which must in all cases and in all parts 
of the country be regarded as sufficient for capital invested in business enterprises. 
Such compensation must depend greatly upon circumstances and locality; among 
other things, the amount of risk in business is a most important factor, as well as the 
locality where the business is conducted and the rate expected and usually realized 
there upon investments of a somewhat similar nature with regard to the risk attending 
them. There may be other matters which, in some cases, might also be properly 
taken into account in determining the rate which an investor might properly expect 
or hope to receive and which he would be entitled to without legislative interference. 
The less risk, the less right to an unusual return upon the investment. One who 
invests his money in a business of a somewhat hazardous character is very properly 
held to have the right to a larger return, without legislative interference, than can be 
obtained from an investment in Government bonds or other perfectly safe security. 
The man that invested in gas stock in 1823 had a right to look for and obtain, if possible, 
a much greater rate upon his investment than he who invested in such property in 
the city of New York years after the risk and danger involved had been almost entirely 
eliminated. (212 U. S., 19, 48, 49.) 

It is extremely significant that, after thus finding that risk was 
"almost entirely eliminated," and, further, that the company was 
"secure against competition" (212 U. S., 49) and that "it seems as 
certain as anything of such a nature can be that the demand for gas 
will increase' 7 (212 U. S. 49), the Supreme Court should have said: 

Taking all facts into consideration, we concur with the court below on this question, 
and think complainant is entitled to 6 per cent on the fair value of its property devoted 
to the public use. (212 U. S., 19, 50.) 

In other words, it was held that if the statute attacked in the case 
then at bar had allowed the gas company less than 6 per cent per 
annum on the fair value of its property it would have been confisca- 
tory and, therefore, unconstitutional and void. No one who com- 
prehends the circumstances of that case can doubt that the same 
reasoning, applied to a business subject to such varying territorial 
conditions and such extreme vicissitudes, hazards, and fluctuations 
as the railway industry of the United States, would not require a 
higher average return than 6 per cent per annum. 

The Chairman. Mr. Peters, the statement that you have just 
presented, as I understand, is for the purpose of showing what, in 
your opinion, would be a reasonable rate on the capital charges ? 

Mr. Peters. Yes. 

The Chairman. Are you prepared to demonstrate that under the 
existing method of railway-mail pay, you are receiving none of that 
on your capital charges ? 

Mr. Peters. In the majority of cases that is true. 

The Chairman. Which. 

Mr\ Peters. That we are receiving no return upon capital. 



KAIL WAY MAIL PAY. 181 

The Chairman. In other words, that your present compensation 
in the majority of cases simply represents the cost of the activity 
with no allowance for capital charges incident to the performance 
of the activity. Is that it ? 

• Mr. Peters. That is correct, although we start out in the beginning 
of that statement and say that granting Document 105 is correct, 
the allowance they make there does not cover by at least $1,000,000 
what the railroads should have on the net valuation at 5 per cent, 
and that at 6 per cent it does not cover by at least $4,000,000 what 
the railroads should have on the net valuation, taking the figures as 
given in Document 105. 

The Chairman. In your association, representing 214,000 of the 
250,000 total mileage of railroads in the United States, are there 
many companies able to demonstrate that out of the actual compen- 
sation they receive from the Government for railway mail pay, they 
are making a loss and demonstrate that they are receiving no allow- 
ance on the capital charge of the operation ? 

Mr. Peters. The vast majority of the companies claim to have 
shown that in their individual reports,- from which Document 105 
was compiled. The statement of the Long Island Kailroad, which 
is published in your preliminary pamphlet, shows that we do not in 
any way get the full amount that the mail service costs us, much less 
getting anything toward paying an interest on the capital invested. 

The Chairman. You think, then, that given the gross amount 
received from the Government, you can demonstrate in a majority 
of instances that the compensation received does not pay the cost 
of hauling the mail — that is, the actual cost of the hauling? In 
other words, that it would be advantageous, from a dollar standpoint, 
for you to refuse to haul the mail rather than continue hauling at 
the rates you receive from the Government at the present time ? 

Mr. Peters. That is correct. Such information is shown in Doc- 
ument 105. 

The Chairman. You have some other statement to present? 

Mr. Peters. We would ask to present a bill, which, in our opinion, 
would remedy our difficulty. Our committee have all felt that we 
could stand by the present law, provided it could be amended, and 
in our draft we have endeavored to make that amendment as simple 
and as brief as possible. That is what we have suggested here. 

A BILL To provide for the transportation of parcel-post matter, to amend existing laws relative thereto, 
and to equalize pay for mail service on railroad lines. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That the proviso in the act of March third, nineteen hundred 
and five, "That hereafter, before making the readjustment of pay for transportation of 
mails on railroad routes, the average weight shall be ascertained by the actual weighing 
of the mails for such number of successive working days, not less than ninety," be and 
the same is hereby repealed, and that hereafter such weighings shall be simultaneous 
on all railroad mail routes not less frequently than once in each year; and the Post- 
master General is hereby authorized and directed to require a railroad mail carrier 
to provide for the carriage of the mails between its trains and a post office or postal 
station only where such post office or postal station is located in a railroad depot or 
station of such carrier, and the Postmaster General is hereby authorized and directed 
to pay for space used as railway post offices in apartment cars in proportion to the present 
rate allowed for postal cars sixty feet in length. 

The Chairman. As I understand, Mr. Peters, this suggested bill 
represents the views of the association of which you are chairman, 



182 E AIL WAY MAIL PAY. 

and if enacted into law would, in your opinion, remedy what from 
your viewpoints are apparent present injustices. It would give you 
annual weighing, eliminate the side service, and give you an allow- 
ance on apartment cars under 40 feet ; it would fix the weight as the 
measure of service rendered, as at present, in 90 per cent of the mail 
carried. 

Mr. Peters. Yes. 

The Chairman. Are you all agreed upon this bill as being all in the 
way of legislation which, in your opinion, is necessary to do justice 
for the transportation companies, from your viewpoint ? 

Mr. Peters. The short lines, I understand, would like to have the 
rates changed on the minimum light weight roads ; that is, the 
minimum weight per mile per annum. 

The Chairman. Some of their representatives are present? 

Mr. Peters. Some of them are here, but we feel under this amend- 
ment the money received by the railroads for carrying the mails would 
not have to be all paid out for messenger service or special facilities 
furnished; that we would be more nearly compensated for the expense 
we are subjected to and it would come as near making reasonable 
compensation for the roads as anything we could possibly hope to get, 
although it does not, in every case, fully compensate each road. 

The Chairman. Is it possible to evolve a general plan, universal in 
its application, that will fully compensate each road? 

Mr. Peters. We have felt that it would not be. 

The Chairman. What, in dollars, would the adoption of this legis- 
lation mean in the way of increased pay to the transportation com- 
panies on the part of the Government ? 

Mr. Peters. As we have discussed this here before, I can not say 
from calculations made by myself, but from the best information I 
would gather in our discussions, it would make a difference of about 
$4,500,000 in the pay for apartment cars and make somewhere 
between two million and three million increase in the revenues, due 
to the annual weighing, or pay for the natural growth of the mail. In 
other words, something between $6,500,000 and $7,500,000. Besides 
this it would save the railroads in expenditure for terminal and mes- 
senger service, about $4,300,000. 

The Chairman. But the Government would have to pay that, 
instead of the railroads, as at present, if that estimate is correct, 
would it not ? 

Mr. Peters. That is my understanding from a report made by the 
Second Assistant Postmaster General in some document, which I 
can not now recall, that the estimated cost of this service, if per- 
formed by the Government would amount to about $4,300,000. I 
can not say positively that the railroads could save that entire 
$4,300,000, but they would save a large proportion of it. 

The Chairman. This is true, is it not. If the railroads now have 
to bear a certain expense for the service rendered and the duty of 
that service was transferred from the railroads to the Government 
the cost of that service would be borne directly by the Government 
instead of by the railroads as at present. It is that which you seek 
to be relieved from ? 

Mr. Peters. Yes. 

Mr. Weeks. Is it not true that that entire service is performed by 
employees of the railroads ? 



RAILWAY MAIL PAY. 183 

Mr. Peters. No; some portion of it is so performed. 

Mr. Weeks. What part of it do you think is performed by em- 
ployees of the railroad who are under fixed compensation and whose 
compensation would not be changed if they did not do this work ? 

Mr. Peters. In a very large number of cases, on many railroads, 
special messengers are employed for carrying the mails between the 
local station and the post office. In some cases that service is per- 
formed by employees who perform other service and we would not 
save that entire expense, but we would use those men entirely for 
railroad service and not for carrying the mails. As I understand, the 
most burdensome part of this messenger service is where the railroads, 
in certain cases as are shown in this preliminary pamphlet, for instance 
on the L. & N., have to pay out from $300 to $900 a year for wagon 
service between their terminal and the post office. There are very 
marked cases of that kind all around the country. In the case 
cited by the L. & N. — and it is the case with many other roads — 
they show the length of the road is counted not to the station but to 
the post office; mails are handled to the station by train and then 
special contracts are made for wagon service from the station to the 
post office, which is, in many cases, three or four times the amount 
of compensation that the railroad gets by having that distance 
included as constructive mileage for the railroad. All that would 
be a saving to the railroad. 

The Chairman. In this estimate of side service have you made a 
segregation of the compensation that the employees receive, charging 
in this computation the actual time that it takes for side service, or 
crediting him in the computations for the actual time that he devotes 
to the railroad service outside of the side service ? 

Mr. Peters. We attempted to do that in the report made to the 
Postmaster General for November, 1909 ; but I understand it was not 
fully given, or given to the satisfaction of the department, and the 
information was not all tabulated. The estimate of $4,300,000 was 
taken from a document that was put out by the Post Office Depart- 
ment, which I can not refer to at this present time. That is a matter 
we can have very carefully checked up and reported upon later if 
that is the desire of the committee. 

Mr. Lloyd. If this bill of yours were to become a law, as I under- 
stand you, it would cost the Government a little over $11,000,000 
more annually to transport the mails than it does now. 

Mr. Peters. No. I said it would cost the Government between 
$6,500,000 and $7,500,000, and that they would be subjected to other 
expense. 

Mr. Lloyd. The Government would have to pay this $4,300,000. 

Mr. Peters. Then, in that event, it would amount to between 
$10,500,000 and $11,500,000. 

Mr. Weeks. Would it not cost the Government more than 
$3,400,000 to perform that service which is now performed by the 
railroad ? 

Mr. Peters. No; I do not believe it would. I think they could 
arrange to compensate the railroad for the actual cost of the service. 

Mr. Weeks. When you take into consideration the fact that very 
much of the service is now performed by the station employees, who 
otherwise would not be doing anything, do you not think that it would 
probably cost the Government more than it costs the railroad now? 



184 RAILWAY MAIL PAY. 

Mr. Peters. I can not definitely answer that. As I stated, the 
figure of $4,300,000 given by us was taken from some document issued 
by the Post Office Department. That was their estimate of what 
this messenger service would cost them. 

Mr. Weeks. What roads were you connected with before you be- 
came president of the Long Island ? 

Mr. Peters. I have been with the Pennsylvania and its lines all my 
life. I was on the Pennsylvania lines west of Pittsburgh, at Pitts- 
burgh, Chicago, Cincinnati, and Columbus. 

Mr. Weeks. Were you familiar with the mail service performed by 
the Pennsylvania Railroad ? 

Mr. Peters. Only in a general way. I did not pay much attention 
to the details of it until I got into this committee work. I had studied 
it very thoroughly on the Long Island, and I presented a petition for 
relief some six or eight years ago. 

Mr. Weeks. Do you not think the Pennsylvania Railroad makes a 
reasonable profit in carrying the mails ? 

Mr. Peters. I do not believe they do. We have their representa- 
tives here, and they are prepared to give you detailed information in 
regard to that. 

Mr. Weeks. In your own case of the Long Island Railroad, you 
have, I think, very successfully demonstrated that you are not getting 
reasonable compensation. Would you be willing to leave that ques- 
tion to the Interstate Commerce Commission to determine what you 
should receive for transporting the mails ? 

Mr. Peters. Yes; I think I would. 

Mr. Weeks. Do you think that could be done in other cases so that 
a fair arrangement could be made as between the railroads and the 
Government to determine the proper rate to be paid ? 

Mr. Peters. I think the commission has its hands pretty full at the 
present time; and if they were to investigate the matter and attempt 
to determine the rates, it would have to be done by some subordinate 
committee or commission. 

Mr. Weeks. That is not an ans ver to the question, because the 
commission might be enlarged. Assuming that it hasn't its hands full 
and has plenty of time to pass on such questions, what do you think 
would be the case ? 

Mr. Peters. As the commission is placing upon itself, and has 
placed upon it by the laws, the responsibility for the railroads, since 
it has to pass upon all rates, I should think it would be fair to let them 
pass upon a rate for handling the mails. 

Mr. Lloyd. And handling express matter, too. 

Mr. Peters. They are passing upon that, too; but the rate there 
is first suggested by the express companies and then the reasonable- 
ness of the rate is passed upon by the commission. As I understand 
the law, the commission does not originate any rates; the rates are 
made by the railroads and reviewed by the commission. 

Mr. Lloyd. You would be willing, as I understand you, to have 
the Government iix the rates and the question of its reasonableness 
might be submitted to the Interstate Commerce Commission ? 

Mr. Peters. In this case I am perfectly willing to have a reason- 
able commission, like yourselves, fix the rate, because I think you 
will endeavor to do what is fair to both sides. 



BAIL WAY MAIL PAY. 185 

Mr. Weeks. Is not the Interstate Commerce Commission the best 
independent authority on such matters? I did not intend to ask 
you whether you would be willing to do this, but I am trying to get 
your idea of what the results would be if it were done. 

Mr. Peters. I think the railroads should be asked first to make 
their rates, and then have the reasonableness of the rates passed 
upon by the commission. 

Mr. Weeks. That is exactly what I intended to ask you. 

Mr. Peters. I did not intend to suggest that the commission should 
make the rates, but if there were a disagreement between the depart- 
ment and the railroads that it should be referred to the commission. 
That is what I had in mind. The difficulty in this matter is that it 
is to make a rate for performing a function for the Government, the 
handling of the mails, an universal service under universal conditions. 
It is not like making the ordinary rate on a small commodity. Your 
service has to be performed alike for all sections, for all parts of the 
country, and the pay is to be arranged on a uniform basis on all 
roads. 

Mr. Weeks. Should it? That is the point I want to get at. It 
seems to me that this service is very dissimilar in its cost and in its 
character and that a rate that will pay a reasonable compensation to 
some of the roads will pay excessive compensation to others, or a 
rate that would be reasonable compensation to the others would pay 
insufficient compensation to the short-line railroads, for instance. 

Mt..Peters. It is possible to make a rate, you might say, on each 
railroad, but you would discriminate; you would be paying one rail- 
road, owing to its condition, location, and everything, on one basis, 
while another road parallel, not necessarily parallel, but in another 
section of the country, on a very much higher basis, and there could be 
claim there for discrimination, and that you are not treating all of 
your people alike. 

Mr. Weeks. Very likely that is true, but should you not be paid a 
higher rate for service on the Long Island Railroad, for instance, 
than a similar service on the Great Northern Railroad in Montana, 
where there are very few stations and the measure of the service and 
the facility of the service amount to practically nothing? 

Mr. Peters. The relief from the messenger service will remove that 
objection. The increase in weight would perhaps remove that, 
although it might not in every case do so. For instance, we have here 
one road that is 115 miles in length that gets fair compensation under 
the present basis, its mail all being handled in postal cars and con- 
centrated loads. Then we have other cases we know of where they 
get a very fair compensation on account of practically 60 or 70 per 
cent of the mails being concentrated on one train over a very long 
route. Those are the exceptional cases. On many of the small 
mail routes with light weight so much of the receipts of the Govern- 
ment has to be paid out for messenger and terminal service and for 
special expenses that it has been very burdensome. I do not believe 
you can in every case compensate absolutely every individual road 
for the handling of the mails without getting such a diversified system 
of rates on the mail business that it would prove very unsatisfactory 
and a constant source of dissatisfaction or litigation. 



186 RAILWAY MAIL PAY. 

Mr. Weeks. You do not have any litigation in freight rates, and 
there are hundreds and thousands and tens of thousands of different 
freight rates. 

Mr. Peters. I think the records show those are in constant litiga- 
tion before the commission now. 

Mr. Weeks. In constant dispute, quite likely, but not in constant 
litigation. 

Mr. Peters. Prior to the institution of the Interstate Commerce 
Commission I think there was a great deal of litigation on that 
account. The railroads have lived under the mail pay law of 1873 
and have cooperated with the Post Office Department in building up 
a wonderful service and were reasonably well satisfied with the com- 
pensation they were paid from the mails until this continual reduction 
of pay was undertaken. I think if we returned to the basis that we 
had, or continue the present basis, after making these corrections, 
that the railroads would be very well satisfied, preferring to live under 
the conditions that we know all about than to undertake something 
which we do not know anything about. I have figured that under 
this amendment the Long Island Railroad should get about $85,000 
or $90,000 a year instead of $43,000. We really ought to have about 
$165,000 a year in order the give us a full return on the property. 

The Chairman. Please elaborate on that $165,000 a year propo- 
sition. 

Mr. Peters. I haven't my figures here with me, but they are in 
some reports which I think are on record. 

The Chairman. Let me ask you this: Have the railroads, so far as 
you know, in their accounting had an account with the Government, 
and in their statements figured a profit or a loss so far as rail transpor- 
ration is concerned, or R. P. O. pay? 

Mr. Peters. I do not so understand. The accounts are all kept 
under the general form of distribution of accounts prescribed by the 
Interstate Commerce Commission. 

The Chairman. If they have no such system of accounting, how 
are the railroads cognizant of the fact that they have made a profit or 
a loss in the transportation of the mails ? 

Mr. Peters. It is only when they make a special study of the case. 
We make special studies in the special rate cases before the Interstate 
Commerce Commission or in the courts. 

The Chairman. Then am I correct in this assumption or under- 
standing: That prior to 1909 the railroads had no definite knowledge 
as to whether they were making a profit or losing on their mail 
contracts? 

Mr. Peters. As a whole throughout the country they are not. 
Many railroads that have studied the matter, in connection with 
their attorneys before congressional committees should have informa- 
tion on the subject and that information is shown in our record. 

The Chairman. That was intermittent information? 

Mr. Peters. Yes. 

The Chairman. They had not the same information or knowledge 
that you had in your other transportation business, the freight, 
passenger and express business. 

Mr. Peters. I io not think there has been the detailed study of 
the express accounts until recent years when the contracts with the 
express companies were revised, some ten or fifteen years ago. 



EAILWAY MAIL PAY. 187 

The Chairman. Have you definite knowledge, or such knowledge 
as would justify you, in your judgment, in advancing an opinion as 
to what the cost to the transportation companies was for compliance 
with the request of the department for the information embodied 
partially in Document 105? 

Mr. Peters. The Pennsylvania Railroad, I understand, kept an 
accurate record of a part of their expense. We were discussing that 
a few days ago and then- cost was over $25,000. It was figured the 
total cost of gathering up this information was something like 
$250,000 ; that is a rough estimate and a mere guess. I do not believe 
there were detailed statements kept. 

The Chairman. Do 3^0 u feel satisfied, with the knowledge that you 
have, that it cost the transportation companies of the country at 
least $200,000 to furnish that information? 

Mr. Peters. Not less than that. Our own expense in the pre- 
liminary tabulation and calculation of the figures in our clearing 
house office in Chicago was between $6,000 and $8,000, where no new 
equipment and no new force was employed for it, but simply using 
the organization we had. 

Mr. Lloyd. According to your statement, if you had your way 
about it, you would like to have the railway mail pay increased about 
20 per cent ? 

Mr. Peters. You are going to increase the weights fully that, as we 
figure it, from the parcel post. 

Mr. Lloyd. You are asking for a weighing so you would get pay 
for that ? 

Mr. Peters. Yes. 

Mr. Lloyd. But I mean these suggestions of change in existing 
laws which have the effect of costing the Government 20 per cent 
more than it now costs the Government. That is your statement ? 

Mr. Peters. The cost at the present time, being in round figures 
$50,000,000, it would be about 20 per cent. 

Mr. Lloyd. At $50,000,000 it would be a little less than 20 per 
cent. Suppose the commission, after investigating the subject, 
came to the conclusion that the railroads were receiving as much 
money as they ought to receive for the service rendered, which would 
you prefer, these changes that you have made and a flat reduction of 
15 per cent on weight, or permit the law to remain as it is. 

Mr. Peters. I do not see how the commission can reach such a 
conclusion. 

Mr. Lloyd. I am not saying that we would. 

Mr. Peters. I think the more the commission studies this question 
the more they will be like we are and feel that the railroads are not 
fully paid. As I understand it, the Government does not want to 
have service performed for nothing, and they should compensate the 
railroads fairly and honestly for the work they do, and that is all the 
railroads want. 

Mr. Lloyd. Nobody objects to that. But suppose the commission 
would come to the conclusion that the railroads are receiving as much 
money as they ought to receive for the service rendered. Would 
you rather have these changes you suggest with a 15 per cefrt flat 
reduction on rate or would you rather have the existing law ? 

Mr. Peters. A 15 per cent reduction oh rates? 

Mr. Lloyd. On existing rates. 



188 RAILWAY MAIL PAY. 

Mr. Peters. For the rate per mile? That would make a con- 
fiscation of property on a majority of the railroads; but even if there 
were a reduction 

Mr. Lloyd. You have not answered my question. 

Mr. Peters. I think these amendments ought to be made in order 
that we might ascertain the weight each year, and that you should 
relieve us from the messenger service. 

Mr. Lloyd. I understand all that. I fix a limit of reduction much 
less than that for which you ask an increase. If we were not going 
to increase the pay, which would you rather have, a flat reduction of 
15 per cent and have these changes in the law which you suggest or 
have the law remain as it is ? 

Mr. Peters. That is a question I am not prepared to answer 
offhand. We did not come to ask for any reduction but we came to 
plead for justice. We want an increase in pay. We are underpaid 
now and to answer a question of that kind will require a little thought. 

Mr. Lloyd. We will have a night session and you can answer that 
to-night. 

Mr. Peters. I will take that under advisement and answer you 
later. However, it would strike us all as manifestly unfair to con- 
sider any such question as a possible reduction in the rates of pay. 
You have put on us the great burden of the parcel post. 

Mr. Lloyd. In the annual weighing do you propose to get com- 
pensation for the parcel post? 

Mr. Peters. That will continue to grow and we shall be com- 
pensated by the annual weighing. 

Mr. Lloyd. One of the things you ask is a change from a quad- 
rennial weighing to an annual weighing. 

Mr. Peters. That is correct. 

Mr. Lloyd. If you got that change and there is an annual weigh- 
ing, then you would get compensation for all the parcels you carry. 
The complaint that you now make could not then be a valid com- 
plaint, because it would be removed by law. 

Mr. Peters. In fact, every pound of mail carried should be weighed 
each day, but it would be too burdensome. 

Mr. Lloyd. Theoretically that is true; yes. 

Mr. Peters. Weighing once a year would come much nearer doing 
the right thing than weighing once in four years. 

Mr. Lloyd. Theoretically you ought to get paid for every pound 
of mail you carry. 

Mr. Peters. That is right. Also we ought to be paid for the serv- 
ice we perform. 

Mr. Weeks. Do you think it would be practicable to weigh the 
mail every day ? 

Mr. Peters. I believe it could be done. We weigh all of the 
freight. 

Mr. Lloyd. Could you weigh the mail without extraordinary 
expense to you ? 

Mr. Peters. I believe we could. 

Mr. Lloyd. Could you weigh the mail and make enough by reason 
of its weighing to meet the expense of it ? 

Mr. Peters. I am quite sure it could be done. 

The Chairman. A daily weighing? 

Mr. Lloyd. A daily weighing. 



RAILWAY MAIL PAY. 189 

Mr. Peters. That is a matter that can be considered in the course 
of investigation. We can make a study on that point. I think the 
New England roads attempted to weigh everything that was carried 
until the Government interfered and asked them to stop it. They 
could give us a very fair idea on the cost of that weighing. 

Mr. Lloyd. It seems to me that is a very practical question, view- 
ing it from the standpoint of weighing, and that is one of your com- 
plaints. If a system could be devised by which all mail is weighed 
and the Government, as well as yourselves, be satisfied that the weights 
are correct, it might be one way of solving the question. 

Mr. Peters. We weigh all of our parcels, freight, or package freight; 
we weigh the carload freight and we weigh all of our express business. 

Mr. Lloyd. If you weighed the mail you would weigh it in the sack 
and it is not difficult to weigh the sack ? 

Mr. Peters. We would weigh it in the sack. 

The Chairman. You say the railroads weigh all of the express 
business every day ? 

Mr. Peters. The express companies do. On the Long Island road, 
where we operate our own express, we weigh it all. 

The Chairman. Of course the express companies do the weighing 
because their compensation is based on their weight, but they have 
50,000 employees confined to the express business alone and the 
railroads do not do that every day. 

Mr. Peters. No; but our own railroad, which handles all of its 
express, weighs -all of the packages. 

The Chairman. That is, your express branch of the railroad does it ? 

Mr. Peters. Yes. 

The Chairman. Of course you have to do that in order to get your 
compensation, because your compensation is based primarily upon 
weight. 

Mr. Lloyd. In reaching the conclusion that you have reached and 
the suggestion that you make in the pending suggested bill, what, if 
any, profit would the railroads make for carrying the mail ? 

Mr. Peters. I have not taken that into consideration. 

Mr. Lloyd. If your system were adopted, I mean the present sys- 
tem with the changes that you suggest, would the railroad companies 
make or lose by carrying the mails ? 

Mr. Peters. They would come nearer being compensated. They 
would have some net money left, but they would not be able to 
figure that out, except at greater cost than the information is worth, 
to ascertain whether or not it produces part of the interest on bonds 
or interest on dividends. 

Mr. Tuttle. Do I understand you, Mr. Peters, to say that for- 
merly the railroads made a profit for carrying this mail and that 
recently they have not ? 

Mr. Peters. No ; I did not say that. I said the railroads had been 
content to accept the compensation ^allowed them for the compensa- 
tion of the mails, except that they had been subjected to constant 
reduction; there were reductions in 1887 or 1888, reductions in 1905, 
and again in 1907, and again a reduction by the change of the divisor; 
reduction after reduction made in the basis of pay, while the weight of 
the mail and service performed was constantly increasing and while 
the regulations covering the performance of the service were getting 
more and more severe. Your act of Congress recently requiring steel 

49396—14 20 



190 RAILWAY MAIL PAY. 

cars and different improvements in them has made it harder than ever 
for the railroads. 

Mr. Tuttle. About how long ago did the account shift from one 
side of the ledger to the other ? 

Mr. Peters. As I stated before, I do not believe any railroads, 
except those who specifically prepared themselves for hearing before 
Congress, had ever thoroughly investigated the cost of handling the 
mail or tried to get at it scientifically until the Postmaster General 
called for the information. 

Mr. Tuttle. Therefore it is just your impression that they were 
being satisfactorily paid ? 

Mr. Peters. That is the impression, that they were reasonably 
compensated, but they have since then performed greater service with 
no increase in the pay. 

The Chairman. The committee will now take a recess until 8 
o'clock p. m. 

Thereupon, at 12 o'clock m., the committee took a recess until 
8 o'clock p. m. 

AFTER RECESS. 

The hearing was resumed, according to adjournment, at 8 o'clock 
p. m. 

Present: Senator Jonathan Bourne, jr. (chairman), Representative 
James T. Lloyd, and Representative William E. Tuttle. 

STATEMENT OF MR. JOHN STEWART. 

The Chairman. Mr. Stewart, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you state your full name, residence, occupa- 
tion, and the official position, if any, in which you appear before the 
committee this evening ? 

Mr. Stewart. John Stewart, superintendent and traffic manager of 
the Marcellus & Otisco Lake Railway, Marcellus, N. Y. 

The Chairman. That is a railroad running between what points ? 

Mr. Stewart. Between Martisco, N. Y., and Otisco Lake, N. Y. 
The length of the line is 10 miles. We have verbally and by wire 
frequently requested another weighing, a year ago, when catalogues 
and seeds were going out in large quantities. After a great deal of 
telegraphing were were politely informed by the Post Office Depart- 
ment that they could not do anything for us until the regular time. 

The Chairman. The regular quadrennial weighing. 

Mr. Stewart. The regular quadrennial weighing. I submitted 
the facts to the management of our property and asked their per- 
mission to refuse to carry the mail. I did not get the permission. 
Our general manager instructed me to have the mails weighed, which 
we have done, commencing on January 9 and winding up on Febru- 
ary 5 of this year. The catalogue mail, which was a little light, 
during the 24 days amounted to 293,390 pounds. We had 14,855 
pounds of mills empties (bags) to put the catalogues in, nearly 8 tons. 



RAILWAY MAIL PAY. 191 

The total of the seed-house mail amounted to 308,245 pounds during 
those dates, covering 24 working days. We had to taKe the section 
men sometimes 5 miles from their work to unload that mail onto the 
platform of the New York Central and delayed the mail trains in 
getting the maximum of that mail, one day, of 9 tons, and a minimum 
m that period of 4 tons. The highest amount we had of that cata- 
logue mail was 9 tons for one day, and the lowest day was 3^ tons. 
The mail other than this seed-house mail, and the empties during that 
period amounted to 14,168 pounds, or an average of 507 pounds per 
diem. We have filed with the Interstate Commerce Commission, 
I. C. C. freight tariff No. 10, which provided for a minimum of 25 cents 
per individual shipment. On these movements we make 60 consign- 
ments per diem on that small mail, amounting to 25 cents per con- 
signment, which would give us $4 per day for the mail other than 
the seed-house mail. For the seed-house mail we get, under this 
tariff, a carload, per diem, $9.60. There are not 24,000 pounds per 
day, but you can not put cabbages and potatoes in a box car on top 
of mail. We have the empty box cars to haul 9 miles to load that 
mail again, and we have to pay for the car, as we have none of our 
own. We have to haul a loaded car back, and, according to the 
Interstate Commerce Commission a minimum of 24,000 pounds is 
what we are entitled to, or $9.60. 

The Chairman. Per car ? 

Mr. Stewart. Per car. We moved it every day during that 
period. 

The Chairman. That $9.60 is per car on the freight basis ? 

Mr. Stewart. Yes, sir. 

The Chairman. What did you receive per car from the Govern- 
ment for carrying the mail ? 

Mr. Stewart. Per car, and less than carload, all told, $3.25. 

The Chairman. So you received $3.25 from the Government as 
against $9.60 which would be received, under the Interstate Com- 
merce Commission rate, if full of freight ? 

Mr. Stewart. Yes, sir; and $4 for the other, each individual con- 
signment having a minimum charge of 25 cents. That was an aver- 
age of mills catalogue mail of 12,224 pounds per diem — 6 tons. 
During the period that I have mentioned, if we had been paid on a 
freight basis for the carload mail, we would have received $230.40. 

The Chairman. What did you receive during that period ? 

Mr. Stewart. We received as remuneration from the Post Office 
Department $78. Our remuneration per annum last year was 
$1,017.98. The route number is 107183. For the 24 days on the 
carload minimum we should have had $230.40, and on the less than 
carloads, under the I. C. C. tariff, $96, a total of $326.40. We re- 
ceived $78, and for the 24 days, if it had been all freight, we would 
have lost $248.40. At express rates of 50 cents per hundred, during 
the period, we would have received $1,613.06. We have an express 
business on the road, and that would be their rate. 

The Chairman. For those 24 days ? 

Mr. Stewart. For the total weight, sir, for the 24 days. 

The Chairman. You would have received the amount you have 
just read? 



192 RAILWAY MAIL PAY. 

Mr. Stewart. Yes, sir; $1,612.06. We did receive $78, making 
a difference in 24 days of $1,554.08. Allowing for the heavy mail to 
run five days in December, 27 days in January and 24 days m Febru- 
ary, leaving out March, which is 56 days, at freight rates of $9.60 
per car we would receive $537.60. On the 1. c. 1. mail, the small mail, 
we get $224, or a total of $761.60. We do not haul the mail on Sun- 
days and if we deduct 56 days from the 312 days, that would leave 
256 days. Leaving the heavy mail out altogether we would get 
$1,024, and that, added to the heavy mail, would make $1,785.60, 
and the Government gave us $1,017.98. 

Mr. Lloyd. Why do you not carry it all by freight ? 

Mr. Stewart. Our trains are all mixed, and it is just as convenient 
to put the mail in a baggage car as it is in a box car. We can haul 
it either way. In fact, we had to beg permission from the Government 
to haul the heavy mail in a box car, and we got it. On the express 
rate, if the whole mail were carried by express on the basis of 50 
cents per hundred, we would lose in revenue per annum, $3,991.50. 

The Chairman. The period of the weighing, covering the 24 days 
according to your own statement, was the heaviest period for carrying 
the mail. That is, you would get more mail during those 24 days 
than during any other period of the year ? 

Mr. Stewart. No, sir; that started on December 26 of last year 
and the postmaster advised me that that would be a heavy period, 
but when it will wind up I do not know. It may wind up early in 
March, and it might be prolonged. 

The Chairman. Does this catalogue business and the seed business 
which you have mentioned, continue during the year? 

Mr. Stewart. No, sir; just a short period. 

The Chairman. And it was during that period that you made the 
weighing ? 

Mr. Stewart. Yes. 

Mr. Lloyd. Your complaint, as I understand it, is that you do not 
get paid for carrying those catalogues? 

Mr. Stewart. That is part of it, sir, and the other feature, we do 
not get as much for hauling mail as we do for merchandise of any 
kind. We do not get a minimum for 16 consignments per diem of 
25 cents. 

Mr. Lloyd. What do you mean by a consignment? Of mail, do 
you mean? 

Mr. Stewart. Using the freight term of a consignment, a given 
parcel of freight or merchandise moving from one initial point to one 
individual point and discharging it. 

Mr. Lloyd. Would that be a sack of mail ? 

Mr. Stewart. Yes, sir; or a mail pouch up to 200 pounds. 

Mr. Lloyd. Would a single empty sack be a consignment ? 

Mr. Stewart. We do not get them that way. 

Mr. Lloyd. I was trying to get at your idea of what you want to 
have pay for. You claimed that if you had 25 cents, such as you 
received for freight, for carrying the mail, that would give you a 
little more money. I want to know what a consignment is. A full 
sack, an empty sack, or both empty and full sacks ? 

Mr. Stewart. Anything of weight, sir. 

Mr. Lloyd. Would an empty sack be included as an item ? 



KAILWAY MAIL PAY. 193 

Mr. Stewart. We never have any sacks that are empty. Our 
empties have always been sacks of sacks. 

Mr. Lloyd. In sending the sacks to be filled again you would have 
a sack full of sacks, and that would be one consignment ? 

Mr. Stewart. If there were 200 pounds or 400 pounds of it when 
we received it from the New York Central to take up to the post 
office, that would be one consignment. 

Mr. Lloyd. But suppose it only weighed 50 pounds ? 

Mr. Stewart. Then the mail would be in the same category as a 
case of boots and shoes. 

Mr. Lloyd. If a case of boots and shoes only weighed 50 pounds, 
what about them ? 

Mr. Stewart. Anything which weighs but 50 pounds is charged 
with the minimum rate of 100 pounds. Any consignment of freight 
moving in the United States on a steam railroad is charged as 100 
pounds, ordinarily, of the class to which it belongs, with a given 
minimum in case the tariff rate is not sufficiently high. 

Mr. Lloyd. ' If you were given 25 cents a pound for every sack of 
mail and called every sack 100 pounds, then would you have the 
freight condition to which you refer, as being a condition which would 
produce you the greater amount of revenue ? 

Mr. Stewart. For 16 movements per diem, each individual con- 
signment, irrespective of the weight, whether it is 200 pounds or 400 
pounds, would be 25 cents each. 

Mr. Lloyd. Sixteeu times 25 cents would be $4 a day ? 

Mr. Stewart. Yes, sir; that is the idea. Four dollars a day for 
the service. 

Mr. Lloyd. And you are now getting $3 a day for the service ? 

Mr. Stewart. $3.25, but we are virtually getting nothing for the 
heavy mail we are hauling in the carloads. We get $9.60 for a car- 
load of cabbages, and the department gives us nothing for a carload 
of mail. That is the equivalent of it. 

The Chairman. If I understood you correctly, you receive per 
annum now, under the weighing upon which your mail rate is ad- 
justed, $1,017.98? 

Mr. Stewart. That is what we received last year. 

The Chairman. Have you any computation to show what it costs 
you to get that $1,017.98 ? 

Mr. Stewart. No, sir; will you allow me to answer that further? 

The Chairman. I will be very glad if you will. 

Mr. Stewart. Any array of figures compiled generally by an 
auditing department getting out individual costs, in my experience 
is not worth the labor, not worth a rap. The auditor's office can no 
more tell what the individual cost of hauling a given parcel of any 
individual portion of its service is, any more than it can fly to heaven. 

Mr. Lloyd. You think you are not getting enough for carrying the 
mail? 

Mr. Stewart. I am reasonably well assured of that, sir. 

Mr. Lloyd. What would be a reasonable compensation ? 

Mr. Stewart. The freight rate that I have outlined. 

Mr. Lloyd. You would want us to change the railway mail rate so 
that you would get the same rate ? 

Mr. Stewart. I am interested only in my own company. I am 
not capable of making any suggestion to a body of gentlemen, such 



194 KAIL WAY MAIL PAY. 

as you are, for the whole of the service. I do not have brains enough 
for that. 

The Chairman. You are one of the units on which the whole serv- 
ice is built up. 

Mr. Stewart. But ours is so small. 

Mr. Lloyd. What would be enough? You say on a freight basis; 
but we are not on a freight basis, and we are not paying on a freight 
basis. How could the rate be changed so as to be compensatory to 
you ? 

^ Mr. Stewart. I just ask you to pay for it on any basis that will 
give us the figures I mentioned. You gentlemen know more about it 
than I ever will know. Any manner in which you may figure it out 
will be acceptable to me, so long as we get the money. 

Mr. Lloyd. Suppose we give you Hve times as much as you now 
receive for carrying the mail. Would that be sufficient ? 

Mr. Stewart. In such a remote contingency, sir, I would drop 
dead. [Laughter.] 

Mr. Lloyd. As I understood you a moment ago, you said if you 
were receiving on the freight basis you would receive about five times 
as much as you do now ? 

Mr. Stewart. $9.60 and $4 makes $13.60. That would be about 
five times as much, but we are not getting paid for what we are 
doing now. 

Mr. Lloyd. I say, if you received five times as much, you would 
receive what you would get on a freight basis ? 

Mr. Stewart. We would just be paid, then, sir. 

Mr. Lloyd. That answers the question. In order that the mail 
may be compensatory to you, you ought to receive five times as much 
as you do now ? 

Mr. Stewart. I wish to put it in a quiet way and I do not wish to 
be rude about it. 

Mr. Lloyd. I am not aiming to catch you. 

Mr. Stewart. I will put it this way, sir. We are to-day a very, 
very small institution. I run every day a train leaving our little 
village at 11.30, making a round trip which we are not supposed to 
make at all. We do not have to do that, as we are only paid for one 
round trip per diem, but we run this train with the mail. 

Mr. Lloyd. Let me interrupt you right there. You get paid for 
all the mail you carry, do you not ? 

Mr. Stewart. No, sir. After a fashion, yes. 

Mr. Lloyd. When the mail was weighed they weighed the mail on 
each one of those trains ? 

Mr. Stewart. Yes. 

Mr. Lloyd. And putting it all together it made the aggregate of 
mail for which you receive compensation ? 

Mr. Stewart. Very true, sir. On the other hand, the mail would 
presumably be carried on one round trip or two round trips, but it 
would not be acceptable to the manufacturers and others located on 
the property. We can not get along without the good will of one 
barley mill, three paper manufacturers, and two woolen mills. They 
need their mail in and they need it out; and we run at noon, just at a 
time when it is most inconvenient, in order to make a round trip, 
leaving at 11.30, and get it back at 12.30. The trip is 3 miles 
each way, and it would "go just as well in the afternoon, but it would 



BAIL WAY MAIL PAY. 195 

not be as convenient for the patrons of our institution. In other 
words, we have to try to help them out. 

Mr. Lloyd. Is this a steam road ? 

Mr. Stewart. Yes, sir. 

Mr. Lloyd. And only 3 miles long ? 

Mr. Stewart. Ten, sir. The city of Marcellus is located not 
midway, but 3 miles from the New York Central, and we get our 
mail inbound from the New York Central and outbound it all goes 
to them. 

Mr. Lloyd. Do you know what you ought to receive for carrying 
the mail ? 

Mr. Stewart. Enough to pay us. 

Mr. Lloyd. Do you know what that would be ? 

Mr. Stewart. $13.60 a day, according to the figures I have com- 
piled. That would simply be a freight rate, and we do not give 
freight the same attention that we give to the mail. 

Mr. Tuttle. That is based on the heavy traffic in January? 

Mr. Stewart. Yes, sir. That is, just now. 

Mr. Tuttle. What relation does that bear to the slack traffic? 
What would your average traffic be ? 

Mr. Stewart. The parcels post business is beginning to come in, 
brooms and everything else coming by mail, and it will keep on coming 
more and more every day. 

Mr. Lloyd. Have they a broom factory in your neighboorhood ? 

Mr. Stewart. No, sir; but they are beginning to buy them away. 
It looks like they are trying to help the parcels post. I saw a piece 
of pipe come by parcels post the other day. To answer your ques- 
tion, I figured the heavy mail and the light mail. Those figures are 
accurate and every pound of mail was carefully weighed. To 
answer your question as to our getting five times as much, I think 
the department, if I may be pardoned, really ought to be ashamed 
of itself for permitting such a ratio. 

Mr. Lloyd. Is the criticism on the department or on the legisla- 
tive branch of the Government ? 

Mr. Stewart. They could have weighed it over again, sir. 

Mr. Lloyd. You mean they could have given an annual weighing 
instead of a quadrennial weighing ? 

Mr. Stewart. One at the end of two years. 

The Chairman. We thank you, Mr. Stewart. 

STATEMENT OF ALFRED W. ANDERSON. 

The Chairman. Mr. Anderson, It will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

_ The Chairman. Kindly state your full name, residence, occupa- 
tion, and the official capacity, if any, in which you appear before the 
committee. 

Mr. Anderson. Alfred W. Anderson; Augusta, Ga.; age 49. lam 
general manager of the Charleston & Western Carolina Railway Co. 

The Chairman. Have you a statement you wish to present ? 

Mr. Anderson. Yes, sir. 



196 RAILWAY MAN l-AY. 

Mr. Chairman, in order not to ramble too much and take up just 
as little time as is necessary, I have to-day put in writing what I have 
to say. 

The Chairman. Will you give us your remarks ? 

Mr. Anderson. Yes. I shall be glad to answer any question that 
the committee may have to ask. 

The road I represent has a mileage of 340, consisting of 236 miles 
of main line and two branches, one of 59 miles, the other of 35 miles. 
Like many of the roads in our section, the original owners lost all 
that they put in it and some 17 years ago the property was reor- 
ganized under its present name, the Charleston & Western Carolina 
Railway Co. 

To reproduce the road to-day in its present condition would 
probably cost $25,000 per mile. When the property was reorgan- 
ized, a first mortgage bond of $8,000 per mile was placed upon it, 
and an income bond of a similar amount was also issued. A little 
later on an additional debt — in the way of a fixed charge — was 
assumed by the company for something over $1,000 per mile. Our 
fixed charges per year aggregate $172,000, or just about $500 per 
mile. I believe that the property, to say the least of it, is econom- 
ically managed, and, notwithstanding some portions of it were 
completed nearly 40 years ago, and all of it over 25 years ago, and its 
present owners have operated it for some 15 years, they have never 
received one cent's return on their investment. All earnings in 
excess of interest on a low bonded indebtedness have been devoted 
to improving the property in an effort to make it valuable — not alone 
to the stockholders, but also in the section through which it runs. 
Our territory is highly competitive, with such competitors as the 
Southern and Seaboard. Some of our rates per ton per mile seem 
high, others so low as to make it questionable whether profitable. 
Our passenger rates are the same as apply on other lines. 

What I have said of our line is true of many others throughout 
our section, and it has been necessary to reorganize nearly all of 
them. It is easy to understand that rates must vary, not alone 
because the articles hauled may differ, nor on account of the care 
that must be exercised in the handling of one as compared to the 
other, but they must differ for still another reason that is recog- 
nized as perfectly sound, and that is that one class of traffic can 
afford to pay a higher rate than another though similar in many 
respects. Another thing always considered is volume, and still 
another value. 

Another feature of railroad operation recognized by all thinking 
men as bearing upon the rates is speed with which business must 
move and the frequency of the service. Fast service, safe service, 
and frequent service are of much more importance to the individual 
than the mere question of whether he pays a few cents more or less 
per hundred on freight, express, or mail that he may ship, and noth- 
ing is so much to be deplored from a standpoint of progress and 
development as the attitude displayed, not alone by the public, 
largely through them by a real misinterpretation of the facts, but 
by the Government itself, as evidenced by the utterly inadequate 
pay fixed by Congress for carrying the mails. I say "fixed" ad- 
visedly, for, while we could no doubt sustain in the courts a refusal to 
perform the service at the rates paid, public sentiment and our wish 



KAIL WAY MAIL PAY. 197 

to do our full duty to our patrons has led us to perform the service 
at such rates as you fix and under such regulations as the depart- 
ment has laid down. And may I not add just here that that fact 
alone should be a guaranty to us that we would receive justice at 
your hands, if not liberal treatment. 

Notwithstanding the fact that we are spending considerably more 
money in the maintenance and operation of our property than we 
earned 12 years ago, we are actually being paid a total of less for 
carrying the mails now than we were paid 12 years ago, though we 
are handling, of course, more mail and performing 60 per cent more 
mail-car miles. Please understand that in referring to the present 
I am using our last annual figures ; that is, figures for the year 1911-12. 

The Chairman. Have you the weights as to those periods men- 
tioned ? 

Mr. Anderson. I may say, sir, that I have not, but the weights 
have not materially increased. The truth of the matter is, Mr. 
Chairman, that the department has rearranged the routes in such 
a way that it is impossible to make a comparison. For instance, 
we have a line north from Augusta of 134 miles and also one south 
of Augusta 125 miles. There is absolutely no physical connection, 
except such as we have arranged for in connection with other lines, 
yet the department has, just before the recent mail weighing, made 
it one route and called it one all the way through. In that way 
they made one of the numerous reductions which have taken place 
in our mail pay for the past number of years. During the time 
referred to, when we had a 2.44 per cent reduction in our earnings, 
the total mail-car miles for 1900 were 252,748; for 1911-12 there 
were 400,543 miles, an increase of 147,795 miles, or an increase of 
59.48 per cent. We are performing 60 per cent more service and 
we are paid 2.44 per cent less for it, that is, less compensation. The 
rate paid per car mile in 1903 was 9.3 cents, and, mind you, this 
is an apartment car, and the rate paid per car-mile in 1911 and 1912 
was 5.7 cents. 

These figures are exclusive of pouch routes, nor do they take into 
consideration the cost of handling to and from post offices, which, 
if included, would still further reduce our earnings per car mile. 

In such we have some 40 to 50 pouch rates not included in this 
statement of 5 cents. 

Assuming that there had been no increase in the weight carried, 
and that we were being paid under the increase we were entitled to 
(if there had been no change in the rates to us), on account of increased 
cost of doing business, we would have been paid about 15 cents per 
mile, car-mile, instead of 5.7 cents. Laying aside every other con- 
sideration but the fact of increase in doing business, and assuming 
that we did the same amount of business we did a few years ago, 
we would be paid now 15 cents as against what we are actually 
paid, of 5.7 cents. 

We have never regarded our passenger business as profitable, as 
you will understand from the following figures : 

Mr. Lloyd. What passenger rate do you receive? 

Mr. Anderson. What all other lines in our section receive. Two 
and one-half cents is the maximum. That is just what the Pennsyl- 
vania receives in the State of Pennsylvania as a maximum. 



198 RAILWAY MAIL PAY. 

During the past year our passenger service revenue per train-mile 
was 82 cents. Our operating expenses per train-mile amounted to 
$1.33. Last year our average passenger train revenue per car-mile, 
including Pullman cars, coaches, baggage cars, and express cars , was 
25.48 cents per mile and yet our mail, which practically occupies the 
half of one car, paid us only 5.7 cents per car-mile, or considerably less 
than one-half of what the average car in our passenger trains earned, 
and that too notwithstanding there was but little, if any, profit from 
our passenger trains. 

The Chairman. To illuminate a little, you say your passenger 
revenue per train-mile was 82 cents? 

Mr. Anderson. Yes, sir. 

The Chairman. And your operating expense per train-mile 
amounted to $1.33? 

Mr. Anderson. Not passenger-train mile. I do not want to mis- 
lead you. 

Thr Chairman. Your operating expenses for passenger trains? 

Mr. Anderson. No, sir; per train-mile. 

The Chairman. What was your freight per train-mile revenue, 
your mail per train mile revenue, and your express per train mile 
revenue, in order that we might determine what your revenues per 
train-mile were? 

Mr. Anderson. I cannot give you that in detail but I can tell you 
our passenger trains earned about one-third of what our freight trains 
earned. 

The Chairman. Then, under that your freight per train-mile was 
2.46? 

Mr. Anderson. What do you mean? 

The Chairman. You say your passenger revenue per train-mile 
was 82 cents, which was one-third of the revenue received on your 
freight per train-mile ? 

Mr. Anderson. No, sir; I do not think I said that. If you so 
understood me, I do not mean that. What I meant to say was our 
gross earnings of freight were about two-thirds of our passenger 
trains. In other words, we will say that for every dollar of gross 
earnings our freight trains earned about 65 cents and the passenger 
trains about 35 cents. The proportion is a little less than that. 
Our passenger train earning, per passenger-train mile, as I have said, 
was 82 cents. I heard the gentleman make the statement that no 
accountant could tell you enough in order to enable you to tell the 
difference between the cost of operating a freight and passenger 
train. The direct cost of operating one, as against the other, I should 
say, does not differ a great deal. 

The Chairman. If you will pardon me and let me interrupt you 
I would like to ask a question. Under the statement that you have 
presented to the committee this inference is possible, to my mind. 
You say you receive 82 cents for passenger service per train-mile. 

Mr. Anderson. Yes, sir. 

The Chairman. And it cost $1.33 per train-mile to operate. You 
do not expect rates from the passenger service to pay the cost of 
operation of the whole service ? 

Mr. Anderson. I am basing this presentation of the facts to you 
•on the fact that even taking it at the 82-cent rate it is less than the 
<cost of the service. 



KAIL WAY MAIL PAY. 199 

The Chairman. Less than the cost of the whole service? 

Mr. Anderson. Less than the cost of the passenger service. 

Mr. Lloyd. Is the passenger service $1.33 ? 

Mr. Anderson. I do not know just what it is, but certainly it is 
not as low as 82 cents. 

The Chairman. The reason that you make the presentation of the 
passenger revenue per train-mile is because you figure mail as part of 
the passenger service. 

Mr. Anderson. Yes, sir; a part of the passenger earnings and 
including the mail we get 82 cents. 

Mr. Lloyd. Do you also include mail, express, and passenger ? 

Mr. Anderson. Yes, sir. I include everything in our earnings, 
that is 82 cents per passenger train mile. 

Mr. Lloyd. How much of that is passenger, how much express, 
and how much mail ? 

Mr. Anderson. Our express is about what our mail is. The 
express does not amount to anything but it is operated and handled 
absolutely at a loss just as our mail is handled at a loss. 

Mr. Lloyd. The loss on each is about the same? 

Mr. Anderson. Yes; I should say we furnish each about the same 
amount of space and the tonnage of each does not amount to a great 
deal. 

Mr. Lloyd. And you entered into a voluntary contract with the 
express company to carry that express at that rate. 

Mr. Anderson. Yes, sir. 

Mr. Lloyd. And yet you make complaint against the Government 
for paying you as much for the mail as you get under the voluntary 
contract that you have entered into with the express companies? 

Mr. Anderson. Yes, sir; and I think that is susceptible of the 
easiest kind of an explanation. Our express business is handled at 
a loss for the same reason that our mail business is handled at a loss 
so far as the public is concerned. In other words the express busi- 
ness is a necessity for our section of the country and we feel the 
importance of caring for our section, although we may care for them 
at a loss just as well as the Southern Railway, the Atlantic Coast 
Line or any other railroad in our section cares for its people. 

The Chairman. Has your railroad any interest in the express 
companies ? 

Mr. Anderson. None at all, sir. In our contract with the express 
company we get about half the earnings. The express company 
assumes all the responsibility for loss and damage to its employees 
and to the express. All that we do is to furnish the space on our 
cars and haul the business. 

The Chairman. By half of the earnings you mean half of the gross 
receipts from the express companies for the business which goes over 
your line ? 

Mr. Anderson. Yes, sir. I use those figures in round numbers. 
The figures may not be exactly accurate, but that is the method of 
computation. The business of the express company has gone down 
as low as $6,000 or $8,000 per year. Can you imagine our making a 
trade with the Southern Express Co. whereby we would get more than 
we would get out of the mail, $22,000, when their business goes down 
as low as $6,000 or $8,000 ? To say the least it is a perfectly equitable 
transaction between the railroad and the express company. We are 



200 RAILWAY MAIL PAY. 

not obliged to make the contract except we are forced into it by the 
position of the country there, and we must serve our section as other 
sections serve their people, and the express company would not go 
into an arrangement with us and say, " We will guarantee to give you 
$25,000 a year when our earnings are very much less." They under- 
take to provide our section of the country with express facilities, and 
they say to us, "You haul the business, you furnish your cars for it, 
and we will do the balance; we will furnish the messengers, we will 
assume all the responsibility, we will pay all the claims, and you will 
get one-half of whatever we earn." I do not know but what that is 
a very fair arrangement. It strikes me that it is, and I venture the 
assertion that even if it is an unfair arrangement it is the best we can 
make with the express companies. However, it is an entirely differ- 
ent proposition with the mail. I think if our section of the country 
needs mail facilities, supposed at least to be furnished by the United 
States Government, that it is not the railroad's business to furnish it, 
but the Government's, and if there is any loss sustained it is the Gov- 
ernment's place to lose it and not the railroads. It strikes me that 
is a very fair proposition. 

Mr. Lloyd. Is not the same thing exactly true with reference to 
the express ? 

Mr. Anderson. Not at all, sir. I think it is a very different prop- 
osition. 

Mr. Lloyd. Do you not think you are under just as much obliga- 
tion to the people and to the Government to carry the mail as you 
are to carry the express ? 

Mr. Anderson. We are discharging that obligation. 

Mr. Lloyd. Yes; but you are complaining that you are not getting 
paid for the one, and you are not complaining that you do not get 
paid for the other. 

Mr. Anderson. We do not share in the mail earnings. Suppose 
the mail makes $1,000,000 a year on our road, which is rather an 
absurd illustration, we would not participate in that. It does not 
make any difference to us whether the mail earns $1 or $1,00Q,000, 
but it is an entirely different proposition with the express company; 
we undertake to go into an arrangement whereby we are going to 
serve a section of the country for 25 years. 

Mr. Lloyd. And you volunteer to enter into that contract to carry 
that express at a loss, and you know it is going to be at a loss ? 

Mr. Anderson. No, sir; I do not think that is exactly a fair way 
to put it. We go into an arrangement with them and say this: 
"We will haul it, we will furnish the cars, you furnish the men, fur- 
nish all expenses, assume all the risk, not only the damage that may 
result to the express, but from personal injury to our employees, and 
we will divide the profits." That strikes me as rather a fair proposi- 
tion. It may be one-sided, but I do not think so. 

The Chairman. As I understand, you do not divide the profits, 
but you divide the net receipts, and your distinction between the 
Government in carrying the mail and your contract with the express 
companies is that you hope for a profit in the express business, but 
you see none in the Government business ? 

Mr. Anderson. That is true, sir; and every dollar that the express 
company makes we share in. 



RAILWAY MAIL PAY. 201 

Mr. Lloyd. I can not understand you. You say that you carry 
the express at a loss ? 

Mr Anderson. I say so; yes. 

Mr. Lloyd. And you have carried it for these 25 years, and it has 
been your experience that you have carried it at a loss, and you continue 
to carry it at a loss. I can not understand why you would enter into 
a contract at a continual loss ? 

Mr. Anderson. I just told you. 

Mr. Lloyd. I do not know whether you participate or not. 

Mr. Anderson. I told you the reason we continue it is because we 
think it is due our section of the country. 

Mr. Lloyd. If you and I euter into a partnership business and we 
both know that we were going to lose money by it, and we continue 
that partnership 

Mr. Anderson. I rather object to your putting it in that way, 
because we hope we are going to build it up, and we will profit in the 
end by the arrangement. 

Mr. Lloyd. But you have explained you have done this for 25 
years at a loss, and naturally the presumption will be that it will 
continue at a loss. 

Mr. Anderson. I do not think it is unnatural, because we have an 
arrangement with the express company where we have something 
to do with the division of the expense and earnings. 

Mr. Lloyd. You have an arrangement with the Government 
whereby you are going to receive a fixed compensation for carrying 
the mail ? 

Mr. Anderson. On the other hand, it is largely fixed by the Post 
Office Department. 

Mr. Lloyd. The difference between the two is that with the railroad 
company and the Government you have a fixed compensation and 
know what you are going to receive and you know just what you are 
going to lose. With the express company you enter into a voluntary 
contract which will be a loss, and you do not know how much you are 
going to lose because you do not know how much express you are 
going to carry. 

Mr. Anderson. In our way of looking at it there is a great deal of 
difference between us. 

Mr. Tuttle. Does the Southern Express Co. find its business 
profitable ? 

Mr. Anderson. I think, as a whole, they do. I am not interested 
in the Southern Express Co., and it does not make a particle of differ- 
ence to me or to my mind whether thay make one dollar or a million. 
If you take into consideration the capital the Southern Express Co. 
has invested, and the fact that the express company's business is 
largely what we call a kind of franchise or the right to do business, I 
do not know that they make any undue return. In our State, 
Georgia, the railroads are taxed on -franchises — the right to exist. 
We get a great right for which we pay very dearly, and we are taxed 
for that privilege. It seems to me that the express companies are 
largely franchises that are valuable to them, and it is an uncertain 
kind of business, for one year they may do well and the next they may 
be out of business. 

Mr. Tuttle. I did not want to get you outside of your line of 
thought. 



202 RAILWAY MAIL PAY. 

Mr. Lloyd. While your road has a considerable number of miles, 
would you not class it in the same category of what we call the short- 
line roads. 

Mr. Anderson. Well, sir, I have been trying to keep in touch with 
both of them. I am perfectly willing to be classed with either. 

Mr. Lloyd. It seems to me that I recognized you as being with 
the short line people ? 

Mr. Anderson. I am not going to disclaim my association with 
those good people. I have been with them for two years in making 
this fight, if I may so term it, for a more reasonable adjustment of our 
pay, and I am sure that I have no apology to make for that associa- 
tion. They need aid and certainly we need it. 

Mr. Lloyd. You may have misunderstood the purpose of my 
question. The objection that you raise to the question of com- 
pensation would be the objection which is raised by the short line 
people, and whatever is applicable to the short line people ordinarily 
would be applicable to your road, notwithstanding it is a longer 
road than what we ordinarily call a short line road. 

Mr. Anderson. That is true. I think what you will do for them 
you will do for us. 

Mr. Lloyd. From what I know of your road it does not run through 
many large cities and it is largely what we would term, in many 
localities, a kind of neighborhood road resulting in benefit to the 
neighborhood that is not on the main line of road ? 

Mr. Anderson. Unfortunately we run through a section of country 
which I have already stated in my brief remarks is largely competitive. 
A large part of our line is through the piedmont section of South 
Carolina, and the people who live in it think it is the garden spot of the 
world. That part of the country has grown very largely and, not- 
withstanding that growth, our line, especially from the mail stand- 
point, has not prospered or kept pace with it. 

Mr. Lloyd. That is due to the fact that the mails are carried on 
the competitive road ? 

Mr. Anderson. That is due to the fact that the methods oi the 
department and the regulations laid down by the Congress make it 
possible for them to add expenses to our service for which we receive 
no pay. The consequence is our earnings have been kept down and 
our expenses have grown in enormous proportion. I will give you 
some figures which I think will impress you all as being rather re- 
markable. 

Our cheapest service is supposed to be our freight- train service; it 
is cheapest because of the largest volume that can be hauled in the 
most inexpensive way. It is because the facilities and men engaged 
cost less per dollar earned than in the passenger service. It is be- 
cause the original cost of freight cars and as well the maintenance 
is hardly one-tenth the cost of passenger cars, and it is also because 
we do not have to furnish in many other respects the same expensive 
service that is required by passengers. 

I am sure it will be admitted by this committee that if the vast 
majority of our roads fail to make something on their freight business, 
they would fail to pay expenses and that if we use our cheapest 
service as a comparison, that we go very much further than we ought 
to have to go in demonstrating the utterly inadequate pay allowed 



EAILWAY MAIL PAY. 203 

us for handling the United States mails. We averaged last year 
(1911-12) 14 cents per car-mile for every .freight car, whether 
loaded or empty, handled on our line, yet we only earned 5.7 cents 
per mail-car mile, not including — mind you — the handling of mail 
to and from post offices, nor does this include some 40,000 pouch-route 
miles. 

To appreciate what this really means, I will add that 41 per cent 
of our business is coal, much of which is handled at the very low rate 
of 3.2 mills per ton per mile and the cars returned empty. 

The space set aside in our apartment cars for mail service averages 
about 192 square feet per car, while our freight-car average is about 
306 square feet per car. Therefore, we find that had our mail-car 
service paid the same rate per square foot per mile that our freight- 
car service paid, including empties, we would have earned 8.8 cents 
per mail-car mile, instead of 5.7 cents, or $35,247.78 instead of 
$22,917, our present mail pay. Is this statement of facts not alone 
sufficient to convince you how inadequately we are paid ? 

Is not that mere travesty on the mail pay of the C. & W. C. Rail- 
road ? Our freight business, taking our freight cars loaded and 
empty, per square foot, pay us nearly 60 per cent more than the 
space used by the United States Government for the handling of their 
mail. 

Mr. Lloyd. Do you think it would be profitable to your road to 
stop carrying the mail ? 

Mr. Anderson. Mr. Chairman, if I had my way about it, I think 
I would dare run the risk of having our tracks torn up in that section 
of the country and go out of the mail business. 

Mr. Lloyd. I am not putting it on that basis. 

Mr. Anderson. I think I have answered your question. I mean 
to say that I think it is unprofitable and we ought to go out of the 
mail business, and we would go out of the mail business so far as I 
am concerned if I did not think we were doing something for the 
people of that country. That is as strong as I know how to put it. I 
do not believe if the Second Assistant Postmaster General was him- 
self present in this room, and he has looked into our situation, that 
he would hesitate to tell you we are not being paid anything like the 
cost of our service on our line. 

Mr. Lloyd. I am well satisfied you do not get much compensation 
for carrying the mail on your road. I think your road is an excep- 
tional case. 

Mr. Anderson. On the other hand, I think that is about the same 
way with every other railroad that has that kind of route. I do not see 
how it can be any different. I heard a man from the Erie road the 
other night state that on a number of his routes they were paid less 
than 2 cents for apartment cars; actually not paid as much as you 
would have to pay for a passenger. 

The Chairman. You said that you were paid 5.7 cents? 

Mr. Anderson. Our revenue for apartment car mile is 7.5 per mile. 

The Chairman. While your freight revenue is 14 cents? 

Mr. Anderson. No, sir; coal is 41 per cent of our freight business, 
and on that the rate is 3 mills per ton per mile, and that is 8.8, or 60 
per cent more. If this applies on a light mail route, such as ours, I 
do not understand why it would not apply on a light mail route, such 



204 KAIL WAY MAIL PAY. 

as the Pennsylvania Railroad would have. I assume that every rail- 
road in this country has a very great many very light routes ; and if 
they do this on every one of them, they compare almost identically 
with our situation. 

The Chairman. Is your road owned by any other railroad, or by 
the public generally? 

Mr. Anderson. No, sir; it is not owned by any other railroad. It 
is owned by the same interests that own the Atlantic Coast Line, and 
the Atlantic Coast Line owns the Louisville & Nashville. 

The Chairman. It is owned by individuals and not by another cor- 
poration? You mean there is a common ownership; that the stock 
is owned generally by the system ? 

Mr. Anderson. No, sir; I should not think it would be worth much, 
and I imagine the man who bought it wanted to take it as a "job lot," 
and he got it very cheap ; if he did not, he got bitten. 

The Chairman. He has not been able to let it go as yet ? 

Mr. Anderson. He has not been able to let it go. I am trying to 

fet the road in condition where he might !et go if he wanted to; but 
e is still hanging on. 

Compare the character of cars, the character of contents, including 
the Government's employee (who is in every sense regarded as a pas- 
senger), the fast service, the greater risks, and the extra delivery serv- 
ice at all stations with the ordinary freight service, and surely it can 
not be questioned that the pay allowed us is absurdly low. 

The committee will not aoubt ask in what way our mail pay has 
been reduced and to what extent. Need 1 answer the question other 
than to refer to the fact that our total pay to-day is less than it was 12 
years ago, though gross earnings of our road per nnVe have increased 
during that time fully 100 per cent, and our mail car nnVes have 
increased nearly 60 per cent, and our gross operating expenses during 
the same time have increased more than 100 per cent. 

During that time our freight earnings have gone up 150 per cent. 
During that time our passenger earnings have gone up 100 per cent. 
During that time our gross earnings have gone up from $2,000 a mile 
to $5,600 a mile. During that time our mail-car miles have been 
increased 65 per cent from 250,000 miles, in round numbers, to 400,000 
m^es, and we are to-day getting less for handling the mails than we 
got 12 years ago. There is something wrong, gentlemen, about a sys- 
tem of that kind. 

Mr. Lloyd. In that time there have been two reductions of 5 per 
cent each and a divisor reduction ? 

Mr. Anderson. Yes, sir. 

If our rates had not been reduced and we had been paid in accord 
with the increased cost of doing business, not to mention the increased 
mail-car miles, we would get to-day twice as much as we were paid 
12 years ago.* 

Mr. Lloyd. As I understand you, you say that you are only carry- 
ing about the same amount of mail that you did 12 years ago? 

Mr. Anderson. Not a great deal more. I do not think we are 
carrying much more. 

Mr. Lloyd. The misfortune with you is that you are not carrying 
mail ? 

Mr. Anderson. Yes, sir; that is one of the misfortunes; but we 
have a greater one than that. 



RAILWAY MAIL PAY. 205 

The Chairman. From your viewpoint, would not this be true: 
That it would be rather good fortune to you if you did not have 
more mail to carry, on the theory that the more you had to carry 
the greater the loss would be ? 

Mr. Anderson. At one time before the congressional committee, 
of which Mr. Lloyd was a member, I made the statement that I 
thought that the only excuse for the department's method of rates 
of pay to us was that they viewed it like the merchant who was asked 
how in the world he managed to sell goods below cost, and he said 
it was because he sold so many. You must remember, however, 
we are called upon by the Government to furnish facilities that 
involve the handling to-day of 205 pounds of mail in each direction. 
We could just as easily handle a thousand and never know the 
difference; and that is the only way to measure it, by pounds. At 
the same time, we also know when we compare 250 pounds of mail 
with 1,000 pounds of mail, both handled in a car that weighs 40,000 
pounds, as the saying is, it does not cut much ice. 

I took occasion some two years ago to compare our pay with that 
of the rural carrier, whose pay is fixed by the same power that fixes 
ours; and again I say "fixed" advisedly, because we all know that 
reference to the arrangement as a contract is, to say the least of it, a 
rather amusing misapplication of the term. The rural carrier is paid 
some 14 cents per mile for the service that he performs, which cod- 
sists of carrying a few pounds of mail over a highway furnished by 
the public, while the railroads maintain their own highway at a cost 
to them of — in many cases — one-fifth of their gross earnings and in 
addition they must furnish and transport an office for the Govern- 
ment's agent, who must also be carried free, all — in our case — for 
5.7 cents per mile. 

You pay one man for hauling your mail in the rural section. 

The Chairman. You buy his whole time. You do not take his 
time for hauling the mail ? 

Mr. Anderson. You do not think that is exactly a fair way? 

The Chairman. I think it is just as fair as your presentation. 

Mr. Anderson. I thought this was a very fair way of putting it. 
I had not the least bit of trouble in convincing myself that the com- 
mittee would agree with me on that proposition. 

There must be some cause for so great a difference. Is it because 
the Government can not get its work performed by the individual 
if it paid even as low rates as it pays the railroads for ten — yes, 
twenty times the service? Surely the fact alone that the Govern- 
ment may force its regulations upon the one, while it must pay the 
other reasonable rates, or else do without the service, is not the 
reason we are being paid such unjust rates; rather it should be a 
reason why the Government should see that we were properly paid. 
We have no voice in this matter. All we can do is to appeal to this 
committee. 

The Chairman. And furnish the committee with the information. 

Mr. Anderson. And furnish the committee with the information 
and ask them to give us a fair return for the service that we perform. 

As further evidencing the inadequate pay and the unreasonableness 
of the practice indulged in by the department, I wish to cite a case 
where, at Anderson, S. C, the terminus of our 59-mile branch, the 
post office is located about one-fifth of a mile from our passenger 

49396—14 21 



206 RAILWAY MAIL PAY. 

station. We employ a carrier, in connection with the other lines, to 
handle the mail to and from our trains. We are paid for the service 
about $10 per year, which is one-fifth of the rate per mile we are paid 
for handling mail on this branch. We paid for this service, up to 
recently, $120, or twelve times what we received for it. Recently, 
and since the parcels post was inaugurated, our carrier has insisted 
upon an increase of $5 per month. We tried to make other arrange- 
ments, but finally found it the most economical thing that we could 
do to pay what he demanded — $180 — or eighteen times what we get 
for the service. 

The Chairman. That $180 is his compensation for the year for 
carrying the mail, or that is his portion of his pay you charge to the 
carrying of the mails ? 

Mr. Anderson. No, sir; that is the amount we pay him. That 
is our propoition of the pay given that man out of some $40 or $50 
a month by the lines interested, and I pay $15 a month of it for car- 
rying that mail to and from our trains for that one-fifth of a mile, 
for which we get about $1 a month. 

The Chairman. And that is insignificant if his whole time were 
employed in carrying the mail and he got compensation for his 
service ? 

Mr. Anderson. That is true, sir. 

In the Postmaster General's report, known as " Document 105/' 
he shows that we lost on our so-called contract with the Government 
for the month of November, 1909, $1,323.33, or 40.90 per cent. 
Our figures, using as we did the basis outlined in the department's 
directions for the preparation of the information, showed a net 
loss per month of $3,369.04, which for the year means a loss of 
$40,428.48. 

Those are my figures, using his basis and I could not follow him 
any further. 

The department figures that we ought to be paid 6 per cent on 
the direct cost of performing the service — that is, 6 per cent on 
$38,828.18, making the total amount that should be paid us $41,160.86. 
We are paid $22,000. The department says, taking that basis, 
we ought to be paid $41 ,000. Again, using the department's basis, 
including the 6 per cent on their way of arriving at the cost, we should 
be paid $67,179.28, or just about three times what we-receive. We, 
of course, do not agree with the department's method, but know 
from experience that we must get 35 per cent in excess of the direct 
cost to properly maintain the property and give to the owners a 
reasonable return on its value. 

As a general proposition, railroads to be prosperous must be able 
to show an operating ratio of between 65 and 75 per cent of its gross 
earnings. There are many roads that could not stand 75 per cent. 
There are others, our line for instance, that should show less than 
65, if we reach with our present earnings a healthy condition. 

Referring for a moment to the proposition as generally outlined 
in Document 105. To say that any other basis of pay should or 
could be used than weight strikes me as just as much impossible, 
if the rights of all concerned are to be regarded, as it would be to 
say that in the purchase, for example, of tea the only thing to be 
considered would be its flavor. Unquestionably flavor is a neces- 



RAILWAY MAIL PAY. 207 

sary factor. Likewise unquestionably, space is a necessary feature 
that must be reckoned with; but to say that only space would 
be paid for and that the department alone would say what space 
was needed, and therefore what would be paid for, would be more 
one-sided and more utterly without reason than the present practice 
of forcing the railroads to furnish apartment cars without pay, with 
the right to add apartment cars with every additional passenger 
train schedule that may be put into service and still the department 
only pay for the gross weight of the mileage covered. 

That seems to me to be all wrong, and it ought to be corrected. 
There can hardly be anything fair in that proposition. 

For example, up to a year or so ago we operated only one passenger 
train daily in each direction on our main line, and the department 
was paying us on gross mail weight of some 819 pounds per mile of 
road, which, you understand, was handled on one train in each 
direction. Now, we have two passenger trains in each direction, and 
the department has called for mail service on the new trains, with 
the result that we have had to double our expenses without receiving 
one dollar's additioual pay. That is to say, a few years ago we fur- 
nished apartment cars for the handling of about 410 pounds of mail 
per apartment car mile, for which we were paid some $80 per mile 
of road. Now we are furnishing apartment cars for some 205 pounds 
of mail and yet are still only paid $80 per mile of road, though we 
are called upon for twice the facilities and put to twice the expense 
heretofore incurred. 

The Chairman. That is on the basis that your weight of mail is 
the same ? 

Mr. Anderson. Is the same. This, I respectfully submit, should 
be corrected, and for additional service we should receive additional 

P a F- 

The short lines are asking for the passage of what is known as the 

Talbott bill, providing not alone for payment for apartment cars, 
but for an increase in the present rates for the light routes. 

I wish to go a step further, and I submit the suggestion as one to 
which we are entitled in all fairness, and that is that where the 
department calls for additional service on any route carrying less 
than 1,000 pounds per mile per year that a minimum allowance 
approximating 500 pounds be made. I do not believe that this will 
mean a dollar's increase in the expense of the department for hand- 
ling the mails, but it does mean that it will have a deterrent effect 
upon the department in preventing their calling upon the railroads 
for additional service on the same route, when probably the gross 
weight of the mail carried will not pay the cost of the service per- 
formed by the railroads. 

Of course the department is going to ask for additional service; 
it does not cost them anything. They will get a visit from a Con- 
gressman and say you must put on certain routes; and, well, why 
shouldn't it? It costs the railroad a good many thousand dollars, 
but that does not concern them. But it ought to concern them if 
they are given the power to do things of that kind. 

In further support, in a general way, of the Talbott bill, I submit 
that we should be paid for office and mail car space, whether full- 
length cars or apartment cars, for surely there can hardly be a reason 



208 KAILWAY MAIL PAY. 

why post offices on wheels should be furnished by the railroads free 
of charge and transported over the roads for the convenience of the 
department, whether they are 20 feet in length or 40 feet in length. 

On one occasion, in discussing this matter before a committee, the 
suggestion was made that the Government could not afford to 
increase the pay of the light routes, upon the theory that the Gov- 
ernment's receipts were very low. I respectfully submit that that 
is a matter in which we are not interested. If the Government pro- 
posed to put on unprofitable routes and operate them at a loss, they 
should pay for the service. 

We are not here asking for an increase in rates already compensa- 
tory, but we are here asking that we be paid something like a reason- 
able price for the services that we are performing, and we are also 
asking that the department be restricted in their demands for service 
by at least placing upon them the necessity of paying something 
additional when they ask for increased service and facilities. 

I thank you for the time that you have given me in presenting 
what I feel is a simple plea for justice — nothing more. 

Mr. Lloyd. Do you stand by the Talbott bill ? 

Mr. Anderson. I would not like to say that the Talbott bill is 
exactly what I would like to have, but it is so much better than 
what we have now, I think we could stand it. 

The Chairman. At the hearing this morning, before a recess was 
taken, Mr. Peters presented a tentative draft of a bill which, in his 
opinion, would meet with the approval of the 214,000 miles of road 
represented in the Railway Mail Association, of which he is chairman. 
That bill appears on page 194 of the typewritten record (p. 181 of the 
printed record). Would you look that over, and say whether you 
think the enactment of that measure would remedy what, from your 
viewpoint, are the evils or injustice in the present method of railway 
mail pay? 

Mr. Anderson. Mr. Chairman, that is along the right lines, and 
it is in the right direction, but I do not think it goes far enough. 

Mr. Lloyd. That does not make the necessary charge of 500 
pounds. 

Mr. Anderson. No, sir. Mr. Chairman and gentlemen, I think 
that is in the right direction, but I think the department ought to be 
restricted in their ability to place upon the railroads any kind of 
service, and as much service as they may choose, when measured by 
the number of passenger trains we may have on a railroad. 

Mr. Lloyd. Do you not carry express on all of those trains ? 

Mr. Anderson. No, sir; we do not. 

Mr. Lloyd. You are carrying mail on trains you do not carry 
express on? 

Mr. Anderson. Yes, sir. 

Mr. Lloyd. Do you carry express just one way? 

Mr. Anderson. I can only say that we do carry mail on some of 
the trains we do not carry express on, but even though our property 
is a small one, and it may reflect upon my knowledge of the situation, 
and I ought to know it, I could not tell you whether we handle express 
on all of our main-line trains. I think there is one round trip on one 
part of the road on which we do not handle express, and we make this 
arrangement with the express companies that our baggage-master can 



EAILWAY MAIL PAY. 209 

handle the express, and we simply provide for the tonnage on the 
trains and he handles it in the baggage car. 

Mr. Tttttle. Is the side service or the messenger service a burden 
to your road ? 

Mr. Anderson. Yes, sir; it is, and it is a rather serious burden, and 
it is becoming vastly more so with the addition of the parcels post. 
We are having applications from all along our line of road from our 
agents for additional help in order to handle the mails to and from the 
post office. 

Mr. Tuttle. Do you have to do that in small villages ? 

Mr. Anderson. Yes, sir. For instance, we received a letter a few 
days ago from the agent in the county seat of Hampton County, at 
Hampton, saying that his men could not handle the stuff, and he would 
have to have additional help. I told him to make two trips, that I did 
not think the department would mind waiting a few minutes. It is a 
considerable burden to us, and I want to emphasize the importance, 
from my viewpoint, of some deterring influence by legislation or some 
arrangement leaving it to the wisdom of you gentlemen to prevent the 
department adding on mail service when they get ready, without any 
possible cost to them and especially when there is a very small amount 
of mail involved. 

The Chairman. In that connection is there any benefit to them ? 
Do you suppose a department head has any selfish interest at all in 
making improved mail facilities ? 

Mr. Anderson. I certainly would not charge the department with 
having any selfish interests there. 

The Chairman. Should not your criticism, then, be that you are 
entitled to compensation for every additional burden that may be 
put upon you either by the legislature or administrative branch of 
the Government ? 

Mr. Anderson. I think that is what I said. That is at least what 
I intended to say. I had no desire to criticize the department, and I 
stated, and I stand by my assertion, that I venture it will not cost 
the Government $1 more if they will place that deterring factor upon 
the department. If it costs them more money to do it they are 
going to be mighty careful how they do it. If it does not cost us any- 
thing we will do most anything a fellow asks us to do 

Mr. Lloyd. The only effect of requiring these additional services 
to be rendered is to satisfy the public. The mail is wanted by the 
people as frequently as they can get it, and if you have two trains 
running each way a day it is perfectly natural the people will want the 
mail on each train, and I certainly do not blame the people. Do vou 
not think these people are demanding of the department and insist- 
ing that the mails shall be carried on each train ? 

Mr. Anderson. That is what I am complaining of. I am com- 
plaining of the department's right to put it on without pa}mig for it. 

Mr. Lloyd. You complain of the law which permits it ? 

Mr. Anderson. I certainly, do, sir; and in my criticism I presume 
the department is doing nothing but what they have a right, and I 
hope nothing I have said has indicated a disposition to criticize the 
department unjustly. I also feel some reluctance in going on record 
as criticizing the lawmaking body of our land, but I have stated some 
facts which I think in all justice should be corrected. 

The Chairman. We thank you very much, Mr. Anderson. 



210 E AIL WAY MAIL PAY. 

STATEMENT OF H. E. MACK. 

The Chairman. Mr. Mack, it will be necessary for you to be sworn. 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Kindly state your full name, occupation, and the 
official capacity in which you appear before the committee. 

Mr. Mack. H. E. Mack, manager of mail traffic, Missouri Pacific 
Kailroad, St. Louis, Mo. My age is 46. 

The Chairman. You are associated, are you not, with the Railway 
Mail Association represented by Mr. Peters as chairman ? 

Mr. Mack. Yes, sir. 

The Chairman. In any official capacity ? 

Mr. Mack. Merely as a member of the subcommittee. On behalf 
of the committee, and at the suggestion of the chairman, I have 
taken up a special subject, rather than the general subject of trans- 
portation, and that is this, to describe and bring out the situation 
with regard to the messenger service, which has many phases that are 
not developed and are not understood, as I find frequently in the dis- 
cussion of the subject. 

The carrying of mail between railway stations and post offices by 
railroad, in connection with mail transportation, is not specifically 
provided for by an act of Congress, but it is required of the railroads 
by the Post Office Department, under a judicial decision, based upon 
a practice in existence when the equalization law of 1873 was enacted, 
which practice was grafted from the star route service upon the rail- 
road service in the beginning, and has since continued. 

The bill proposed by the Post Office Department in Document 105, 
with reference to this service, reads as follows: 

They shall provide side, terminal, and direct transfer service for handling, distribu- 
tion, and transfer of mails en route, and for offices and rooms for the employees of the 
postal service engaged in such transportation, when ordered by the Postmaster 
•General. 

The Post Office Department, in the statistics used in Document 105 
makes the following statement: 

The data reported by the companies on Form 2602 as to expenditures for station 
service and station and terminal facilities furnished were very carefully considered, 
and in view of the fact that it was found impossible to ascertain the totals of the 
accounts from which the amounts directly charged on this form should be deducted, 
and of the fact that such data were found to be unreliable in many instances, and of 
the further fact that it was determined that the mail service should participate in all 
of the station expenses upon a basis of car-foot miles, it was decided not to make use 
of such information in connection with the cost ascertainment. 

The view, as above stated, might be logical, with regard to station 
service; that is, as to the handling on the railway station property 
by agents and porters, but the carrying of mails between the post 
office and station is not a station service. It is entirely an extra 
service and in no sense a natural or usual function of a railroad in 
connection with its transportation business. 

The Chairman. The part that you read from the suggested bill 
printed in Document 105 is the same requirement contained in the 
second suggested bill as prepared and submitted by the Postmaster 
General under date of January 20, as printed in the last portion of 
this pamphlet ? 

Mr. Mack. So far as I understand there has been no change. I do 
not believe there has been any change. 



RAILWAY MAIL PAY. 211 

The railroad does not provide drayage for delivery of freight; 
wagons for the delivery of baggage; carriages for the delivery of 
passengers; nor wagons for the delivery of express. It performs no 
service beyond its station property. 

Although this is a most valuable service to the Post Office Depart- 
ment, and actually saves the Government from employing probably 
30,000 mail messengers, it is not taken into account in the depart- 
ment's calculations of cost, nor as to compensation to the carriers, 
in its proposed bill. 

The report of former Postmaster General Meyer to the Senate 
Committee, on February 19, 1909, estimated the value of this service 
as $4,393,000 per annum, and it may be fair to assume that its value 
is higher to-day, as the rate per mile traveled on mail messenger 
service routes, in 1909, was 12.28 cents, while in 1911 it was 13.36 
cents. 

The bill of the Post Office Department, however, as stated, makes 
no provision for payment for this extra money to the Government, 
of the amount above quoted, and under which bill the railroads would 
be required to throw in this valuable service for nothing. This 
manifestly would not be right or fair to the railroads. 

The Chairman. If you will allow me to interrupt you for a moment, 
do you think it costs the transportation company the same as you 
say the ex-Postmaster General estimated it would cost the Govern- 
ment, $4,385,000? 

Mr. Mack. No, sir; it does not. 

The Chairman. Have you any estimate as to what additional 
expense, because of the side service, actually is to the railroad 
companies ? 

Mr. Mack. I can not give you that information for all of the roads. 
It was reported, but not compiled satisfactorily. I can give you 
the information for our road, which shows the actual cost for em- 
ployees solely for this purpose to be about $25,000 or $30,000 per 
annum. 

The Chairman. What do you receive in the way of total mail 
compensation ? 

Mr. Mack. $2,500,000. 

The Chairman. That covers the R. P. O. and railway mail pay 
both? 

Mr. Mack. The entire pay; yes, sir. 

The Chairman. And your additional cost of extra employees 
solely occupied in the side service to your road is from $25,000 to 
$30,000 a year? 

Mr. Mack. Yes, sir. 

It is desired for the information of your committee, and for the 
record, to show some of the actual conditions and hardships arising 
from changed conditions since it began, and from administrative 
practices in connection with this service performed by the roads, to a 
better understanding of the subject. 

When referring to this messenger service performed by the rail- 
roads the idea may be conveyed that the station agent, in connection 
with his station duties, once or twice a day merely carries a bag of 
mail on his back from the post office to the station for the outgoing 
train and another bag to the post office after the train leaves. When 
this service first began with the railroads this was probably true, but 
with the rapid growth of the postal service in recent years, and the 



212 



RAILWAY MAIL PAY. 



freat development of the railroads, the messenger service performed 
y them has become increasingly difficult, and instead of being as it 
began, an incident of the agent's duties conveniently performed, it 
now requires the railroads in many cases to employ contract wagon 
service on account of the volume of mail, and special messengers on 
account of other conditions. 

The following illustrations will describe special burdens, difficulties, 
and expense involved in performance of this service on the railroads 
of the country at this time. 

Mr. Lloyd. In that connection, in speaking of what it costs you 
for the side service, do you know what the Post Office Department's 
estimate was of what it would cost your road ? 

Mr. Mack. I do not know, sir. 

Mr. Lloyd. I did not know but what you might have made some 
sort of a report. Would that appear in any report that you have 
made? 

Mr. Mack. No. I can probably answer your question that it was 
probably based on the average cost of messenger service for which 
the department does pay. 

The Chairman. Would it be fair to the transportation companies 
with whom the Government does business, to take as a criterion the 
specific information you have submitted, namely, that you receive 
$2,500,000 of the total compensation paid by the Government for 
railway mail and K. P. O. service, and it costs you for side service 
from $25,000 to $30,000 to perform that ? Would it be fair to apply 
that to all the transportation companies proportionately ? In other 
words, take the percentage of what you receive of what the Gov- 
ernment pays for railway mail pay, and R. P. O. pay, and then 
multiply the $25,000 or $30,000 by that percentage ? Do you think 
that would be fair to the other companies ? 

Mr. Mack. I could not say as to that, but I would like to say this : 
That on the small independent roads that ratio would not be very 
useful. 

The Chairman. It would cost them proportionately much more 
than it costs the Missouri Pacific with the large business that they do ? 

Mr. Mack. And it would affect them very directly and very seri- 
ously, while with the large systems the proposition might be worked 
out on the percentage basis of cost. 

The greater frequency of train service, especially in the denser 
sections of the country, makes the service burdensome, on account 
of the increased number of trips required between the post office and 
the station, which may be illustrated by the conditions at Poplar 
Bluff, Mo., shown in the following statement: 



Station to post office: 

From train 28, 12.30 a. m. 
From train 6, 1.25 a. m. 
From train 5, 1.50 a. m. 
From train 10, 1.50 a. m. 
From train 7, 6.50 a. m. 
From train 433, 10.45 a. m. 
From train 4, 1.00 p. m. 
From train 3, 2.30 p. m. 
From train 8, 2.35 p. m. 
From train 436, 7.25 p. m. 



Post office to station: 
To train 6, 1.25 a. m. 
To train 5, 1.50 a. m. 
To train 29, 3.00 a. m. 
To train 7, 6.50 a. m. 
To train 433, 10.45 a. m. 
To train 4, 1.00 p. m. 
To train 3, 2.30 p. m. 
To train 8, 2.55 p. m. 
To train 434, 2.40 p. m. 



BAILWAY MAIL PAY. 213 

Transfers from the following arriving trains to other departing 
trains : 



Train 9, 12.20 a. m. 
Train 28, 12.30 a.m. 
Train 6, 1.25 a. m. 
Train 5, 1.50 a. m. 
Train 10, 1.50 a. m. 
Train 7, 6.50 a. m. 
Train 433, 10.45 a. m. 



Train 22, 10.50 a. m. 
Train 4, 1.00 p. m. 
Train 3, 2.30 p. m. 
Train 8, 2.35 p. m. 
Train 434, 2.40 p. m. 
Train 435, 7.25 p. m. 



In addition the company is required to transfer the mails from its 
arriving trains to the departing trains of the Frisco Railroad at then- 
depot, which is one-eighth of a mile distant. 

2. As above alluded to in many instances this messenger service, 
instead of being performed incidentally by the railroad agent, carrying 
the mail between the post office and the station, the volume is so 
great as to require the railroads to make contract service for trans- 
portation in wagons. 

The following instances will illustrate, with the special cost of 
service : 

Per month. 

Sedalia, Mo $90. 00 

Atchison, Kans . . . . ^ 35. 00 

Alexandria, La 37. 50 

Joplin, Mo - 37. 50 

Warrensburg, Mo 30. 00 

Helena, Ark 30. 00 

El Paso, Tex 40. 00 

Sweetwater, Tex 25. 00 

Gatesville, Tex 30. 00 

Salida, Colo 25. 00 

Grand Junction, Colo 50. 00 

I would like to say here that the service as performed by the rail- 
roads grew up from a condition that is very different from what it is 
to-day, and while from year to year it is costing the railroads more 
mone}' to perform the service because of the distance between the 
post offices and stations, the night service, and other conditions — 
which I will develop later — show that it is costing more. The 
measure of that service is really the value of it to the Post Office 
Department. The fact that it costs us $25,000 is no criterion of 
what the value of that is to the Post Office Department. 

The Chairman. Have you any computation or definite idea as 
to what it would cost the Government itself to perform the side 
service that you perform at an expense to you of from $25,000 to 
$30,000 a year ? 

Mr. Mack. That which we contract for the Government could 
probably perform at the same rate; that is, in this case where we 
employ special service. Does that answer your question? 

The Chairman. That answers the question as asked, but I will ask 
another question. What would it cost the Government to perform 
the side service that you perform, in to to, a great proportion of it 
being performed, I presume, and not chargeable directly to the side 
service, but to employees who perform other services as well as the 
side service ? 

Mr. Mack. I think that is answered in the statement of Postmaster 
General Meyer. 



214 RAILWAY MAIL PAY. 

The Chairman. I wanted your statement on it with regard to the 
Missouri Pacific. 

Mr. Mack. I could not give you that for our company alone. How- 
ever, I think the information as to the entire country would apply 
to all the systems equally. 

The Chairman. You mean the $4,300,000 that you have quoted 
from ex-Postmaster General Meyer's report? 

Mr. Mack. Yes ; or, in other words, what it would cost the Govern- 
ment if it employed messengers at the rate they pay for messenger 
service now. 

3. The nine-hour operator's service law, approved March 4, 1907, 
adds to the difficulty of performing this service, and in a number of 
instances requires the payment of overtime charges for mail handling, 
as the operators' hours do not always fit in with the required mail 
exchanges. 

4. It is difficult to perform this service in some States, because in 
recent years State legislatures have .enacted laws requiring the 
ticket offices to be open from 30 minutes (as in Texas) to 1 hour 
(as in Louisiana) before train departures, and the agents are not 
permitted to receive the outgoing mails at the post office more than 
15 or 20 minutes in advance of train time. 

5. The Rural Free Delivery Service has imposed some additional 
difficulties and expense, on account of the necessity of delivering 
mails arriving on night trains early in the morning and before the 
agent's scheduled hours of duty. 

An illustration of this kind is at Admire, Kans., where the agent's 
hours, based upon train service, are necessarily fixed to begin at 
8 a. m., and the Missouri Pacific Co. is obliged to deliver the mail at 
the post office at 6.30 a. m., because the rural carrier leaves at 7.30 
a. m., therefore paying the agent about $7.50 per month overtime. 

6. It frequently occurs that the Post Office Department requires 
exchanges of mails on trains passing stations through the night, when 
sometimes the trains do not even stop, and when there is no business 
of any kind requiring the agent to be on hand at the station. In such 
instances, the railroad company must employ a special contractor 
exclusively for the purpose of handling these night exchanges. 

The postal regulation requires the service between the post office 
and station "at which the company has an agent or other repre- 
sentative employed." 

The interpretation given this regulation by the Post Office De- 
partment is that if an agent or other representative is employed at 
any time during the 24 hours, the company must perform the mes- 
senger service during the entire 24 hours, and net only when an 
emplo}^ee, in connection with other duties, is at the station to 
handle it. 

The post offices usually are not open during the night, and the mail 
must be gotten for the outgoing night trains before the post office 
closes, kept in custody of the company, and put upon the proper train 
by the night carrier, so employed, and the incoming mails put off the 
night trains must be kept in the custody of the company and delivered 
at the post office by tne carrier at such an hour as the Post Office 
Department may designate. 



KAILWAY MAIL PAY. 215 

The following will illustrate cases of this character, with the amount 
paid per annum by the company, in each case: 

Allen, Kans $120 

Swayne, Kans 1 20 

Archie, Mo 120 

Bridgeport, Kans 150 

Carlton, Kans 120 

Wilsey, Kans 120 

Delaven, Kans 120 

Dumas, Ark 150 

Wilmot, Ark 150 

Elmo, Kans 180 

7. In recent years the railroads have not only been required to 
handle the mail between the post office and the station, but the postal 
regulations have extended this class of work even further, and require 
transfer service from one railroad station to another in towns through- 
out the country where the distance is 80 rods or less. 

8. While it might be thought that the carrying between the post 
office and station required of the railroads would naturally apply to 
the local mail between the town and the post office, it often very much 
exceeds this; as not only does the Post Office Department require the 
carrying of the local mail, but also the mail for back country star 
routes, or rural routes; and further, it requires the carrying of any 
transit or connecting mail arriving on one road for departure on 
another, by way of the post office, in instances where the distance 
between the stations is greater than 80 rods, thereby saving to the 
department the expense of direct transfer messenger service. 

The Post Office Department employs certain direct transfer service 
where the connections are so close that the mail can not be passed 
through the post office. 

9. There are many very small places, particularly in new sections, 
where an arrangment is made with a storekeeper, or postmaster, 
merely to sell tickets on commission for the public convenience, and 
where the business is too trivial to permit the employment of an 
agent or conduct a station. 

The Postal Regulations are so construed by the department in such 
cases, if the post office is within 80 rods, as to require the railroad 
company to provide for the carrying of the mail. 

Persons acting in this capacity are not regarded by the railway 
company, nor are they in fact, station agent or employees in an 
accepted sense. 

In such cases the railroad companies are met with demands for the 
payment to the postmaster or storekeeper for handling the mail. 

Very often, however, it occurs that by reason of the department's 
demands the companies are compelled to abandon such agencies. 

A case of this kind occurs at Perkins, Mo., where the postmaster 
requires $5 per month. 

10. There are instances where the time fixed for delivery of the 
arriving mails at the post office compel railroads to employ special 
carriers. 

Instances of this kind are at Conway Springs, Kans., where the 
company pays $10 per month; and at Henderson, Tex., where, 
although the distance is 0.49 mile, the department requires delivery 



216 BAIL WAY MAIL PAY. 

within 20 minutes after train arrival making it impossible for the station 
employees to handle the service, and the company has had to make 
a contract at $150 per annum. 

11. Another difficulty of the railroads in the matter of messenger 
service, and one which causes considerable dispute and dissatisfac- 
tion particularly, is the postal regulation and practice thereunder in 
regard to the measurement of distance between the post office and 
station to determine whether it is within 80 rods and whether the 
company shall be compelled or not to carry the mail. The difficulty 
arises from the indefinite regulation on this subject, reading as follows : 
Section 1191, paragraphs 4 and 5: 

4. In all cases the distance between the railroad station and the post office or postal 
station must be measured by the shortest route open to public travel, avoiding angles, 
from the nearest door of the baggage room to the nearest door of the post office building 
where the receipt and delivery of the mails is practicable. In case there is no baggage 
room or station the measurement shall be made from the middle of the station platform 
where mails are exchanged. The route need not be a way regularly dedicated to 
public use; and if it be over private property, no prohibition against the Government 
will be recognized which shall not also have been made and enforced against the 
general public. 

5. Any person acting for an advantage to himself or another, by authority or consent 
of the railroad company, and representing in any manner the interests of the company 
or railroad in its business transactions with the public, will be regarded as the company's 
agent or representative. 

This leaves the employee of the Government to measure according 
to his judgment of what is the " shortest route/' and in many cases 
the railroad companies and the department do not agree. 

The Chairman. Suppose that the Government, through its own em- 
ployees, performs the whole side service, and suppose the trains were 
late and the employee took half an hour or an hour or several hours of 
his time waiting for the trains. Then should the transportation com- 
pany be debited because of that loss of 'time to the governmental 
emplo3^ee due to the train being late ? 

Mr. Mack. I would not think so. 

The Chairman. Is not the responsibility with the transportation 
company because of the loss of time of the governmental employee 
and not with the Government ? I mean : Suppose that the Govern- 
ment assumed the whole side service, eliminating for the time being 
the question as to the compensation to the railroad for its perform- 
ance of side service, and the Government does perform the whole side 
service, in your opinion, under a condition of that kind, where the 
employee's time was not occupied but was wasted, if you please, 
because of the irregularity of the trains on their schedule, who would 
bear that loss ? The transportation company, would they not ? 

Mr. Mack. That is a new proposition. 

The Chairman. There are a good many coming out at this hearing. 

Mr. Mack. I should say that the transportation company ought 
not to bear the expense simply because its train was late. 

The Chairman. You are charged for some trains, are you not, if 
you are late beyond a certain period ? 

Mr. Mack. No, sir. 

The Chairman. There is no such a case? 

Mr. Mack. No, sir. We do not guarantee schedules, and it would 
be impossible to guarantee them in the operation of a railroad. 

The Chairman. No compensation is based upon a guaranteed 
schedule within limitations ? 



RAILWAY MAIL PAY. 



217 



Mr. Mack. No, sir. That class of service went out of commission 
with the special facility trains in the South about four or five years 
ago. 

12. The railroads are required to carry the mails between the 
station and the terminal post office on routes where required by the 
Post Office Department, receiving therefor the same rate per mile as 
paid on the particular railroad route. This frequently is trivial 
compared to the cost of the service. 

This terminal service is not restricted to a distance of 80 rods, as 
with side service, but covers a distance as much as 1.06 miles on my 
routes, with a very considerable proportion of them beyond 80 rods 
The distance may be greater in the case of other lines. 

The following will illustrate the earnings for such terminal service 
and the cost to the companies performing it, in a number of cases : 



Terminal 
distance. 



Earnings 
per annum 



Cost per 
annum. 



Alexandria, La 

Helena, Ark 

Womble, Ark 

Joplin, Mo 

Silverton, Colo 

Crested Butte, Colo.. 

Aspen, Colo 

Grand Junction, Colo 
Gatesville, Tex 



Miles. 
0.59 
.52 
.54 
.62 
.47 
.50 
.14 
.37 



$35. 81 
32.01 
38.31 
94.35 
29.72 
21.37 
21.37 

113.87 
64.50 



$450.00 
360. 00 
240.00 
450. 00 
360. 00 
180. 00 
250.00 
600.00 
360. 00 



The L. & N. have the following special examples: 




Terminal 
distance. 


Earnings 
per annum. 


Cost per 
annum. 


Pensacola, Fla 


Miles. 
0.73 
.60 
.39 


$175. 75 
44.12 
20.30 


$900. 00 


Columbia, Tenn 


120. 00 


Gallatin, Term 


180. 00 







In fact, terminal messenger service is not an incident of station 
work on any of our routes, which are 50 miles or less in length, as on 
every one of such routes the company is obliged to make contract 
terminal arrangements at either one or both ends of such routes. 

There are a good many cases on the shorter routes also where the 
terminal service exceeds in cost the entire mail earnings, or nearly so, 
as the following will illustrate: 



Route. 



145031. Marshall Junction to Marshall 

145049. Mineral Point to Potosi 

145085. Lake Junction to Creve Couer 
150026. Georgetown to Round Rock.. 
165030. Colorado Springs to Manitou.. 

155071. Hoisington to Great Bend 

149042. Natchez to Incline 



Length. 


Annual 
mail pay. 


Miles. 




2.03 


$118.02 


3.96 


192.97 


8.60 


367. 65 


10.37 


531.98 


5.55 


294. 20 


10.43 


588. 56 


3.08 


284.40 



Terminal 
service 

costs per 
annum. 



$120. 00 
240. 00 
120.00 
144. 00 
180. 00 
120. 00 
300.00 



218 RAILWAY MAIL PAY. 

Here it will be seen is a distinct hardship, which applies with par- 
ticular force to independent short line railroads, and concerning 
which I have no doubt testimony of the short lines will develop. 

The foregoing will enable the commission to more fully under- 
stand the messenger service as required of the railroads by the Post 
Office Department. 

The illustrations given are those on lines with which I am asso- 
ciated, but which may be considered as fairly representative of gen- 
eral conditions throughout the country, and I hope the information 
wiO be of advantage in the commission's study of this question. 

The Chairman. That is very interesting and illuminating. Is it 
your contention that the railroads should be relieved entirely from 
the side service, or that they should receive compensation for side 
service performed ? 

Mr. Mack. The suggestion of the railroads is, as a measure of 
relief, that they be paid for an annual weighing and 

The Chairman. My question refers now to the side service. 
Should you be relieved of it entirely, or should you be compensated 
for it ? 

Mr. Mack. I should say that we should be relieved of it or com- 
pensated for it on some agreed basis. 

The Chairman. If compensated for it, should you be repaid the 
expense that you are put to because of the service rendered ? 

Mr. Mack. I should think that would afford very considerable 
relief to the railroads and at the same time be very moderate in its 
cost to the department. 

The Chairman. That is the point I wanted to draw out. 

Mr. Mack. However, it would not compensate the railroads for 
the service which they perform without specific cost, and that ought 
not to be treated as a service of no value to the department. 

The Chairman. In other words, taking the Missouri Pacific as a 
concrete case, your first point would be that if the Missouri Pacific 
performed the side service it should receive as indirect pay or com- 
pensation the $25,000 to $30,000 that it costs the Missouri Pacific 
additional for performing that service, in the way of additional 
employees ? 

Mr. Mack. Yes, sir. 

The Chairman. With an adjusted compensation for the nonsegre- 
gated expense on the part of the Missouri Pacific for whatever part 
of the other employee's time went for that particular service. 

Mr. Mack. I should think that would be a very reasonable adjust- 
ment for the messenger service at the stations. 

The Chairman. But is the position of the railroads, as you under- 
stand it, that they should be relieved entirely of the side service, or 
do the railroads contend that they should receive compensation for 
that service which, from their viewpoint they have no allowance for 
now under the present method of adjustment of railway mail pay? 

Mr. Mack. I think the railroads would be glad to be relieved of 
the service. 

The Chairman. Would not the railroads be glad to cooperate with 
the Government if under their operation of the service they could 
perform it much cheaper than the Government, as a distinct govern- 
mental activity ? 



EAILWAY MAIL PAY. 219 

Mr. Mack. I think in the adjustment of mail pay an agreement or 
understanding could be reached that would be satisfactory to the 
commission with regard to that question. 

The Chairman". Do you think that is possible of solution so that 
you could arrive at what would be a fair compensation ? The Mis- 
souri Pacific Road is receiving $2,500,000 out of $55-000,000 of the 
total railway mail pay, and the R. P. O. car, or $54,000,000. It 
costs you from $25,000 to $30,000 that, from your viewpoint, you 
receive no compensation for. It would amount to but a few hun- 
dred thousand dollars, as compared with the ex-Postmaster General's 
statement, where he, according to that statement you have read, 
estimated that it would cost the Government $3,400,000 to perform 
the same service. Is that correct? 

Mr. Mack. The direct expense and the value of the service to the 
department are two separate things. 

The Chairman. I appreciate that, but what I wanted to get at 
was whether the position of the transportation companies is that 
they should be relieved entirely from the side service, or whether they 
would be glad to perform that service with the cooperation on the 
part of the Government, on the assumption that they could perform 
it cheaper than the Government could, if they received compensation 
for the service rendered? 

Mr. Mack. I think that that could be agreed to. I do not know 
that the railroads have considered that question definitely, but I 
think it would be agreed to. 

The Chairman. Is not that a question ? Here you have an appar- 
ent estimate, presented from some viewpoint, as though the railroads 
were underpaid $4,300,000. That is based, as I now infer, upon a 
report made by an ex-Postmaster General, and yet any information 
that we have before the commission on that particular subject is 
that it costs the Missouri Pacific from $25,000 to $30,000 additional 
for performing that service themselves instead of the Government 
performing it, and the Missouri Pacific receives $2.500 ; 000 out of the 
$54,000,000, we will say, of the total railway mail pay and R. P. O. 
pay. Applying that information it would simply show that the rail- 
roads were only losing three or four hundred thousand dollars because 
of the side service. 

Understand, I am not applying that because I believe myself that 
it would not be fair to all of the 795 different railroads with whom 
the Government has mail contracts to apply the experience of the 
Missouri Pacific. It simply shows the variety of viewpoints that 
must come up in the study of a subject of this magnitude, does it not ? 

Mr. Mack. It does. 

The Chairman. And I think it would be most interesting and im- 
portant to the committee to see whether the railroads' position was 
that they should be relieved entirely of the side service or receive a 
compensation for the side service on the basis of the additional cost 
to the transportation company for the 'service rendered, with a com- 
pensation that could be arrived at for the value of the cooperation. 

Mr. Lloyd. Your company receives about one-twentieth part of 
that amount which is paid for carrying the mails. 

Mr. Mack. We receive about one- twentieth ; yes. 

Mr. Lloyd. It costs you, as you say, between $25,000 and $30,000 
to perform this extra side service. It would cost the Government, 



220 EAILWAY MAIL PAY. 

according to the estimate of the Postmaster General, $4,300,000; 
that is, to perform the whole service in the United States. If it cost 
just its proportional part to render the service as rendered by your 
road it would cost the Government $215,000. . That is one- twentieth 
part of $4,300,000. Now, it has cost you $25,000, whereas the same 
service would cost the -Government $215,000 if the Postmaster- 
General in his statement is correct. 

Mr. Mack. I can not say what it would cost the Government, but 
those are the figures which have been, submitted. 

Mr. Lloyd. What I am trying to get at is a concrete statement. 
If we take it for granted the Postmaster General's was a correct 
ascertainment that it would cost the Government $4,300,000 to 
render this service and it would cost you the one-twentieth part to 
perform the service on your road, it would cost the Government 
$215,000 to perform the service on your road; yet according to your 
statement it has only cost you a little over $25,000 to perform that 
service which would cost the Government $215,000. That is the 
most accurate statement that we have had in connection with any- 
thing concerning the side service. 

Mr. Mack. That is true as to the direct cost. The two figures do 
not represent the same thing. The $25,000 represents the service 
where we pay for it. The $215,000 would provide for the service at 
all of the stations on our line where we do not 

Mr. Lloyd. You are one of the best posted men on railway mail 
pay that I know anything about. I want to ask you this question: 
What, in your judgment, is the comparison between the two, that 
service which costs you actually $25,000 and that which it costs you 
in connection with other service ? Which of the two is the greater ? 

Mr. Mack. I do not get the point. 

Mr. Lloyd. Does it cost you more for the service that is rendered 
in this side way by those who perform other service, or does it cost 
you more for that which is rendered in specific service for which you 
pay $25,000 ? 

Mr. Mack. The cost of the service incidentally rendered we have 
no figures upon. 

Mr. Lloyd. With your general knowledge, do you think it would 
cost as much as that which you actually spend for the specific service ? 

Mr. Mack. It would be merely an estimate. 

Mr. Lloyd. I know it would, but your estimate is one of the best I 
know of that we could get. 

Mr. Mack. It would be based upon a division of the time of the 
station employee engaged in handling the mails. We have those 
figures, and we gave that information in one. of the reports to the 
Post Office Department. 

Mr. Lloyd. Haven't you a copy of it ? 

Mr. Mack. I have, but I haven't the summary. I will put it in 
the record. 

Mr. Lloyd. I wish you would. That will help us reach a basis in 
connection with it. The trouble is with all this we do not get any- 
thing on which to stand as a basis. You have given us a basis on 
your road of what it will actually cost you. Now, if you can give us 
an estimate of the basis of what it will cost you for the service per- 
formed partly by the railroad and partly by the Government, then 



KAIL WAY MAIL PAY. 221 

you have on your railroad a practical, complete expenditure for this 
side service. Then if we can ascertain what it would cost the Gov- 
ernment to perform that side service, we can take the difference 
between what it cost you and the Government and make the ascer- 
tainment the chairman has undertaken to find out, and I believe 
from you we are going to get those figures. 

Mr. Mack. Of course it is going to be considered, as I said in the 
outset, that in the department's calculations of cost, by which they 
arrived at their figures of $9,000,000, that this service was not calcu- 
lated 

Mr. Lloyd. I understand that, but I am going at this in connection 
with Mr. Meyer's statement, taking that as a correct basis that it 
would cost the Government $4, 300, 000, and now we want the facts 
as to what it would cost the railroads. 

The Chairman, I think we should put in the record that the point 
is simply a computation and not a definite ascertainment. 

Mr. Lloyd. Certainly; I did not accept it as true. 

Mr. Mack. Mr. Stewart testified the other day that it was approxi- 
mately $4,000,000. 

Mr. Lloyd. Mr. Peters's statement is based upon the theory that 
that is probably the most accurate statement we have. 

The Chairman. As I remember Mr. Peters's testimony, he said he 
figured that it would cost about $1,000,000. 

Mr. Mack. There may not be a great deal of difficulty in furnishing 
the committee at its next meeting with some satisfactory information 
as to the direct cost and as to the estimated cost. 

Mr. Lloyd. Have you any special information that you can give us 
on the question of space as the determining factor ? If so, we would 
like to have it. 

Mr. Mack. That is, space as compared with weight ? 

Mr. Lloyd. Space as a determining factor, rather than weight. 

Mr. Mack. I have some views on that subject, Mr. Lloyd, but I 
thought the investigation was taking a turn with a view of developing 
conditions in car-foot miles. 

Mr. Lloyd. Would you rather submit that later ? 

Mr. Mack. I think it would be more appropriate later, if agreeable 
to the committee. 

Mr. Lloyd. I am anxious for Mr. Mack now or some time to give 
us all of the information that he has in connection with every branch 
of this whole question. Where he has investigated it I am sure his 
information will be very illuminating. 

The Chairman. Mr. Peters, as the chairman of the Railway Mail 
Association I would ask you on behalf of the committee if you will 
designate a committee of three to confer with a similar committee of 
three, to be appointed by the Second Assistant Postmaster General, 
Mr. Stewart, as representing the department, to take up what is 
known as Document No. 105, and determine what the difference is 
between your representatives and the departmental representatives, 
whereby upon the same figures, which, as I understand, were the 
returns rendered by the transportation companies to the department 
in respect to specific questions, you reached the conclusion that the rail- 
roads received from the mail 3.23 mills per car-foot mile and from other 
service 4.35 mills per car-foot mile, while the department reached the 

49396—14 22 



222 KAIL WAY MAIL PAY. 

conclusion that you received from the mail 4.14 mills per car-foot 
mile and 4.16 mills from other service. Also to take up the extract 
from ex-Postmaster General Vilas's statement, as appears in the 
Postmaster General's report of the year 1887, referring to the R. P. O. 
car and make comments in reference to that statement and furnish 
the result of the conference between your respective committees to 
this commission now sitting within the next two weeks if possible. 

Mr. Peters. We will be very glad to do that, but we think it will 
take from two to three weeks. It will be done as quickly as possible, 
and we will appoint Mr. Mack, Mr. Bradley, and Mr. Plant, the comp- 
troller of the Southern Railway. I think Mr. Plant will be glad to 
serve, and he is an expert accountant and the head of the American 
Association of Railway Accountants. 

The Chairman. We are very much obliged, Mr. Mack. 

STATEMENT OF MR. S. C. SCOTT. 

The Chairman. Mr. Scott, it will be necessary for you to be sworn. 
Thereupon the witness was duly sworn b}^ the chairman. 

The Chairman. Kindly state your name, age, residence, and 
occupation. 

Mr. Scott. My name is S. C. Scott. I am assistant to the 
first vice president of the Pennsylvania Lines West of Pittsburgh. 
My residence is Pittsburgh, Pa. I am 59 years of age. I have been 
in the service of the Pennsylvania Lines for something over 31 years. 
Mr. Chairman, I have written out what I have to say, because I have 
had no experience in testifying before committees, and I am liable 
to forget things unless I have the information in front of me. With 
reference to what I have prepared, a considerable part of it is statis- 
tical, and with your permission I will summarize the figures as briefly 
as possible. (See tables at the end of Mr. Scott's statement.) 

In compliance with the request of the chairman and Mr. Weeks, I 
beg to submit the following statements which are attached hereto: 

First. Statement C, which shows for the Pennsylvania Lines West 
of Pittsburgh the miles of road, pounds of mail per day, tons per day 
over the route, ton-miles per annum, and the gross earnings and 
average ton-mile earnings from weight and from R. P. O. car space 
and the total, now in effect. 

In several of the statements, to which your attention is called, 
comparison is made with similar data submitted by Mr. James 
McCrea, under date of December 30, 1898, to the Special Committee 
on Postal Service, of which Hon. E. O. Wolcott was chairman. 
There was no special reason for selecting the year 1897 for compari- 
son, except that it was the only period for which similar data was 
available. 

Second. Statement C-l gives the same character of information as 
Statement C for the year 1911 compared with 1897, except that in 
order to get on a comparative basis, only such routes are shown as 
were included in the Pennsylvania Lines in 1897. 

The Chairman. Are these routes selected with a view to making 
these statements ? 



EAILWAY MAIL PAY. 223 

Mr. Scott. They are selected with a view to showing the results 
on the so-called lines of dense mail traffic. 

In connection with this statement, attention is called to the fact 
that with a decrease of 2.03 per cent in miles of road operated there 
is an increase of 114.4 per cent in the number of tons over the route; 
109.9 per cent in the tons hauled 1 mile; 67.2 per cent in pay for 
weight carried, with a decrease of 7.6 percent in the pay for K. P. O. 
car space. The average earnings per ton per mile for weight carried 
has fallen from 8.05 cents to 6.41 cents, or 20.4 per cent; the rate per 
ton per mile from pay for R. P. O. cars from 2.31 cents to 1.01 cents, 
or 56.3 per cent, and the total from 10.36 cents to 7.42 cents, or 
28.4 per cent. 

Third. Statement D shows a comparison of the mail operations 
and receipts in 1897 and 1911 between Pittsburgh and St. Louis. 

Briefly this statement discloses that for transporting a postal car 
costing, approximately $12,000, with 2.94 tons of mail, at a speed of 
over 35 miles per hour, the railroad company received 3.19 mills 
per ton per mile for the gross weight of the car and its load; 
while for a freight car costing, say, $950, with 18.12 tons of lading, 
moved at an average speed of 11 miles per hour, the company received 
3.16 mills per ton-mile. In the case of the mails we haul 20.6 tons 
of dead weight for each ton of mail, while for freight we only haul 
1.06 tons of dead weight for each ton of freight. 

The Chairman. What is the total tonnage capacity of that car, 
if fully occupied with mail ? 

Mr. Scott. I should say about 15 tons. 

The Chairman. Then the loss of carcying space falls on whom, 
the railroad or the Government, under the present method of com- 
putation ? 

Mr. Scott. I think the railroad. 

On this line the tons carried 1 mile increased 90.4 per cent and the 
pay for weight carried 72.7 per cent, while the pay for R. P. O. cars 
decreased a fraction less than 20 per cent. With an increase of 90.4 
per cent in the ton-miles, there was an increase of only 28 per cent in 
the average load per car, which, on this main trunk line, still remains 
at the low average of 2.94 tons per car. The average earnings per car- 
mile were 20.80 cents. 

Fourth. Statement E gives similar information and comparisons for 
the line between Pittsburgh and Chicago. 

On this line the receipts for hauling a mail car and its lading is only 
2.83 mills per ton per mile, as against 3.06 mills per ton per mile for a 
freight car and its lading, while the average mail-car load has failed 
from 2.80 to 2.59 tons, and the earnings from mail per car-mile have 
decreased from 26.1 cents to 17.89 cents; all this with the same differ- 
ences as to the cost of the cars and the speed of movement. Dead 
weight per ton of mail is 23.4 tons, as against 1.04 tons for a ton of 
freight. 

It costs just as much to haul an empty car as it does a loaded car. 

The Chairman. It costs you just as much to haul a car empty with 
a capacity of 60 tons as it does if it was loaded? 

Mr. Scott. Probably I did not say that right. It costs just as 
much to haul a ton of car as it does to haul a ton of freight. 



224 EAILWAY MAIL PAY. 

The Chairman. In that connection, does it ? You mean the power ? 

Mr. Scott. Yes; I mean the operations of a railroad are all reflected 
in the movement of the train. 

The Chairman. That statement of yours is simply applicable to 
power. It would not be applicable to operating expenses. 

Mr. Scott. Only in a general way. 

Fifth. Statement K covers the line from New York to St. Louis 
and gives like data and comparisons. 

Here again the ton mileage has increased over 97 per cent, the pay 
for weight 75.9 per cent, and the pay for R. P. O. cars shows a decrease 
of 8.2 per cent. 

The receipts per car-mile are 22.54 cents for both weight and space; 
the receipts per ton-mile for mail car and lading are 3.51 mills, while 
for freight cars and lading the earnings per ton per mile are 3.23 mills. 
While the total mail traffic as represented by the ton mileage has 
increased over 97 per cent, as stated above, the average load per car 
has only increased 21.4 per cent, and at the last weighing was only 
3.52 tons per car. On this through line the dead weight per ton of 
mail is 17.2 tons, while for freight it is only 0.77 of a ton. 

The latest available figures covering the mileage of cars in passenger 
trains are those of the Interstate Commerce Commission, shown on 
page 66 of Railway Statistics of the United States (1910) for the year 
ending June 30, as follows: 

Passenger-car miles 1,420,353,329 

Sleeping, parlor, and observation car miles 628, 244, 180 

Other passenger-train car miles 949, 572, 994 

Total 2, 998, 170, 503 

On page 51 of the same report we find that the total earnings from 
all traffic carried on passenger trains during the same period were 
$764,773,354, and a simple matter of division of the former into the 
latter shows that the average earnings of all cars moved in passenger 
trains in that year, both loaded and empty, were 25.51 cents per car- 
mile. 

It has been shown in Statement D that for mail cars between 
Pittsburgh and St. Louis, the earnings per mail-car mile are 20.32 
cents; on Statement E that the earnings per mail-car mile between 
Pittsburgh and Chicago- are 17.89 cents, and in Statement K that the 
earnings per mail-car mile between New York and St. Louis are 22.54 
cents, in each case well below the average earnings of all kinds of cars 
carried in passenger trains. 

Certainly these statements do not seem to offer any convincing 
proof of overpayment on the so-called lines of dense mail traffic; on 
the contrary do they not point rather to the impracticability of 
securing any substantial increase in the loading of mail cars and the 
consequent inability upon the part of the railways to make effective 
those economies in the movement of mail traffic that are readily 
accomplished with increase in the volume of all other kinds of traffic. 

In passing, I would like to say a few words concerning two mail 
trains which, for the distance traveled, are probably the fastest in the 
world. They are trains Nos. 11 and 45 between New York and 
St. Louis over the Pennsylvania lines and are scheduled to make the 
run of 1,060 miles in 23 hours and 55 minutes, or at the rate of over 
44 miles per hour. 



RAILWAY MAIL PAY. 



225 



The following statement shows some of the changed conditions 
that have taken place: 



Train No. 11. 


1912 


1897 




6 

Steel. 
400 


6 


Character of materials 

Length of cars in train 




feet.. 

1 ons . . 


Wood. 
350 


Weight of cars 


338 
221 


227 


Weight of locomotive 




do.... 

do.... 

do.... 

do.... 


90 


Weight of train 

Weight of mail in train 

Dead weight per ton of mail. . . 


559 

27 

20.7 


317 

21 

15.1 



Train No. 45 has been in commission since March 26, 1911, and 
is of practically the same make-up as No. 11, but carries about 30 
tons of mail, and the dead weight per ton of mail is about 18.6 tons 
instead of 20.7 tons. 

Because of their fast schedules these two trains overtake and pass 
around a large number of trains traveling in the same direction 
and meet and pass many opposing trains on single track. In all 
such cases the other trains are delayed from 20 minutes to 1 hour, 
and it is estimated that these two trains each cause delays to other 
trains that in the aggregate equals the total time which they consume 
in running from New York to St. Louis. 

While w^e have no figures as to expense other than average cost 
per train mile, it is beyond all question that the cost of running these 
trains is greatly in excess of any average figures. 

The following shows the preponderance of mail movement in one 
direction over the other: 



Between — 


Weighing. 


West. 


East. 


New York and Philadelphia 


Spring, 1909. . . 
.....do 


Per cent. 
71.90 
78.37 
66.79 
62.94 
83.42 
78.92 
72.50 
74.35 
88.57 
86. 15 
1 76. 62 


Per cent. 
28.10 




21.63 




Spring, 1911... 

Fall, 1911 

Spring, 1911... 

Fall, 1911 

Spring, 1911... 

Fall, 1911 

Spring. 1911... 

Fall, 1911 

Spring, 1911... 


33.21 


Do 


37.06 


Pittsburgh and Columbus 


16. 58 


Do 


21.08 




27.50 


Do 


25.65 




11.43 


Do 


13.82 




2 23. 38 







North. 



a South. 



It will be noticed on the Fort Wayne route between Pittsburgh and 
Chicago that they have the largest per cent of the movement east- 
bound, being 37 per cent, while between Indianapolis and St. Louis 
the eastbound movement was less than 14 per cent. 

Under such conditions of traffic the empty haul becomes a factor 
of large import in determining the profitableness or unprofitableness 
of the mails even on the lines of greatest density, and trains like Nos. 
1 1 and 45 should earn sufficient in one direction to compensate for the 
almost entire absence of earnings in the other. 

I have been asked by Mr. Peters to reply to Mr. Weeks' s inquiry as 
to the practicability of the Post Office Department segregating the 



226 



KAILWAY MAIL PAY. 



through from the local mails and asking for bids for handling the 
through mails as a distinctive movement, between, for instance, New- 
York and St. Louis, and it seems to me the answer depends primarily 
upon the question as to whether there is a sufficiently large volume 
of distinctly New York-St. Louis mail to justify its being withdrawn 
from the regular service and handled independently. 

The Chairman. But would it be withdrawn from the service and 
handled independently upon Mr. Weeks's question? 

Mr. Scott. It was my understanding of Mr. Weeks's question that 
he proposed to take the New York-St. Louis and New York-Chicago 
mail that was destined to go through and handle it in solid cars from 
one point to another. 

The Chairman. That is the through mail, to see whether there 
could not be a separation of that, and put into competition with the 
various competitive lines traveling over that route. 

Mr. Scott. Over all of the roads between New York and St. Louis. 

As to this I am wholly unable to say. We all know that there is a 
very large volume of mail leaving New York for St. Louis each day 
by the Pennsylvania lines. On the four principal mail trains, it is 
approximately as follows: 



Train. 


Leave New 
York. 


Weight of 
Mail. 


Train. 


Arrive St. 
Louis. 


Weight of 
Mail. 


No. 25 


8.25 a. m 

6.30 p. m 

9.30 p. m 

2.50 a. m 


Pounds. 
25,000 
50,000 
57,000 
6$ 000 


No. 13 


8.30 a. m 

5.25 p. m 

1.45 a. m 


Pounds. 
15,847 
49, 946 




No. 45 


No. 1019 




48,081 


No. 11 


Total 






Total . 


197,000 


113, 874 













The Chairman. Is this all the mail that is handled between New 
York and St. Louis, or just the mail that is handled by your system ? 

Mr. Scott. We haul most of the mail between New York and St. 
Louis. 

The Chairman. Does that represent all of the mail or only what 
you haul ? 

Mr. Scott. That represents only the mail handled on those four 
trains. 

The Chairman. And not all of your trains ? 

Mr. Scott. No, sir. 

Of course these figures refer to the average amount of mail car- 
ried over the route, but the 197,000 pounds leaving New York begins 
to dissipate almost from the moment it starts and a very large part 
of the mail going into St. Louis did not start from New York at all. 
A large mail leaving New York City in these trains is destined to 
Trenton, Philadelphia, and intermediate points, and some of it to 
points south of Philadelphia; while they receive at Philadelphia 
a very large mail for points west as far as the Pacific coast, as well as 
receiving and delivering mails at almost every station between 
New York and St. Louis. 

So far as I know, there are no single cars regularly loaded solid 
at New York and carried through to St. Louis on these trains, but 
mail for different States is loaded into and taken out of the different 
cars at all of the principal stations en route. 



KAIL WAY MAIL PAY. 227 

At the last reweighing the Pennsylvania Lines carried between 
Indianapolis and St. Louis a daily average of 145,657 pounds. Of 
this almost 14 per cent or, say, 20,000 pounds moved eastbound, 
and of the remaining 125,000 pounds it would be a very broad as- 
sumption to say that half of this came from New York — I should 
guess 25 per cent or less — but if we have 62,500 pounds per day 
New York to St. Louis, it could easily be loaded into two cars, and 
no two cars of mail would justify a special train from New York to 
St. Louis, so that the only thing the Post Office Department could 
do would be to put them on some of the existing trains — which they 
can do now; however, if this amount of mail was taken from the 
existing two exclusive mail trains, the amount remaining certainly 
would not justify the continuance of both of them, and, unless the 
whole quantity was taken from one of these two trains and the 
other left as it now is, the company could not reasonably be expected 
to run either of them. 

The Chaikman. Then, as I understand, the suggestion made by Mr. 
Weeks would not be capable of being put into operation. 

Mr. Scott. Of course this is a new question for me and I am only 
expressing the views that have occurred to me in the matter. I 
should think they would not. That will develop as we go on, though. 

Then comes the question of the local service, the cost of which 
probably could not be proportionately reduced. We all know that it 
takes almost as much space to make separations for 1 ton of mail 
as for 2 tons, and saparate dispatches of mails would have to be 
made from many local points on pouches made up on trains for St. 
Louis and points west that are now included in the through pouches. 

As I understand the theory of mail handling on postal cars, it con- 
templates a gradual but steady broadening of the scope of separations 
as the mails approach their final destination. For instance, the clerks 
on west-bound mail trains leaving New York, Philadelphia, Wash- 
ington, and other large mail-producing centers, concentrate their 
efforts first on mail to be dispatched at nearby points and the mak- 
ing up of pouches for connections or for return on trains in opposite 
directions; later, they take up city distribution for some of the more 
important cities served by their particular train; then separations for 
purposes of expediting dispatches on immediate connections, and, 
finally, separations for nearby States via different connections from 
large terminals like Chicago, St. Louis, Kansas City, Omaha, and St. 
Paul. At all times from the departure of the train from the initial 
point there are pouches and sacks on the racks into which mails picked 
up en route are being consolidated for final distribution in Kansas, 
Colorado, Arizona, New Mexico, California, Utah, the Dakotas, Ore- 
gon, and Washington, etc. Mail from New York and Philadelphia and 
other points in the East destined to these far western States is not 
handled on the trains between New York and St. Louis or New York 
and Chicago, except to the extent referred to above. 

I am speaking with reference to our own line. I do not know what 
the New York Central does in this matter. 

On the contrary, mails from the far West, as well as the local mails, 
must be assorted on the east-bound trains for final despatch. 

This being the situation, we will assume that a certain volume of 
mail for Chicago and poirits beyond is awarded to, say, the Erie I? ail- 



228 RAILWAY MAIL PAY. 

road Co., to be handled in solid car or train loads. There would be no 
necessity for the handling of these mails en route,, and consequently 
no clerical force, but there would still remain on the New York 
Central Lines all of the mail traffic from the New England States and 
that to and from the large cities and contiguous territory which it 
serves, requiring a force of clerks and car space almost if not fully 
equal to that now used. Obviously there could be no concentration 
of the east-bound movement of through mails, because at Chicago and 
St. Louis these mails have reached points from which distribution for 
final dispatch must be made and to a large extent they become local 
to the line over which they are routed. 

Even if it were practicable to concentrate any considerable quantity 
on the Erie Kailroad, it would be necessary to organize a force of 
clerks for distribution purposes, while ample facilities are already 
available on the various local lines. 

As I see it, the Erie Railroad Co. could only afTcrd to carry this mail 
at a rate that would compensate it for the movement in both direc- 
tions, and the Post 'Office Department could not make a reduction in 
its expenses on the local lines at all proportionate to the reduced 
weight while the weight remaining on the local lines would, under the 
existing law, take a considerably higher rate than it does now. 

It must be remembered that so far as the weight is concerned, all 
of the mail between New York and St. Louis, and a great deal more, 
could easily be handled on one train per day, but a train so loaded 
would not permit any work being done on it. 

The Chairman. In that connection you mean so far as the weight 
is concerned the car has the carrying capacity for all of the mail, 
but it would not enable them to have the space to work the mail in 
the car. 

Mr. Scott. That is the idea. 

If any substantial part of this mail was to be consolidated on one 
train, a special movement would be necessary in order to make the 
connection at St. Louis ; but it seems to me that such an arrangement 
would inevitably result in a discontinuance of some of the existing 
fast mail trains, and while it would no doubt give a very satisfactory 
service for New York, would result in seriously retarding the mails 
from all intermediate points destined to the territory west of St. 
Louis. It is hardly possible for any person, looking at this proposi- 
tion from one side only, to do more than speculate as to the out- 
come. As it appears to me, it would revolutionize the whole mail 
traffic proposition, and if a service equal to that now in effect is given 
to all localities, I can not see how any important economies to the 
Post Office Department can be accomplished. 

The question has been raised before this committee as to whether 
or not a railroad company carrying mail for the General Government 
was entitled to receive the same rate of return on that part of its 
capital representing property used in the performance of such service 
as it receives for that part of its capital invested in freight facilities, 
etc., and it has been suggested that there is some vague, illusive, and 
indescribable relation existing between the railroads and the Gov- 
ernment by reason of which the former are called upon to perform a 
service rendered the Government for some~f>rice less than it would 
do the same service for individuals. 






RAILWAY MAIL PAY. 229 

A service for the Government is a service for the people. The 
people have a right to conduct any service in any way that they may 
deem best. Take the Post Office Department, for instance. The 
function of free communication between all parts of the country is a 
matter of such vital importance to the people individually and col- 
lectively that the element of cost has to a large extent been lost 
sight of. In no other country in the world is there a postal service 
so complete in all its details. It is true the newspapers talk about 
deficits semiperiodically, and once in a while we have heard of a 
surplus ; but does anyone know of a single citizen in the whole country 
who is willing to forego any of the conveniencies he now enjoys in 
order to make the Post Office Department self-sustaining? 1 think 
not. Now, if the people want this kind of service, ought not the 
people — the whole people — to pay the bill ? 

The men who operate the railroads of the United States do not 
own them. I think it would be a very great surprise if it could be 
known how little of them they do own. They are simply employed 
for a special kind of work, and the people who employ them — the 
stockholders of the railroads — are plain, simple citizens of the United 
States, and to my mind are no more called upon to devote any part 
of their property to the service of the people at less than cost than 
should stockholders in banks, steel mills, furniture factories, or for 
that matter, farmers. 

The great reason why a railroad is looked upon as being under 
some special obligation to the Government — that is, some obligation 
different from that of a steel corporation or a coal company or a 
farmer, if you will — is that it gets with its charter the " right of 
eminent domain." 

Now, this simply means that in order that the building of a rail- 
road might not be stopped by someone who owned, or had bought 
for the purpose, a piece of property needed by the railroad, and for 
which an unreasonable or exorbitant price was being demanded, the 
State says to the railroad company, "You can have this property 
appraised and take what you need by paying its full value"; that is 
all there is to it. Supposing the people had not wanted railroads 
built or had not cared whether they were built or not, do you think 
they would have given the railroads any such right? Now, so far 
as I know, this is the only difference in the relationship between 
railroad corporations and the Government and any other corpora- 
tion and the Government, and it is the only ground that I am aware 
of upon which to base the proposition that the railroads should per- 
form a governmental service at a less rate than it gives the public. 
m The Chairman. You do not think there is anything in the protec- 
tion due to the carriage of the mails or noninterference with the 
carriage of the mails ? 

Mr. Scott. In the case of a strike, I would say yes. Otherwise, I 
think the protection is the same that the Government gives to other 
corporations. 

We are before you, gentlemen, in order to protect the revenues of 
the companies winch we represent, and I want to say that the rail- 
road officials of the country generally look upon the existing condi- 
tions with the utmost apprehension. Comparing the year 1912 with 
the year 1909, the operating revenues increased $433,174,027, or 16 



230 RAILWAY MAIL PAY. 

per cent, but the net operating income, after paying taxes, only 
increased $7,180,844, or 0.88 per cent. Taxes increased $32,946,125, 
or 35 per cent. Rates, both passenger and freight, have for many 
years been stationary or in a downward scale, while expenses for 
both wages and materials are going up by leaps and bounds. We 
all recognize the right of the Government and the obligation of the 
Post Office Department to conduct its business in the most economical 
manner consistent with reasonable recognition of the rights of the 
railroads, and we are only here to ask for a fair and impartial decision 
upon the part of this committee and Congress as to the reasonableness 
oi our contention. 

The Chairman. The system with which you are connected is mak- 
ing extensions continuously, is it not ? 

Mr. Scott. Only in the way of building branch lines occasionally. 

The Chairman. Take the Pennsylvania system, as a whole; in the 
determination as to whether they will extend or build any branch 
line or extend in any way any of their lines, do they take into calcu- 
lation any railway-mail pay that they would receive from the 
Government ? 

Mr. Scott. I should think not. 

The Chairman. It would not be considered % 

Mr. Scott. I should think not. 

The Chairman. Then is there anything in this viewpoint: The 
question continually comes up in my mind that the railway mail pay, 
from one phase, is a sort of by-product of transportation. You do 
not think that is sound % 

Mr. Scott. I think it is to a certain extent, but we have always 
felt it ought to pay its fair proportion of the traffic movement. 

The Chairman. Then to your mind there is absolutely no dis- 
tinction, if I catch your idea, between mail compensation and com- 
pensation for ordinary transportation — that is, freight, passenger, or 
express — that they should all be dealt with exactly the same ? 

Mr. Scott. That is my general view. Of course we all recognize 
our obligation to move the mail and to give the service to the public, 
but as a matter of compensation we think it ought to be all on the 
same basis. 

The Chairman. Do you nojb think you get an indirect benefit from 
the improvement in mail f acilities in business in general ? Is not all 
business founded and dependent on mail facilities and benefited by 
improved mail f acilities ? 

Mr. Scott. I think I would answer that question by suggesting 
that business and the mail facilities are improved by the railroad 
facilities. I think they go jointly together. I do not see how you 
can separate them. 

The Chairman. There is much force in that, but is there not an 
indirect benefit to the transportation companies in this extension 
incident to improved mail facilities because of the dependence that 
business has upon the method of intercommunication between 
citizens ? 

Mr. Scott. I think so; yes. 

The Chairman. That does not apply to business ordinarily — that 
is, to freight and passenger business — or is there anything in that 
viewpoint, in your opinion ? 



RAILWAY MAIL PAY. 231 

Mr. Scott. I would hardly think it went that far, Senator. 

The Chairman. Then the only difference that you make between 
freight, passenger, and express service and the mail is the difference 
that you have given in your statement and the protection of the 
Federal Government in the case of strikes ? 

Mr. Scott. Yes; I am speaking from the standpoint of the financial 
benefit to the company. 

The Chairman. Has not the Pennsylvania Kailroad done business 
at a very low cost, or even at cost, for the purpose of getting business 
from competitors heretofore ? 

Mr. Scott. I think all classes of corporations do some business for 
much less than cost when they are in competition. 

The Chairman. Do they do it in cases where they are not in com- 
petition, but with the idea of building up business in general, and 
thereby indirectly receiving the compensation in the total gross 
receipts ? 

Mr. Scott. I think that has been done in the past more than it is 
done at present. 

The Chairman. Due to the law and regulations ? 

Mr. Scott. Yes, sir. 

The Chairman. Not because of a policy adopted by the railroads ? 
T put that not assertively, but interrogatively. 

Mr. Scott. I do not know that I could answer the question clearly. 
I do not know that I understand the drift of it. I think the railroad 
companies in the past had to develop certain industries on their 
lines, and before the existing regulations with regard to railroads, 
they used to give them advantages and benefits to enable them to 
prosper for the purpose of producing tonnage later on. 

The Chairman. And you do not think the same principle would 
apply to the carriage of mail, because of the increase in business in 
general, and secondly, the increase in passenger and freight service 
incident to the benefit of improved mail facilities ? 

Mr. Scott. I should think that that was a joint and coordinate 
growth and benefit. There is one thing I would like to say with 
reference to the matter mentioned by Mr. Mack, and that is the 
question of the side deliveries. The Pennsylvania Lines paid out, 
or, as I recollect it, in connection with the statement to the Post- 
master General, they made the statment that they paid out directly 
for delivery service over and above that performed by the joint 
employees $50,000 a year. 

The Chairman. The Pennsylvania Co. receives how much per 
annum in all its systems of railway mail pay? 

Mr. Scott. About $5,800,000. 

Mr. Lloyd. That is nearly exactly in the same per cent. 

Mr. Scott. Yes; the cash outlay for side and terminal service on 
our lines is almost exactly the same per cent of the grosss mail pay 
that it is on the Missouri Pacific. I -think the railroads can perform 
that service much more cheaply than the Government directly, and I 
think the railroads would be perfectly willing to perform that service 
at direct cash cost plus a fair division of the expense where railroad 
employees perform the service without specific compensation. 

The Chairman. Then, so far as your system is concerned, the side 
service would be eliminated, from your viewpoint, as a present injus- 



232 RAILWAY MAIL PAY. 

tice to your company by the allowance of $50,000 and a fair appor- 
tionment and allotment for the postal service as performed by your 
employees, for which we make no direct outside payment. Have you 
any idea what that would amount to in dollars ? 

Mr. Scott. I have not. 

Mr. Lloyd. What would be the method of ascertaining that? 

Mr. Scott. I think the figures were given in the statement of 
November, 1909. I think that information was given in those state- 
ments. They are on file with the Post Office Department, and I have 
a copy of them at home. 

Mr. Lloyd. You could get a copy and put that statement in the 
record. 

Mr. Scott. Yes. You mean the statement I have just made ? 

Mr. Lloyd. The specific statement, in dollars, of jouy estimate of 
cost. 

Mr. Scott. Yes; I think possibly Mr. Bradley can put it in with 
reference to the entire system. What I wanted to get before you 
gentlemen was this: That we do not believe that that messenger 
service will ever cost anything like $4,300,000, and while we want to 
be relieved of the legal responsibility under which we are now required 
to perform that service, we would be glad to cooperate with the Post 
Office Department in doing it in the most economical manner in which 
it can be clone. 

Mr. Lloyd. Could you not render this branch service much better 
than the Post Office Department, where the mail is taken to the sta- 
tion and must remain there to be placed on a night train, and where 
mail has to be received from a night train to be delivered to the post 
office in the morning ? Your people can do that a great deal better 
than the Post Office Department, can they not ? 

Mr. Scott. I think we can, but we do not like to accept that re- 
sponsibility, because if anybody comes in and steals the mail the 
Post Office Department fines us for not taking care of it. 

The Chairman. In your system and method of accounts, do you 
show in addition to the receipts that you receive for railway mail pay 
and R. P. O. service, what the actual cost of the performance of that 
service is, so that you know whether you are making an actual loss 
or an actual profit, and the amount, whichever it may be? 

Mr. Scott. Mr. Chairman, I do not think that there are any rail- 
roads who show in their accounts a direct charge for the mail busi- 
ness or the express business or the passenger business. All we have 
are average figures as to the average earnings and cost per passenger 
or the average earnings and cost per passenger train. In 1898, when 
Mr. McCrea made his statement, and at every other time that we 
have attempted to secure the information we have tried to do so by 
finding out what proportion of the space occupied on passenger trains 
was occupied by mail, passengers, and express, and that is all we 
have in regard to the cost. 

Mr. Lloyd. Is it not true that every time you undertake to make 
an estimate of cost to yourselves, that you go right back to the space 
basis ? 

Mr. Scott. With reference to passenger service, yes. 

Mr. Lloyd. Any service ? 

Mr. Scott. No; not for the freight service. 



KAILWAY MAIL PAY. 233 

Mr. Lloyd. I am talking about the mail in connection with express 
and passenger service. For instance, take a passenger coach, a mail 
coach, and an express coach; in order to determine how much the 
mail should pay, you ascertain the space that is used for mail, the 
space that is used for passengers, and the space that is used for ex- 
press. 

Mr. Scott. Almost invariably, but some roads divide it on the 
basis of earnings. 

Mr. Lloyd. Then why would you say that the same basis is not 
the proper method of determining what your compensation should be ? 

Mr. Scott. Mr. Lloyd, I do not know anything about the space 
basis. That is, I do not know anything about where it is going to 
lead us. If we could agree with the Postmaster General upon the 
percentages and upon a division of the expenses between passenger 
and freight service, I do not know but what this might work out very 
satisfactorily to the railroads. 

Mr. Lloyd. Is not this true: The thing that has alarmed the rail- 
roads is the statement made by the Postmaster General that the 
space basis would result in a saving of $9,000,000? 

Mr. Scott. Why, undoubtedly. 

Mr. Lloyd. If that is true, you people would naturally be opposed 
to it because it would cut down your pay ? 

Mr. Scott. Undoubtedly. 

Mr. Lloyd. Forgetting all about that, for the sake of argument, 
is it not true that, after all, every one of us must necessarily come 
back to the space basis to determine what should be the compensa- 
tion? 

Mr. Scott. I do not know any other way to do it. 

Mr. Lloyd. Then there seems to be a difference of opinion among 
you gentlemen. 

Mr. Scott. Pardon me, Mr. Chairman. I do not say that I am 
willing to take the space-cost basis as a basis for fixing the payment 
for mail pay; that is, the cost as a basis for fixing the payment. I 
do not think cost is a proper basis for fixing rates. I think the value 
of the service should be the basis of fixing rates. 

Mr. Lloyd. Do you not, in making your freight rates, take into 
consideration the cost ? 

Mr. Scott. Mr. Chairman, the freight-rate proposition is a very old 
one, and in fixing rates to-day it is almost invariably adjusted on the 
basis of competitive rates. The rates were established many, many 
years ago, and the present rate structure is the development of every- 
thing since the railroads started. 

Mr. Lloyd. Can it be improved upon ? 

Mr. Scott. I do not know of any way in which it could. 

Mr. Lloyd. You think then that it has been solved ? 

Mr. Scott. I would no say that. I am not an expert rate man, 
but it seems to me it is wonderful the way the rate development of 
this country has progressed without any scientific basis for it, and that 
to-day it moves the traffic all over this country from one end to the 
other in the way that it does. 

Mr. Lloyd. That is due to the development of the country and the 
necessity of the citizens requiring transportation, is it not ? 



234 EAILWAY MAIL PAY. 

Mr. Scott. No; it seems to me it is simply the development of 
those great laws of " supply and demand" and " competition." 

Mr. Lloyd. Do you figue that the Pennsylvania system, or that 
portion of it with which you are connected, makes a profit or a loss 
on handling the mail ? 

Mr. Scott. The statement that we rendered to the Post Office 
Department, as I recollect it, would show that the Pennsylvania 
Lines West of Pittsburgh made $10,000 over their operating expenses 
and taxes. 

Mr. Lloyd. What amount did they receive — that is, the whole 
system— $5,800,000 i 

Mr. Scott. Yes, sir. 

Mr. Lloyd. That showed a profit over operating expenses and 
taxes of $10,000, with the receipt of $5,800,000, more than 10 per 
cent of the total railway mail pay and K. P. O. pay of the United 
States ? 

Mr. Scott. Yes. 

Subsequently Mr. Scott furnished the committee the following 
explanatory statement : 

There is a misunderstanding here due to the fact that in one case we have been speak- 
ing of the Pennsylvania lines west of Pittsburgh (about 4,900 miles), while in the other 
case the Pennsylvania system (about 10,000 miles) is referred to. The mail pay of 
the whole Pennsylvania system is in round figures $5,800,000 per annum. The state- 
ments submitted to the Post Office Department for the month of November, 1909, 
show that the lines west of Pittsburgh received about $10,500 for the month in excess 
of the actual operating expenses and taxes, while the line east of Pittsburgh received 
$39,500 less than it cost them for operating expenses and taxes, or for the entire system 
about $29,000 less than the actual operating expenses and taxes for November, 1909, or 
at the rate of $348,000 per annum. 

Mr. Lloyd. From a dollar standpoint purely, eliminating any 
indirect benefit incident to the carrying of the mail, in the way of 
prestige with competing lines in the way of business development 
incident to the mail facility, would you rather continue carrying the 
mail at the present method of compensation or discontinue it? In 
other words, would you rather abrogate and throw up all your con- 
tracts ? 

Mr. Scott. I should say no, because we have our trains going over 
the road, and whatever we get on those trains over the operating cost 
and taxes, contributes something toward the fixed or overhead charges 
and we can afford to haul it rather than not take it at all. 

Mr. Lloyd. Then the $10,000 profit over and above operating 
expenses and taxes would justify you in the continuance of the busi- 
ness, even under the present compensation that you receive, rather 
than surrender the contract? 

Mr. Scott. I would not want to say from a dollars and cents stand- 
point that that justifies it, but we would not feel justified in giving 
that up. 

Mr. Lloyd. I am eliminating that and dealing with it from a dollar 
standpoint only. 

Mr. Scott. Answering that question in that way, I do not think 
the $10,000 would pay us (the Pennsylvania Lines West of Pitts- 
burgh) for the expense, responsibility, and the extra service that we 
perform. 



KAIL WAY MAIL TAY. 235 

Mr. Lloyd. Viewing it from the cold standpoint of dollars and 
cents, would you rather not carry the mails at all than to receive 
the present compensation ? 

Mr. Scott. At only $10,000 over the actual cost; yes. From the 
dollars and cents standpoint, I would say yes. 

Mr. Lloyd. If you did not carry the mails, viewing it solely from a 
dollars and cents standpoint, your competitors would. Would you 
not rather carry it than to have your competitors carry it ? 

Mr. Scott. I do not know that I would like to commit my company 
on this proposition. If you will let me give my own personal views, 
without committing my company, I would say this 

Mr. Lloyd. You are not committing anybody. 

Mr. Scott. I have felt this way about it : I have believed that the 
railroad company that did not carry the mail, and could thus make 
its passenger schedules in order to accommodate its passengers, 
would be better off without the mail than with it. We take our pas- 
senger train into Cincinnati at 6.40 in the morning. \\ ho in the 
world wants to get into Cincinnati at that time in the morning ? We 
take our train into Chicago, from Cincinnati, at 7 o'clock in the morn- 
ing, winter and summer. We fix the leaving time of our trains at 
New York to accommodate the mail in order to make the connections 
at St. Louis. My own personal opinion is that the railroad company 
that could eliminate the mails would afford so much better passenger 
service as to attract the passengers to its trains. That is merely a 
personal view of the matter. 

The Chairman. To return, you say that the space is the sole 
determining factor in your passenger and express rates, and not 
weight ? 

Mr. Scott. No; we do not weigh the passengers, of course. 

The Chairman. I understand that. But is not the rate you deter- 
mine upon primarily based on the carrying capacity of the train and 
of the car, in the weight of material, rather than the space it has ? 

Mr. Scott. In fixing passenger and express rates ? 

The Chairman. Yes; do you not think that the carrying capacity 
is so many tons ? 

Mr. Scott. Oh, no. With reference to the passengers the capacity 
is the number of passengers that can be accommodated in a given 
train. 

The Chairman. I understand that, but the rate is based on the 
carrying capacity in weight of the train, is it not ? 

Mr. Scott. Vv eight is the prime factor in fixing rates, because the 
principal activity of a railway consists in hauling weight, or trains, 
from one place to another. 

The Chairman. Therefore, is not the fundamental basis on which ' 
all rates are founded weight and not space, and is not space supple- 
mental in passenger and express service ? I am not a traffic expert, 
you understand. 

Mr. Scott. I am not either, and I do not know that I would like 
to answer that question categorically. The passenger rate situation 
is very much like the freight rate situation; it has grown up through a 
series of years, and our passenger rates to-day are not fixed by the 
railroad company any more, but they are fixed by law; they are not 



236 RAILWAY MAIL PAY. 

a commercial proposition. We are not able to fix a passenger rate 
at what we think will be a compensatory rate. 

The Chairman. Prior to legislation fixing the passenger rates, 
was not weight really the basic measure, and the space supplemental 
to the weight, namely, the carrying capacity in weight ? Was not 
that the determining factor as to what the charge would be for the 
space occupied by the passenger or the express ? 

Mr. Scott. I do not think so, Mr. Chairman. 

The Chairman. We thank you very much, Mr. Scott. 

Following are the statistical tables mentioned at the beginning of 
Mr. Scott's statement: 



KAILWAY MAIL PAY. 



237 



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238 



KAIL WAY MAIL PAY. 



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RAILWAY MAIL PAY. 



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240 



RAILWAY MAIL PAY. 



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RAILWAY MAIL PAY. 



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RAILWAY MAIL PAY. 243 

STATEMENT OF MR. H. M. WADE. 

The Chairman. Mr. Wade, it will be necessary for you to be sworn . 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Please state your name, age, residence, and 
occupation. 

Mr. Wade. H. M. Wade; 48; agent of the mail traffic and general 
baggage agent, Erie Railroad. I have been an employee of the Erie 
Co. for about 3 years and in the Government employ for about 23 J 
years. 

The Chairman. In what capacity were you with the Government ? 

Mr. Wade. As railway postal clerk, clerk of the Railway Mail Serv- 
ice, and Assistant Superintendent of the Railway Mail Service. 

The Chaerman. Have you any prepared statement to submit to the 
committee ? 

Mr. Wade. I have. Before submitting that, Senator, I would like 
to call attention to the paragraph in the proposed bill in regard to the 
railroads providing side messenger service. 

The Chairman. You mean in the suggested bill of the department ? 

Mr. Wade. The suggested bill of the department. 

The Chairman. Submitted by the Postmaster General under date 
of January 20, on page 109 of the preliminary report? 

Mr. Wade. The proposed bill would require the railroads to provide 
city terminals and direct transfer service, etc. This would require the 
railroads, according to my understanding, to carry the mails to all 
post offices, regardless of the distances, whereas the present regula- 
tions only require them to carry it to post offices where they are 
within easy run of the railroad station. That would make a very 
material difference in the cost to the railroads. 

The Chairman. What difference, in your opinion ? 

Mr. Wade. At all stations where the Government now carries the 
mail outside of the 80-rod limits the railroads would be required to 
assume that expense. 

The Chairman. Which you figure at $1,500,000 ? 

Mr. Wade. I have not made any figures on that. 

The Chairman. Could the appropriation for the messenger service 
be applicable to the side service under this viewpoint which you 
present ? 

Mr. Wade. Practically. 

The Chairman. Will you kindly give us your statement ? 

Mr. Wade. My statement is simply a comparison showing the ine- 
quality of rates that would exist under the space-basis service : 

The following table, comparing operating expenses charged to mail service and 
car-foot miles made in mail service on several railroads, showing either an approxi- 
mately equal amount of service or allowed about an equal amount for operating 
expenses and taxes for mail service in Document No. 105, indicates a few of the 
many varying results obtained. 



244 



EAILWAY MAIL PAY. 



Operating 

expenses 

chargeable 

to mail 



Car-foot miles 

made in mail 

service. 



Operating 



per car- 
mile, 60- 
foot car. 



Astoria & Columbia River 

St. Jonnsbury & Lake Champ lain 

Colorado Springs & Cripple Creek 

Columbia & Puget Sound E.. R 

Columbia, Newberry & Laurens R. R 

Denver, Northwestern & Pacific 

Duluth, South Shore & Atlantic 

Louisville & Nashville 

Missouri Pacific 

Great Northern 

Chicago, Rock Island & Pacific 

Chicago, Milwaukee & St. Paul 

Atchison, Topeka & Santa Fe 

Pennsylvania R. R 

New York Central & Hudson River R. R . 
New York, New Haven & Hartford R. R. 
Cleveland, Cincinnati, Chicago & St. Louis 

Port Townsend Southern 

Potomac, Fredericksburg & Piedmont 

Pittsburgh & Lake Erie 

New York, Chicago & St. Louis 



$1,237.76 

857.55 

823.69 

815.07 

158. 71 

2,396.60 

2,442.61 

45,175.89 

58,575.10 

100,501.66 

84,348.16 

128,965.16 

93,614.87 

138,686.11 

129,886.96 

69,381.99 

50,847.86 

52.89 

51.83 

4,197.92 

1,589.98 



225, 

224, 

29, 

52, 

40, 

256, 

813, 

18, 191, 

16,887, 

30,889, 

30, 188, 

36, 974, 

35, 762, 

46,974, 

49, 076, 

14, 687, 

17, 610, 

1. 

19, 

674. 

837, 



571.80 
184.05 
547.00 
399. 76 
618.50 
956.00 
548.55 
222. 62 
104.88 
628.27 
296.09 
295. 97 
263.37 
972.68 
804.02 
728.45 
438.37 
869. 16 
619.60 
064. 79 
040.38 



$0.3292 
.2295 
.1672 
.9330 
.2344 
.5596 



.2081 
.1952 
.1676 
.2092 
.1570 
.1771 
.1588 
.2834 
.1732 
1.6980 
.1585 
.3726 
.1139 



Analyzing the last two items, P. & L. E. and N. Y. C. & St. L., we 
find that the P. & L. E. has five mail routes, viz, 110123, 110156, 
110159, 110187, and 110222, but one route, No. 110123, 65.10 miles 
in length, carries an average of 20,658 pounds per day, which is 
about seven-eighths of the mail carried by all of the routes. There- 
fore, the concentration of mails on this line is very largely on one 
route, which, under ordinary circumstances, would be considered as 
favoring economical operation. However, compared with the serv- 
ice on the N. Y. C. & St. L. Railroad, route No. 131089, where a daily 
average weight of only 1,527 pounds is carried, the result is very 
interesting, as it will be noted that document No. 105 credits the 
P. & L. E. with $4,197.92 operating expenses and taxes for 674,064 
car-foot miles of mail service, whereas the N. Y. C. & St. L. Rail- 
road is credited with an operating expense of $1,589.98 for 837,040 
car-foot miles of mail service. 

The Chairman. How do you account for that seeming discrep- 
ancy? 

Mr. Wade. It is in the figures. 

The Chairman. Is it an error in the computation or an error in 
the system of computation ? 

Mr. Wade. I think it is an error in the system. 

The Chairman. Then, you give this as a demonstration of the 
weakness of the system recommended ? 

Mr. Wade. Yes, sir; the various results that would obtain on 
similar railroads. 

CLOSED-POUCH SERVICE. 

The following table shows all Erie mail routes, with the total average daily weight 
of mails carried on each during the last quadrennial weighing; percentage valuation 
of all closed-pouch trains shown by the Post Office Department's train valuation 
sheets; percentage of car-foot miles credited to closed-pouch service in Document 
No. 105; and the average daily weight of closed-pouch mails based on each of these 
percentages. This table shows that the method adopted by the Post Office Depart- 
ment for estimating closed-pouch service resulted in reducing the weight more than 
50 per cent. 



KAILWAY MAIL PAY. 



245 





Total average 
daily weight of 

mail during 

the weighing of 

1909. 


Value of all 
closed-pouch 
trains as shown 
by Post Office 
Department's 
train valuation 
sheets. 


Percentage of 

car-foot miles 

credited to 

closed-pouch 

service in 

Document 

No. 105. 


Average daily weight of closed- 
pouch mails. 


Route No. 


Carried during 

weighing of 

1909 based on 

the value of 

closed-pouch 

trains as shown 

in Post Office 

Department's 

train valuation 

sheets. 


Based on the 

percentage of 

car-foot miles 

credited to 

closed-pouch 

service in 

Document 

No. 105. 


107001 


18,964 

1,566 

773 

8,836 

305 

2,131 

1,723 

1,754 

959 

515 

1,226 

2,814 

276 

702 

584 

766 

416 

18,623 

11,574 

1,614 

9,438 


0.0396 
.1409 
.2903 
.0836 
.2041 
.2013 
.2413 
.2754 
.1814 
.4611 
.1666 
.0312 
.2916 
.0065 
.3923 
.0896 
.2027 
.2906 
.0438 
.3609 
.0042 


0.0301 
.0387 
.0749 
.0419 
.2346 
.0594 
.0383 
.0715 
.0413 
.1746 
.0766 
.0692 
.0497 
.0066 
.1459 
.0242 
.0576 
.1301 
.0282 
.1612 
.0315 


751 

221 

224 

739 

62 

429 

417 

483 

174 

237 

204 

88 

80 

5 

229 

69 

84 

5,412 

507 

582 

40 


571 


107005 


61 


107006 


58 


107008 


370 


107009 


72 


107091 


127 


107150 


66 


109017 


125 


109024 


40 


109034 


90 


109037 


94 


109055 


195 


109058 


14 


110020 


5 


110043 


85 


110064 


19 


110189 


24 


131005 


2,423 


131034 


326 


131059 


260 


1310901 


297 






Total 








11,037 


5,322 













1 Shortly after the weighing of 1907, additional closed-pouch service was established on route 131090 
that greatly increased the percentage of closed-pouch mails. 

If, as Second Assistant Postmaster General Stewart admits, it will be necessary to 
weigh closed-pouch mails in order to ascertain the amount of space occupied by them, 
there would seem to be no necessity for using any theoretical basis for adjusting the 
pay for such service, as it would surely be more equitable to pay for the weight itself, 
which provides a fixed basis, instead of using a theoretical method of converting weight 
into space, which could not be accurate. 

Another means of showing at a glance the inequality of results obtained from the 
department's method of computing space is shown in the following statement. 

The ratio per 100 pounds is found by dividing the total mail car-foot miles for the 
month of November, 1909, by 30 (number of days in month), and by dividing this 
result by the length of route and by the number of hundred pounds of average daily 
weight shown by the report of last quadrennial weighing of mails. 

Route: 

Erie Railroad — Ratio per 

Class A — 100 pounds. 

107001 2. 11 

107008 2. 03 

131005 1. 17 

131034 1. 94 

131090 1. 75 

Average unit 1. 80 

Class B— 

107005 5. 18 

107006 4. 84 

107009 4. 73 

107093 3. 58 

107150 4. 18 

109017 3. 78- 



246 EAILWAY MAIL PAY. 

Route — Continued . 

Erie Railroad — Continued. Ratio per 

Class B— Continued. 100 pounds. 

109034 6. 11 

110020 6. 28 

110043 5. 21 

110064 6. 86 

1103 89 7. 51 

131059 3. 20 

109037 4. 59 

109058 .-. 7. 92 

109024 6. 82 

Average unit 5. 38 

Class C— 

107002 1. 24 

107004 2. 41 

107047 .- 2.96 

107074 2. 42 

107092 1. 08 

109030 1. 90 

109064 2. 05 

109066 4. 77 

110009 1. 00 

110024 75 

110136 1. 85 

131139 1. 54 

309059 2. 81 

109084 2. 45 

107104 4. 30 

107096 1. 27 

Average unit 2. 17 

«Class D, 109055 1. 90 

Class E, 131037 4.58 

Class A: Full R. P. O., apartment-car, and closed-pouch service. 

Class B: Apartment-car and closed-pouch service. 

Class C: Closed -pouch service only. 

Class D: Full R. P. O. and closed-pouch service. 

Class E: Apartment-car service only. 

Note. — Between the two extremes the ratio varies approximately 1,000 per cent. 

I have classified the 36 routes into classes A, B, C, D, and E, class A 
having full R. P. O. apartment cars and closed-pouch service; class B, 
apartment car and closed-pouch service; class C, closed-pouch 
service only; class D, full R. P. O. and closed-pouch service; and 
class C, apartment-car service only, showing a variation in results of 
from 1.80 to 5.38 on the same road. 

The Chairman. The criticism being concretely what ? 

Mr. Wade. That the results would be unequal rates of pay. 

The Chairman. And the criticism is on the formula adopted, is it ? 

Mr. Wade. No; this is the formula I have used in arriving at this 
result. 

The Chairman. I thought you said that was the formula used in 
Document 105 ? . 

Mr. Wade. No. Their criticism is on their form of arriving at the 
result in Document 105. 



KAILWAY MAIL PAY. 



247 



The Chairman. And you think you have demonstrated the weak- 
ness of that formula by the substitution of your formula ? 

Mr. Wade. No, sir; this is not intended as a formula for obtaining 
that rate. It is a formula for obtaining this variation in the results 
obtained by the department's formula. 

The Chairman. Then your criticism of the department's formula 
is that it causes results that vary tremendously in divergence ? 

Mr. Wade. Yes, sir. 

As an example of inadequate mail pay on short routes, your attention is called to the 
New Jersey & New York Railroad, page No. 274, Document No. 105, showing the 
operating expenses and taxes chargeable to mail service as $310.83 for the month of 
November, 1909; revenue from mail service $307.86, less $2.97. This road has two 
mail routes: 107104 and 109024, 46-83 miles in length, and has 12-foot mail apartment 
car service on eight trains running 272.23 miles per day, and closed-pouch mail service 
on eight trains running 221.83 miles per day, a cotal of 494.06 miles per day, for which 
the company received pay at the rate of $0.0239 per mile per day, which is a little 
more than the first-class passenger fare of the postal clerk who performs service in the 
mail apartment car. 

It frequently happens that the use of these mail apartment cars requires the opera- 
tion of an additional car on the train, as you will note from the attached letter from 
Mr. G. W. Kirtley, superintendent of transportation, Erie Railroad Co., dated July 18, 
1912. (Exhibit A.) This letter shows that 19 mail apartment cars on 31 different 
trains are being operated exclusively for mail service, and this is a little over one-half 
of all mail apartment cars in use on Erie Lines. 

It also may be interesting to note the revenue per car-mile received from the operation 
of a few of the mail apartment cars on the more important mail apartment car trains 
which is shown in the following table and is computed from the percentage of value 
given each train by the Post Office Department in their statement of weight of mails 
and compensation per train for mail transportation that is made up from weights taken 
during the quadrennial weighing and is approximately correct: 



Train No. 



Between- 



Revenue 
per car-mile 



Size of mail 
apartment. 



4 
5 

5 

6 

7 

7 

10 

11 

15 

16 

26 

47-25 

226 



Marion and Salamanca 

Hornell and Buffalo 

Salamanca and Youngstown . 
Youngstown and Salamanca. 

Salamanca and Marion 

Marion and Chicago 

Jamestown and Youngstown 
Youngstown and Jamestown. 

Youngstown and Marion 

Marion and Youngstown 

Salamanca and Susquehanna 
Jersey City and Salamanca. . . 
Chicago and Marion 



Feet. 
SO. 1081 

.0595 
Return deadhead. 

.0562 

.0337 

.0969 

.0972 

.0547 

.0125 

.0393 

.0344 

.0434 

.0597 

.0459 



Baggage compartment not used in any of the above-mentioned mail apartment 
cars, due to the fact that a full car is required for the baggage and express on each 
train. 

I would also submit a letter from Mr. Kirtley, superintendent of transportation of 
the Erie Railroad, which is as follows: 

July 18, 1912. 
Mr. H. M. Wade, Agent Mail Traffic. 

Dear Sir: Papers received with your letter of June 21 to Mr. Stuart relative 
70-foot combined baggage and mail car, are returned herewith. 

The amount of express shipping between Jersey City and Buffalo in train No. 1 is 
too great to be taken care of in a car allowing only 30 feet loading space for express. 



248 

Th 
mail service are as follows 



RAILWAY MAIL PAY. 

The combined baggage and mail cars which are being operated exclusively for 
foil 



Car. 


Trains. 


Between— 


Car. 


Trains. 


Between— 


603 
604 
606 
607 
608 
609 
610 

611 
612 
614 


222 and 541. . 
178 and 179.. 
532 and 531.. 
468 and 467.. 
5(478DH).. 
527 and 540.. 
10 and 11.... 

15 and 16.... 

do 

7, 226, and 4. 


Hornell and Salamanca. 
Jersey City to Port Jervis. 
Salamanca and Dunkirk. 
Corning and Rochester. 
Hornell and Buffalo. 
Salamanca and Dunkirk. 
Jamestown and Youngs- 
town. 
Youngstown and Dayton. 

Do. 
Salamanca and Chicago. 


615 
617 
618 
624 
625 

626 
627 
628 

629 


5, 618, and 6. 
do 

7, 226, and 4. 

514 and 517.. 

47, 25, 26, 48, 

and 180. 
do 

48 and 47.... 

47,25,26,48, 
and 180. 

7, 226, and 4. 


Salamanca and Cleveland. 

Do. 
Salamanca and Chicago. 
Buffalo and Jamestown. 
Jersey City and Salamanca. 

Hornell and Buffalo. 

Do. 
Jersey City and Salamanca. 

Salamanca and Chicago. 



Yours, truly, 



G. M. Kirtley, 
Superintendent of Transportation. 



Mr. Lloyd. In that connection, suppose that they were paid for the 
space that was used, if a full car was required, you have pay for the 
full car. Then there would not be objection at that point? 

Mr. Wade. No, sir; but the full car is not required. In none of 
these cases is more than 30 feet required for mail purposes. 

The Chairman. Then is your contention against the present policy 
of receiving no compensation on the apartment cars, or is your criti- 
cism against the substitution of space for weight as the determinate 
factor of the service rendered? 

Mr. Wade. This part of my paper is against the present method of 
not paying for full cars, showing that we are obliged to operate 
full cars in many instances without car pay? 

Mr. Lloyd. But if you were paid according to space ydu would 
get full pay? 

Mr. Wade. Yes; but we would not get paid for the car. This re- 
quires the operation of a full car. 

Mr. Lloyd. But you would get paid for the space used, whereas 
at the present time you get no pay at all ? 

Mr. Wade. Yes, sir; that is true. 

The Chairman. What are your objections, based on your experi- 
ence of 23 years in the Government service, to substitute the plan of 
the department of space for weight as the measure of the service ren- 
dered ? 

Mr. Wade. Chiefly because it would have no stability. It is 
subject to the varying opinions of varying officials. If you will per- 
mit me, I will also put in a little paper I wrote fitting our own fine, 
which shows the great elasticity: 

To show the great elasticity of the space basis your attention is directed to the full 
railway postal car service between Jersey City and Chicago on trains 3 and 8 of the 
Erie Railroad. 

This service was authorized by the Post Office Department in 1895 at the 60-foot 
full postal car rate, and equipment was purchased by the railroad company to fulfill 
the requirements of the department. In 1907, I believe, the authorization between 
Salamanca and Chicago was reduced to the 50-foot full postal car rate, and in 1908 a 
further reduction was made to the 40-foot rate between Salamanca and Marion, leav- 
ing the service stated and paid for as follows — Jersey City to Salamanca, 60-foot rate; 
Salamanca and Marion 40-foot rate; and Marion and Chicago, 50-foot rate; these differ- 
ent authorizations being made with the full knowledge of the department that it 
would be an operating impossibility to change the cars, load and unload the mails at 
Salamanca and Marion without seriously interfering with the train schedule to the 
detriment of passengers as well as mail service and with the full knowledge that 



RAILWAY MAIL PAY. 249 

more mail was being carried in 1907 and 1908 and more distribution was being per- 
formed in the cars than when the original authorization was made in 1895. 

No doubt the officers of the Post Office Department who recommended the original 
authorization were honest in their judgment that 60-foot cars were needed and the 
reductions made were due to a different opinion held by some one of his successors. 

The Chairman. Do you contend that even theoretically space 
would not be as scientific a measure of the service rendered as weight ? 

Mr. Wade. I think not — the space alone. 

The Chairman. Do you contend that the weight is a more scien- 
tific measure of the service rendered than space, eliminating the 
personal equation of the individuals who happen to be in charge ? 

Mi*. Wade. Do you mean by that strictly weight or a combination 
of both space and weight ? 

The Chairman. As I understand, under the present method, 90 
per cent of the mail compensation is determined by weight and 10 
per cent practically by space, namely, that portion of the mail that 
goes in the R. P. O. cars. Do you agree as to that statement ? 

Mr. Wade. I think weight and space should be both considered. 

The Chairman. Both are considered to-day? 

Mr. Wade. Yes, sir. I think that is the principal item on which 
it should be based. 

The Chairman. Would both be considered under the suggested 
plan of the department ? 

Mr. Wade. Yes, sir. 

The Chairman. Then why do you criticize the suggestion planned ? 

Mr. Wade. No; I beg your pardon. The plan of the department 
says space only. 

The Chairman. It uses weight on the determination as to the 
space occupied in the pouch service. 

Mr. Wade. Simply as a means of ascertaining the weight, but not 
as the basis on which to pay for the service. 

The Chairman. I do not exactly catch your concrete criticism as 
to the substitute plan of the department as represented in this bill. 
Would you state your criticism again ? 

Mr. Wade. My criticism is that it would be too elastic, it would be 
subject to the varying opinions of the different officials and would not 
be as scientific as a combined weight and space basis. Freight 
rates, I think, are based to some extent on the weight of the com- 
modity and the space it occupies. I think express rates are, and I 
think practically all rates ^ are, except, of course, passenger rates. 
You can ship a ouggy if it is knocked down and crated cheaper than 
if it is on its wheels and occupies more space. 

The Chairman. Then I will put this question: You do not think 
the present method of determination as to the payment of mail com- 
pensation to the railroads can be improved upon so far as weight is 
the determinate factor for the railway mail pay and space being the 
determinate factor for the R. P. O. service. 

Mr. Wade. I believe that is the best' thing I can figure out. 

The Chairman. Do you agree with the gentlemen who have 
testified before the committee that an injustice is being done the 
railroads by giving them no allowance for side service and allowing 
them no compensation for apartment cars and not having a regular 
annual weighing ? 

Mr. Wade. I do, sir. 



250 BAILWAY MAIL PAY. 

The Chairman. You have heard their testimony ? 

Mr. Wade. Yes, sir. 

Mr. Lloyd. Having had experience in the Post Office Department, 
what is your objection to the quadrennial weighing? 

Mr. Wade. We simply do not receive any compensation for the 
increase in weight during the four years. 

Mr. Lloyd. Have you any other reason ? 

Mr. Wade. Well, that is the principal reason. That is the funda- 
mental reason. 

"Mr. Lloyd. I accept that as your answer, then, that that is the 
fundamental reason. But are there any other reasons ? 

Mr. Wade. None that I think of. 

Mr. Lloyd. Do you think any advantage is taken of anybody, 
anywhere, under the quadrennial system that would not be taken 
under an annual system of weighing ? 

Mr. Wade. I do not exactly understand what you mean ? 

Mr. Lloyd. I do not want to state it exactly. I thought possibly 
you could answer it in that way. To be specific, it is charged that 
the mails are padded somewhat under the present system, and ad- 
vantage, in that way, is taken of the Government and that the in- 
ducement to padding the mail is the fact that there is such a long 
period before there is to be another weighing. 

Mr. Wade. I do not think there is anything in that. I think 
if a man was crooked once in four years he would be crooked every 
year. 

Mr. Lloyd. There would be more inducement to be crooked for 
a four-year period. 

Mr. Wade. Well, perhaps. I think there are so few cases of that 
kind they are not worth considering. 

Mr. Lloyd. I am asking you from both sides. Your impression 
is that it is a false idea, that is prevalent in many localities, that the 
mails are padded for the weighing? 

Mr. Wade. I think it is. In all my experience I never found 
but one where there was any suspicion. 

The Chairman. And you have had 23 years' experience in the 
service ? 

Mr. Wade. Yes, sir. 

Mr. Lloyd. You have read the stories in the magazines and news- 
papers ? 

Mr. Wade. I do not believe in those things. 

Mr. Lloyd. That is what the people get hold of ? 

Mr. Wade. I think most of the railroads and the Government 
are honest, so far as that is concerned; I have no reason to believe 
otherwise. 

Mr. Lloyd. Who would be benefited by the annual weighing, 
rather than the quadrennial weighing? 

Mr. Wade. The railroads. 

Mr. Lloyd. Would the people be benefited in any way by having 
an annual weighing rather than a quadrennial weighing? 

Mr. Wade. The greater the compensation the railroads receive, 
the better service they would be able to perform. I do not see any 
other benefit. 

Mr. Lloyd. They are rendering the best service then can now, 
are they not ? 



RAILWAY MAIL PAY. 



251 



Mr. Wade. Possibly not. 

Mr. Lloyd. That is getting at the point I was aiming to reach. 
Is it not true that an annual weighing will only result in benefit 
to the railroad company and will have the effect of causing the 
Government to pay more money to the railroads for carrying the 
mail ? 

Mr. Wade. I should judge so. 

Mr. Lloyd. In other words, the annual weighing scheme is a 
railroad scheme to get more money for carrying the mails. 

Mr. Wade. It is a scheme to get pay for the service actually ren- 
dered. 

The Chairman. We thank you very much, Mr. Wade. 



STATEMENT OF P. R. ALBRIGHT. 

The Chairman. Mr. Albright, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you state your full name, your residence, 
and occupation ? 

Mr. Albright. T. K. Albright; residence, Wilmington, N. C. 
Age 46. Assistant to general manager of the Atlantic Coast Line 
Railroad Co. 

Mr. Lloyd. What phase of this subject do you aim to discuss? 

Mr. Albright. I have not prepared a paper on a particular feature, 
but have rather made a small general statement as to conditions on 
the Atlantic Coast Line Railroad to-day: 

The act of March 3, 1873, is the basic act for the present railroad mail rates. It is 
not believed the carriers of this country were overpaid in the earlier years of mail 
transportation, yet the original rates were decreased beginning as far back as 1876, 
by act of Congress of July 12 of that year, making a reduction of 10 per cent; by act 
of June 17, 1878, a further reduction of 5 per cent was made, and by act of March 2, 
1907, an additional reduction of 5 per cent on weights between 5,000 and 48,000 pounds, 
and practically 10 per cent on weight above 48,000 pounds, and, additionally, com- 
pensation for full R. P. O. cars was reduced about 20 per cent. In various other ways 
our compensation for handling the mails has been seriously reduced. Departmental 
orders were issued from time to time creating half lines and decreasing pay based on 
length of R. P. O. cars arbitrarily on supposed space necessary, in the opinion of the 
department, for the service between given points, irrespective of the length of the car 
operated. One of the most serious losses to railroads has been the change of the divisor 
from 6 to 7, under Order 412, effective on our lines on July 1, 1908, which alone decreased 
the compensation on the Atlantic Coast Line at the rate of about |49,000 per annum. 
This was a serious blow, particularly on the poorly-paid routes, and while it might 
have been deemed a fair method in arriving at averages in fixing pay, the compensa- 
tion or earnings for the mail service having been based on a different factor, the rail- 
roads should have had some increase in compensation otherwise to have overcome 
this great loss. 

The following table shows the annual compensation of this line for carrying the mails, 
including compensation for R. P. O. for fiscal years 1903 to 1912, inclusive, and the 
compensation for one year on the basis of the rates effective July 1, 1912: 



Year ended June 30 — 

1903 $600, 321. 39 

1904 600,841.04 

1905 618,550.63 

1906 619,622.98 

1907 611,400.10 

1908 587,897.66 



Year ended June 30 — 

1909 $607, 372. 96 

1910 608,301.17 

1911 607,869.19 

1912 590, 640. 00 

1913 618, 049. 65 



252 RAILWAY MAIL PAY. 

It should be noted that the total compensation was less for the fiscal year beginning 
July 1, 1913, than for either of the years 1905 and 1906. 

In 1905 the compensation received by this company for use of full R. P. 0. cars, 
which cars were provided at the request of the Post Office Department, and for the 
operation of which we assumed we had a well-understood contract, was $71,432; in 
1908 this compensation had been reduced to $46,936.65, and from February 23, 1912, 
the compensation was further reduced, until to-day our annual compensation for the 
use of postal cars aggregates only $13,624.65, or a loss of 80.9 per cent within the period 
of eight years from 1905 to 1912. 

The Chairman. That is, you mean a reduction in compensation? 

Mr. Albright. A reduction from $71,432. 

The Chairman. You said a loss. 

Mr. Albright. A loss in revenue from that source. 

Mr. Lloyd. How do you account for so much reduction in your 
rates when the R. P. O. car pay has increased in the United States 
with each recurring year ? 

Mr. Albright. I am unable to understand it. That is just the 
point. We have lost it. 

Mr. Lloyd. But other roads have not lost it. That is a very inter- 
esting thing to know, why your road should have lost it. 

Mr. Albright. I think I can make it still more interesting by quot- 
ing later on some figures which show the weight of the mail. 

Mr. Lloyd. Is not that by reason of the diversion of the mail to 
the Southern roads ? 

Mr. Albright. No, sir. 

Mr. Lloyd. All through mails from here go over the Southern in- 
stead of the Atlantic Coast Line ? 

Mr. Albright. Oh, no. 

Mr. Lloyd. Does not the mail to Atlanta, Florida, and New Or- 
leans go over the Southern? 

Mr. Albright. The mail to Atlanta and New Orleans does, but 
the mail for the coast points goes via the Atlantic Coast Line and 
the Seaboard Air Line. The Southern Railroad has trackage rights 
over our line from Hardeville, S. C, to Jacksonville, Fla., but they 
carry a very small portion of the mail coming into Florida. 

There was never any diminution of service rendered by these 60-foot cars; irre- 
spective of the reduction in pay the same number of cars were maintained and changed 
in accordance with departmental requirements as to construction from time to time. 
In 1911 we purchased eight modern all-steel 60-foot It. P. O. cars, and have main- 
tained them since in the lines we were originally paid for on proper basis. 

Mr. Lloyd. May I ask you right there what is the difference 
between the Seaboard Air Line and Atlantic Coast Line ? 

Mr. Albright. The Atlantic Coast Line operates from Richmond 
to Jacksonville, Fla., and on to Tampa, Fla. The Seaboard Air Line 
operates a little farther west than our line in the coast section of the 
South Atlantic States. While it does not parallel our line it is a 
competitor for the southern business. 

Mr. Lloyd. Does it start from Norfolk ? 

Mr. Albright. One of the original coast lines runs from Norfolk 
to Rocky Mount. The second main line of the system starts from 
Richmond, south. 

So, from the standpoint of the Atlantic Coast Line, it will thus be seen that our 
losses have been particularly severe, as is more fully shown in the following table, 
calculating on the reductions made effective since 1904 and on the rates to June 30, 
1912: 



KAILWAY MAIL PAY. 



253 



On weight of mail, notwithstanding the large increase in weights carried. . $5, 562. 42 

R. P. 0. pay 57,807.35 

By change in divisor from 6 to 7 49, 114. 97 

Total per annum 112, 484. 74 

While the above loss per annum is enormous, the first and second items thereof 
have been increased on account of the readjustment of pay effective July 1, 1912, 
and since that date we estimate that our total loss (had the divisor not been changed 
and had we not been subjected to the foregoing reductions) from July 1, 1912, would 
approximate $120,000 per annum. 

Had either the traffic or the cost of the service been less, there might be some argu- 
ment that, in a measure, these losses to the railroad company were justifiable, but 
neither is the case; on the other hand, the records show, taking pay for the carriage 
of mails only, the following figures: 

1904— Ton-miles per annum 3, 041, 131. 40 

Pay per annum $542, 927. 08 

1908— Ton-miles per annum 3, 811, 192. 13 

Pay per annum $564, 554. 50 

1912— Ton-miles per annum 4, 346, 608. 83 

Pay per annum $602, 336. 37 

The percentage of reduction in rate from 1904 to 1908 was 17.03, and from 1908 to 
1912 was 6.48, while that from 1904 to 1912 was 22.40. 

Looking at the earnings from another standpoint, let us consider the Pv. P. O. pay 
in conjunction with the pay for weight. It shows a reduction in receipts since 1904 
of 29.9 per cent. These figures are startling in that while a steady increase in tonnage 
is shown for the three periods named, the revenue has greatly decreased. Bear in 
mind that no element of cost necessary to handle this great business has decreased 
in the slightest degree, but, on the other hand, has enormously increased. 

During the past eight years, or since 1904, wages of railroad employees in the 
South have increased in a greater percentage than any other similar period in our 
history. 

I might say right there in the years gone by, when the South was 
partly settled and labor plentiful the wage of labor was low. In later 
years the South has been compelled to adopt the same wages practi- 
cally that other parts of the country have, where they are more 
densely populated, and they pay for similar services, and the decreased 
cost on percentage basis to the railroads of the South has been very 
mucii larger than on the railroads in any other section of the country 
with "m the past 10 years. 

We will take, for illustration, the increase in rates of pay for train crews, who are 
more closely associated with the conduct of the business under discussion. The 
table following shows the average daily rate of passenger train crews for 1903, as 
compared with the year 1912: 





1903 


1912 


Increase. 


Per cent. 


Engineers 


$3.25 
3.00 
1.50 
1.50 


$5.00 
4.50 
2.26 
2.90 


$1.75 

1.50 

.76 

1.40 


54 


Conductors 


50 


Firemen 


50 


Baggagemen 


47 







In comparing the receipts from other sources during the same period it is found that 
in 1903 the receipts in passenger-train service per passenger-train mile amounted to 87 
cents; in 1912, $1,198; or an increase of 32.8 cents, equal to 37.7 per cent. 

Our passenger-train mileage for the years 1905 to 1912, inclusive, increased 42.7 per 
cent. 

Comparing the years 1905 to 1912, inclusive, there was an increase of 73.9 per cent in 
passenger revenue, 81.4 per cent in express revenue, and a decrease in mail revenue for 
the same period of 4.5 per cent. The percentage of total passenger-train revenues 
divided under the three heads in 1905 was, from passengers, 79.6 per cent; from express, 

49396—14 24 



254 RAILWAY MAIL PAY. 

10.4 per cent; from mail, 10 per cent. In 1912 these figures were very materially 
changed, and show, from passengers, 82.8 per cent; from express, 11.5 per cent; from 
mail, only 5.7 per cent. 

Another expensive factor in conjunction with handling the mails which adds to our 
operating expenses is the cost of terminal service. From February 1, 1913, our allow- 
ance from the Post Office Department for terminal service was $1,775.37 per annum. 
The cost of performing this service, together with the cost of side service handled by 
employees engaged exclusively in handling the mail, was $13,441.80 per annum. 
This figure is the actual money paid out under contract and otherwise for handling the 
mails only, no estimate having been made of the value of handling the mails otherwise 
by employees who are paid for performing general duties at stations. 

The Chairman. What do you receive from the Government for 
railway mail pay and R. P. O. pay? 

Mr. Albright. At the present $618,000 per annum. [Reading:] 

As an illustration of how the rulings of the department affect the pay of the short 
routes, I wish to call attention to routes numbered 123063 and 123065. 

Route 123063, Winston to Mulberry, Fla., length 10.82 miles, pay per annum 
$766.76. Annual cost of side and terminal service $270, or 35.2 per cent of total pay. 

Route 123065, Croom to Brooksville, Fla., 9.99 miles, pay per annum $629.62. 
Annual cost of side and terminal service, $240, or 39.4 per cent of total pay. 

Now, Mr. Chairman, I have made a note on the question of space 
and weight, but I do not feel that with the statistics we have I would 
be competent to give you any enlightenment on that subject, but if 
you desire I would be glad to read you a short note I have made from 
our viewpoint. 

The Chairman. We would be glad to get your viewpoint. 

Mr. Albright (reading) : 

In the consideration of the question of the proper basis for determining com- 
pensation for the carriage of mails by railroads — that is to say, whether weight 
or space shall be the measure upon which said compensation shall be deter- 
mined- — any system that might be deemed at first thought expedient in fixing com- 
pensation on the basis of space must of necessity be thoroughly built up. Not only 
should this be determined upon by actual trial, but the condition under which the 
space should be used in connection with any rates that might be suggested should be 
clearly laid down, and there are so many other conditions that would enter into regu- 
lations governing the use of space that in our opinion it would be impossible to make 
any calculations as to the value of space for the handling of mail traffic without first 
determining the condition of usage. 

Rut aside from any other consideration of the subject, it seems impossible to regulate 
the assignment of space in especially equipped cars for the postal service. Either full 
cars or apartment cars, designated for the mails, shall be paid for in some manner, as 
such space is not available for passengers or express; that is to say, any surplus space 
over and above the assignment under requirements as determined by the Postal 
Department. The present practices of the Post Office Department with respect to 40- 
foot and 50-foot allowances in 60-foot equipment is an illustration of the difficulty that 
would confront us, not only in full R. P. O. cars but in apartment cars as well, under 
rates based on space. 

The universal practice of charging for transportation of all matter on a weight basis is, 
in our opinion, a proper method of fixing the rate, and we do not favor a change from 
weight to space. 

Mr. Lloyd. Is your objection to the space basis really that you are 
likely to receive less compensation, or is it because you think it is 
not a proper determining factor ? 

Mr. Albright. We do not think it is the proper factor. 

Mr. Lloyd. Is it not true that at the present time, in order to ob- 
tain the estimate of compensation, it is necessary to take in space, 
to some extent. 

Mr. Albright. That is to say the dual compensation that we 
receive is, first, the weight carried, and, secondly, an allowance for the 
use of the R. P. O. cars or specially fitted post-office cars. 



EAILWAY MAIL FAY. 255 

Mr. Lloyd. And you think it should have compensation not only 
for the R. P. O. cars, but for the apartment cars as well ? 

Mr. Albright. I think it would be only justice that the railroads 
should be paid for any special facilities that they render. 

Mr. Lloyd. Then your idea is that you should receive compensation 
for all the space that is used in carrying the mail, whether it be in the 
apartment car or in the R. P. O. car? 

Mr. Albright. The space used for post-office purposes, especially 
designed equipment, in our opinion should be paid for separately 
from the weight. 

Mr. Lloyd. Then your idea is you should have pay for the space 
used as well as the weight of the mail itself ? 

Mr. Albright. We feel that we should be paid for the equipment 
that is furnished — special equipment for the use of the department as a 
traveling post-office car. 

Mr. Lloyd. I do not think that is a practical answer to the question. 
Is it not true that you think that you ought to have compensation 
for the space that is used, both in the R. P. O. car and the apartment 
car, as well as for the weight of the mail that is carried either in the 
R. P. O. car or the apartment car? 

Mr. Albright. I can only answer your question in this direct way: 
That I should not consider that we were computing our compensation 
on a space basis for the carriage of the mail. 

Mr. Lloyd. Well, you are, in part. 

Mr. Albright. Yes ; as I put it. 

Mr. Lloyd. And for all mail that is not pouch mail. 

Mr. Albright. Well, a great deal of that mail is not pouch mail. 
You mean letter mail ? 

Mr. Lloyd. Any kind of mail that is carried in any kind of car, 
either an apartment or an R. P. O. car, you should have pay for on 
the basis of the space used. Is that your idea? 

Mr. Albright. As well as the weight. 

Mr. Lloyd. Then you are in favor of pay according to both space 
and weight. You want pay for all the space used and you want pay 
for all the weight carried ? 

Mr. Albright. On the present method. 

Mr. Lloyd. But you want to extend the present method by includ- 
ing the apartment car. 

The Chairman. The way Mr. Albright's position comes to my mind 
is, he wants the transportation compensation based on weight; he 
wants space compensation based on extra service. 

Mr. Albright. Special facilities. 

The Chairman. Is that your position? 

Mr. Albright. Yes, sir. 

Mr. Lloyd. Do you indorse as the proper change in existing law the 
suggestion that is made by Mr. Peters in the bill which he presents, 
and which is found on page 194 of the typewritten record? (See 
p. of the printed record.) 

Mr. Albright. Yes, sir; and I think it would be helpful to our line 
at least. 

Mr. Lloyd. Is it your judgment that that meets the present require- 
ment? 

Mr. Albright. I feel that that bill would give us relief. 






256 KAIL WAY MAIL PAY. 

Mr. Lloyd. It would give you some relief, but would it give you 
the relief which you think your road ought to have ? 

Mr. Albright. That would be very difficult to determine without 
making calculations. 

Mr. Lloyd. Let me ask you the question a little diffierently. If 
that bill were adopted, and it became a part of the law, would the 
compensation which you think ought to be restored to you be 
restored ? 

Mr. Albright. We feel that the compensation should be restored 
to us, irrespective of what we may think as to the total amount we are 
entitled to for the carriage of the mail, and for the furnishing of 
special facilities in connection therewith, and should at least approxi- 
mate $120,000 per annum. 

Mr. Lloyd. Will that approximate $120,000 per annum for your 
road ? 

Mr. Albright. I am sorry that I can not give you that information. 

Mr. Lloyd. Then the truth is you do not know. You have not 
given the matter sufficient attention to know whether that would be 
the change that ought to be made in the existing law ? 

Mr. Albright. I feel this way about it: That it would certainly 
give us much needed relief and would increase our compensation, and 
we are willing to try it. 

Mr. Lloyd. What I am getting at is this: This commission wants 
to settle once and for all, if it can, by making a proper suggestion as to 
what is the right compensation for the Government to pay the railroad 
companies for the service rendered by the railroad companies to the 
Government. If the law is changed in accordance with that bill, has 
that been accomplished ? 

Mr. Albright. I feel to a great extent that we would be remuner- 
ated for the service we render. I should only be too glad, Mr. Lloyd, 
if I could answer that question from a dollars and cents standpoint. 
I would like to be able to so answer it for my own satisfaction. 

Mr. Lloyd. As I understand you, you do not know what is neces- 
sary to be done, but you want the $120,000 restored? 

Mr. Albright. We would like to have that back and a little bit 
more, if we could get it. 

Mr. Lloyd. That bill does not change the rate of compensation. 
You complain in your statement of the divisor and you complain in. 
your statement of the reduction from time to time in railway mail pay. 
This proposed bill does not restore those at all. 

Mr. Albright. We feel there are other considerations in that bill 
that would go a long way toward restoring some of our losses. 

Mr. Lloyd. And it would have the effect of taking the place of the 
reduction. 

Mr. Albright. We hope so. 

The Chairman. We thank you very much, Mr. Albright. 

Thereupon, at 12.30 o'clock a. m., the committee adjourned to meet 
at the call of the chairman. 



RAILWAY MAIL PAY. 257 

MONDAY, FEBRUARY 17, 1913. 

Joint Committee on Second-Class Mail Matter, 

Washington, D. 0. 
The hearing was resumed at the call of the chairman, at 11 o'clock 
a. m. 

Present: Senator Jonathan Bourne, jr. (chairman), Senator Harry 
A. Richardson, Senator John H. Bankhead, Representative James T. 
Lloyd, Representative William E. Tuttle, jr., and Representative 
John W. Weeks. 

STATEMENT OF MR. E. G. BUCKLAND. 

The Chairman. Mr. Buckland, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Kindly state your full name, residence, occupa- 
tion, and the official position which you occupy with the company, 
and in what capacity you appear before the commission this morning. 

Mr. Buckland. My name is Edward G. Buckland. My residence 
is New Haven, Conn., occupation, vice president of the New York, 
New Haven & Hartford Railroad Co., and as such charged, among 
other things, with the duty of representing that company and its 
allied and controlled lines in its relations to the Federal Government 
and in its relation with the Post Office Department. 

The Chairman. Have you read the second suggested bill trans- 
mitted by the Postmaster General to this commission in reference to 
the readjustment of the method of railway mail pay embodying the 
substitution of space for weight basis as the measure of the service 
rendered ? 

Mr. Buckland. I have. 

The Chairman. Kindly give the committee your comments and 
views on the main features of that bill ? 

Mr. Buckland. My criticism of the first paragraph of that bill is 
that the Postmaster General is authorized and directed to require 
companies to furnish such data as in his judgment may be deemed 
necessary to ascertain the cost to the companies of carrying the mail. 

The Chairman. He represents the Government so far as that part 
of its activity is concerned, and is the proper individual, is he not, to 
designate the information necessary for the Government to obtain 
in order to get an intelligent ascertainment as to the compensation 
to the railroads, provided cost is one of the elements entering into 
that ascertainment? 

Mr. Buckland. It is proper for him to obtain that information for 
his own purposes, in order to present it to a tribunal who shall ascer- 
tain that cost, but it is no more proper for him to require the railroads 
to give data of that kind to enable him, for his own purpose and for 
his own demands, to ascertain the cost than it is proper for the War 
Department to obtain similar data from the railroad companies in 
order that the War Department may determine how much it will 
pay to the railroad companies for carrying munitions of war or can- 
nons or anything of that sort, or for the Navy Department to obtain 
similar information. If I apprehend the function of the Postmaster 



258 BAIL WAY MAIL PAY. 

General with reference to the carriage of mail, he stands in exactly the 
same position toward the common carriers of this country as the 
heads of other departments in regard to other commodities which 
they are asking the railroads to carry. 

The Chairman. If cost is to be an element in arriving at the com- 
pensation to be paid the railroads, how is the Government to obtain 
that information and what suggestion would you make as an improve- 
ment on the plan in the suggested bill, concerning which you have 
made a criticism as to the first paragraph ? 

Mr. Buckland. I think that the wording should be so plain as to 
make it perfectly clear that the data which he is seeking to obtain 
should be data of a kind which can be furnished by the railroad com- 
panies, in order that he may obtain the necessary information to 
present to the Interatate Commerce Commission, if you like, in case 
the railroads and the P. M. G. can not agree as to what is a reasonable 
charge for carrying the mail ? 

The Chairman. Is your criticism against the first paragraph that 
cost should not be an element in the determination as to the compen- 
sation or as to the method of ascertainment of that cost ? 

Mr. Buckland. As to the method of ascertainment of that cost. 

Mr. Lloyd. You do not claim that the Postmaster General has not 
a right to that information, do you ? 

Mr. Buckland. Are you asking me as a lawyer ? 

Mr. Lloyd. No. I am asking you as a witness in this case. We 
are not dealing with you as a lawyer, but we are trying to deal with 
you in order to get the facts. I take it you are not sworn to answer 
questions as a lawyer, but to answer as to facts. 

Mr. Buckland. I will answer you on that same basis, I know 
nothing which requires railroad companies to furnish such informa- 
tion to the Postmaster General. 

Mr. Lloyd. What they are proposing to do is to have a law enacted 
and if a law is enacted, that you are required to furnish that informa- 
tion to the Postmaster General, what harm is there in it ? 

Mr. Buckland. No harm at all, but you asked me whether they 
were required to do it. 

Mr. Lloyd. No; you misunderstood me. The chairman wants to 
know what your objection to the proposed bill is, and the objection 
that you urge to the proposed bill is that the Postmaster General will 
be authorized to obtain information which you think he ought not 
to obtain. 

Mr. Buckland. I beg your pardon. I did not make that statement. 

Mr. Lloyd. Then make your statement as it should be. 

Mr. Buckland. I think that it should not be in the power of the 
Postmaster General to obtain the information only in his own way for 
the determining of the cost of carrying the mail in his own way. The 
Postmaster General ought to have the right under this bill or some 
other bill 

Mr. Lloyd. Then whose way should we adopt ? 

Mr. Buckland. He may obtain all the information which he likes, 
but he should not thereby have the right to determine, for the sake of 
enforcing his determination upon the railroad companies, what the 
cost of carrying the mail is. 

Mr. Lloyd. Your position is that the railroad companies ought to 
be placed in position that they can give such information as they 



RAILWAY MAIL PAY. 259 

think the Postmaster General ought to have in order to determine the 
element of cost ? 

Mr. Buckland. No; it is not that at all. 

Mr. Lloyd. Then please state what it is ? 

Mr. Bucexand. My position is that the railroad companies should 
be required to give the Postmaster General any information he may 
ask for the purpose of enabling him to present to an impartial tribunal 
what, in his opinion, is the cost to the railroad companies of carrying 
the mail, and that the railroad companies may, on their part, be 
permitted to present their data to the same tribunal for the purpose 
of meeting the Postmaster General and having the issue determined 
between them. 

Mr. Lloyd. You are getting away from the question that was 
stated in the first proposition. The first proposition is that the 
Government shall be placed in the position that it shall have the 
necessary information to determine what it costs to carry the mail, 
not to leave it to any other tribunal, but shall know itself. You, as I 
understand it, do not want it placed in that position, but you want to 
furnish such information as you desire and then you want to leave it 
to a tribunal to determine whether it is fair or not fair, just or unjust, 
whether it is a proper statement of cost ? 

Mr. Bucexand. No, sir; I think you have misunderstood my posi- 
tion entirely. May I read the bill ? 

Mr. Lloyd. Yes. 

Mr. Bucexand (reading) : 

The Postmaster General is authorized and directed to require companies operating 
railroads by steam, electricity, or other motive power, carrying the mails, to furnish, 
under oath and seal, not less frequently than once in each fiscal year, such informa- 
tion relating to the service, operation, receipts and expenditures, and such other 
information of such roads for a period of not less than 30 days, to be designated 
by him, as may, in his judgment, be deemed necessary to enable him to ascertain 
the cost to the companies of carrying the mails on their respective roads and the 
proper compensation to be paid for that service. 

That is followed by a proposition that he shall adjust the pay upon 
that basis, subject to a review by the Interstate Commerce Com- 
mission. 

Mr. Lloyd. What is the criticism about the first part 3 How would 
you have that changed, or would you cut it out altogether? 

Mr. Buckland. No; I should not cut it out altogether. I think he 
ought to have that information. 

Mr. Lloyd. How would you change it? 

Mr. Buckland. I should strike out the words "in his judgment/' 

Mr. Lloyd. Then whose judgment would you have? 

Mr. Bucexand (reading) : 

As may be deemed necessary to ascertain the cost to the companies and the proper 
compensation to be paid for that service. 

Mr. Lloyd. Whose judgment would you have? 

Mr. Buckland. The judgment of the Interstate Commerce Com- 
mission. 

Mr. Lloyd. Then you would have the inquiry made by the Inter- 
state Commerce Commission and not by the Postmaster General ? 

Mr. Buckland. If the railroads and the Postmaster General could 
not agree without that inquiry. 



260 RAILWAY MAIL PAY. 

Mr. Lloyd. What objection is there to the Government finding out 
what it costs ? 

Mr. Buckland. None at all, sir. I am afraid you and I do not 
understand each other. 

Mr.. Lloyd. Evidently we do not. 

Mr. Buckland. I wish to give the greatest and fullest publicity to 
the cost of carrying the mail. 

Mr. Lloyd. The Government must get its information through the 
Postmaster General ? 

Mr. Buckland. I should think it ought to get it through a neutral 
tribunal." 

Mr. Lloyd. You would not allow the Government to obtain any 
information through the Postmaster General, except that which is 
directed by the Interstate Commerce Commission? 

Mr. Buckland. I think it would be much fairer. 

Mr. Lloyd. Let me ask you this question: Do you contend that 
the Government has no right to make any inquiry at all, except 
through a tribunal such as the Interstate Commerce Commission? 

Mr. Buckland. Under the present law? 

Mr. Lloyd. No; we are talking about a change in the law. 

Mr. Buckland. The Government has a right ? 

Mr. Lloyd. The sole purpose of this commission is to ascertain 
what is right and make recommendations for changes. 

Mr. Buckland. The Government has a perfect right to obtain 
such information, either through the Postmaster General 

Mr. Lloyd. Why should they not obtain this through the Post- 
master General, as this directs? 

Mr. Buckland. There is no reason why they should not obtain 
the information and I am perfectly willing to give the information 
to the Postmaster General. 

Mr. Lloyd. Then your objection is as to his determination as to 
the cost ? 

Mr. Buckland. Yes, sir. 

Mr. Lloyd. You have no objection to giving him the information 
whatever ? 

Mr. Buckland. Not the slightest. 

Mr. Lloyd. I wish you would indicate just what you think ought 
to be cut out. Is that the only expression you want to cut out ' ' in 
his judgment" ? 

Mr. Buckland. I think so. I have not studied the bill with the 
idea of studying other language, but that in general is my idea. 

Mr. Lloyd. Do you object to the Postmaster General ascertaining 
the cost ? 

Mr. Buckland. Not for* the purpose of making a presentation to 
the Interstate Commerce Commission; no, sir. 

Mr. Lloyd. I want you to understand that we are not dealing with 
the Interstate Commerce Commission, that we have nothing to do 
with that commission under existing law, in the slightest, and if we 
do have anything to do with it, it will be because we have changed 
the law. 

Mr. Buckland. That is what I understand this law contemplates. 

Mr. Lloyd. We are not bound by this in any manner whatever. I 
suppose that every member of this commission has some objection 



RAILWAY MAIL PAY. 261 

to that proposed law. We are not standing on that at all, but the 
only question that is asked you is, What is your objection to the 
proposed change in the law, which change is suggested by the Post- 
master General? 

Mr. Buckland. If you ask for my criticism of this bill, I must, of 
course, assume, in taking the first paragraph of the bill, that it is 
connected with other paragraphs of the bill which deal with the 
Interstate Commerce Commission and which do, perhaps, give to the 
Interstate Commerce Commission certain revisory or reviewing 
powers. 

Mr. Lloyd. You may object to that, too? 

Mr. Buckland. Possibly; but I was referring to the whole frame- 
work of the bill. I must either talk upon this bill or upon the existing 
law. 

Mr. Lloyd. Go ahead, and I will understand you better later on. 

The Chairman. As I understand your objection to the first para- 
graph, it is the inferential right of the Postmaster General to make 
a determination as to what shall enter into the element of cost ? 

Mr. Buckland. Yes, sir. My thought is that he should have the 
fullest information and all of the information at the disposal of the 
railroad companies, but that he should not be authorized, even by 
inference, to include or exclude finally such information or such data 
as would be material in determining the cost of carrying the mail. 

The Chairman. I think we understand you. 

Mr. Buckland. In the third paragraph there is the same general 
objection [reading]: 

The Postmaster General shall determine the cost to each railroad company of carry- 
ing the mails on its respective road or roads and shall verify and state the results in 
such form and manner as he shall deem proper. For this purpose he shall transmit 
the information furnished by the railroad companies relating to the operating ex- 
penditures to the Interstate Commerce Commission, who shall credit, assign, and 
apportion such operating expenses to the passenger and freight services, and report 
the result as to the passenger service to the Postmaster General. . 

The Chairman. The right of determination, under that proposed 
legislation, would rest entirely with the Interstate Commerce Com- 
mission, would it? 

Mr. Buckland. I think it would, only as to the information which 
he had received from the railroad companies. 

The Chairman. Such information as he chose to transmit? 

Mr. Buckland. As he chose to transmit; yes, sir. 

The Chairman. Your criticism is, that under the suggested plan 
he would not be compelled to give all the information to the Inter- 
state Commerce Commission for a final determination ? 

Mr. Buckland. That is my general criticism. 

Mr. Weeks. You do not think, do you, that the Postmaster Gen- 
eral would withhold any information which would have been obtained, 
but what you object to is the construction which he would put upon 
that information ? 

Mr. Buckland. He might not require such information as the rail- 
roads might desire to give him, or he might exclude such information 
as being immaterial that the railroads might wish to give him.^ 

Mr. Lloyd. That is going back to another point on which we differed 
a while ago. If I understand your statement, you want it left in the 



262 KAILWAY MAIL PAY. 

hands of the railroads to furnish such information as they desire to 
give? 

Mr. Buckland. No, sir. 

Mr. Lloyd. The term that you used there was such information as 
they desired to furnish? 

Mr. Bucexand. No, sir. I did not advisedly say that; no. 

Mr. Lloyd. Will the reporter kindly read the witness's answer ? 

The reporter read the answer, as follows: 

Mr. Buckland. He might not require such information as the railroads might desire 
to give him, or he might exclude such information as being immaterial that the rail- 
roads might wish to give him. 

The Chairman. I understand that Mr. Buckland's objection to the 
present plan is that the Postmaster General might have the right of 
determination as to what was vitally important and material, and 
what was not. 

Mr. Lloyd. Then as I understand his latter expression he thinks 
the railroad companies ought to be permitted to give such informa- 
tion as they want to give, and that gives them the opportunity to 
furnish whatever they desire and they become the determining factor 
as to what shall be furnished. 

The Chairman. Let me ask a question in that connection. Would 
you have any criticism on this section of the suggested plan of the 
department, providing specific permission was given, that the rail- 
roads should, in addition to answering the inquiries and furnishing the 
information requested by the Postmaster General, be allowed to 
submit such additional information and material as in their opinion 
was of importance to the subject matter, and that information be 
transmitted to the Interstate Commerce Commission through the 
Postmaster General's office. 

Mr. Buckland. I think that would be an excellent suggestion, for 
if the Postmaster General did not see fit to permit or to report all 
information which the railroad companies gave him, that they might, 
in their appearance before the Interstate Commerce Commission, 
submit such additional information as they might have. 

Mr. Lloyd. Do you not think it unwise to allow the Postmaster 
General to fix the cost at all ? 

Mr. Bucexand. No ; I think that he, in order to have some inteUi- 
gent idea of the position of his department, should know something 
about it. I think he ought to know all he can about it. 

Mr. Lloyd. But this authorizes him, as I understand it, to deter- 
mine the question of cost and in that way he would be expected also 
to determine the question of pay which you would receive. 

Mr. Buckland. I do not think that quite follows, if I read the bill 
correctly. He proposed in the first instance to determine the cost and 
submit it to the Interstate Commerce Commission. If, whether or 
not he determines the cost, all of the data that he asks the railroad 
companies to furnish, and all of the data in addition thereto that they 
desire to furnish can be submitted to the Interstate Commerce Com- 
mission, and they in the last analysis may have the determining of 
this cost, I have no particular objection to his determining it for his 
own purpose in the first instance. 

Mr. Lloyd. Why should he have the right to determine it at all ? 

Mr. Buckland. Well, I think it is perhaps similar to a proceeding 
in equity where a bill of discovery is filed. There is certain informa- 



EAILWAY MAIL PAY. 263 

tion which your opponent has — I used the word "opponent" not in 
the sense that there is any issue — which you are entitled to, and the 
court will undoubtedly give you that information and you can make 
up your case on that and the Postmaster General certainly ought to be 
in a position where he can intelligently present his case to the Inter- 
state Commerce Commission. 

Mr. Lloyd. Do you not think that the law ought to fix the pay that 
the railroads receive, rather than the Postmaster General? 

Mr. Buckland. The statute law ? 

Mr. Lloyd. Yes. 

Mr. Buckland. No, sir. 

Mr. Lloyd. You would leave to him the determination, in any 
particular, of the amount that you should receive in compensation ? 

Mr. Buckland. No, sir. 

The Chaikman. Your answer to Mr. Lloyd's question would leave 
that inference; at least it would in my own mind. 

Mr. Buckland. He asked me the direct question if I would make 
the statute law fix it and I said no, and then he asked me if I would 
leave it to the Postmaster General and I said no. 

The Chairman. To whom would you leave it ? 

Mr. Buckland. The Interstate Commerce Commission. 

Mr. Lloyd. You would have all the rates of pay for carrying the 
mail fixed by the Interstate Commerce Commission ? 

Mr. Buckland. Yes, sir. 

Mr. Lloyd. You would have the statutes so changed that the sole 
tribunal in the determination of railway mail pay would be the Inter- 
state Commerce Commission ? 

Mr. Buckland. The sole tribunal; yes, sir. 

Mr. Lloyd. The sole determining factor in the ascertainment of 
railway mail pay ? 

Mr. Buckland. Not if you use the word "f actor" in the sense of 
an element or a function of government which should present the 
facts to the Interstate Commerce Commission. In other words, I 
think the Postmaster General ought to be able to present facts to the 
Interstate Commerce Commission in regard to railway mail pay, just 
as the railways should present the facts likewise. 

Mr. Lloyd. Carry out that view of it, how would you fix the law 
with reference to compensation to you ? 

Mr. Buckland. I have drafted a bill here which I will present. 

Mr. Lloyd. I beg your pardon; I did not know that. 

Mr. Buckland. My ideas in regard to this may perhaps clear up 
what we have between us. I regard the railroad companies of this 
country as commor carriers of all commodities of a proper kind to be 
carried; it does not make any difference whether it is flour, sugar, 
munitions of war, or mail. 

Mr. Lloyd. And you place them all on the same basis ? 

Mr. Buckland. I place them all on the same basis, with this excep- 
tion: Those things which belong to the Government and which must 
be carried as a part of the Government's business — not a part of the 
Government function, but as a part of the Government business — I 
think the common carriers ought to be required to carry without giv- 
ing them certain rights of prepayment, if you like, or certain other 
rights which belong to them as common carriers. To be specific, if 



264 RAILWAY MAIL PAY. 

you come down to my railroad company and deliver a barrel of apples 
to be carried I have a right to demand as a condition precedent to the 
carriage of those apples that you should prepay the freight; if I do 
not carry them you could force me by mandamus, and I think the 
Government has the right to have its mail carried, munitions of war 
carried, and its troops carried, and everything which pertains to it, 
without the necessity in the first place of prepayment, if you like. I 
do not see how the Government stands in any different position in 
regard to the carriage of mail than any shipper stands in regard to the 
carriage of any other commodity, so far as a fair compensation to the 
common carrier is concerned. 

Mr. Weeks. Then you would differentiate between Government 
mail and personal mail ? 

Mr. Buckland. I suppose that it is a function of the Government, 
that the Government could compel the mail to be carried. 

Mr. Weeks. That is the purpose of the Post Office Department, 
originally, to carry the Government mail ? 

Mr. Buckland. That constitutes a very small part of the general 
mail. I think we might consider it altogether. My idea has been 
that something along the line of the English law is the law which 
we ought to have in this country, to permanently remove this ques- 
tion of railway mail pay from legislation. 

Mr. Lloyd.' Do you think you would have the right to refuse to 
carry the mail ? 

Mr. Buckland. The Supreme Court of the United States says that 
I have. 

Mr. Lloyd. Would you have the right to refuse to carry munitions 
of war ? 

Mr. Buckland. No; I do not think so. 

Mr. Lloyd. Why ? 

Mr. Buckland. Because I think the Government holds itself out 
as ready to pay a tariff rate to carry munitions of war. It does 
not hold itself out as willing to pay such a rate for carrying the 
mails. 

The Chairman. Do you hold that the Congress of the United 
States could not enact legislation that would compel you to carry 
the mail, providing the rates were not confiscatory ? 

Mr. Buckland. I have no hesitation in saying that Congress has 
that power, but it has never exercised it. 

Mr. Lloyd. The question has been raised in this investigation 
several times as to whether the railroad companies have the right to 
refuse to carry the mail ? 

Mr. Buckland. I think we ought to clear that up. No common 
carrier, in my opinion, has the right to refuse to carry any proper 
commodity tendered to it, upon the payment of a proper 
compensation. 

Mr. Lloyd. The only difference you make between the mail and 
anything else is that you think the Government ought to have an 
exemption as to the demand for prepayment ? 

Mr. Buckland. I do; yes, sir. 

Mr. Lloyd. But otherwise you place them on the same basis ? 

Mr. Buckland. I place them on the same basis. 

Mr. Lloyd. Do you not receive a protection from the Government 
you would not receive from a private individual ? 



RAILWAY MAIL PAY. 265 

Mr. Buckland. I do not think so; nothing that is of such conse- 
quence that would put the mail into any excepted class. 

The Chairman. Take the zone of the activity of your lines. If 
you could not receive any profit on carrying the mail, would you not 
deem that you would receive an indirect compensation for the addi- 
tional facility to the business in your territory by the carrying of 
mail at cost ? I do not mean for you to infer from my question that 
I favor, so far as I am concerned, compelling the railroads to carry 
at cost at all, but I do mean to say that there is a distinction, an 
indirect benefit that the transportation company would receive in 
the facilitation of business by improved mail facilities, according to 
my present viewpoint. 

Mr. Buckland. Mr. Chairman, I have heard that view expressed, 
and I think you have expressed it once or twice before in these 
hearings. Practically every commodity carried by a railroad is car- 
ried with a view to promoting the transportation of some other com- 
modity. We carry pig iron into New England with the idea of carry- 
ing out machines. We carry copper ingots with the idea of carrying 
out copper goods. We carry bricks for the purpose of erecting 
buildings and factories, and I do not believe that the mail stands in 
any different relation to the common carrier than do these commodi- 
ties. The mail may differ slightly in degree, but every carrier 
building up its business will take such commodities as will bring 
other business to it. 

The Chairman. And the Federal protection to the mail is no 
advantage to the common carrier, in your judgment ? 

Mr. Buckland. Not enough to bring it into an excepted class. I 
intended to start my statement here with the result of the report of 
the Postmaster General as referring to our particular road, and in 
that I include the New York, New Haven & Hartford, the Boston & 
Maine, the Maine Central, St. Johnsbury & Lake Champlain, the 
Somerset, Vermont Valley & Sullivan County, Washington County, 
the Central New England, and the New York, Ontario & Western. 

The Chairman. Representing what in mileage and what in 
capitalization ? 

Mr. Buckland. Representing in mileage about 10,000 miles and 
in capitalization about $750,000,000. 

The Chairman. Bonds and stocks ? 

Mr. Buckland. Bonds and stocks. 

The Chairman. At par ? 

Mr. Buckland. At par. 

Mr. Weeks. That covers all of the roads in New England with the 
exception of the Boston & Albany and its leased lines, the Bangor 
& Aroostook, and the Central Vermont ? 

Mr. Buckland. The Central Vermont, the Canadian Pacific, and 
the Grand Trunk. I can go over the losses for months which the 
Postmaster General has figured that these roads are making on 
account of the present law. 

The Chairman. Where has the Postmaster General figured that? 

Mr. Buckland. In House Document 105, page 276. 

The Chairman. Does he make a direct and specific statement to 
the effect that these roads are losing so much per month under the 
present rates paid them for transporation? 



266 BAILWAY MAIL PAY. 

Mr. Buckland. Yes, sir. 

The Chairman. Read it, kindly. 

Mr. Buckland. I am reading from this pamphlet because it is 
difficult to follow the line across. The New York, New Haven & 
Hartford operating expenses and taxes chargeable to the mail service 
were $69,391.89. 

The Chairman. What page is that on of Document 105 ? 

Mr. Buckland. Page 276. Revenue from service, $53,180.54; 
loss, $16,201.15. 

The Chairman. This is a deduction made by the Post Office 
Department, based upon answers to interrogatories propounded by 
the department to your system, is it not ? 

Mr. Buckland. Yes, sir. 

The Chairman. Is there any other statement in Document 105 
where the Postmaster General or his representative accurately states 
or concedes that. you are making a loss in the carriage of mail, or is 
your prior statement based entirely upon this computation made 
by the Post Office Department, or rather a compilation and tabula- 
tion of information submitted by you at the request of the depart- 
ment in answer to interrogatories ? 

Mr. Buckland. My present compilation, that I am now reading 
from, is a compilation of Table 7, as relating to the roads owned, 
operated, or controlled by the New York, New Haven & Hartford 
Railroad Co. 

The Chairman. But Table 7 is a compilation and tabulation of 
information furnished by you ? 

Mr. Buckland. Yes, sir; but checked by the Post Office Depart- 
ment. 

The Chairman. Checked only upon the information furnished by 
you in answer to specific questions asked of you by the Post Office 
Department ? 

Mr. Buckland. Yes, sir. 

The Chairman. Has the New York, New Haven & Hartford infor- 
mation satisfactory to you so that you know definitely just what you 
are making or losing in your mail contract with the United States 
Government ? 

Mr. Buckland. Yes, sir. 

The Chairman. What do you claim you are making or losing and 
how do you arrive at your statements ? 

Mr. Buckland. I would like to have that testified to by our statis- 
tician, Mr. Bowman, when you put him on the stand. 

The Chairman. You can do that later, but if you have the informa- 
tion before you I would like to get it in the record at this point, so 
as to get the relativeness between the information that you have 
quoted from Document 105 and your own deductions. 

Mr. Buckland. Answering that specific question, I would say that 
whereas the Postmaster General's Table 7 indicates a loss to the 
New Haven road of $16,201.15 per month, the data of the New York, 
New Haven & Harftord Railroad Co., as shown on the report of 
the value of the service rendered in the transportation of mail for the 
two and one-half years to December 31, 1911, prepared by Price, 
Waterhouse & Co., chartered accountants, 54 William Street, New 
York City, shows a loss for the fiscal year to June 30, 1910, of $743,035; 



KAILWAY MAIL PAY. 267 

for the fiscal year of June 30, 1911, $728,943; and for the six months 
to December 31, 1911, $336,675. I quote from page 138 of that 
report, but as to the specific method by which that result is reached, 
I prefer to leave that to Mr. Bowman, the gentleman who made it up, 
as he can tell you much more specifically than I. 

The Chairman. What did the New York, New Haven & Hartford 
system receive in the way of mail compensation, in R. P. O. pay, in 
the last fiscal year 1 I suppose you combined the two ? 

Mr. Buckland. Oh, yes. In the fiscal year ending June 30, .1910, 
they received $645,572; for the fiscal year ending June 30, 1911, 
$646,846; for the six months to December 31, 1911, $324,258. 
The latter figures are both the earnings and the expenses for the 
six months, and are necessarily not so accurate as those taken for the 
complete fiscal year. The loss to the Boston & Maine, according to 
Table 7 on page 272 of House Document 105 is $9,457.46 per 
month. The loss to the Maine Central, on the same page, was $454.21 
per month. The gain to the St. Johnsbury & Lake Champlain was 
$12.92. The loss to the Somerset Railway was $114.06. The loss to 
the Vermont Valley and Sullivan County Railway was $253.69. The 
gain to the Washington County Railway, $518.74; gain to the 
Central New England Railway, $105.73; loss to the New York, 
Ontario & Western Railway, $720.50. These are losses; that is, 
where the revenue does not meet the apportioned operating expenses. 
The Postmaster General's proposed bill would add 6 per cent profit to 
these operating expenses. If that were done, the total loss would be 
somewhat greater. The total loss per month for the entire system 
would be $35,066.47, or a total loss on the Postmaster General's 
figures of $420,797.64 per year. 

The Chairman. Prior to the initiation of the inquiry under Docu- 
ment 105 and receipt by your companies of request for information 
for the Postmaster General did you carry on your books any accounts 
with the railway mail pay, so that you knew yourselves exactly what 
you were making, whether a loss or a profit, and if so, how much ? 

Mr. Buckland. We carried to a very considerable extent accounts 
upon our books (but just how far they went I do not know) because 
of our contention with the Post Office Department at the beginning 
of the last period in 1909 that we were being inadequately paid and 
the protest under which we sent the circulars. I think, Mr. Chair- 
man, that the Postmaster General has never contended that the New 
York, New Haven & Hartford Railway was fully paid. 

The Chairman. The point is whether you had the definite informa- 
tion and knew yourselves as to exactly how this particular account 
stood in your earnings. 

Mr. Buckland. I could not say that we knew exactly how we stood, 
but I think we knew approximately. We have come to the point 
where I should like to introduce Mr. Bowman. 

The Chairman. Before doing so I would be glad if you would sub- 
mit for the information of the committee the concrete bill, based on 
the English system, which, in your judgment, if enacted would make 
a more equitable method of mail compensation for the transportation 
companies. 

Mr. Weeks. Mr. Chairman, would it not be well to have the English 
law put into the record ? 

The Chairman. Yes; both. I think it would be well to put them 
both into the record in order to get their relativeness. 



268 KAILWAY MAIL PAY. 

Mr. Buckland. I quote from a document entitled "The Railway 
and Canal Traffic Acts, 1854, 1873, 1888, and 1894, and Other Statutes; 
with the general rules of the Railway and the Canal Commission. 
London: Printed for His Majesty's stationery office by Darling & 
Son, 1 ' in 1910. On page 14 of the regulation of railways act, 1873, I 
quote as follows : 

CONVEYANCE OF MAILS. 

18. Every railway company shall convey by any train all such mails as may be 
tendered for conveyance by such train, whether such mails be under the charge of a 
guard appointed by the postmaster general or not, and notwithstanding that no 
notice in writing requiring mails to be conveyed by such train has been given to the 
company by the postmaster general. 

Every railway company shall afford all reasonable facilities for the receipt and 
delivery of mails at any of their stations without requiring them to be booked or 
interposing any other delay. 

Where the mails are in charge of a guard appointed by the postmaster general, 
every railway company shall permit such guard, if he thinks fit, to receive and deliver 
them at any station by himself or his assistants, rendering him nevertheless such 
aid as he may require. 

19 . Every railway company shall be entitled to reasonable remuneration for any serv- 
ices performed by them in pursuance of this act with respect to the conveyance of 
mails, and such remuneration shall be paid by the postmaster general. 

Any difference between the postmaster general and any railway company as to 
the amount of such remuneration or as to any other question arising under this act 
shall be decided by arbitration in manner provided by the act of the session of the 
first and second years of the reign of her present majesty's chapter 98, or at the option 
of such railway company by the commissioners. 

I may say by later acts that arbitration is now referred to the 
railway and canal commission. 

Where a railway company use, maintain, or work, or are party to any arrangement 
for using, maintaining, or working steam vessels for the purpose of carrying on a com- 
munication between any towns or ports, all provisions contained in any act with 
respect to the conveyance of mails by railways shall, so far as they are applicable to 
the conveyance of mails by steam vessels, extend to the steam vessels so used, main- 
tained, or worked. 

The Chairman. Under that the postmaster general and the rail- 
roads arrange as to the compensation to be paid the railroads for 
the carriage of the mail ? 

Mr. Buckxand. If they can. If they can not, they leave it to 
the railway and canal commission. 

The Chairman. Do you think, taking into consideration the dif- 
ference in conditions in the United States and in England, that the 
same laws of England could be enacted by this country with benefit 
to the Government and to the transportation companies ? 

Mr. Buckland. I think not the same law, but the principle 
involved in the law. 

Mr. Lloyd. You have the proposed bill with you ? 

Mr. Bucexand. Yes, sir. 

Mr. Weeks. Has this bill of yours been submitted to the Post 
Office Department ? 

Mr. Bucexand. No, sir. 

A BILL To provide for the carriage of the mails. 

Be it enacted by the Senate and House of Representatives of the United States in Congress 
assembled — 

Section 1. That every railroad company operating as a common carrier shall 
convey by any train all such mail as may be tendered for conveyance by such train, 
and where necessary shall provide sufficient and suitable room, fixtures, and fur- 



RAILWAY MAIL PAY. 269 

niture in a car or apartment properly lighted and heated for route agents to accom- 
pany and distribute the mails. Every such railroad company shall afford all reason- 
able facilities for the receipt and delivery of mails at any of its stations. 

Mr. Weeks. Who is to determine the necessity? 

Mr. Buckland. I am fixing here the rules and regulations of the 
Post Office Department. That is practically the wording of section 
4001, so far as providing suitable room, fixtures, and furniture is con- 
cerned, the existing law regarding the carriage of the mails. 

Sec. 2. That the Postmaster General is authorized to make and enforce all proper 
rules and regulations to govern the receipt, transportation, and delivery of the mails, 
which rules, regulations, and penalties for the violations thereof shall be filed with the 
Interstate Commerce Commission prior to any hearing in regard to remuneration and 
be considered in determining the cost of service for which remuneration is hereinafter 
provided." 

The Chairman. Under legislation of that nature there might be, 
might there not, a different rate paid to each one of the 795 railroads 
with whom the Government now has mail contracts ? 

Mr. Buckland. Very likely. 

The Chairman. The enactment of the plan suggested by you would 
not result in an universal rate applicable to all? 

Mr. Buckland. No, sir. 

The Chairman. In your opinion it is impossible, is it, to evolve a 
plan where the rate would be universal to ail and just to all ? 

Mr. Buckland. I do not know of any such plan that could be 
evolved. 

The Chairman. v s it your judgment that it could not be evolved, 
an universal plan that would be just to all % 

Mr. Buckland. It is my opinion that it can not be evolved, that 
is, a plan to put into statute a specific sum to be paid either per car- 
foot mile or per ton mile for the carriage of the mails, if you like, in 
New England and in Arizona. 

Mr. Weeks. Taking section 2 of the proposed bill of yours, do you 
not think the Post Ollice Department ought to have the sole right to 
determine the responsibility in regard to the transportation and de- 
livery of mail? 

Mr. Buckland. I do: and I give them the same right. 

Mr. Weeks. You give them another tribunal to go to ? 

Mr. Buckland. No. I give that tribunal no supervisory powers 
over those rules and regulations. The Postmaster General provides 
his rules and regulations and they are to be considered in determining 
the remuneration. He may provide such rules as he deems necessary. 
He may ask for steel cars, if he is willing to pay for them, or he may 
ask for electric or acetylene lights, provided he is willing to pay for 
them, but the thing that I object to is that he asks for one thing when 
he makes his contract and after the contract is made he calls for some 
thing else. Let him state what he wants, and if we can not agree, 
then let the Interstate Commerce Commission decide what is a fair 
nite. 

The Chairman. What happens during that period of adjustment. 
Are the mails interfered with: 

Mr. Buckland. Not at all. 

The Chairman. You go on and carry them, in accordance with 
the request of the Postmaster General? 

Mr. Buckland. Yes, sir. 

4939G— 14 25 



270 RAILWAY MAIL PAY. 

The Chairman. And the ba,sis of remuneration is determined sub- 
sequently ? 

Mr. Buckland. Yes, sir. 

The Chairman. You having a right of appeal to the Interstate 
Commerce Commission? 

Mr. Buckland. Yes, sir. 

Sec. 3. That every such railroad company shall be entitled to reasonable remunera- 
tion for any services performed by it in receiving, transporting, and delivering the 
mails. 

You will notice I do not limit the duty of the railroad companies 
to transporting the mail, but to receiving, transporting, and delivering 
the mails. 

Mr. Weeks. How do you define reasonable remuneration? 

Mr. Buckland. My definition of that would be— 

Such remuneration shall be paid by the Postmaster General as shall equal the cost 
to such companies for the performance of such service, plus six per centum of such 
cost; in addition such companies shall be entitled to such additional amount as shall 
constitute a proper proportion of a fair and reasonable return on the value of the 
property necessarily employed in the performance of such services. 

Those are practically the Postmaster General's words in the modi- 
fication which be has made of his present bill. 

The Chairman. By subsequent legislation you would expect to 
avoid the injustice which, as I understand, it is the contention of the 
transportation companies they now suffer through the requirement 
of said service without direct compensation through the failure to 
receive compensation in apartment cars for the space occupied. I 
notice in your bill you make no arrangement for annual weighing, 
except every two years the adjustment shall be made, and inferen- 
tially, in order to get such adjustment, you have to get an ascertain- 
ment as to what the amount of the transportation is. 

Mr. Buckland. Yes, sir. Upon that first point there is a conten- 
tion on the part of the public that the railroads are overpaid and there 
is a contention on the part of the railroads that they are underpaid. 
Certainly nobody can object if a neutral tribunal shall determine 
to what expense the railroads are put in the performance of this 
service and give them a stated profit over that. It seems to me 
if you agree to-day upon a bill which shall amply compensate every 
railroad in the country in accordance with this contention, by mak- 
ing a specific ton-mile or a specific cubic-foot rate of compensation, 
that two years will not roll around before this matter will be up in 
Congress again on the proposition that that ought to be reduced. 
You will never get this out of continued legislation until the question 
of remuneration is made flexible and to be determined by some 
neutral tribunal. 

The Chairman. You do not agree with the general railway mail 
commission, representing some 214,000 out of the 250,000 total rail- 
road mileage of the country, of which Mr. Peters, as chairman, has 
appeared before the committee several times ? 

Mr. Buckland. To a certain extent I agree with them and to a 
certain extent I do not. Their contention has been based very 
largely on the question of space and weight. It seems to me that 
the question of space and weight is immaterial, according to my con- 
ception of what ought to be done in regard to railway mail pay. I 






RAILWAY MAIL PAY. 271 

do not believe Congress should determine a ton-mile rate on mail any 
more than it determines a ton-mile rate on coal. 

The Chairman. Do you not believe it is desirable, where possible, 
to have the law express specifically what the rights of the citizen 
may be, rather than leave it to the ipse dixit of an individual or tc a 
rule and regulation ? 

Mr. Buckland. That is a very general proposition. I might 
answer that and say yes but when it comes to a question of compen- 
sation for the performance of service, the cost of which and possibly 
the value of which differs under different conditions, I can see no 
more reason why the statute should fix the price at which the mail is 
to be carried than the price at which gunpowder should be carried. 

The Chairman. The statutes do fix the rates you can charge for 
passenger traffic in many of the States ? 

Mr. Buckland. Yes. 

Mr. Lloyd. And the freight rates, too ? 

Mr. Buckland. I do not know of any. There may be some, but 
there are none in the States that I represent. The commissions have 
power to iix maximum reasonable rates which shall be charged for 
the carriage of freight, but I do not know of any States in New Eng- 
land where the commission fixed the rate definitely. 

Mr. Lloyd. That is fixing a rate, though, by saying you shall not 
charge more than a certain sum? 

Mr. Buckland. I am perfectly willing in this case that the Inter- 
state Commerce Commission should say that we shall not charge 
more than a certain sum. 

The Chairman. But your whole position is predicated upon the 
elasticity incident to the delegation of this power to the Interstate 
Commerce Commission, rather than to wait for legislation over a 
period of time? 

Mr. Buckland. Yes, that and the fact that this is no part of the 
legislative function of the Government, which should be exercised 
in a rigid statute. 

Mr. Lloyd. Is it not true to-day that the greatest complaints the 
railroad people have, or the greatest complaints made in the last 
number of years are because of the treatment of the Postmaster 
General toward the railroads, and his determination against them? 

Mr. Buckland. I have never known of a time when there has not 
been this friction and this issue between the Post Office Department 
and the railroads, I can not see how it can ever be avoided so long 
as the Postmaster General reserves the right to impose additional 
services upon a railroad without additional pay. 

Mr. Lloyd. If you leave it all to him to fix the rates and deter- 
mine rules, are you not placing yourselves completely subject to 
him, excepting this, if you are dissatisfied you will have the right of 
appeal, which you do not now have? 

Mr. Buckland. Yes, sir. 

Mr. Lloyd. That is the only difference, except this: That that 
would give him, under your bill, all power, not only to make the 
rules for the Government, but to make the rate himself, and if you 
are not satisfied with that, you under your bill would have the right 
to appeal to the Interstate Commerce Commission to determine 
the differences between you ? 



272 RAILWAY MAIL PAY. 

Mr. Buckland. Yes, sir. 

Mr. Lloyd. But all the power you vest in the Postmaster General 
to Sjl the rates and fix the rules to determine what shall be paid. 

Mr. Buckland. I think there is no power in him to fix the rate. 
He has the power to fix the rules and he ought to have that power, 
and he should have the fullest power. 

Mr. Lloyd. Who fixes the rates ? 

Mr. Buckland. The Interstate Commerce Commission, if you 
can not agree. 

Mr. Lloyd. Before you get to the court, who fixes it? 

Mr. Buckland. It must be by agreement between the two. He 
has it between the railway company and the Postmaster General. 
He has no power to fix the rates. 

Mr. Lloyd. Let me put the matter in another light. Of course, 
Congress must represent the people, or at least try to. Suppose we 
pass a law such as you suggest, and leave it to the railroad company 
to furnish the information and leave it to the Postmaster General 
to determine the compensation, the compensation, however, to be 
made by contract, to which the railroad companies must agree. Do 
you think that would satisfy the people? 

Mr. Buckland. Not if it were left there, but if it were a contract 
to which the railroad companies must agree, or to put it more exactly, 
if it were a duty which the railroad companies must perform, after an 
order of the Interstate Commerce Commission, I can not see how the 
people could ask for any fairer treatment than that. 

Mr. Weeks. Suppose the opposition to an administration contended 
that the railroads and the Postmaster General were working in coop- 
eration and had agreed on rates that were much higher than the 
service warranted. How would you remedy that situation? 

Mr. Buckland. As a railroad man, I could hardly charge derelic- 
tion on the part of the Postmaster General. 

Mr. Weeks. That is a situation that might arise. 

Mr. Buckland. I think it might be possible for the Attorney 
General to intervene in a case of that kind. That has been so foreign 
to my mind that it has never occurred to me as a possibility. 

Mr. Lloyd. What do you think in that connection with regard to 
the doctrine of recall? Suppose, for instance, that the people 
believed that the Postmaster General and the Interstate Commerce 
Commission were both in sympathy with the railroads. What are 
we going to do under such a situation as that ? 

Mr. Buckland. Mr. Lloyd, if we have gotten to such a place that 
we can not trust our own Government officials, the Government is in 
a pretty bad way. I do not think that that is a thing which we ought 
to think could be brought about. 

Mr. Lloyd. Do you not think it is the duty of the legislative body 
to avoid just as much responsibility in the individual officer as is 
possible, so as to prevent the impression of the people that the indi- 
vidual has sold himself out to the interests of the country ? 

Mr. Buckland. I should hardly put it that way. I think it is 
our duty to get such men to serve us at the head of the Government 
who will command the respect of the people. 

Mr. Lloyd. Abstractly that is a splendid doctrine, but I am talking 
about a concrete proposition. Take it in the light of recent occur- 
rences and you will realize that the people are demanding now that 



RAILWAY MAIL PAY. 273 

an officer shall do his duty, and if he does not do his duty they are 
demanding that they shall have the right to recall him, it does not 
make any difference whether he is a judge of the Supreme Court, of 
the Interstate Commerce Commission, or whether he is the Postmaster 
General. Are we not encouraging the idea in the minds of the people 
and are we not encouraging the sentiment that demands the recall 
of everything if we give more power to the official instead of less ? 

Air. Buckland. Not if 3^ou have, as you have to-day, the Inter- 
state Commerce Commission practically a permanent committee of 
Congress appointed to perform legislative functions with limited 
terms of office and their terms subject to the limitation of Congress 
and always responsive to the demand of the people as exhibited 
through Congress. I can not understand why if the tariff regarding 
a commodity carried for the citizens generally is confided to the 
Interstate Commerce Commission the Government is not willing to 
confide to that same commission a tariff for the carriage of its mails. 

Mr. Lloyd. The people of the country, as you know, have the 
impression that the railroad companies are receiving too much. 
You made that statement yourself a while ago. 

Mr. Buckland. Yes, sir. 

Mr. Lloyd. Do you think that idea would be disabused by the 
Interstate Commerce Commission saying that you are not receiving 
too much ? 

Air. Buckland. If it can not be disabused that way, I do not know 
how it can be. You must understand, Mr. Lloyd, that the Inter- 
state Commerce Commission receives to-day reports from the railroad 
companies in regard to all sorts of operating expenses, and they have 
by no means exhausted their powers or privileges in requiring addi- 
tional reports. 

Mr. Lloyd. I am especially gratified that the Interstate Commerce 
Commission seems to be at this day one body that is not attacked, 
and I am especially anxious that it shall so remain that wa,y. 

Mr. Buckland. As against that I think you must agree with me 
that if you fix a rigid sum for the payment of the mails you are going 
to have it a matter of controversy in the halls of Congress just as 
long as you can see. 

Mr. Lloyd. That is not a question for us to determine. Questions 
of appropriation and questions of law are matters of constant legis- 
lation. The only thing for us to do is to do what we think ought to 
be clone to-day and the next Congress will be charged with the respon- 
sibility if it is deemed advisable to change a law. That is their 
responsibility and not ours. 

Mr. Buckland. To-day the Supreme Court of the United States 
has said that the railroads are not bound to carry the mails, but, of 
course, what the Supreme Court means is they are not legally bound 
to carry the mails. 

The Chairman. That is under existing law ? 

Mr. Buckland. Under the existing law. 

The Chairman. But you concede Congress can enact legislation to 
develop that ? 

Mr. Buckland. Yes. I am referring to our present statutes. 
Supposing that any railroad which has appeared before you would 
say we accept that decision of the Supreme Court and we will stop 
carrying the mails. Why. that is an utter impossibility. The rail- 



274 RAILWAY MAIL PAY. 

road company's property would not be worth anything a week after 
it had stopped carrying the mails. It is a physical necessity for us 
to carry the mails. 

Mr. Lloyd. That is the reason I think it is unwise for you to make 
the statement repeatedly and leave it in the record, that you do not 
have to do it, without making some explanation of your meaning. 

Mr. Buckland. I had assumed that the gentlemen here realized 
the scope of the decision. 

Mr. Lloyd. This goes into the hearings which are read by the 
public and they are the subject of magazine articles, newspaper 
articles, and other publications of that kind. 

Mr. Buckland. Let me say that the Supreme Court of the United 
States in the case of the Atchison, Topeka & Santa Fe Railroad Co. 
have decided that the railroad companies are not required to carry 
the mails, that if they do not like the compensation which the Post- 
master General under authority of Congress prescribes, they can stop 
carrying them. Therefore they have no legal right to go to court 
and say that the compensation is insufficient. Everybody knows 
that whereas a railroad may not legally be bound to carry the mail 
it is physically obliged to carry the mail, and if Congress can continue 
to diminish the pay for carrying it, without leaving them any com- 
pensation, they being practically required to carry the mail all the 
time, the result will be that the time will come when they will nc t be 
getting anything for carrying the mail and the people of this country 
will regard it as a duty which the railroads should perform without 
any charge whatever. That is the inevitable result, it seems to me, 
of a continuing of statutes of that nature. I agree that the Govern- 
ment has the right to require the railroads to carry the mail and I 
think it ought to require them to do so. Then they would have a 
standing as to whether or not on account of inadequate compensa- 
tion they were being subjected to confiscation of their properties, 
but so long as the law remains in this chaotic state the railroads may 
be perfectly sure that their property is being confiscated and yet have 
absolutely no redress in the courts. Do I make myself plain for the 
record ? 

Mr. Lloyd. Yes, sir. I think that the frankest and plainest 
statement we have had on that subject by far, from your viewpoint. 

The Chairman. Under your suggested bill you provide for biennial 
ascertainment by the Interstate Commerce Commission, do you not ? 

Mr. Buckland. Had I better not read this section ? 

The Chairman. I have read it. 

Mr. Buckland. I say that the Postmaster General may not, 
oftener than once in two years, apply to the Interstate Commerce 
Commission. 

The Chairman. There is no question at all in the development of 
the postal service of the United States, roughly representing a 7 per 
cent increase annually, that the railroads every two years would 
demand increased compensation upon the increased tonnage, and the 
practical effect of your legislation would be a biennial ascertainment 
by the Interstate Commerce Commission. That is your judgment, 
is it not ? 

Mr. Buckland. In the absence of an agreement between the Post- 
master General and the railroad; yes, sir. 



RAILWAY MAIL PAY. 275 

The Chairman. Do you think that the Interstate Commerce Com- 
mission already have duties imposed upon them that occupy their 
full time 1 

Mr. Buckland. In answering that, I think they have duties im- 
posed upon them which require their full time, but I do not know of 
any duties which should more clearly occupy their time than this. 

The Chairman. Under this system your remedy would be increas- 
ing the number of commissioners in the Interstate Commerce Com- 
mission ? 

Mr. Buckland. I do not think it necessary. # 

The Chairman. If a man's time is fully occupied, how is he going 
to have an additional burden placed upon him and be able to do 
justice to the matters he already has under consideration ? 

Mr. Buckland. It may be that some of his duties could be dele- 
gated to some subordinate. In any event I think it will be found 
soon that this question of the ascertainment of railway mail operat- 
ing costs would reduce itself to such a routine as to be easily ascer- 
tainable. 

The Chairman. Then you think a yardstick can be evolved for 
each one of the 795 railroads with whom the Government now has 
mail contracts that would extend over a decade ? 

Mr. Buckland. Not a yardstick; no, sir — but a principle. 

The Chairman. What is your distinction ? 

Mr. Buckland. A yardstick, I should say, would mean a com- 
pensation per ton-mile or compensation per car-foot mile.' I do not 
believe that that can be evolved for all of the railroads. I think that 
the principle of additions to profits beyond operating cost and fair 
charges against the capital expenditures could be easily developed. 

Senator Bankhead. Your idea is that the railroads over the country 
might be classified, certain railroads with certain environments and 
certain conditions should receive a certain amount. 

Mr. Buckland. I should think it would nmount to that very 
soon. I am not wise enough just how that would work out. 

Sentor Bankhead. That is just what you propose for the Inter- 
state Commerce Commission ? 

Mr. Buckland. I imagine that railroads operating under sub- 
stantially similar conditions could come under such a classification. 

Senator Bankhead. That is the reason that I said classify them. 

The Chairman. Then you think there is merit in the suggested bill 
submitted by the department of compensation being based upon the 
cost of the operation, with a reasonable profit? Personally you 
think that is the line on which the solution must be worked out ? 

Mr. Buckland. Personally I have always feit so; yes, sir. My 
principal objection to the bill, as I have indicated to Mr. Lloyd, is 
that it still leaves in the power of the Postmaster General the right 
to prescribe additional services after we have made our contract. 
I do not think that is fair. 

Mr. Lloyd. It must be true from the reports of the Postmaster 
General that your system of railroad has suffered worse under the 
existing law than any other system in the United States. How do 
you account for that ? 

Mr. Buckland. I assume it is because 

Mr. Weeks. Just a moment. Do you admit that that is true? 



276 RAILWAY MAIL PAY. 

Mr. Buckland. I think of the large roads, ours has suffered the 
worst. I think some of the short lines have suffered more. 

Mr. Lloyd. I mean the New York, New Haven & Hartford system. 
That is the one to which I refer. That seems to have lost in nearly 
every direction. Why is it that that system is apparently losing 
more than the other systems of the country? 

Mr. Buckland. I should say probably it is because of the short- 
ness of the travel, the frequency of the trains and the amount of 
terminal services which appertain to each train. As an illustration,, 
the New York, New Haven & Hartford road runs a train for every 
mile of its road. It has, in round numbers, 2,000 miles, and runs 
2,000 trains every day and most of those trains carry mail. Each 
one of those trains has to perform certain terminal services. 

Mr. Lloyd. Is not your system a combination of short line roads ? 

Mr. Buckland. Yes; I should say that it was. 

Mr. Lloyd. Then whatever applies to the short line railroad 
would more nearly apply to your system than probably to any other 
system, because there is no other system that is made up of short line 
railroads ? 

Mr. Buckland. Yes, sir; although there may be this addition, that 
the density of traffic in the immediate viciniyt of large cities raises a 
necessity for increased trains and increased terminal facilities, which 
would apply not only to roasd like ours, like the New York, New 
Haven & Hartford, but I assume to roads like the Long Island, the 
Jersey Central, and others that operate out from New York with 
comparatively short distances. Further than that I think that we 
are a collection of short roads. 

Mr. Lloyd. You think that the bill that is suggested by Mr. Peters, 
if enacted into law, would not sufficiently compensate your system 
of roads? 

Mr. Buckland. I do not know that I know the last bill which he 
has submitted. I may say this, for your information, that I ob- 
tained figures as to what annual weighings and compartment car 
space would pay to our company, and I found that it would diminish 
our deficit by about $50,000 a year that is, against the $400,000 we 
are losing according to the Postmaster General's admission and some 
$700,000 according to our own. 

The Chairman. You say that according to the Postmaster General's 
admission you are losing $400,000. That would, in my opinion, con- 
vey a false impression to the public. Your contention is based upon 
the information submitted by you in reply to specific interrogatories 
made of you by the Postmaster General, is it dot ? 

Mr. Buckland. Not quite that. I understand that the Postmaster 
General examined our answers, checked them up, and wherever he 
thought they were not accurate, he made them accurate according 
to his understanding. In other words, the reports made by the 
railroads of this country to the Postmaster General are not the reports 
which he adopted in House Document 105. 

The Chairman. House Document 105 contains deductions based 
upon the compilation and tabulation made by the Post Office Depart- 
ment on the mformation submitted by the railroads. 

Mr. Buckland. As modified by the Post Office Department after 
it had received it. 



RAILWAY MAIl PAY. 277 

The Chairman. Modified to the extent of credits and debits under 
the data submitted by the railroads and not checked by the Post Office 
Department. You received a lot of interrogatories, you answered 
them, but the Post Office Department did not send representatives 
to go over your books and determine the answers to those questions ? 
It simply compiled a tabulation of the information you submitted, 
and then made such and such deductions according to its own idea 
of credits and debits or allowances in accordance with the information 
submitted by you. Is not that true ? 

Mr. Buckland. You may be correct, but I do not think that was 
it. I thought the Post Office Department of its own motion, where 
it believed it was warranted in so doing, modified those figures. 

Mr. Lloyd. That is on the question of dead space, return cars, and 
things of that kind. 

Mr. Buckland. Yes, sir; I think so. I should like to introduce 
at this point, if I may, Mr. Bowman. Owing to the fact that Mr. 
Bowman is having a little trouble with his voice. I ask the permis- 
sion to read the brief of Mr. Bowman of the firm of Price, Waterhouse 
& Co., made upon the report of the value of the service rendered by 
the New York, New Haven & Hartford B ailroad Co., a copy of which 
report I hand to the chairman. 

Mr. Weeks. Has the firm of Price, Waterhouse & Co. any con- 
nection with the New York, New Haven & Hartfoid road other than 
having been employed for this paper ? 

Mr. Buckland. None whatever. They are chartered accountants, 
and as I understand it have no connection with anybody. 

Mr. Lloyd. Where are they located ? 

Mr. Buckland. In New York and London. I believe. 

Mr. Lloyd. From which office did you get this report ? 

Mr. Buckland. Perhaps the reading of it will indicate. 

The Chairman. For the time being we will excuse Mr. Buckland 
and call Mr. Bowman. 

STATEMENT OF MR. JOHN HAIL BOWMAN. 

The Chairman. Mr. Bowman, it will be necessary for you to be 
sworn. 

The witness was theieupon duly sworn by the chairman. 

The Chairman. Kindly state your full name, residence, and 
occupation. 

Mr. Bowman. John Hall Bowman; residence, Clifton, N. J.; 
certified public accountant, and principal of the firm of Price, Water- 
house & Co., 54 William Street, New York. 

The Chairman. Have you any other offices than the one in New 
York? 

Mr. Bowman. W"e have also some 10 or 12 offices scattered over 
the United States from the Atlantic to the Pacific, and offices in 
Canada and Mexico. 

Mr. Lloyd. Where are your offices in the United States ? 

Mr. Bowman. The main office in the United States is 54 William 
Street, New York City. 

Mr. Lloyd. Where are your other offices ? 



278 EAILWAY MAIL PAY. 

Mr. Bowman. Boston, Chicago, Pittsburgh, Philadelphia, San 
Francisco, Seattle, and St. Louis. 

Mr. Lloyd. Is your St. Louis firm doing business under this name ? 

Mr. Bowman. It is. It is a branch of the New York office. 

The Chairman. Have you or your firm any interest in the New 
York, New Haven & Hartford Kailroad Co. ? 

Mr. Bowman. Other than a professional interest, none whatever. 

The Chairman. Your professional interest is that you are annually 
employed, as chartered accountants, to go over their accounts anp 
make a certification as to your findings for the stockholders and the 
public ? 

Mr. Bowman. We do not do that at the present time. We are 
engaged on this particular occasion for the purpose of preparing this 
report and investigating that matter. 

The Chairman. How long were you on your investigation, the 
results of which are embodied in the report which you have filed with 
the commission here entitled, "Report on the value of the service 
rendered in the transportation of mail for the two and one-half years 
to December 31, 1911"? 

Mr. Bowman. Between six and seven months. 

The Chairman. Your investigation and results found apply only 
to the value of the service rendered in the transportation of the mail? 

Mr. Bowman. No. They apply also to the results of the transpor- 
tation of other passenger-train service and of freight, as is shown by 
the table in the separate pamphlet. 

The Chairman. The summary pamphlet which the committee have 
before it gives, in brief, the information contained and elaborated in 
the fuller report ? 

Mr. Bowman. It does. 

Mr. Lloyd. Other passenger service includes express, does it? 

Mr. Bowman. It does. 

Mr. Lloyd. Did you make a separate accounting for express ? 

Mr. Bowman. We did, but the data on the separation of express 
from other passenger- train service is not satisfactory to ourselves. 
We present it here subject to distinct limitations. The results are 
shown on page 188 of the full report. 

Mr. Weeks. Has your firm been employed in connection with pre- 
paring statistical information for the Post Office Department ? 

Mr. Bowman. It has in past years. 

Mr. Weeks. On another occasion? 

Mr. Bowman. On another occasion. 

Mr. Weeks. State what that occasion was. 

Mr. Bowman. I am not fully posted as to that work. I was not 
connected with it in any way myself. It was an investigation for a 
commission in 1907, which was investigating, as I understand it, the 
business efficiency of the Post Office Department. Our report there 
had to do with the question of business efficiency entirely. 

Mr. Weeks. That, is the report I had in mind. 

The Chairman. That was the Weeks-Carter Commission? 

Mr. Bowman. Senator Penrose was on it, I know. 

Mr. Weeks. That was the Overstreet Commission. It was a joint 
commission of the Senate and House. The Weeks bill was simply the 
bill that was framed at that time, which was originally introduced by 



RAILWAY MAIL PAY. 279 

Mr. Overstreet in the House and, I think, by Penal or Penrose in the 
Senate. 

The Chairman. In your study of the railway-mail compensation 
of the New York, New Haven & Hartford system did you work down 
a doctrine on the car-foot-mile basis as to what the system received 
per car-foot mile from railway-mail pay, including E. P. O. pay, and 
what they received from other services on the car-foot-miie basis? 

Mr. Bowman. I do not remember calculating the receipts on that 
basis. We used the car-foot-mile basis for arriving at the separation 
of the expenses for passenger-train service, but we used it as a ratio 
and not as a unit. 

The Chairman. Using it as a ratio, you had to have some figure 
even in that utilization. What was the figure that you used ? 

Mr. Eowman. The ratio of the car-foot mileage in any particular 
service to the total car-foot mileage of the passenger service. 

The Chairman. What did you allow as the car-foot mile ratio for 
the passenger service, and what did you allow for railway mail 
service ? 

Mr. Bowman. We allowed for railway mail service, June 30, 1910, 
4.805 per cent of car-foot mileage and for the total passenger-train 
service, including express, mail, and passenger, 100 per cent. 

The Chairman. What was the per cent allowed for the express 
service ? 

Mr. Bowman. In that year 8.772 per cent. 

The Chairman. Then the balance remaining, after adding together 
your ratio for express and mail, represented your passenger ratio ? 

Mr. Bowman. The passenger and small sundries that go on passen- 
ger trains; a little bit of milk service and a little bit of circus- train 
service that is negligible. 

The Chairman. Negligible? 

Mr. Bowman. Practically negligible. I do not think it has any 
bearing on the figures at all. 

The Chairman. Have you had any experience in transportation 
matters other than in the accounting branch ? 

Mr. Bowman. The accounting branch as applied to both the finan- 
cial matters and matters of valuation. 

The Chairman. The statements read by Mr. Buckland as to the 
receipts from the Government for the fiscal year 1910-11 and six 
months of 1912, and the computed losses to the New York, New Haven 
& Hartford system for those years, were based on the determinations 
made by your firm ? 

Mr. Bowman. They were. 

The Chairman. How did you reach the conclusion that, while this 
system in the fiscal year 1910 received $645,572 from the Government, 
they made a loss in that period of $743,045 ? 

Mr. Bowman. By assigning the operating expenses and taxes of the 
road as a whole, first, as between passenger-train service and freight- 
train service, then resubdividing that assigned passenger- train service 
between mail service and other passenger- train service. 

The Chairman. This was an autocratic assignment of yours ? 

Mr. Bowman. The method of this assignment was very similar to 
that adopted by the Postmaster General. A great many expenses ai e 
assigned on the basis of the actual purposes for which they were 



280 RAILWAY MAIL PAY. 

incurred. Many others have necessarily to be on the best relative 
data that can be chosen. 

The Chairman. The method adopted by the Postmaster General? 
How did you get the information as to that method ? 

Mr. Bowman. From House Document 105; the method is described 
in that document. 

The Chairman. Did you approve of that method as a specialist in 
accounts ? 

Mr. Bowman. Not fully. In fact, we differed quite a little in it. 
But its net results we found to vary less than 2 per cent from the 
method as regards the separation of expenses from the method that 
we had approved fully. 

THe Chairman. That is your own method ? 

Mr. Bowman. Our own method. 

The Chairman. There was but a difference of 2 per cent in net 
results between the method requested by the Post Office Department 
and your own method ? 

Mr. Bowman. Yes. 

The Chairman. Will you explain for the information of the com- 
mittee the difference between the Postmaster General's method 
referred to by you in your testimony and your own method ? 

Mr. Bowman. In this full report the Postmaster General's method, 
as described in Document 105, has been applied to all operating 
expenses in detail alongside of the method that we prefer and recom- 
mend. 

The Chairman. Could you not concisely and briefly state the dis- 
tinctions between the two methods, the result of which shows there 
is a difference of but 2 per cent in the results obtained ? 

Mr. Bowman. The main difference was due to the fact that where 
the Post Office Department was dependent on the imparted data, 
we had opportunity to go into all of the records that were available 
with a view to getting accurate separations in place of arbitrary ones, 
and that condition applied to a large number, particularly many of 
the transportation expenses. 

The Chairman. Then, from your experience as a chartered account- 
ant, in view of the fact that you had fuller hiformation than that 
which was received by the Postmaster General, because the questions 
asked by the Postmaster General did not cover all the points, do you 
think they had a bearing upon this ascertainment? The fact that 
there was only a difference of 2 per cent in the results would demon- 
strate, to my mind, that the Post Office Department evolved a very 
satisfactory method of ascertainment. 

Mr. Bowman. I do not think it would have fallen as closely on 
every road as it did in this one, but it was somewhat of a coincidence. 

The Chairman. What would be the difference between the New 
York, New Haven & Hartford road and other systems, from your 
viewpoint ? 

Mr. Bowman. The difference is more marked when you come to 
taking individual groups of expense. The difference between the 
amount assignable to pasesnger, of the maintenance of way and 
structures in total, is, roughly, 8 per cent. 

The Chairman. According to which method ? 

Mr. Bowman. Our method assigns 8 per cent more of the mainte- 
nance-of-way expenses to passenger service than the Postmaster 



KAIL WAY MAIL FAY. 281 

General's method does. The difference is reversed in the separation 
of transportation expenses. 

The Chairman. Then, as I understand you, if you were going over 
the accounts of some other system, like the New York Central or the 
Pennsylvania, you would not expect to have the results come within 
2 per cent of each other ? 

Mr. Bowman. I would not; no, sir. 

The Chairman. In the brief which you have filed with the com- 
mittee, previously referred to, you have summarized all of the infor- 
mation contained in the larger report before the committee, have 
you? 

Mr. Bowman. Yes. 

The Chairman. You think you have brought out the salient fea- 
tures ? 

Mr. Bowman. I believe I have brought out the salient features, 
leading, at least, directly to the results shown. 

Mr. Weeks. Will you point out to the committee the pages of 
your report of the New York, New Haven & Hartford Railroad on 
which appears your demonstration of the difference between the 
method adopted by you and the method adopted by the Post Office 
Department ? 

Mr. Bowman. It covers pages 71 to 160. That matter is dealt 
with under the heading of Expenses. The two methods are dealt 
with and the reason for abandoning the post-office method is indi- 
cated. 

Mr. Lloyd. What per cent of operating expenses and taxes did 
you assign to mail ? 

Mr. Bowman. That would show better from the table. I do not 
think I have the calculation made. 

Mr. Lloyd. It may be obtained from the table, but I did not know 
but what you had it. It would be such Dart as $936,976 bears to 
$42,217,789. 

Mr. Bowman. Yes. 

Mr. Lloyd. It would be a little over 2 per cent ? 

Mr. Bowman. A little over 2 per cent; yes, sir. 

Mi . Lloyd. You assign to other passenger- train service $18,681,412, 
which would be about 40 per cent ? 

Mr. Bowman. It is more than 40 per cent. It is 45. 

Mr. Lloyd. Can you tell me why you made the assignment of 2 
per cent to mail ? 

Mr. Bowman. Because, having divided the expenses between 
passenger and freight train service, the two classes, we found that the 
mail service represented, as shown on page 183 of our full report, 
about 4.8 per cent of the car-foot mileage in the passenger train 
service. 

Mr. Lloyd. What relation does that bear to the assignment of 2 
per cent ? 

Mr. Bowman. Four and eight-tenths per cent of the passenger 
train cost is equivalent to that 2 per cent, approximately, of the total 
of the passenger train costs and freight train costs, which were 
divided on the basis of actual incidence or of calculated incidence 
based on relative data. 

Mr. Lloyd. In your estimate here, you ascertain that the freight 
on that system is carried at a loss and the passenger traffic at a profit ? 



282 RAILWAY MAIL PAY. 

Mr. Bowman. It must be; yes, sir. 

Mr. Lloyd. And the profit on other passenger service is practically 
the same as the loss on mail service ? 

Mr. Bowman. It is very close. 

Mr. Lloyd. Then, using mail as a part of the passenger service, the 
passenger service was carried practically without loss, while the 
freight was carried at a heavy loss, including the mail ? 

Mr. Bowman. The passenger-train service, mail, express, and 
passenger, did work out very closely. 

Mr. Lloyd. But there was a very large loss on the carriage of 
freight? 

Mr. Bowman. A large loss on the carriage of freight. 

Mr. Lloyd. Generally it must be said that there is more money on 
carrying freight than there is on carrying passengers. Have you had 
any other source of information to indicate that there was more 
money made on passenger service than on the freight service by the 
railroads of the country? 

Mr. Bowman. I do not quite understand your question. 

Mr. Lloyd. Have you had any other information from any other 
railroads, or from any other source, to carry out the idea that there 
is a profit on passenger service and a loss on freight service in the 
railroad business of the United States ? 

Mr. Bowman. I think that is an exceptional condition; it is a condi- 
tion that goes with a very dense population, and the natural conse- 
quence, high valuation of terminals. Freight terminals, include 
enormous areas, and if the valuation of land in these areas is very 
high; in other words, if the land is in congested portions of the cities, 
the terminal costs of handling the freight that comes in through the 
fair return on the property required become a very large factor 
indeed, and practically absorb most of the profit that would otherwise 
be made. 

The Chairman. In your tables, in your summary of your large 
report, as I read these things, you say the excess of value of servile 
over revenue shows a $700,000 loss in mail service, over $5,500,000 
loss in freight service, and a total of over $5,500,000 in the entire 
service, and a profit of $734,000 plus in the passenger service other 
than the mail service. How do you pay dividends of 8 per cent on 
the stock? 

Mr. Bowman. For the reason that a large amount of the stock that 
has been issued has been issued at a premium for which no capital 
liability exists. In the second place, half of this property is not 
represented by any capital value in this company's accounts. It is 
leased property, and the return on that investment is the profit the 
company is entitled to by virtue of having guaranteed outright this 
rental to the true owners, a rental which is low compared to what 
those owners were originally entitled to receive. 

The Chairman. You mean the Boston & Providence, 7 per cent, 
and the Old Colony, 7 per cent, and the other lines. After all, the 
information which you submit in your summary is predicated on 
your own method of adjustment of operating expenses and revenues, 
is it not ? 

Mr. Bowman. Of operating expenses and revenues, yes, but no 
consideration is taken of the actual financial charges that were 
incurred by the company. 



EAILWAY MAIL PAY. 283 

The Chairman. But not according to your own statement, unex- 
plained, where the New Haven is paying dividends that it is not 
earning. 

Mr. Bowman. The New Haven road does not have to pay out in 
cash the fair return on the property used that is quoted here. 

The Chairman. It pays cash for its dividends ? 

Mr. Bowman. It is owing to the fact that this companv, instead of 
paying dividends in past years has chosen to reinvest this money in 
the property, and is required to pay no return on it in the first place. 
In second place, more than half of the property is not represented by 
any dividend payments whatever; it is leased property under which 
there is no capitalization included in the New Haven balance sheet. 
The stockholders of the New York, New Haven & Hartford road are 
entitled to extra compensation for having assumed its properties and 
operating them. 

The Chairman. But those are arbitrary allowances which you 
made as calculations for business shrewdness and foresight ? 

Mr. Bowman. No. I think it has the right to secure a fair return 
on the investment as taken over by the New Haven Co. from these 
other companies under the lease. 

The Chairman. Do you make any computation as to the revenues 
received in railway mail pay from the Government, and the actual 
cost of the operation and hauling of the mail ? 

Mr. Bowman. The first item in here, operating expenses and taxes, 
is supposed to be the actual cost as nearly as can be ascertained, of 
the handling of that mail, $936,976, for the year ending June 30, 1910. 

The Chairman. Then the loss under that method of computation 
would be the difference between these figures and the $645,572 that 
the system receives from the Government in railway mail pay. 

Mr. Bowman. Yes, sir. 

The Chairman. The apparent loss at the bottom, excess value of 
service over revenue, is a deduction based on autocratic charge on 
capital account in your computation, is it not ? 

Mr. Bowman. I do not like to call it autocratic. 

The Chairman. Well, arbitrary. 

Mr. Bowman. It is arbitrary in a sense, but on the other hantl the 
value of the property that is used in operation is known in this case 
case very accurately. When I say "very accurately" I mean rela- 
tively. We will say it is within 2 or 3 per cent of what is the true 
value of that property, as nearly as may be estimated. The rate 
at which that return has been taken is 6 per cent on this depreciated 
valuation. The result is a figure that is arbitrary in itself, but at the 
same time it is a minimum figure because we do not see how any 
method of computation could arrive at a smaller figure as a fair 
return. 

The Chairman. Is this interpretation of your statement for the 
year ending June 30,1911, a fair one I, You show operating expenses 
and taxes for the mail service of $944,217, and you show actual 
revenue from transportation, $646,846. Would not the difference 
between these two statements represent the actual loss to the New 
York, New Haven & Hartford road based on a computation of oper- 
ating expenses and taxes and actual revenue received from that ? 

Mr. Bowman. Based as you have stated; yes. 



284 .RAILWAY MAIL PAY. 

The Chairman. The loss you show of $728,943 takes into consider- 
ation capital charges which, in your judgment, the conditions warrant 
and are just and fair ? 

Mr. Bowman. Perhaps I might put it in another way. It takes 
into consideration the fact that the Post Office Department should 
pay for the use of this enormous property that is at their disposal for 
the transportation of mail, as well as for the actual cost of carriage 
over the facilities. 

The Chairman. Which you estimate should be a value to the Gov- 
ernment of the difference between the actual loss sustained on the 
two sets of figures I have mentioned and the difference of the amount 
which you state, in your judgment, is a fan return on the value of 
the property used. 

Mr. Bowman. A fair return on the value of the property used is 
the difference between our excess value of service and the figures 
which you arrive at as the operating loss, subject to this secondary 
revenue which has to be considered with a fair return on the value. 

The Chairman. Then the actual loss would be the difference 
between a fair return on the value of the property used and the 
excess of value of service over revenue, that difference being, namely, 
$197,941? 

Mr. Bowman. I am afraid I am getting a little bit lost in this. 

The Chairman. What do you figure your actual loss — the differ- 
ence between $944,277 and $646,846? 

Mr. Bowman. That is the operating loss. 

The Chairman. What is your distinction between actual and 
operating loss ? 

Mr. Bowman. The actual loss is the loss after consideration is 
given to the use of all of these facilities. 

The Chairman. What do you allow as a compensation for the use 
of these f acilities ? Is that estimated on the 6 per cent basis ? 

Mr. Bowman. Six per cent on the depreciated costs of reproduction. 

Mr. Lloyd. I understood you to say also that you charged up 
something for cars not used but prepared and ready for use ? 

Mr. Bowman. I do not ' recognize that statement. I did not 
intend to make any such statement. I do not know just what you 
refer to. 

Mr. Lloyd. I so understood you, that you thought something 
should be charged for this equipment that is required in the Rail- 
way Mail Service, which at different times might not be used, but 
capital was invested in it, and it was part of the investment of the 
railway company for which compensation should be received. 

Mr. Bowman. I was not aware that I had gotten into that ques- 
tion at all. 

Mr. Lloyd. If you do not intend it so, do not follow the question 
now, except I would like to know whether you did take that into 
account or net. 

Mr. Bowman. I did not take it into account, for the simple reason 
the condition does not exist. 

Mr. Lloyd. You mean the mail cars are used all the time? 

Mr. Bowman. I believe that all of the cars equipped for mail 
service on the New Haven road are practically in use. 



SAIL WAY MAIL PAY. 285 

Mr. Lloyd. Did you take into account the passenger coaches that 
might be prepared and ready for use, but might not be used by the 
company ? 

Mr. Bowman. Yes. All of the passenger equipment was taken 
into consideration. If there was any such principle as that applied 
it would have worked against the mail service so as to reduce the 
cost of the mail service. 

Mr. Weeks. Has the New York, New Haven & Hartford road 
equipment enough to perform the service? 

Mr. Bowman. The mail service ? 

Mr. Weeks. All of its service ? 

Mr. Bowman. I believe so. 

Mr. Weeks. Has it freight cars enough? 

Mr. Bowman. I do not know about the freight cars. It is very 
easy to draw on other roads for freight cars, and vice versa. 

Mr. Weeks. What do you mean by "depreciated costs "? 

Mr. Bowman. The cost to reproduce new, less a depreciation to 
cover athe wear and tear in its present condition. 

Mr. Weeks. For how long a time? 

Mr. Bowman. On the basis of the present condition of the facilities 
at the time the engineering work of the appraisal was done. That 
was done three or four years ago, but that average condition may be 
regarded, broadly speaking, as being maintained, because where one 
thing has been replaced another thing has gotten a little bit older. 

Mr. Weeks. What percentage of your total operating expenses 
and taxes does the $944,217 charged to mail service, under your 
statement for the year ending June 30, 1911, represent to all the 
operating expenses and charges ? 

Mr. Bowman. That question I was answering previously in con- 
nection with the previous year. It is the percentage of $944,000 to 
$44,476,000, as shown in that table. 

Mr. Weeks. What percentage of your total operating expenses 
and taxes, in your statement, do you charge to mail service ? 

Mr. Bowman. No particular percentage. The percentage is what 
it works out. 

Mr. Weeks. Can you tell us what that is ? 

Mr. Bowman. Approximately 2 per cent. 

Mr. Weeks. Then in a fair return on the value of the property 
used, you make the same percentage charge to the Railway Mail 
Service all the way through in this table ? 

Mr. Bowman. Not quite, no. 

Mr. Weeks. Why do you make a difference ? 

Mr. Bowman. It is dealt with in this pamphlet in some place. 
There is an allowance made in the matter of equipment. 

Mr. Weeks. It would be hardly appreciable on a percentage basis, 
would it ? 

Mr. Bowman. It is a very large amount. The equipment is not 
at all regarded as proportional to the expenses. 

Mr. Weeks. How about your classification of secondary revenues 
incidental to but not direct compensation for transportation? 

Mr. Bowman. That is direct assignment. 

Mr. Weeks. Your percentage charged to the mail would be cor- 
responding to the percentage charged to the mail under operating 
e penses and taxes? 

4939G— 14 26 



286 RAILWAY MAIL PAY. 

Mr. Bowman. No. The percentage of the total passenger charge 
to the mail is the same, but the percentage of the total is not tfie 
same. The subdivision between passenger and freight service in 
that case was actually according to the character of the revenues. 
They were distinguishable. 

Mr. Weeks. Then your statement for the year ending June 30, 
1911, under your computation here, as to operating expenses and 
taxes, taking that as a factor only, and your revenues received from 
transportation would show a direct loss of $297,371 to the New York, 
New Haven & Hartford system for that fiscal year, eliminating any 
returns on capital allowance. 

Mr. Bowman. Yes, sir. 

Mr. Weeks. Is your firm chartered accountants for other railroad 
systems ? 

Mr. Bowman. Our firm has done professional work for, I imagine, 
about one-third of the mileage of the United States. 

Mr. Weeks. Do you find in your work for these other systems a 
similarity or a distinct difference between the other roads and the New 
York, New Haven & Hartford, so far as this particular item of per- 
centage of railway-mail pay is concerned, as compared with revenue ? 

Mr. Bowman. I have not made those calculations of mail service 
for any other railroad excepting the New Haven. 

Mr. Weeks. Is there a general, universal system in the way of 
determination of railroad accounts, according to your experience? 

Mr. Bowman. By which the accounts of the road may be based ? 

Mr. Weeks. Yes. 

Mr. Bowman. I do not think so. It would be a general-average 
rule, but subject to a very great variation and must always be left open 
to special interpretation. 

Mr. Weeks. Then you simply audit the accounts of the different 
transportation companies based on their system of accounting and not 
on your own ? 

Mr. Bowman. Their system of accounting is rather limited by the 
Interstate Commerce Commission's requirements, and it takes a 
general uniformity. In order to carry the accounting system beyond 
that required by the Interstate Commerce Commission and make it a 
cost system, there must be allowed leeway for variation from those 
rigorous rules of the Interstate Commerce Commission, because they 
will not apply. 

Mr. Weeks. Do you audit according to the system used by the 
different companies or according to your own system applicable to 
all? 

Mr. Bowman. Our purpose in auditing, as a rule, is to secure true 
financial statements that are true to the stockholders and the finan- 
cial investors. 

Mr. Weeks. But your audit is based on the system in vogue for 
the company for whom you are auditing and not your own ? 

Mr. Bowman. Not our own; no, sir. 

Mr. Weeks. Does the New York, New Haven & Hartford road 
own freight terminals in New York ? 

Mr. Bowman. Yes, sir. 

Mr. Weeks. How do you get at the value of those terminals, or 
how was it done when the valuation of the property was made ? 



EAILWAY MAIL PAY. 287 

Mr. Bowman. The New York terminals were very largely taken 
at actual cost in recent years. 

Mr. Weeks. What do you mean by that ? Those terminals must 
have been acquired, or parts of them, a great many years ago. 

Mr. Bowman. The greater portion of that investment is an in- 
vestment of recent creation; I should think within the last 10 years. 

Mr. Weeks. Let us take the passenger terminals at New York and 
assume that the New York, New Haven & Hartford road owns the 
Grand Central Station. How would you get at that value ? 

Mr. Bowman. I did ascertain the value of the Grand Central Sta- 
tion property. Generally it would be the cost to reproduce all of 
the improvements that constitute that terminal. 

Mr. Weeks. How did you figure the land ? 

Mr. Bowman. The land at its present valuation, based on the pres- 
ent value of surrounding and adjacent property. We do not figure 
a multiple in that at all. The western commissions have allowed 
a multiple on account of the excessive cost that the railroad has to 
pay for land. 

Mr. Weeks. Is that a fair valuation ? 

Mr. Bowman. Which ? With the western idea ? 

Mr. Weeks. No. Based on the value of the surrounding property. 
Is not the property worth more than it would be if the railroad was 
not there ? 

Mr. Bowman. I think, in the first place, the property adjacent 
to a railroad is worth less than it would have been if the railroad was 
not there, assuming that the district had railroad facilities. I think 
that the railroad tends to depreciate the value of surrounding prop- 
erty, rather than to increase it. 

Mr. Weeks. It does for some purposes. 

Thereupon, at 1.30 o'clock p. m., the committee took a recess 
until 8 o'clock p. m. 

AFTER RECESS. 

The committee met after recess, at 8 o'clock p. m. 

Present: Senator Jonathan Bourne, jr. (chairman), Representative 
James T. Lloyd, Representative William E. Tuttle, jr., and Repre- 
sentative John W. Weeks. 

STATEMENT OF MR. JOHN HAIL BOWMAN— Continued. 

The Chairman. When we took our recess this afternoon we had 
under consideration the tables in your summary, entitled "A Brief 
Memorandum of the Results of an Investigation made by Price, 
Waterhouse & Co., Chartered Accountants, which are described fully 
in the report to C. S. Mellen, president, under date of October 31, 
1912." What elucidation would you be able to make in reference to 
that summary where, under the item '" Excess of value of service over 
revenue," you show an excess of value in the mail service, a large 
excess of value in the freight service, a small excess of revenue in the 
passenger service, and a total excess of value over revenue in all 
service, the query being as to how you would be justified in paying 
dividends under such a presentation. Would you kindly explain that 
for the information of the committee ? 



288 KAIL WAY MAIL PAY. 

Mr. Bowman. The explanation might be made in this manner: 
The actual fixed charges and dividends are shown in the income 
accounts of the company attached to the full report as Exhibit 1 . 

The Chairman. Could you not, without reference to a long report, 
containing some one hundred and eighty odd pages, give a brief 
explanation as to that ? 

Mr. Bowman. I am going to do that. 

The revenues actually received on all traffic yielded about 5 per 
cent on the depreciated value of the property used in operation. Such 
a rate was adequate, as may be seen from the reports, to pay, along 
with the income from activities other than railroad operation, the 
interest and rental charges for which the company was obligated and 
to leave a little more than 8 per cent in 1909-10 and a little less than 
8 per cent in 1910-11 on the outstanding capital stock. Inasmuch as 
the value of the property is vastly greater than its capitalization, 
owing to the issue of the stock at large premiums and to the expendi- 
ture of important sums out of income or surplus for capital purposes, 
and inasmuch as the fair return on the values of the leased properties 
is in general much greater than the rentals paid, it naturally follows 
that the full return would if earned justify an increase of stock that 
would bring the capitalization to an amount more nearly approaching 
the true value of the property. 

The Chairman. Your annual statement shows that you earned 
about 8 per cent on the stock ? 

Mr. Bowman. About 8 per cent. 

The Chairman. What would you have earned on this stock if, 
under this statement referred to by me in the interrogatory on the 
resumption of the hearing this evening, you had broken even on the 
freight service or the total service ? What dividends could you have 
paid on the stock or would you have shown as earned on the stock ? 

Mr. Bowman. About 10 or 11 per cent. 

The Chairman. Instead of the 8 per cent ? 

Mr. Bowman. Instead of 8 per cent; yes. 

The Chairman. As I understand, referring again to statements in 
your summary for the years 1910 and 1911, the items "Fair return 
on value of property used" are based upon the value of the property 
determined by you, which is about $20,000,000 less than what the 
commission of Massachusetts allowed as the physical valuation of 
the pronerty of the New York, New Haven & Hartford system. Is 
that right ? 

Mr. Bowman. It is less by a greater amount — the valuation used 
for the New York, New Haven & Hartford property. 

The Chairman. Based on the whole system or the company 
proper. 

Mr. Bowman. Based on all property operated by the New York, 
New Haven & Hartford Co. 

The Chairman. What is this statement based on ? 

Mr. Bowman. All property operated by the New York, New 
Haven & Hartford Railway Co., included in its income. 

The Chairman. Does this cover the returns of the aggregate of 
7,000 miles or the return of the 2,000 miles of the New Haven Co. ? 

Mr Bowman. The return of the 2,000 miles. 



RAILWAY MAIL PAY. 289 

The Chairman. What is the stock and bonded indebtedness of 
that amount, of about 2,000 miles, or the New Haven system proper, 
as I think you designate it ? 

Mr. Bowman. The capital indebtedness of the New Haven system 
is $424,000,000, as of June 30, 1911. 

Mr. Tuttle. That is the system ? 

Mr. Bowman. That is the operating system. 

Mr. Tuttle. What is the mileage of that ? 

Mr. Bowman. Two thousand and forty-one miles of first track. 

Mr. Tuttle. That is the New York, New Haven & Hartford 
Railroad ? 

Mr. Bowman. Yes, sir. 

Mr. Tuttle. You say the bonded and stock indebtedness is what, 
on the New Haven proper? 

Mr. Bowman. $424,221,292.98. 

The Chairman. How do you get cents and odd dollars on the 
stock and bonded indebtedness on a computation at par ? 

Mr. Bowman. The cents come in in the form of capital obligations 
that are not represented by bonds or mortgages, but the payment of 
which is deferred. 

The Chairman. Those are rentals ? 

Mr. Bowman. No; they are not rentals. 

The Chairman. Borrowed money, or accounts payable ? 

Mr. Bowman. It is liability for property used in operation and 
taken over — equipment, and things of that kind. 

The Chairman. Eliminating all of that, what is the total bonded 
indebtedness and the total stock indebtedness of the New Haven 
system; that is, the New York, New Haven & Hartford Railroad Co. ? 

Mr. Bowman. The bonded indebtedness and stock indebtedness 
would be $474,803.98 less than the amount I stated. 

The Chairman. As against the four hundred and twenty-four odd 
million dollars bonded and stock indebtedness at par, what is your 
physical valuation as determined under your own figures, which, as I 
understand from the vice president, Mr. Buckland, is less than the 
amount allowed or accredited to you by the Massachusetts validation 
commission? What was the valuation allowed by this commission 
on the property of the New York, New Haven & Hartford Railroad 
Co.? 

Mr. Bowman. The date of the validation was June 30, 1910, a year 
prior to the date that I gave you those figures. At that date the total 
liabilities validated was $394,147,563.63. The cents included at that 
time are not due to the same item I included before. I do not know 
what this item represented without some reference. The odd cents 
there were due to installments for stock in the course of issue. The 
valuation of the corresponding properties and securities shows an 
excess over that amount of $101,612,074.38. 

The Chairman. Am I to understand that the validation commission 
under their allowance simply gave you a net credit of $101,000,000 as 
against four hundred and twenty-four odd millions of dollars of bond 
and stock issues ? What I want to get at is what allowance did this 
validation commission give the New York, New Haven & Hartford 
Railroad system for the physical valuation of all their property? 

Mr. Tuttle. Did this commission value the property in other 
States ? 



290 RAILWAY MAIL PAY. 

Mr. Bowman. No; the engineers who were employed by the com- 
mission, Stone & Webster, have done a great deal of valuation work. 

Mr. Tuttle. Have they valued property in the other States in 
which this system runs ? 

Mr. Bowman. Yes. The commission took over all the New York, 
New Haven & Hartford properties wherever they might be. 

Mr. Lloyd. Leased lines and all? 

Mr. Bowman. They did not cover the leased lines. It was only 
the property owned by the New York, New Haven & Hartford. 
They were establishing a validation of assets. The valuations that 
were dealt with here in our report are the valuations of property used 
in operation, whether owned or whether rented. 

The Chairman. Then the data upon which you base these two 
tables is on the property rented, owned, and operated properties, by 
the New York, New Haven & Hartford system ? 

Mr. Bowman. Yes, sir; but not controlled and independently 
operated. These are not touched at all. 

Mr. Lloyd. What roads are controlled and independently operated % 

Mr. Bowman. The New York, Ontario & Western, for example. 

The Chairman. What roads are owned and directly controlled by 
the New York, New Haven & Hartford % 

Mr. Bowman. And included in the operation % The only one I 
remember outside of the New York, New Haven & Hartford is the 
Harlem River & Port Chester. 

The Chairman. What roads are owned and directly operated by 
the New York, New Haven & Hartford ? 

Mr. Bowman. The New York, New Haven & Hartford proper and 
the Harlem River & Port Chester. 

The Chairman. The Boston & Providence ? 

Mi. Bowman. The Boston & Providence is a leased line. 

The Chairman. What we have to find out is upon what company's 
property, according to my idea, Mi . Bowman makes the return under 
the heading of "Fair return on value of property used." What I 
would like to know is what the general stock and bonded indebtedness 
is of these companies on whose properties you make an estimate of 
fair return on value of property used ? 

Mr. Bowman. I do not think we have thai available. 

The Chairman. But you must know upon what data and terms 
you draw a conclusion to make a specific statement that under the 
heading "Fair return on value of property used/' vour system should 
receive $25,000,000 ? 

Mr. Bowman. Tnat $25,000,000 is derived entirely from valuation. 

The Chairman. It is a physical valuation? 

Mr. Bowman. Yes. 

The Chairman. Of what property ? 

Mr. Bowman. Of the New York, New Haven & Hartford property 
itself and the following leased lines: The Old Colony Railroad,, the 
Boston & Providence Railroad, Providence & Worcester Railroad, 
Norwich & Worcester Railroad, Harlem River & Port Chester Rail- 
road, Holyoke & Westfield Railroad, Providence, Warren & Bristol 
Railroad, the Plymouth & JViiddleboro Railroad, and the Chatham 
Railroad; of certain properties operated jointly of which a percentage 
of the valuation corresponding to the use was taken, part of the New 



RAILWAY MAIL PAY. 291 

York & Harlem River Jiailroad tracks from Woodlawn to Grand 
Central Station, New York; use of the Grand Central facilities, 
South Station facilities at Boston, use of certain tracks between Ster- 
ling Junction to Worcester, Hopewell Junction to Poughkeepsie, 
Shelburne Junction to Shelburne Falls, and the use of station facilities 
at Springfield, One hundred and twenty-fifth Street Station (N T ew 
York), New London, Worcester, and various minor points. 

The Chairman. The valuation for the joint usage of those tracks 
and these facilities is an arbitrary valuation made by you, or by this 
Massachusetts Commission ? 

Mr. Bowman. The Massachusetts Commission figures we can only 
compare in the case of the New York, New Haven & Hartford proper, 
which constitutes the greatest portion, as it happens, of the total 
valuation of the properties. 

The Chairman. Given the valuation of this property, what per- 
centage or sum did you arbitrarily make as a fair return in order to 
obtain your figures under the total column of $25,0000,000 plus? 

Mr. Bowman. I do not think we made any percentage of it arbi- 
trarily. The valuations that were used when the complete valua- 
tions were not available were either cost or they were a figure known 
to be absolutely safe within the cost or present value. 

The Chairman. It seems to me my question is very simple and 
easily answered. How do you get your $25,000,000, which you say 
is a fair return on the value of property used ? You say you ascer- 
tained the value of the property. What do you estimate and deter- 
mine is a fair return on that valuation; if your property is 
$1,000,000,000, what is this percentage, 6 per cent, 1 per cent, 5 
per cent, or what ? How do you get the $25,000,000 ? 

Mr. Bowman. That is 6 per cent on values that were arrived at. 

The Chairman. Then presumably the total valuation of these 
properties directly owned and operated and in which you had equities 
or joint interests, represented a capitalization, which, computed on 
the 6 per cent basis would be 16 times as great as this $25,000,000. 
Is that it ? 

Mr. Bowman. Yes, sir. 

The Chairman. The item " Operating expenses and taxes" was 
derived upon taking the total operating service or cost of all the dif- 
ferent companies described by you in your previous answer and arbi- 
trarily computing the 2 per cent of that aggregate as the operating 
expense of the mail service. Is that right? 

Mr. Bowman. No, sir; that is not stated correctly. In the first 
place the total operating expenses are the operating expenses of the 
New Yoik, New Haven & Hartford Kailroad proper, precisely as 
expended. The other companies had no operating expense because 
they were all operated by the New Haven Co. In the second place 
the subdivision worked out to 2 per cent or thereabouts, but is is 
done by a system of subdivisions that is based on minute study and 
the best judgment, item by item throughout. 

The Chairman. Had you determined that the percentage was 1 
instead of 2, you would have shown a slight profit instead ol a loss 
in the actual expense of the mail service, would you not? 

Mr. Bowman. No. If that had been one instead of two 

The Chairman. That would have been the case in the year 1910? 



292 EAILWAY MAIL PAY. 

Mr. Bowman. It would have shown a slight operating profit, but 
not an actual profit. 

The Chairman. You have not a statement of any one of the various 
systems operated by the operating company segregated, so that you 
could show what the capital indebtedness is, cost of operation, and 
the physical valuation, and the deductions made on that one segre- 
gated unit of the whole system, have you ? 

Mr. Bowman. The operations are not kept separate for these dif- 
ferent units. The operations are all one for the system, and there are 
no statisticalor other records kept of the individual operations. 

Mr. Lloyd. Does the system include the independent lines ? 

Mr. Bowman. No, sir. We are not dealing with any lines that have 
independent operations. 

Mr. Lloyd. None at all % 

Mr. Bowman. No. Excepting the New Haven itself. 

Mr. Lloyd. As I understand from these two tables in your sum- 
mary for the years 1910 and 1911, you show an actual loss in the mail 
service to the New York, New Ha\en & Hartford system of $291,404. 

Mr. Bowman. Yes, sir; an operating loss of that amount. 

Mr. Lloyd. That is arrived at by taking the actual operating ex- 
penses, plus taxes, of the entire system and figuring a percentage a 
little less than 2 per cent of that as charged against the mail service 
of the system. Is that it ? 

Mr. Bowman. Yes, sir. 

Mr. Lloyd. That little less than 2 per cent is a charge arbitrary in 
its nature, but based upon the best known methods in railroad 
accounting ? 

Mr. Bowman. Yes, sir. 

Mr. Lloyd. Agreeing with the method of accounting suggested 
by the Post Office Department in its letter to you, answers to which 
were the basis for what is known as House Document No. 105, with a 
2 per cent variation between your own method and the method of the 
Post Office Department. 

Mr. Bowman. It has the result in net. 

Mr. Lloyd. Now you claim that you have actually suffered a loss 
by insufficient compensation from the Government for railway mail 
pay, including R. P. O. service, of $743,035 for the fiscal year ending 
June 30, 1910, that claim being based upon a 6 per cent allowance, 
which from your viewpoint you should be credited with on the phy- 
sical valuation of the properties engaged in the activities that you have 
with the United States Government, such valuation being determined 
by the board of railroad commissioners, the tax commissioner, and 
the bank commissioner — the special board appointed by the Massachu- 
setts Legislature. Is that right? 

Mr. Bowman. No, sir; that is not correctly stated. 

Mr. Lloyd. Then will you make a correct statement ? 

Mr. Bowman. It is correct, excepting for the valuation, which is 
not that of the Massachusetts Validation Commission but is a valua- 
tion which was in large part restudied by them and is covered by their 
report, the part which they studied being shown to be undervalued 
by them to the extent of some $20,000,000. 

Mr. Lloyd. Then, this question that I have put applies to the 
valuation made by the New York, New Haven & Hartford system 
of its own ? 



RAILWAY MAIL PAY. 293 

Mr. Bowman. Yes. 

Mr. Lloyd. Which, as I understand from the previous answer, was 
some $20,000,000 less than what this commission I have just referred 
to allowed you ? 

Mr. Bowman'. Yes, sir. 

Mr. Lloyd. So that you would show a still further loss on the 6 
per cent basis on the valuation if you took the valuation allowed by 
this commission instead of your own valuation? 

Mr. Bowman. Yes, sir. 

Mr. Lloyd. Or $120,000 added to this? 

Mr. Bowman. Yes, sir. 

Mr. Lloyd. Is it true that the public which has been served by the 
New York, New Haven & Hartford Railroad has not received by 
$5,595,088 for the year ending June 30, 1910, of the amount that it 
actually expended in improving the service which it did render? 

Mr. Bowman. No, sir. The return over and above the expendi- 
tures for that year was less than the amount to which it may be 
regarded as fairly entitled by that amount of $5,595,088. 

Mr. Lloyd. Then, as a matter of fact, the Government for hand- 
ling the mail should pay the New York, New Haven & Hartford 
$743,035 in order to make a reasonable compensation, but it is not 
necessary for the public served otherwise to pay the $5,595,088 ? 

Mr. Bowman. The situation in regard to freight service is not 
hardly under consideration, is it ? We have not given consideration in 
our report as to what the status of the freight service was. 

Mr. Lloyd. You have a statement here in which you say " Excess 
of value of service over revenue" was $5,586,088, and you place it 
exactly on the same basis as the mail service. Here is shown a loss 
in the mail service of $743,035 and a loss in the freight service of 
$5,586,727. 

Mr. Bowman. There is a question that enters into the freight 
service and that is the value to the shipper. It is possible that the 
value of the service is less than a fair return on the value in the case 
of freight. We do not think that such a condition can conceivably 
exist in the case of the mail service. The value of the service to the 
Government is incalculable and there is no basis for getting at it, but 
it is certainly not a service that can be regarded as not able to bear 
a fair rate of charges. 

Mr. Weeks. Let me assume that the physical valuation is 
$425,000,000 and you are figuring that you should earn 6 per cent 
on that valuation. That would amount to $25,500,000. Based on 
that figure your operations show that you lost ^ve and one-half mil- 
lion dollars, in round numbers, in other words, you earn $20,000,000. 
I think these figures are substantially correct, but assuming that they 
are correct, in 1909 you had outstanding $240,000,000 of bonds ancl 
$100,000,000 of stock; on the bonds you were paying 4 per cent, or 
$9,600,000, and on the stock vou were paying 8 per cent, or $8,000,000, 
making a total of $17,600,000. That left a surplus of $2,400,000 
in the operations of the road to pay the leased charges or whatever 
other charges you had to pay, but certainly showed in the net result 
that the New York, New Haven & Hartford Railroad would make 
enough to pay 8 per cent on its capital stock ? 

Mr. Bowman. Yes, sir; that is correct. 



294 RAILWAY MAIL PAY. 

Mr. Weeks. Does not that illustrate why you. show a deficit of 
$5,500,000, based on your valuation, and at the same time show why 
you were able to pay your interest charges and show a dividend of 8 
per cent on your capital stock outstanding. 

Mr. Bowman. Yes. If the full amount had been earned it would 
have made it possible for the company to have enlarged the capitali- 
zation to a point that would more nearly have covered all the property 
that it actually possessed. 

Mr. Weeks. Let us assume that in that year you earned 6 per cent 
on your valuation, or $25,500,000. That would have been 4 per cent 
on your bonded debt and 16 per cent on the capital stock. 

Mr. Bowman. Yes; on those figures. 

Mr. Weeks. Does not that absolutely illustrate why you are ablt 
to pay an 8 per cent dividend, and have been, arid at the same time 
show a deficit in operation based on your valuation figures. 

Mr. Bowman. That illustrates it perfectly. 

Mr. Lloyd. If that is a correct hypothetical statement, then the 
fair return on the value of the property used in the mail service for 
the year ending June 30, 1910, includes the payment on all bonds 
and 8 per cent interest on the capital stock. 

Mr. Bowman. And a very low rental on very many properties, a 
normal rental on others. It contains the only provision that is made 
for abandoned property further. 

Mr. Weeks. If the interest was not paid and the 8 per cent divi- 
dend was not paid and only actual operating expenses and taxes 
were taken into the account, what would be the loss ? 

Mr. Bowman. About $20,000,000, if I understand you correctly. 

Mr. Weeks. What would be the loss on account of mail? 

Mr. Bowman. On mail service about $291,000. 

The Chairman. $291,000 for the fiscal year 1911 ? 

Mr. Bowman. Yes. 

Mr. Lloyd. If you had fixed 1 per cent of the total operating ex- 
penses and taxes as the amount that should be met by mail service, 
there would have been a profit made in carrying the mail, would 
there not ? 

Mr. Bowman. One per cent would not have been enough to have 
made a profit. 

Mr. Lloyd. You fix nearly 2 per cent, or about 2 per cent. Sup- 
pose that somebody else in making the ascertainment would have 
fixed it at 1 per cent. In that event there would have been a profit 
for carrying the mail, would there not ? 

The Chairman. Under that method of apportionment, there would 
have been an operating profit in the year 1910 of $177,094, or debit 
to the mail service. 

Mr. Lloyd. In order to show that you are correct it would be a 
fine thing if you could make a perfectly plain statement that the 2 
per cent is the proper amount chargeable on account of the mail 
service. I am not saying you have not done so. 

The Chairman. If you will permit me to interrupt you just there, 
Mr. Lloyd, if I correctly understood Mr. Bowman, he claims that his 
method of ascertainment as to the charge, practically a little less than 
2 per cent, is in accordance with the Postmaster General's method of 
ascertainment for the percentage to be charged to the rnail, with a 
difference of 2 per cent in the two methods — Mr. Bowman's method 



RAILWAY MAIL FAY. 295 

as indicated here and the Postmaster General's method as indicated 
in interrogatories which led to what is known as Document 105 — a 
variation of 2 per cent only in the net results obtained by the appli- 
cation of the two methods. 

Mr. Lloyd. What I am aiming to get at is this: Is it not true that 
the determining factor as to whether there has been a profit or a loss 
for carrying the mail depends very largely upon the per cent that is 
chargeable for carrying the mail? 

Mr. Bowman. The present per cent of the total expense ? 

Mr. Lloyd. Yes. 

Mr. Bowman. Yes; that is the whole thing. 

Mr. Lloyd. As I understand, you are a specialist in accounting ? 

Mr. Bowman. Yes, sir. 

Mr. Lloyd. And you do not claim to be in transportation matters ? 

Mr. Bowman. No; except that I have been engaged in railroad 
accounting during the greater part of the last 15 years. 

Mr. Lloyd. Would you feel qualified to pass upon the question 
of the desirability of the substitution of space for weight as the 
determining factor for the measure of the service rendered ? 

Mir. Bowman. No, sir. I would like to read a short extract from 
the full report bearing on that question, which is found on page 169 
entitled "The choice of methods for separating the cost of passenger- 
train service": 

The several classes of passenger-train traffic are commonly handled in the same 
trains, though trains exclusively for passengers, mail, or express are also* to some 
extent hauled. The manner of running the exclusive trains differs, however, so 
little in any respect pertinent to this inquiry from that of the common trains that 
there is no advantage to be gained by attempting to deal with them separately. 

The basis of subdivision is to be found in some common dimension or measure that 
is applicable to each class. The measures of this character that call for consideration 
are: 

1. Weight of cargo. 

2. Weight of car. 

3. Combined weight of car and cargo. 

4. Cubic space in car. 

5. Floor space in car. 

6. Inside length of car. 

The weight of the cargo is less than 10 per cent of the weight of the cars themselves, 
and as passenger- train cars are rarely loaded to capacity, increasing the cargo would 
not in all probability noticeably increase the dead weight, while, on the other hand, 
dead weight might be substantially increased to meet public demand for additional 
train service without corresponding increase in the cargo. It is obvious that this 
measure is not adequate. 

The weight of the car is inadequate also for reasons analogous to those just cited 
in regard to cargo weight. 

The combined wieght of car and cargo has a much stronger claim to consideration. 
If it could be ascertained for each of the three classes it would provide an admirable 
measure. Unfortunately it requires the use of too many arbitraries: 

1. The weight of the passengers and their baggage. 

2. The weight of the express matter. 

3. The weight of the pouch mail. 

4. The weight of mail in R. P. O. or apartment cars. 

The weight of exclusive cars could be dealt with adequately after some labor, 
bat the weight of that portion of common cars used for pouch mail service and for 
part of the express service would of necessity be arbitrary. 

The lack of information in the respects mentioned is not due to mere failure to 
gather data but to impossibility of doing so in some cases and impracticability of 
doing so in others. This measure must therefore be discarded as a working meas- 
ure but kept in mind as a sound one in theory. 

The cubic space in the car differs in no important respect as a measure from the 
floor-space basis, inasmuch as the variations in height do not affect the capacity of 



296 EAILWAY MAIL PAY. 

a passenger-train car except in the case of the express or baggage car. The tendency- 
is toward standard height. 

The floor space in its turn is proportional to the inside length, inasmuch as the cars 
are of practically standard width. Linear car feet therefore measure for practical 
purposes the cubic or the square space as well as the length and may be considered 
as proportional to the other two. 

I think there is some light, perhaps, on that subject. 

The Chairman. That is very illuminating, indeed, and I infer 
from same that you believe that space, as measured by linear car-foot 
measure, is far more scientific than weight as the measure of service 
rendered in mail transportation ? 

Mr. Bowman. I do, owing to the enormous percentage of dead 
weight. 

The Chairman. You concur then with the Post Office Depart- 
ment's views as presented on that particular phase of the question 
in Document No. 105 ? 

Mr. Bowman. Fully. 

The Chairman. Is this conclusion of yours based on your expe- 
rience with the New York, New Haven & Hartford system, or on the 
experience your firm has had with practically one- third of the rail- 
road mileage of the United States ? 

Mr. Bowman. This is based on all of the experience that I have 
accumulated, personally, perhaps, rather than the firm's experience, 
because I largely wrote this myself. 

The Chairman. You think then that the linear car foot should be 
the basic measure upon which the question of railway mail pay must 
rest fundamentally ? 

Mr. Bowman. That is my opinion. 

The Chairman. You eliminate weight entirely except so far as the 
pouch service is concerned ? 

Mr. Bowman. Eliminate weight for the reason that it introduces 
factors that are impossible of accurate determination. Combined 
weight of car and cargo furnishes a very excellent method, but it is 
impracticable. 

The Chairman. But the only way weight would enter into the 
problem at all would be the linear foot space occupied based upon 
the supposed weight of a pouch of mail ? 

Mr. Bowman. Ye% sir. 

The Chairman. It would be space ? 

Mr. Bowman. Space. 

Mr. Weeks. Do you know how much a steel car 60 feet long 
weighs ? 

Mr. Bowman. Not accurately, but something like 100,000 pounds 
or over. 

Mr. Weeks. Do you know how much the mail, if that car were a 
storage car and were filled with mail, would weigh ? 

Mr. Bowman. I know nothing about the weight of mail, excepting 
the information elicited at the Walcott commission's inquiry several 
years ago. 

Mr. Weeks. Do you remember that figure ? 

Mr. Bowman. About two to three tons, and that was regarded as 
high, I believe. 

Mr. Weeks. Then the car would weigh in round numbers 45 tons 
and the mail not to exceed three tons ? 



RAILWAY MAIL PAY. 297 

Mr. Bowman. I think that would be fairly putting it in approxi- 
mate figures. 

Mr. Weeks. How much would a car with a steel frame and wooden 
upper structure weigh, do you know ? 

Mr. Bowman. I have one class of cars here which weigh about 
93,500. 

Mr. Weeks. Then a steel car would weigh more empty than the 
steel frame car with a wooden upper structure loaded ? 

Mr. Bowman. I believe so ; yes, sir. 

Mr. Weeks. That is the basis for your contention that the percent- 
age of weight of the mail is so small compared with the weight of 
equipment that it is not a good measure on which to base the pay? 

Mr. Bowman. Yes, sir. On page 172 of the original report there 
are some figures with reference to the New Haven road: 

The average passenger car contained in the year to June 30, 1911, an average of 25.55 
passengers when in transit. Assuming 175 pounds as the average weight of a passenger 
and his hand baggage, the average load would have been 4,471 pounds, or, say, 2\ 
tons. The average load in the R. P. O. cars was found by the Walcott Commission to 
be about 2 tons, and it was believed that on this road it is less. It would seem, then, 
that the excess in the weight of a car was offset in part by the deficiency in weight 
of cargo. 

The combined car and cargo of passengers and mail appear to be 
very close in their average. 

The Chaieman. Suppose space was accepted and space only, and 
we will say only a portion or 10 feet of the car was authorized; sup- 
pose there was an mcreased business and another 5 feet needed and 
the department simply notified the transportation company that they 
wanted 5 more feet. Suppose the railroad company, in order to give 
them that 5 feet, had to put on another car. Suppose it was a 60-foot 
car. In that event is the Government supposed to pay for the 60 
feet, although they only use 5, and are only authorized to use 5 ? 

Mr. Bowman. I think that it would be the duty of the railroad 
company to furnish the car necessary for that space under such 
circumstances in the same way that it is necessary to furnish a pas- 
senger car for passengers offered. 

The Chairman. Even if they only have two passengers to go in 
that car and the rest of it had to go empty? In other words, is it 
your idea — I am not expecting you to bind the railroads in any way— 
if space was substituted for weight as the determining factor and 
authorization was made for additional space, so that only 10 per 
cent of the space in the additional car would be used by the Gov- 
ernment, should the Government pay for the whole 100 per cent? 

Mr. Bowman. Well, there are two possibilities there: If that car 
is a specially equipped car, I think that the Government's requisition 
for space should take into consideration the facilities that the railroad 
company has to offer. 

The Chairman. How would you clear up these questions of differ- 
ence between the transportation companies and the Government 
under the method of substitution of space for weight. Would there 
not always be differences and claims for readjustment on the ground 
such as I have indicated? 

Mr. Bowman. It would not be necessary in the case of pouch 
mail to requisition for space at all. Whatever space was required 
by the mail that was put on the train would be necessary. 



298 RAILWAY MAIL PAY. 

The Chairman. That is, figuring that a pouch of mail occupied 
so many inches of space ? 

Mr. Bowman. Yes, sir. 

The Chairman. Then the space would be determined absolutely 
by the number of pouches that the train carried ? 

Mr. Bowman. At its maximum point. 

The Chairman. Then you would have to have a weighing for the 
pouch mail and in order to determine the space really occupied b} r 
the pouch mail, would you not ? 

Mr. Bowman. It might be done by a count system and you could 
determine with weighing tests to find the average weight of pouches 
in that particular part of the country. 

The Chairman. That is clear to my mind. I think then you 
would have to have a count of the number of pouches ? 

Mr. Bowman. That could be done by records. It would be a 
matter of counting everything that went in and out. 

The Chairman. So the expense incident to weight would be 
eliminated by the substitution of space for weight ? 

Mr. Bowman. It would be greatly reduced, I think, in any case. 

The Chairman. Would it be entirely eliminated ? 

Mr. Bowman. I do not think so. 

The Chairman. Why not ? 

Mr. Bowman. Because there would have to be some sort of record 
or check made. 

The Chairman. You would substitute space for weight ? 

Mr. Bowman. Yes. 

The Chairman. In the pouch system only ? 

Mr. Bowman. In the pouch system only. 

The Chairman. And the other determinations would be based 
entirely on authorization ? 

Mr. Bowman. No ; entirely on use. 

The Chairman. But your use has to be predicated on an authoriz- 
tion? 

Mr. Bowman. Yes, sir. 

The Chairman. But before the authorization would come the 
determination as to the amount of space which would be required, 
based on the general average of the business coming in to the Post 
master General ? 

Mr. Bowman. The weighing would only be necessary in that case 
for the department's own satisfaction. 

The Chairman. Would any weighing be necessary other than the 
original ascertainment as to what the average weight of a pouch of 
mail was and what space a pouch of mail occupied ? Then you would 
substitute count entirely for weight for the pouch mail and eliminate 
weight entirely in the rest of the ascertainment, would you not ? 

Mr. Bowman. I was thinking somewhat of the conditions offered 
by the parcels post and which I have not given consideration to and 
I do not know what they would be. 

The Chairman. Thank you very much, Mr. Bowman. 

STATEMENT OF E. G. BUCKLAND— Continued. 

The Chairman. Mr. Buckland, I want to ask you whether you 
attribute your losses, as shown in the summary here, the actual loss 
of $290,000 for each year, 1910 and 1911, based on the cost of the 



RAILWAY MAIL PAY. 299 

operation and taxes and the receipts from the Government for rail- 
way mail pay, to the fact of the expense of the side service to the 
New Haven system, the quadrennial weighing, the failure to receive 
compensation in apartment cars, or all. 

Mr. Buckland. All, to a certain degree. It is particularly true of 
the quadrennial weighing in this particular case, because the quad- 
rennial weighing occurred in the autumn of 1908 and for the first time 
in many series of weighings showed a decrease in the weights of mail 
carried, due, I think, very largely to the fact that we were then expe- 
riencing a period of very great depression. Of course the side service 
rendered is directly proportional to the number of trains which are 
run and the preparations for receipt and delivery as to each of these 
trains. 

The Chairman. Which is the largest factor in making up this actual 
loss, according to your estimate, noncompensation for side service, 
noncompensation for excess or increase in the mail over the four years 
following the quadrennial weighing, or noncompensation for space 
taken but not paid for, from your standpoint, in the apartment car ? 

Mr. Buckland. I am unable to answer that question. I have not 
made the analyses. May I say one or two words in conclusion. 

The Chairman. Yes. 

Mr. Buckland. The railroads of the country, since the decision of 
the Supreme Court of the United States in the case of the Atchison, 
Topeka, & Santa Fe Railroad Co. against the United States, are left 
in this peculiar position, if I read that decision correctly: The rail- 
roads to-day are not by law compelled to carry the mail, excepting in 
the case of land-grant roads. Now, if a land-grant road is carrying 
the mail at less than cost, it has a standing in court in order to make 
a protest that its property is being confiscated ; but the railroad which 
has not been aided by land grants is, according to the decision of the 
court, a voluntary carrier and has no standing in court, even though 
it be carrying at an actual loss. That is an anomalous condition 
which could only be corrected by a law which would require all rail- 
roads to carry the mail and give them all an equal standing under the 
law to determine whether they were being required to carry at a rate 
which was confiscatory. One thing more. I do not believe it is nec- 
essary for me to argue that in the case of the New England roads the 
weights, having been taken during the autumn of 1912 for the four 
years beginning July 1, 1913, an omission to give any additional 
weighing will require them to carry for four years and a half mail, 
including the parcels post, which has not been included in the weigh- 
ing. That is so obviously unjust that it does not require any argu- 
ment on my part to show that it is an injustice which ought to be 
corrected. At the present time it is the custom of the Post Office 
Department in taking the weights to take them without giving the 
railroads an opportunity to check the weights as they are taken. It 
is true that we have the right to weigh going on the cars and weigh 
coming off the cars, but we have not the right to witness the weighing 
done in the cars themselves. Inasmuch as upon these weights de- 
pends our revenue, it seems only the part of justice that the railroads 
should have the right to check those weights. 

The Chairman. If you have the rig«rt to weigh going on the cars 
and weigh coming off the cars, why should you criticize the fact that 



300 KAIL WAY MAIL PAY. 

you have not the right to weigh in the cars ? What is going to happen 
to the mail in the cars between the period of time when it is put on 
and taken off ? 

Mr. Btjckland. Nothing intentional, but there may be a mistake 
in the weight, and that often happens. It would seem to me, as a 
matter of business between the buyer and seller, that there ought to 
be an opportunity for both the buyer and seller to check the weight at 
the same time under the same circumstances. 

The Chairman. Have you ever asked the privilege of having your 
representatives present when the mail was weighed going on the cars 
and coming off of the cars ? 

Mr. Buckland. You mean in the car itself ? The weight is taken 
in the car itself, as I understand it. We have asked them for that 
privilege and it has been refused. 

The Chairman. The weight is taken in the car itself ? 

Mr. Buckland. Yes. 

The Chairman. You mean that the sacks are all weighed in the 
car at the New York Terminal and in Chicago and all those large 
points ? 

Mr. Buckland. I understood that they were taken not only at the 
points, but taken en route. 

Mr. Tuttle. Do they weigh on the car the same items which they 
weigh when they are put on the cars ? 

Mr. Buckland. I think so; yes, sir. 

Mr. Tuttle. Do those compare ? 

Mr. Buckland. Sometimes they do and sometimes they do not. 

Mr. Tuttle. Serious differences have arisen ? 

Mr. Buckland. Yes, sir. 

Mr. Lloyd. Do they fail to correct when they find out your check 
indicates an error ? 

Mr. Buckland. My impression is they rather insist upon their own 
weight. 

Mr. Tuttle. Is it always against the railroads, or will it average up ? 

Mr. Buckland. Mr. Rowan, I think, could reply to that better than 
I. I did not wish to leave the committee with the impression that 
the valuation of the Joint Massachusetts Commission was made by 
that commission, but it was made by Prof. George F. Swain, of the 
Massachusetts Institute of Technology, who was employed by the 
commission, and the commission accepted his valuation. 

The Chairman. And stood sponsor for it ? 

Mr. Buckland. I think so; yes, sir. They simply said they were 
under obligations to him for services which he performed. I do not 
know that they expressed themselves in any place as adopting that 
valuation. I did not want to leave a loophole for a misunderstanding 
in that regard. In conclusion I should like very much to have the 
committee consider at some time this whole report of Mr. Bowman's, 
because it does go into the methods whereby the cost of carrying the 
mails is ascertained with very great accuracy. That report is pre- 
pared with great care, and I am strongly in hope that you will con- 
sider favorably printing it, so that every member of the committee 
can have an opportunity to examine it. 

Mr. Lloyd. Do you expect to have it printed and put in book form 
yourself ? 



RAILWAY MAIL PAY. 301 

Mr. Buckland. I do not think so. We have only three or four 
copies, and I do not think we will pr nt any more. 

The Chairman. Thank you very much, Mr. Buckland. 

STATEMENT OF MR. H. E. MACK— Continued. 

The Chairman. Mr. Mack, you will still consider yourself under 
oath. 

Mr. Mack. I wdl. 

The Chairman. Will you give the committee the benefit of your 
ideas in reference to the substitution of space for weight as the 
measure of the service rendered in the transportation of the mails ? 

Mr. Mack. I have memoranda, Mr. Chairman, which I have pre- 
pared at Mr. Peter's suggestion that cover most of the points per- 
taining to that subject. 

The railway mail pay is at present, and has been for 40 years, on a 
twofold basis, namely, weight and space, upon rates and conditions 
of service fixed, not by the railroads but by Congress and the Post 
Office Department, the customer. The present system recognizes the 
two distinct things done, the services rendered to the Government, 
one of which is not done with relation to other transportation service. 
The transportation part of the mail service rendered is on the uni- 
versal basis commonly used for the transportation of things, viz, 
weight, and represents 90 per cent of the mail pay. 

The railroads in addition thereto fit up and haul working post 
offices and carry postal clerks for distribution of the mail, so that it 
may both be consolidated and distributed from place to place and 

i 'unction to junction, utilizing transit time for this purpose. This, 
Lowever, extends to full postal cars only at present, and is on a space 
basis for cars 40 to 55 feet and over and represents 10 per cent of the 
total mail pay. 

The present basis, therefore, appears to be most logical and prac- 
tical and sound in principle, as it recognizes the two distinct kinds 
of service rendered. 

Although the rates as to both weight and space have been reduced 
since the equalization law was passed, the basis has remained the 
same for 40 years, notwithstanding, as the testimony has shown, that 
other methods, and even one exactly similar to that proposed in Docu- 
ment No. 105, have been recommended and considered by Congress. 

I can not state what particular reasons were urged from time to 
time which prompted the discarding of proposed new methods for the 
continuance of the present system, but the action taken from time to 
time is very strong presumption against change to a single and 
exclusive space basis, and for the maintenance of the space-and- 
weight method; in other words, every time a space plan has been 
proposed it has been rejected. 

1. The change to an exclusive space basis, now proposed by the 
Post Office Department, means the 'abandonment of the scales and 
the exclusive use of the tapeline theoretically. But the matter at 
issue is not a simple one of measuring the length of a car with a tape- 
line, but instead is one wholly of opinion and judgment, at the very 
best, and it is human judgment and opinion, therefore, and not the 
tapeline, which would become the measure of pay to the railroads on 
every mail route. 

49396—14 27 



302 RAILWAY MAIL PAY. 

The chief clerk, Railway Mail Service, would pass his judgment upon 
the space to be paid for. This would be passed upon by the division 
superintendent, general superintendent, Railway Mail Service, the 
Second Assistant Postmaster General, and perhaps by post-office 
inspectors, each of whom would have a different idea, which would 
result in a different measure on every line. There could be no sta- 
bility or uniformity, with changing officers, from the Postmaster Gen- 
eral on down the fine, who would have changing views. 

The volume of mails vary according to the days of the week and 
month, and an opinion by a chief clerk as to space required on Monday 
might be overruled by the superintendent who inspected a line on 
Wednesday, with different conditions, and both might be overruled 
by a post-office inspector who would inspect a line on Friday. 

The railroads do not want to be placed in the position of having 
their entire mail pay of $50,000,000 per annum depend upon the 
judgment of officers in the service. As the railroads do not originate 
the rates of mail pay as with other traffic, it seems to me sound doc- 
trine, likely to receive the approval of the country, that Congress 
should fix the rates and also the conditions of service. We should not 
be asked or required by regulation of the department to perform 
service of any character not clearly embraced within the rates fixed 
by the law itself. 

On the one hand, the space system would probably have the effect of 
depriving a railroad of justice, where an officer, although conscientious, 
might be reluctant or afraid, to recommend to his superiors an ade- 
quate amount of space; and on the other hand there would be the 
opportunity, with the postal officers whose opinion would be involved, 
for favoritism, and abuse and resulting scandals could hardly be 
avoided. The plan would confer too much arbitrary power upon an 
executive department of the Government. It might be wielded un- 
justly to the railroads or might be used as a powerful political instru- 
ment. 

The above is the chief and fundamental objection to the exclusive 
spate basis. 

The Chairman. If space were the determining factor, do you think 
it would be possible with the espionage (I do not use that term in- 
vidiously) in the department for a conspiracy to exist by which the 
Government would have to pay for space not used or authorized ? 

Mr. Mack. I think that the great fear that has existed in the past 
in regard to the exclusive space basis is that possibility with entire 
mail pay of fifty millions involved. I think it was developed in the 
report of the commission in 1898. Congressman Loud, even, who 
favored space, was impressed to a large extent by the possibility of 
difficulties of that kind. 

2. There would seem nothing scientific or practical in the depart- 
ment's plan, which appears to be fundamentally wrong, because it is 
based upon the relative proportion authorized (based on opinion) of 
mail space on a train, and the mail pay would be fixed, not merely by 
the mail space used, but would be largely regulated and determined 
by the number and size of the passenger or baggage cars in the train. 
For example: An additional passenger, express, or baggage car on a 
train would decrease the mail pay; and if a railroad should take off or 
reduce the number of passenger,^ express, or baggage cars on a train, 
it would increase the mail pay. 



BAILWAY MAIL PAY. 30& 

The Chairman. I do not catch that. Providing that the deter- 
mination would be based on the original authorization of the depart- 
ment, through the various individuals as you have so clearly outlined, 
what difference would it make how many additional passenger cars or 
express cars you put on that train as long as you were authorized and 
required by the Second Assistant Postmaster General to provide such 
space ? 

Mr. Mack. His basis of pay is proportional and conditioned upon 
the express and passenger space on the trains. 

The Chairman. On a 6 per cent basis, as in the suggested plan? 

Mr. Mack. On a cost basis; yes, sir. 

3. Such a plan would provoke continuous and interminable dis- 
pute and dissatisfaction as to space allowed or furnished, as may be 
fairly judged by the results of the space figures reported by the com- 
panies for November, 1909, and as used by the department in Docu- 
ment 105, there being a total monthly difference of 210,326,652 car- 
foot miles, or an annual difference of 2,523,919,824 car-foot miles, 
representing 21.28 per cent, on the list of roads alone, which is com- 
pared in the document entitled "An examination and analysis of 
Postmaster General's proposal," Exhibit, pages 28 and 28a, the 
differences in space on various lines ranged from 6 per cent to 53.59 
per cent. 

There are differences on nearly every route, and the controversy 
between the railroads and the department, as to space, would there- 
fore extend to practically every route, every railway, every year. 

4. This enormous difference in space was a material factor in the 
production of a reputed saving of $9,000,000 by the plan proposed in 
Document 105. The Post Office Department cut out this large 
amount of space, which, so far as may be understood, can generally 
be classed as " incidental" space, actually furnished and hauled in 
connection with mail transportation, but treated by the department 
as "dead" space (some of it is pretty live space on fast mail trains 
on some lines) , and was not only cut out of the mail proportion, but 
the difference widened by adding it to the passenger space, which 
had already been charged in the railroad reports, with its own "dead" 
space. 

If a 60-foot car is required by the Government one way, it is 
obvious that that identical car must be returned, as it can not be 
changed to a 40-foot car on its return run, simply because the Gov- 
ernment may not use it to its full capacity the railroad must haul it. 

The mails are as much as six times as heavy in one direction, 
namely, West, South, or Northwest, as a rule, than in the opposite 
direction, particularly where fast mail service exists, and a maximum 
movement in one direction must be provided for to meet the neces- 
sities of the postal service, and similar space must necessarily be 
returned. 

The Chairman. Do you understand that it is the suggestion of the 
department, under its plan of substitution of space for weight, that 
thev would have two space authorizations, one westbound and one 
eastbound, one northbound and one southbound ? Would it not be 
a round-trip space authorization ? 



304 RAILWAY MAIL PAY. 

Mr. Mack. It has not been so calculated with reference to Docu- 
ment 105 and the reputed saving of $9,000,000 calculated thereon. 

The Chairman. The $9,000,000 supposed saving was based entirely, 
then, on space authorization needed in each direction and not on a 
round-trip space. 

Mr. Mack. It was based upon space assigned by the department, 
which provided for some space in both directions, in other space 
in only one direction. 

This heavy movement, in fast mails particularly, requires storage 
cars in one direction, and usually the light eastbound mail movement 
requires their return empty, as such storage cars or space can not be 
otherwise utilized, as each class of equipment, baggage, express, and 
mail, must necessarily balance itself and be returned regularly on 
schedule for the service in use in the opposite direction. 

The Chairman. Where do you get your compensation for your 
empties under your present system ? 

Mr. Mack. Theoretically it is in the rate of pay on the weight 
basis. 

The Chairman. Well, practically? 

Mr. Mack. I do not think we get anything for it actually. 

The annual train-miles of passenger service in the country is in the 
neighborhood of 549,015,003. The Post Office Department and the 
Government have the privilege, under the regulations, of using every 
mile of this passenger train service, and do use most of it, and should 
be fully charged with its proportion of dead or incidental space in 
any statistics purporting to show comparative revenue or cost. The 
average number of passengers per car is 15, and the average pas- 
senger dead space therefore may be assumed to be at least 66 per cent 
or more, in the reports made by the railroads to the department, and 
to this large proportion of passenger dead space it reported the Post 
Office Department added the so-called dead mail space. 

5. The space basis is obviously not a proper measure to determine 
pay on closed pouch mail routes, or baggage car service on other 
routes. Weight is the exclusive determining factor in this class. 
Under the plan of the department, the mail in such cases would be 
weighed, but the weight would not be used as a pay basis, but an 
estimate of space based on the weight would arbitrarily be assigned 
and used as a basis for the payment of mail transportation. 

The Paragould Southeastern Railway, for example, under this 
plan, and which, on two trains a day, handles an average of 65 mail 
bags and sacks, would only receive an average of 2 cents per piece. 
The present pay is only 7 cents per piece. For these 65 pieces of 
mail the Post Office Department only allows 2 car-feet for each 
train. In a practical way, it would be utterly impossible to handle 
these 65 pieces on and off at the various stations in 2 feet of space. 

On this assumed and estimated basis, as shown in Document 105, 
the annual mail earnings, on a large number of such routes, trival and 
obviously inadequate, would be as follows : 

Present pay. 
Hoisington to Great Bend, 10.44 miles; $60.67 pay per annum; pay per 

trip, 4 cents $517, 71 

Dexter to Arkansas City, 20.27 miles, $72.12 pay per annum; pay per day, 

20 cents 1, 123. 04 

Mineral Point to Potosi, 3.96 miles; $9.41 per annum; pay per trip, 1J cents. . 192. 97 



RAILWAY MAIL PAY. 305 

A long list of these instances might be made, but the above will 
suffice for illustration. 

Mr. Weeks. Have you got the comparative statements as to what 
the earnings are under the present weight system ? 

Mr. Mack. I have, and will be glad to put them in the record 
alongside of that statement when it comes to me. 

The Chairman. I think that will be very illuminating. 

Mr. Mack. Sixth. If a basis of cost, plus 6 per cent, is adequate 
and scientific- it is not clear upon what theory an arbitrary rate of 
$25 is proposed if the earnings, under the department's plan, on 
independent routes do not equal that amount. 

Seventh. The space basis proposed by the department would, in 
all probability, have effect, with its adoption, of eliminating the fast 
mail train service. 

The earnings on Missouri Pacific fast mail 7, per train-mile, would 
be, one way only, $1.04; Missouri Pacific fast mail 5, per train-mile, 
would be 62 cents; Iron Mountain fast mail 7, per train-mile, would 
be 54 cents. Service could not be maintained with such earnings. 

Eighth. The committee chairman has already stated that the plan 
was fundamentally wrong, because there would be 795 different rates 
for 795 different routes. 

I would like to supplement this by showing that wide variations 
in rates would extend from 0.08889 cent per car-foot mile on the 
Arizona Copper Co.'s line, to 0.00157 cent on the East Broad Top 
Coal Co.'s line. The present rates are uniform on every line. 

Mr. Weeks. Mr. Peters is assuming that they should be. 

Mr. Mack. That they should but would not be, because under 
Document 105 there are 795 different lates for the respective 795 
different roads, and I am pointing out the wide rate variations of 
from 8 cents in one case per car-foot mile as compared with 1 mill 
in another case, as a result of this proposed plan of the department. 
It would be rather hard to defend if the East Broad Top Coal Co.'s 
line went to the Postmaster General and wanted an explanation. 

9. The experience which the railroads have had with space, as 
only an incidental factor, representing 10 per cent of the mail pay, 
does not commend it as an exclusive basis, with the entire 100 per 
cent of mail pay involved. 

I would like to say I believe it was a wise provision to make the 
present pay 90 per cent on weight and 10 per cent on space, the actual 
mail determining itself, when weighed, the amount of mail pay on 
weight, and only 10 per cent being left to the judgment and discretion 
of the officers of the service. I think that was a very deliberate in- 
tention although that does not represent, by any means, the relative 
proportion of space used for transportation and for post-office work. 
I think that was the deliberate purpose of the existing basis. 

The law provides for " fines" of full R. P. O. cars and simultaneous 
with the enactment of the law, the practice, as we understand, was 
followed, of paying the railroads for such cars on a "line" basis, but 
in recent years this practice has not been followed, and the railroads 
have been paid in some cases, for a 60-foot car in one direction, based 
on the necessities of the department, and only 40 foot in the opposite 
direction, by agreement, for example, at the 50-foot rate. As obvi- 
ously, the mail car going out must be brought back, and as the de- 



306 BAILWAY MAIL PAY. 

Eartment's need fixes 60 foot as the requirement in one direction, we 
elieve 60 foot line should be paid for. 

The Chaerman. The same car ? 

Mr. Mack. The same car. I would like to say there that mani- 
festly the department's requirements for a 60-foot car out of a cer- 
tain point, we will say St. Louis, absolutely fixes the kind and size of 
car which the railroad company must furnish. We can not change 
it to a 50-foot car half way over the road and then a 40-foot car and 
haul it back empty without cost to us. 

Where formerly a 60-foot line was authorized and paid for in cars 
that had 92 letter boxes and 98 paper boxes, now by change in re- 
quirement of the Government, a car must have 600 letter boxes and 
200 paper boxes in use, before a railroad receives pay for a 60-foot 
car, and the cost now is $12,000 per car, as compared with $4,200 
years ago. 

You can see how the post office has been developed in the mail 
cars during that time. 

The Chairman. Do you get the same compensation for the $12,000 
car that you got for the $4,200 car? 

Mr. Mack. No, sir; we get 20 per cent less, as the pay was reduced 
in 1907 on 60-foot cars. 

The Chairman. Although the requirements were increased ? 

Mr. Mack. Although the requirements were increased, and since 
then the law requires all-steel cars. 

Mr. Weeks. How much does a steel car, of the same length, cost 
more than a steel-frame car ? 

Mr. Mack. I do not know that I could answer the question as to 
a steel underframe car, but I should think the difference would be 
in the neighborhood of about $2,000 per car less than the higher pay 
for an all-steel car. 

With full cars, the payment does not always extend to the operating 
end of the run, although in the operation of a railroad, a 60-foot car 
can not be cut off, maS transferred to a 50-foot car at any point, and 
to a 40-foot, or 30-foot car farther along, because it would ruin 
schedules to do so, and the car which starts out the railroad must 
haul through and back. 

Inspectors have recently been on many lines, and the car pay 
reduced, although the same cars, I think, are still in use, as formerly. 

The experience the railroads have had, therefore, does not inspire 
confidence that the space basis would be fair to them. 

10. The department called upon the railroads for the average 
amount of space during the month of November, but an average 
amount would not be a proper method, even of determining space, 
because space implies reservation, and to take care of its needs on 
a space basis, it would be necessary to consider the department's 
maximum space, and not the average. 

If a post office is rented by the Post Office Department it is not on 
the average amount used, but it must be large enough for the greatest 
amount of business it would handle, and which would be on a maxi- 
mum basis. 

The Chairman. Your R. P. O. cars are rented by the year? 

Mr. Mack. Not for any definite period; no, sir. The department, 
if it needs full R. P. O. cars, issues what is termed an authorization 
for those cars and they are paid for at the customary rate. 



RAILWAY MAIL PAY. 307 

The Chairman. Per month? 

Mr. Mack. On a monthly basis, but service can be terminated at 
any time the department chooses. 

The Chairman. It is at the option of the department? 

Mr. Mack. Yes, sir. 

Weight may be considered as the most practical basis, as it is a 
universal basis for rates for the transportation of things, on railroad 
lines. It leaves nothing whatever to judgment or opinion. It is a 
measure of the very article, the exact thing, which is to be trans- 
ported, and as to mail, is the very identical basis upon which the 
Post Office Department itself, as forwarders of mail for the public, 
has charged, even to so smill an article as a letter weighing as little 
as 1 ounce. Weight may be considered an automatic adjuster. 

The mail itself on this basis determines what the compensation 
shall be, and protects the railroad company, as it does the Post Office 
Department. The weight basis applied to mail on each train and 
trip must balance, and is an added measure of protection, both to the 
Government and the railroad, because the weights are taken both on 
and off, and at the end of the run a balance exists, proving the 
accuracy of the weights of the mail transported. 

That is the memorandum that I have prepared, Mr. Chairman, on 
that question. It might clear the atmosphere a little in regard to 
space if we differentiate between the two things that seem to have 
gotten confused. One of those things is whether you can use space 
as a measure of testing the adequacy or inadequacy of pay, and the 
other is its possible use as a basis of pay. In testing the adequacy of 
pay, all of the incidental mail space hauled, exactly as the service 
existed, would go into the classification of mail car foot miles. Space, 
perhaps, might be used as a common basis of comparison of the service 
on passenger trains. Instead of trying to use that, however, to arrive 
at the cost of the service, I have thought, and many others have 
thought, that it could be better employed to show the comparative 
revenue car foot mile earnings embracing all the incidental factors 
involved and thus determine broadly whether the railroads are under- 
paid or overpaid, and after the determination is reached then seek a 
method of adjustment. It seems to me that that will produce a 
simple basis of explanation to the people and also to members of 
Congress who can not give, owing to their manifold duties, the time to 
study volumes and volumes of complicated figures. In addition, 
you do not go into the element of cost which brings into the question 
a division of accounts — a complicated subject upon which there is no 
authority at present to settle the subject universally. 

The Chairman. Is it feasible to take a ton-mile as the measure, 
determined by weighing, and then arrive at a specific payment of so 
much per ton-mile ; and if that was determined, would that be equita- 
ble over a decade, for instance, or would the payment on a ton-mile 
basis have to be changed during a period of years, in your opinion ? 

Mr. Mack. It seems to me that a frequent weighing would be neces- 
sary and more frequent than at present. 

The Chairman. So as to ascertain the ton-mile ? 

Mr. Mack. So as to ascertain the pay and to take care of the 
changed weight. The weights are not always increasing on every 
route, and there are diversions of mail which occur. 



308 RAILWAY MAIL PAY. 

The Chairman. I do not think I make myself clear. You favor 
the ton-mile basis instead of the linear foot ? 

Mr. Mack. I favor the weight basis rather than the linear foot. 

The Chairman. Then, taking the weight basis as the measure of 
the service, would it be possible, practicable, and equitable to deter- 
mine a rate that that weight per pound or per ton should receive, 
that compensation to be the same over a period of years, or would 
it be necessary to change that compensation every two or three years ? 

Mr. Mack. That is, change the rate ? 

The Chairman. Yes. 

Mr. Mack. I do not see any need for changing the rate with any 
frequency. The weight would change and pay change accordingly, 
however. 

The Chairman. The number of tons of mail would change, but if 
you were to receive so much for each ton of mail hauled for every mile 
hauled could that amount which you receive be determined so that 
it would be equitable and just, and be permanent for a decade, or 
two or three decades, or would a change of conditions require a change 
in that amount per ton per mile ? 

Mr. Mack. I should think a permanent rate could be determined. 
I do not know why not. There might be changing conditions which 
one could not anticipate, but I do not see anything to prevent a 
permanent and satisfactory rate on a weight basis. I do not see any 
difficulty at all in that. 

Mr. Weeks. Would it be practicable to weigh all of the mail that 
goes on every train ? 

Mr. Mack. I would say not. You mean daily ? 

Mr. Weeks. Yes. 

Mr. Mack. I would say not, because it would be too great an inter- 
ference with the work of the Railway Mail Service in the first place; 
it would be expensive in the second place, and it would also tend to 
delay train service. For instance, let me cite an example: At St. 
Louis the heavy mail arrives there from the eastern trains and there 
is a limited margin of time in which to make connections. During 
the period when the weighing is in progress the trucks on which the 
mail is unloaded are not taken directly to the outgoing trains, but 
they are first taken to the scale, which involves an extra movement 
of each truck, increased force of porters, and involves delay in the 
departure of trains, and for that reason at the large points it would be 
impracticable, I should think. 

Mr. Weeks. Do you not weigh all of the express every day ? 

Mr. Mack. No. The express is weighed at the initial point, as I 
understand it, but not on the intermediate routes. 

Mr. Weeks. Why weigh the mail on the intermediate route ? 

Mr. Mack. You weigh the mail on every route. The express is 
different from the mail in this respect: Your mail is changing con- 
stantly as it goes over the road, but the identical single package of 
express remains. the same. The express is weighed and the rates 
charged at the starting point, but the mail is constantly changing 
as to receptacle as it goes along, and when weighed is worked out to 
an average basis per mile. The express is not handled in that way. 

Mr. Lloyd. Suppose the mail is weighed as it is put on the train. 
Would not that give the full weight of mail? For instance, if you 
start at St. Louis and weigh the mail which you start with, then take 






RAILWAY MAIL PAY. 309 

the weight of the mail that is put on at the first, second, third, or fourth 
stations, and so forth, when you have reached Kansas City, if you 
add those several weights together you have the total weight of the 
mail carried between St. Louis and Kansas City. 

Mr. Mack. Yes ; but the difficulty is getting the w ^ight at the ini- 
tial point, at St. Louis, without delaying the trains. There is an 
extra handling of the mail that is very troublesome at the large sta- 
tions, and we are always very glad when the weighing is over on that 
account. 

Mr. Lloyd. Do you not think it possible to have a permanent 
system by which that could be overcome ? 

Mr. Mack. I have not thought so, but it is rather hard to say that 
anything is impossible. 

Mr. Lloyd. That is the only trouble in that theory ? 

Mr. Mack. The expense of taking the weights and the interference 
with the work of the Railway Mail Service and of course, great 
expense of tabulation. 

Mr. Lloyd. There need not be much expense except at the large 
stations ? 

Mr. Mack. I do not know but what a system of weighing could be 
had at the small stations. I do not see, so far as the Railway Mail 
Service is concerned, that there is any need of having a man on the 
train, providing the station agent would take the weights of the mail 
on and off, but the department, of course, does not permit that now. 

Mr. Lloyd. Why can not the postmaster, when he sends his mail, 
in the ordinary towns in the country, to the train, weigh it ? 

Mr. Mack. He could as to local mail, but a great quantity of this 
mail does not go to the post office; it is connecting mail at junction 
points. That mail does not go to the post office at all, and those are 
the heavier mails. 

Mr. Weeks. How many solid mail trains are there between St. 
Louis and Kansas City a day ? 

Mr. Mack. We have two fast mail trains, but I would hardly call 
them solid mail trains because we have a passenger car on each 
train — a sleeper. There are two such trains. 

Mr. Weeks. Does that train go through without distributing mail 
en route at all ? 

Mr. Mack. At the local points? 

Mr. Weeks. Yes. 

Mr. Mack. No; it exchanges mail at the principal points between 
St. Louis and Kansas City and the mail clerks work up the mail for 
connecting trains at Kansas City. 

Mr. Weeks. Is there any train that goes through without dis- 
tributing mail at all. 

Mr. Mack. None at all; no, sir. In fact I might say that prac- 
tically every car that carries mail from St. Louis to Kansas City has 
distribution performed in it. For instance, mail for New Mexico, 
mail for Colorado, mail for Arizona, and mail for all distant territory 
is worked up so that when it arrives at its connecting point it is all 
worked up for the route at that connecting point. 

Mr. Weeks. How many other similar trains are there between these 
two points on other roads ? 

Mr. Mack. On other roads there are no fast mail trains between 
St. Louis and Kansas City. 



310 KAIL WAY MAIL PAY. 

Mr. Weeks. Do other roads offer similar facilities as your road? 

Mr. Mack. The regular passenger service on the other lines very 
nearly corresponds to our own. 

Mr. Weeks. Are the distances practically the same? 

Mr. Mack. Practically the same. 

Mr. Weeks. Do you make better time? Is that the reason you 
carry the mail? 

Mr. Mack. I think the reason why it happens we have the through 
mail is, as I understand, that we were the first through line from 
St. Louis to Kansas City and that line was developed and the growth 
has continued on that line. 

Mr. Weeks. What I was getting at was this: Is there any reason 
why transportation lines between the two points like that should not 
bid for such service ? 

Mr. Mack. I should say, in answer to that question, that the fast 
mail service which the department has to-day is a competitive 
service, that is, the competition is on the basis of service and it is so 
interwoven, as a general rule, with the local service that it can not 
very well be disturbed, that is, from time to time, if you have that in 
mind as I assume you did, for competitive bidding. I would hardly 
consider that the instances where that could exist would be worth the 
trouble of bothering with it. Of course if the railroads were earning 
large sums of money from this service it would be quite different, but 
to-day this committee on railway mail pay is very much like a 
grievance committee. We were reduced in 1907 about $8,000,000 
per annum, and instead of getting relief from Document 105, the 
suggestion is that $9,000,000 more be dropped off, so we are naturally 
a grievance committee now, feeling that our service is very much 
underpaid and that restitution should be made, rather than cut us 
more. 

Mr. Lloyd. How does the Post Office Department determine which 
one of the roads between St. Louis and Kansas City shall carry the 
mail? 

Mr. Mack. I do not know that that question comes up specifically. 
For instance, in the establishment of the fast-mail service from 
St. Louis to Kansas City, in 1887, that was by special contract, and I 
can readily look back and see that the railroad lost money, without 
any question, as the volume of mail was very small. Just why that 
service started on the Missouri Pacific rather than on any other line 
I do not know. I am not familiar with the history of the railroad 
conditions in the West at that time. 

Mr. Weeks. Has any other road attempted to secure the diversion 
of the through mail? 

Mr. Mack. Not that I am aware of; no, sir. I do not think any 
road could offer any superior service, and I can see no advantage to 
the department in making any change. 

Mr. Weeks. How many cars do you run on those through trains 
ordinarily ? 

Mr. Mack. On one train five cars and on the other three. 

Mr. Weeks. Five mail cars ? 

Mr. Mack. Yes, sir. 

Mr. Weeks. And one passenger car ? 

Mr. Mack. Yes, sir. 



RAILWAY MAIL PAY. 311 

Mr. Weeks. On the other, three mail cars ? 

Mr. Mack. Three mail cars and one passenger car. 

Mr. Weeks. How much does that train earn, the five-car train ? 

Mr. Mack. I think it is $1.30 a train mile. 

Mr. Weeks. How much does the other, the three-car train earn ? 

Mr. Mack. About $1.03. 

Mr. Weeks. Do you run any trains between those points composed 
of nothing but sleepers, for instance ? 

Mr. Mack. No, sir. 

Mr. Weeks. Take the best passenger train you run, how many cars 
will that train haul ? 

Mr. Mack. The best passenger train we have usually carries about 
9 or 10 cars. 

Mr. Weeks. How much does that earn ? 

Mr. Mack. I could not say. 

Mr. Weeks. Could anybody say? 

Mr. Mack. I have no doubt we could get that information. 

Mr. Weeks. Have you any opinion upon that ? 

Mr. Mack. I have no hesitancy in saying that it earns very much 
more than the mail. 

Mr. YrEEKS. It does, because it is a longer train and has more 
equipment ? 

Mr. Mack. Yes; but the unit is the same, one train as compared 
with another. 

Mr. Weeks. Suppose they run a train of six passenger cars — do 
you think it would earn more per train mile than the mail? 

Mr. Mack. The passenger train ? 

Mr. Weeks. Yes. 

Mr. Mack. Well, that is problematical and it is a heavily loaded 
train. I do not think we could carry the same number of people in 
the six cars. 

Mr. Weeks. From your standpoint how are we going to determine 
the contention that you make that you are not getting pay enough ? 

Mr. Mack. My idea is this: That we have to try to get to a com- 
mon basis of determining the general question and I believe that it is 
most satisfactorily determined on the principle that all of the pas- 
senger space on the train ought to earn an equal amount. In other 
words, there is no reason why the mail should earn less than the 
passenger space on the same train. The figures that we produced 
from the committee on the railway mail pay indicated the earnings 
from the mail space as $3.23'per thousand car-foot miles, while the 
earnings on the remaining passenger space were $4.25 per thousand 
car-foot miles, illustrating very clearly in two figures that the mail is 
underpaid. The point of the calculation there, which, however, 
is in dispute at the present, is the car-foot mile, which is the basis of 
division by which those figures are reached. Senator Bourne, a few 
days ago, suggested a joint committee to see whether those figures 
might be reconciled — that is, the difference in car-foot-mile earnings 
might be reconciled to more accurately reach a more satisfactory 
determination of what the earnings per car-foot mile were. I am a 
member of that committee, and we had a meeting yesterday, and I 
believe probably within two weeks the committee will be able to 
reach a satisfactory conclusion in regard to that question. 



312 RAILWAY MAIL PAY. 

The Chairman. A committee consisting of three from your associa- 
tion and three, appointed by the Second Assistant Postmaster General, 
representing the department ? 

Mr. Mack. Yes, sir. We had a meeting to-day and have another 
meeting for to-morrow morning. 

The Chairman. A meeting of the six ? 

Mr. Mack. Yes, sir. The committee is attempting to give you 
figures that will assist you materially in reaching your conclusions. 

Mr. Tuttle. Your road never protested against carrying this mail 
and insisted on your competitors taking it and showing a loss ? 

Mr. Mack. Well, that is true; yes, sir. 

Mr. Tuttle. You never have protested ? 

Mr. Mack. We never protested against carrying the mail, but we 
have protested against the fact that the pay was inadequate, or at 
least we felt it was. 

Mr. Weeks. Would not the natural result be that you would like 
to get rid of something if you were being inadequately paid for it ? 

Mr. Mack. There does seem to be an inconsistency in the position 
of the railroads, but they have their facilities and all of the additional 
business that is secured on their train service adds to the earnings of 
the train, just as an additional passenger adds to the earning of the 
train. 

Mr. Tuttle. Do you know of any railroads that have ever tried 
to avoid carrying the mails ? 

Mr. Mack. I do not. 

Mr. Tuttle. Do you know of any railroads that have ever refused 
to carry it because the pay was inadequate and were willing for their 
competitors to carry it ? 

Mr. Mack. No; I do not think so. 

Mr. Tuttle. It is really a desirable traffic after all, is it not ? 

Mr. Mack. Well, I do not know that it is desirable. 

Mr. Tuttle. Most railroads seem to want to get the mail contract. 

Mr. Mack. I have explained that. I think the additional business 
that you add to your train increases the earnings of that train just 
as an additional passenger does that you have advertised for and 
tried to get. 

Mr. Weeks. The New Haven Railroad has protested very vigor- 
ously against carrying the mail? 

Mr. Mack. I do not know of the action of the New Haven Railroad. 

Mr. Weeks. No railroad would decline to carry the mail without 
feeling that its interests would be jeopardized on account of the crys- 
tallization of public sentiment agamst it because of its refusal to 
carry the mail and the irritation incident to such refusal. 

Mr. Mack. I think many railroads have considered the question as 
to whether they could, but they probably have not given any notice 
to the department, but they have felt that it was a public necessity 
and they have always made their contracts on that basis, that it is a 
public necessity. 

Mr. Lloyd. How do you account for the apparent fact that the 
New York, New Haven & Hartford Railroad does not get as much 
compensation for its service as the other great systems of the country ? 

Mr. Mack. Well, I have not made any definite comparison, but 
perhaps the division of accounts may have some bearing on that. 



BAILWAY MAIL PAY. 313 

Those questions are settled to some extent by the relative volume of 
passenger and freight traffic, with a corresponding division of ex- 
penses, cost of fixed charges, and things of that sort. 

Mr. Weeks. How many miles of road has the Missouri Pacific in 
operation ? 

Mr. Mack. In the neighborhood of 7,000 miles. 

Mr. Weeks. How many passenger trains do you run a day? 

Mr. Mack. I could not answer that question without counting 
from the time table. 

Mr. Weeks. Did you hear Mr. Buckland's statement that there 
were 2,000 miles of New Haven road in operation and they ran 2,000 
passenger trains ? 

Mr. Mack. I did; yes, sir. 

Mr. Weeks. How do you think your figures would compare with 
those ? 

Mr. Mack. I do not think we have anything like the frequency of 
service that exists on the New Haven road. 

The Chairman. Would not that be one reason why their service is 
more expensive than yours ? 

Mr. Mack. That probably has some influence; yes. 

Mr. Weeks. How many stations are there on the Missouri Pacific 
road? 

Mr. Mack. I think 862. 

Mr. Weeks. That is one station about every 8 miles. The proba- 
bilities are there are just as many stations on the New Haven road. 
Would you not think so ? 

Mr. Mack. Very likely. 

Mr. Weeks. That would add to the expense, would it not? 

Mr. Mack. That very likely would; yes, sir. 

Mr. Weeks. How many reasons can you think of why there would 
be a difference of expense on different roads, depending on their loca- 
tion, density of population, and all those questions ? 

Mr. Mack. I would prefer not to answer that question offhand. 

Mr. Weeks. You will be here for some days? 

Mr. Mack. Yes; I expect to. 

Mr. Weeks. Will you think it over and try to give an answer to it 
later on ? 

Mr. Mack. I will be very glad to ; yes, sir. 

Mr. Weeks. As definitely as possible. 

Mr. Mack. I will be very glad to. 

The Chairman. You think the joint committee of six, representing 
the department and the committee on railway mail pay, probably can 
reach their conclusion as to how near they can come together in a 
couple of weeks ? 

Mr. Mack. I am inclined to think probably within a couple of 
weeks. We can tell better to-morrow morning, when we ascertain the 
condition of the figures at the department and how deep an investiga- 
tion will be necessary to check up. 



314 RAILWAY MAIL PAY. 

STATEMENT OF MR. GRANT W. TAYLOR. 

The Chairman. Mr. Taylor, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Kindly state your full name, residence, and occu- 
pation, and the official position in which you appear before the 
committee. 

Mr. Taylor. Grant W. Ta}dor; general superintendent of trans- 
portation, Southern Railway system. Residence, Washington, D. C. 

The Chairman. Will you give the committee the benefit of your 
views regarding the subject the commission has before it? 

Mr. Taylor. Mr. Chairman, Mr. Peters asked me to make some 
memorandum with reference to the departmental rulings and their 
effect on transportation, and I have made a few notes. 

In considering the. effect on transportation of " administrative 
regulations" (regulations promulgated by the Post Office Depart- 
ment), it would seem proper to state that the existing contracts 
covering the transportation of the United States mails were executed 
by a very large number of the transportation lines, subject to pro- 
test against the enforcement of the following specific regulations of 
the Post Office Department: 

1. Order No. 412, issued by the Postmaster General, June 7, 1907. 

2. "Requiring railroad companies to furnish free transportation to any person or 
persons, other than those actually in charge of distributing the mails in transit." 

3. Section 1186, paragraph 2, requiring railroad companies "to provide suitable and 
sufficient rooms, lighted, heated, furnished, supplied with ice water and kept in order, 
at stations where clerks or transfer clerks are employed, for distributing, handling, 
and assorting the mails, without agreed rental therefor." 

Mr. Lloyd. You are quoting from the law, and not from regula- 
tions. 

Mr. Taylor. I am quoting from regulations. These are the de- 
partmental regulations. 

4. Section 1186, paragraph 3. "The specific requirements of the service as to due 
frequency and speed, space required on trains or at stations, fixtures, furniture, etc., 
will at all times be determined by the Post Office Department and made known 
through the General Superintendent of Railway Mail Service." 

5. "Railroads to furnish and operate postal cars without full legal compensation for 
the maximum length in both directions." 

6. "The furnishing of postal apartments, or postal cars, for the distribution of the 
mails, or for other post-office purposes, at stations or terminals, either before the regular 
time of making up, or placing the train for loading for departure from such station, or 
after the arrival of such cars at the terminus of the run of the train." 

7. "The night exchange of the mails at points where agents are not employed, ex- 
cept at points where the department provides employees to take the mails from and 
deliver them to the trains." 

8. Section 1187. "The requirement of the department that railroads shall keep and 
furnish pouch records, and shortage slips, and protest against the imposition of fines 
where pouch records are not kept or shortage slips not furnished." 

9. "Deductions from compensation for mail transportation where mail service is 
regularly performed six times a week each way over the route." 

10. "The stoppage of through trains for mail purposes at other than the regularly 
scheduled stopping places for such trains." 

11. That part of section 1330, reading as follows: "Railroad companies will be re- 
quired to furnish monthly statements, certified as above, of all delays and other causes 
to trains which the department regards as being of special importance as mail trains." 

12. Section 1334, paragraph 13. "Applications from companies for remission of de- 
ductions made from their compensation for carrying mail will not be considered unless 



EAILWAY MAIL PAY. 315 

filed, with evidence, in the office of the Second Assistant Postmaster General within 
six months from the date of notice by the Post Office Department to the railroad com- 
pany that such deduction has been ordered." 

In explanation, I would say that it is generally felt that the enforce- 
ment of the above departmental regulations create an operating, as 
well as financial, hardship upon the transportation lines not contem- 
plated by the law governing the transportation of the mails on rail- 
road lines, in the following particulars: 

First. Order 412 has materially reduced compensation for services 
rendered, as fully set forth in evidence already submitted. 

The Chairman. That is the divisor order ? 

Mr. Taylor. Yes, sir. 

Second. The carriers object to furnishing free transportation to 
other than those specified in the law, namely, " railway post-office 
clerks to accompany and distribute the mails." To accept the u ad- 
ministrative ruling" relating to the carrying of persons not specified 
in the law, involves the furnishing of a large amount of free trans- 
portation, of a personal character, that has no connection with the 
actual transportation of the mails, which, in effect, not only takes 
away revenue that should properly accrue to the carrier line, but 
further opens an avenue for the unlimited use of free transportation, 
no record of which is in the carriers' possession. 

Mr. Lloyd. In that connection, what is the practice with reference 
to persons riding with the railway-mail clerks, and who rides with 
them? 

Mr. Taylor. The post-office clerks or post-office employees, in- 
spectors, and certain other classes of employees. They ride in the 
postal cars with postal clerks, but those employees also hold com- 
missions issued by the Postmaster General authorizing free travel. 

Mr. Weeks. There is no free travel when not on duty. 

Mr. Taylor. I suppose that there are certain orders confining the 
use of such transportation while on duty, but the transportation lines 
have no method of checking or knowing whether the men are on duty 
or off duty. 

Mr. Lloyd. Your real complaint, then, is that you do not know 
whether they are on duty or off ? 

Mr. Taylor. We do not know, for we have no means of knowing. 
We have asked for tha't information and it has been declined. 

Mr. Lloyd. The department has declined it ? 

Mr. Taylor. The department has. 

Mr. Tuttle. What class of employees besides inspectors travel 
free « 

Mr. Taylor. I believe the postal clerks hold commissions and 
substitute clerks hold commissions. 

Mr. Tuttle. You mean the railway mail clerks ? 

Mr. Taylor. Railway mail clerks and inspectors of the Post Office 
Department, superintendents of Railway Mail Service, chief clerks 
and others. 

The Chairman. Do they not all come under the provision of the 
law appertaining to that particular branch of the service? 

Mr. Taylor. Not necessarily pertaining to the branch of the 
service of the individual fines that they might be traveling over. 



316 BAILWAY MAIL PAY. 

Mr. Tuttle. You are aware that part of this has been remedied 
by reason of the fact that clerks in the terminal offices do not hold 
the commissions now? 

Mr. Taylor. I know that. 

Mr. Weeks. You know there is a very stringent order of the 
department that the commission shall only be used when the holder 
is on duty or returning to his home from duty. 

Mr. Taylor. I might give a little further information. While the 
argument may be advanced by some that this item is inconsequential, 
it is known that the money value of such transportation will, on the 
Southern Kailway system aggregate approximately $40,000 per 
annum. 

We have some data covering that feature for a period of six months, 
ending December 31, 1912. 

Mr. Lloyd. An inspection service of your own ? 

Mr. Taylor. Post Office Department employees riding on our 
trains in other than the postal cars or in charge of the mail. 

The Chairman. That amounts to $40,000 ? 

Mr. Taylor. Yes, sir; per year. 

The Chairman. Your ascertainment was $20,000 actually for six 
months ? 

Mr. Taylor. $20,000 for six months. 

Mr. Weeks. How many miles of road do you operate ? 

Mr. Taylor. Approximately 7,036. 

Mr. Weeks. How much do you receive for the transportation of the 
mails ? 

Mr. Taylor. The amount is decreasing quite rapidly. In the fiscal 
year ending June 30, 1912, it was $1,352,219.62. 

Mr. Weeks. How much do you imagine it costs the railroad to 
carry these men who, if they had been paying their transportation, 
would have paid $40,000 ? 

Mr. Taylor. Mr. Chairman, that would be a very difficult question 
to answer. We consider it in the light of furnishing service for which 
we receive no return. 

Mr. Weeks. Do you think you furnish any more service than you 
would if you did not transport those persons ? 

Mr. Taylor. We furnish a money value, a definite money value for 
which there is no return. 

Mr. Tuttle. Your railroad figures do not show how much it costs 
to carry a passenger per mile. 

Mr. Taylor. Taking into consideration all expense incident to pas- 
senger service, I presume they do. 

Mr. Tuttle. You have not that figure ? 

Mr. Taylor. I have not. I am not up on statistics. I merely have 
to do with the operating end of the railroad. 

The Chairman. Your computation of $40,000 is based on what you 
are allowed per mile for passengers ? 

Mr. Taylor. That $40,000, Mr. Chairman, is on a basis of actual 
money value at the current passenger rate for the number of miles 
traveled by postal employees, for which we have their receipt in each 
individual case. 

The Chairman. In other words, if they had paid the regular pas- 
senger rate you would have received $40,000 more than you did 
receive from those employees ? 



RAILWAY MAIL PAY. 317 

Mr. Taylor. That is true. 

Third. The carrier lines can not concede the right of the depart- 
ment to require the furnishing free its terminal facilities for post 
offices or other purposes not connected with the transportation of the 
mails. 

Mr. Weeks. It does not do that in all cases. It furnishes some 
space for the separation of the mail and for the handling of the mail, 
but it does not furnish space for post-office purposes. 

Mr. Taylor. We feel that to a very large extent we do. Perhaps 
that may be brought cut more clearly in the use of postal cars at ter- 
minals for distribution purposes. 

Mr. Weeks. The reason I differentiate in that case is I noticed a 
short time ago that the Boston post office opened a substation in the 
South Station in Boston ; and I asked the postmaster about the rental, 
and he told me what he paid. I do not recall the figures, but they 
were a very exorbitant price per square foot for the space used for 
that substation; so I think you ought to differentiate between the 
space used for sorting, distribution, and handling of mail and for 
post-office purposes. 

Mr. Taylor. That may be true at some of the large terminal cen- 
ters, such as Boston, or perhaps such as the Washington terminal, but 
in the majority ©f large terminal stations throughout the South the 
department requires facilities for making separations and distribu- 
tions in these stations. 

The Chairman. For which you receive no rental ? 

Mr. Taylor. For which we receive absolutely no pay. That is 
common and the question has been up a great many times. 

Fourth. The carriers can not concede the right to the department 
to place in the hands of any individual the control of its property. 

That refers to section 1186, whereby the General Superintendent of 
Railway Mail Service would determine all facilities required. 

Fifth. The department having recently conceded the equity of the 
protests of the carriers that the operation of a fixed postal car author- 
ization in one direction should carry a similar compensation in return 
movement, further comment would seem unnecessary at this time. 

Sixth. The practical effect of carrying out the practice contem- 
plated by the ruling of the department would be to create the use of 
working post offices, in frequently congested terminals, involving the 
use of tracks necessary in the conduct of the general terminal work, 
as well as a material increase in the expense of additional switching 
made necessary by such occupation. 

That is the furnishing of postal apartments, or postal cars for the 
distribution of mail in terminals ? 

Seventh. The requirement of this ruling necessitates the employ- 
ment of additional men at many points whose services are not 
essential to or needed otherwise in the companies' service. 

The Chairman. As I understand, your criticism is not upon the 
department's rules and regulations for the improvement of the 
service, but that you receive no compensation for the increased 
burdens imposed. 

Mr. Taylor. That is true. In other words, the burden is placed 
upon us without compensation. 

Eighth. The compliance with section 1187 creates an unnecessary 
burden on the carriers, especially in the matter of fines which do not 

49396—14 28 



318 RAILWAY MAIL PAY. 

serve any good purpose, nor can they be extended to employees 
individually responsible: 

The Chairman. That is a direct criticism against the requirement, 
which, from your viewpoint, is unnecessary and not in any way 
beneficial to the service. 

Mr. Taylor. It does not improve or add to the service. Penalties 
of that character can not be, under present conditions, extended to 
employees actually responsible for an individual failure. In years 
gone by that has been done. 

Mr. Weeks. Does it not stimulate the road to perform a better 
service ? 

Mr. Taylor. I can not see how it can. We are all anxious to do 
the very best that is possible to be done, and so long as the mail or 
any other branch of the service is dependent upon individuals, so 
long you will continue to have some failures. The service can not 
be 100 per cent perfect. 

Mr. Weeks. Are not those fines levied very largely on account of 
delay in delivering the mail ? 

Mr. Taylor. No, sir. They are for failure of employees, perhaps, 
to dispatch mail. I do not know what the policy of the department 
is in that respect as pertaining to its own employees. There may be 
a system of fines in effect for failure of departmental employees to 
perform certain work or for certain errors, but I do not know about 
that. 

Mr. Weeks. There is a demerit system. 

Mr. Taylor. Our discipline, so far as the transportation fines is 
concerned, is confined to a merit and a demerit system. The money 
fines have been abolished for a number of years. 

Mr. Weeks. I supposed the fines imposed were very largely for 
the failure to deliver the mail at the time stipulated. 

Mr. Taylor. Ninth. There are instances where carrier lines have 
been subjected to fines for the failure to transport mails on freight 
trains between points where regular mail service has been performed 
twice daily each way on passenger trains. 

We regard that as an unjust departmental ruling. 

Tenth. "The stopping of through trains for mail purposes at other 
than regularly scheduled stopping points for such trains" is held by 
transportation fines to be an unwarranted regulation, in that to com- 
ply with the same would seriously interfere with train movement 
and remove from the responsible operating officer the control of his 
operation. 

Mr. Weeks. Is that frequently done? 

Mr. Taylor. It is becoming more frequent since the establishment 
of the parcel post. I might say that in other than the parcel post it is 
done. 

Eleventh. A compliance with section 1330 involves a useless 
clerical expense for which there can be no adequate return. 

Twelfth. Section 1334, paragraph 13, is objectionable in that it 
only allows six months in which to present evidence in connection 
with the applications for remissions of deductions or fines imposed 
on railroad companies. Six months is frequently not sufficient for 
the proper collection of the evidence necessary to meet such fines and 
deductions; and, further, the provision seems to be in conflict with 



BAILWAY MAIL PAY. 319 

section 1069 of the Revised Statutes, which fixes the limitation 
in which action may be brought in the Court of Claims against the 
Government at six years. 

The Chairman. What time would you suggest instead of the six 
months as being ample and proper ? 

Mr. Taylor. I would suggest the provision of the Revised Statutes — 
six years — as ample. 

The Chairman. Would you consider it as necessary? 

Mr. Taylor. Personally I would not; no, sir. 

The Chairman. What would you think would be necessary? A 
year ? 

Mr. Taylor. I should say three years would be a fair compromise. 

In addition to the above specific objectionable il administrative 
rulings" seriously affecting the compensation of transportation lines 
for service rendered the Government there are many other equally 
burdensome rulings in connection with the adjustment of railway 
mail compensation. 

As illustrative of one of the points, there has come to my attention 
an instance where, for reasons best known to the department, empty 
mail equipment, the transportation of which has been withdrawn 
from railway postal cars during the mail-weighing period, was sub- 
sequently restored to and forwarded as mail in postal cars. 

The Chairman. Which was withdrawn during the weighing period, 
carried by freight during that period, and then returned to the postal 
cars ? 

Mr. Taylor. Yes, sir. 

Mr. Weeks. That is an old charge. Have you any recent instances 
of that sort ? 

Mr. Taylor. Quite recent; yes, sir. 

Mr. Weeks. How recently? 

Mr. Taylor. Possibly within a year. 

Mr. Weeks. Is there any reason ? 

Mr. Taylor. I will read the reason that was given. 

The question of compensation for such service arose and the depart- 
ment expressed a willingness to compensate the carrier on the basis 
of freight rate transportation, but declined to make settlement on any 
other basis. The equipment in question involved 3,113 pieces, an 
aggregate weight of 142,765 pounds. Value of service performed on 
basis of express transportation, $4,087.67; value of service performed 
on basis of freight rate transportation, $1,152.59. 

Mr. Weeks. Did that happen on your line? 

Mr. Taylor. Yes, sir. 

Thus it will be seen that although the highest class of service was 
rendered by carrier line, the department declined to adjust on other 
than freight-rate basis, insisting that the loss of $2,935.08 be assumed 
by the carrier line; otherwise the service should remain unpaid for. 
Instances of this kind have not been uncommon in the past, but have 
been experienced in some form with frequency. 

There is probably no line of endeavor that is more susceptible to 
cooperation or where success is more dependent upon cooperation 
than in the train and station service of a railroad, or where its absence 
is more quickly reflected in unfavorable results. I have in mind the 
employees having to do with the movement of trains. The prompt 



320 RAILWAY MAIL PAY. 

and efficient manner in which each employee, in his particular sphere 
of responsibility, performs his duty, whether it be the conductor, hav- 
ing general charge of his train, tne engineer, flagman, baggageman, 
postal clerk, or express messenger, all of whom co jointly must at all 
times contribute his best efforts if maximum efficiency of service is to 
be realized. In other words, it is vital that every man upon whom 
the success of the service depends should at all times do his full duty 
with the promptness that the service requires. I regret to say that 
it has not been the experience of the transportation lines that postal 
and transfer clerks have displayed that uniform cooperation so essen- 
tial, and this fact is not infrequently reflected in delayed train move- 
ment. We believe that closer departmental supervision on educa- 
tional lines, as applying to postal and transfer clerks, would result 
in marked improvement in the movement of mail trains, and thereby 
extend to the Railway Mail Service generally. 

The Chairman. If you had a train carrying an R. P. O. car and the 
schedule time for the train to depart had arrived, would you hold the 
train if there was a railway mail clerk who had not arrived ? 

Mr. Taylor. We do those things. 

The Chairman. Are you compelled to do it? 

Mr. Taytor. The mail is a preferential service. All other branches 
of passenger- train service are subordinated to the mail. That is our 
practice. 

The Chairman. So, if a railway mail clerk is late you hold your 
train until he arrives ? 

Mr. Taylor. I would not like to say until he arrives, but we would 
be reasonable about it. 

Mr. Lloyd. How long would you wait ? 

Mr. Taylor. I would wait 30 minutes. 

Mr. Lloyd. You would hold up a passenger train 30 minutes ? 

Mr. Taylor. I would do it. I have not had occasion to do it, but 
I would. 

Mr. Lloyd. Did you ever do it? 

Mr. Taylor. I have never held one that length of time. 

Mr. Lloyd. Do you know of any other railroad that has held a 
train that long ? 

Mr. Taylor. I would not come in contact with that character 
of information. 

The Chairman. How long have you held a train ? 

Mr. Taylor. I can not state a concrete case where we have held 
a train for the arrival of a postal clerk, but I can show you a number 
of instances where we held our trains for the work to be performed 
by postal clerks and by transfer clerks. 

Mr. Weeks. You would report that ? 

Mr. Taylor. I have a number of times. 

Mr. Weeks. Do you always report it? 

Mr. Taylor. Not always, because they are too frequent. 

Mr. Weeks. Does the department take any action ? 

Mr. Taylor. I have never observed material improvement from 
such reports. 

Mr. Weeks. Do you know whether the employees are punished? 

Mr. Taylor. I could not say. 

There are instances where, apparently, the thought prevails in the 
minds of postal and transfer clerks that their time is their own and 



RAILWAY MAIL PAY. 321 

their station work is conducted on that theory, which not only 
demoralizes the work and discipline of employees in other branches of 
the service, but actually results in delays in the operation of mail 
trains. I do not wish to convey the impression that postal or transfer 
clerks are altogether responsible for station delays, for I recognize 
that departmental economies have, in many cases, had the effect of 
reducing the number of employees in postal cars below a point where 
it is physically possible for postal clerks to handle their transfers 
with the promptness that they would otherwise, such economies 
being accomplished at the sacrifice of time and at the expense of the 
carrier in which the other branches of the services which the carrier 
undertakes to perform participate. 

It is appreciated that the general question of railway mail service, as 
well as the general question of just compensation therefor, are prob- 
lems of great magnitude and at the same time are capable of being 
worked out on lines of equity alike to the Government and the 
carriers. This much-desired end, however, can not be accomplished 
except through the most thorough cooperation of the parties at inter- 
est, and the carriers stand ready to extend that cooperation un- 
stintingly. 

The Chairman. We thank you very much, Mr. Taylor. 

Thereupon, at 11.30 o'clock, the committee adjourned to meet at 
the call of the chairman. 



RAILWAY MAIL PAY. 



THURSDAY, MARCH 27, 1913. 

Committee on Second-Class Mail Matter, 

Washington, D. C. 

The hearing was resumed, at the call of the chairman, at 10.30 
o'clock a. m. 

Present: Senator Jonathan Bourne, jr. (chairman), and Senator 
John W. Weeks. 

The Chairman. For the information of those present who have 
not attended informal conferences, I would like to say that confer- 
ences between members of the committee, representatives of the 
Postal Department, Mr. Lorenz, associate statistician for the Inter- 
state Commerce Commission, and representatives of the transporta- 
tion companies, and particularly members of the committee on rail- 
way mail pay, have been held almost daily since the last official hear- 
ings for the purpose of interchanging ideas and getting respective 
viewpoints relative to the subject matter of this inquiry. 

The committee, by request, and upon compliance by the Interstate 
Commerce Commission, have had the very valuable assistance of its 
associate statistician, Mr. Lorenz, in the study in the past two weeks, 
and by permission of the commission he will continue to assist us in 
the study we now have before us for some time to come. 

At the last hearing a request was made by the committee or repre- 
sentatives of the Postal Department and of the railroad companies 
to give further consideration to the seeming discrepancy between the 
deductions made by the two parties, the governmental representatives 
and the railroad representatives, as to the relative earnings in pas- 
senger service and the railway mail pay. In a reply by the Postal 
Department to the answers and briefs filed by the railroad represent- 
atives to Document 105, it appeared that the railroad companies 
figured the earnings per car-foot mile from mail service at 3.23 mills 
and 4.25 mills from other passenger service, whereas the depart- 
mental representatives figured the revenue from mail service at 4.14 
mills per car-foot mile and 4.16 mills from other passenger service. 
The desire of the committee was to determine the reason for this 
apparent great difference in deductions based on apparently the same 
premise, namely, the information contained in Document 105. The 
committee have received a joint letter under date of March 15, 1913, 
representing their efforts in compliance with the request of the com- 

323 



324 BAIL WAY MAIL PAY. 

mittee to submit further information relative to this seeming dis- 
crepancy. The letter is as follows : 

Washington, March 15, 1918. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class 

Mail Matter and Compensation for the Transportation 

of Mail, Congress of the United States. 

My Dear Me. Chairman : In response to tlie direction of the joint committee 
at its session February 12, 1913, the undersigned committees were designated 
by the Second Assistant Postmaster General and Mr. Ralph Peters, chairman 
committee on railway mail pay, to represent the Post Office Department and 
the railroads respectively, to consider the differences in the statements of 
revenue per car-foot-mile received by the railroads from the mail service and 
from other passenger- train services, as computed by the department and the 
committee on railway mail pay. 

The earnings per car-foot-mile from the mail service and other passenger 
services as stated by the committee on railway mail pay were 3.23 mills for 
the mail service and 4.25 mills from other passenger services. These figures 
were computed from the data as reported by the companies represented by the 
railway mail pay committee and covered 178,716 miles of service. 

The earnings per car-foot-mile, as stated by the Post Office Department in its 
memorandum dated January 17, 1913, in reply to the statement of the rail- 
roads entitled "Mail carrying railroads underpaid," were 4.14 mills for mail 
service and 4.16 mills for other passenger services. These figures were com- 
puted from the data as to space reported to the department by companies rep- 
resenting approximately 175,922 miles of service as reclassified by the de- 
partment. 

The differences between the car-foot-mile earnings by the two calculations 
are due entirely to the fact that the Post Office Department upon receipt of 
the data as to space from the railroads made certain modifications therein, 
based upon the space deemed by the Post Office Department to be necessary 
for its purposes and upon its rules with respect to assigning other space re- 
ported by the companies as mail space, which resulted in a reassignment of 
the car-foot-mile space to the different subdivisions of passenger train service. 

A computation made by the Post Office Department from the data reported 
by the railroads, representing 187,760 miles of service, as actually operated 
in November, 1909, without any of the changes and modifications which the 
department deemed necessary and proper to make in preparing Document 105, 
brings the following results: 

Mills. 

Earnings per car-foot mile in mail service 3. 37 

In other passenger services 4. 34 

The matter of an inquiry into the cost of construction, operation, and mainte- 
nance of railway postal cars, which you also referred to the committee, is being 
investigated and upon receipt of certain information asked for from the 
companies a further report will be made relative thereto. 
Yours, very truly, 

Joseph Stewart, 
C. H. McBride, 
A. N. Prentiss, 
Committee Representing the Post Office Department. 

H. E. Mack, 
O. J. Bradley, 
H. P. Thrall, 
Committee Representing the Railroads. 

At the committee's request Mr. Lorenz, associate statistician for 
the Interstate Commerce Commission, made a study of the informa- 
tion contained in Document 105, and submitted a statement in refer- 
ence to the figures and returns upon which the conclusions were 
arrived at by the postal and railroad representatives. The statement 
is as follows: 









RAILWAY MAIL PAY. 325 

PASSENGER-TRAIN CAR-MILE EARNINGS IN 1910 FOR THE UNITED STATES AS A WHOLE. 

Our first result, obtained by dividing the total earnings of passenger trains 
as given in the printed volume by the total mileage of all cars in passenger 
trains, is 25.51 cents per car-mile. If we eliminate those roads which report 
earnings but not car mileage, and also eliminate certain passenger earnings 
from ferry steamers, the average is not much affected, being 25.42 cents. It 
would be desirable to have separate averages for passenger service proper, for 
mail service, and for express service. The official statistics separate the earn- 
ings but can not separate the car mileage in these three groups. Such a 
separation requires a smaller unit. It is possible to make an estimate by 
dividing the car mileage between the three services according to the propor- 
tions given by the Post Office Department. If we take the Post Office Depart- 
ment's view that dead space should be charged to passenger proper, we get 
82.18 per cent as the proportion of space in passenger trains devoted to other 
than mail and express purposes. According to the railroads' contention, the 
dead space should be charged to mail, and the percentage becomes 80.51 per 
cent. On these two bases, the passenger-car-mile revenue, excluding mail and 
express from consideration would be, according to the post-office percentage, 
26.29 cents, and according to the railroad view, 26.84. With respect to the mail 
service, the difference as to dead space, again gives two percentages : Post office, 
7.16 per cent; railroad, 8.83 per cent. These lead to a mail-car-mile revenue of 
22.80 cents and 18.49 cents, respectively. Finally, the express would have 10.66 
per cent of the train space, and the corresponding car-mile revenue would be 
21.03 cents. It should be emphasized that these averages are in the nature of 
an estimate. They rest in part upon data annually reported to the commission, 
but also in part on the facts reported by the railroads to the Post Office De- 
partment for a single month. A warning should also be given against using a 
single average for the United States as a whole without a detailed consideration 
of similar averages for individual railroads. Finally, the averages given need 
some minor adjustments which could not readily be made on account of the 
clerical labor involved. They are offered simply as a basis for a discussion of 
method. 

STATEMENT OF W. A. WORTHINGTON. 

The Chairman. Mr. Worthington, it will be necessary for you to 
be sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you kindly state your full name, residence, 
and your official capacity with any transportation companies? 

Mr. Worthington. W. A. Worthington. I am assistant director 
maintenance and operation, Southern Pacific Co.; residence, New 
York City. 

The Chairman. How long have you been connected with the 
Southern Pacific Co. in your present official position ? 

Mr. Worthington. About 6 years, and with the Southern Pacific 
Co. about 26 years. 

The Chairman. The matter of railway mail pay from the Gov- 
ernment comes directly under your supervision, does it? 

Mr. Worthington. In a general way. We have a mail traffic 
manager who handles the details. 

The Chairman. You are the determining voice? 

Mr. Worthington. Yes ; I have general supervision. 

The Chairman. Have you prepared a statement to submit to the 
committee relative to Document 105, and your comments on same? 

Mr. Worthington. I have prepared a statement. First, a state- 
ment to be made for the Southern Pacific, which road I represent; 
and then I have some additional information, including some 



326 



RAILWAY MAIL PAY. 



graphic charts with relation to mail pay in the United States as a 
whole. Will it be agreeable for me to read this? 

The Chairman. If you would, kindly. 

Mr. Worthington. This presentation is made as a member of the 
committee on railway mail pay and in behalf of the Southern Pacific 
Co., of which I am assistant director of maintenance and operation. 

I have read over and am familiar with the provisions of proposed 
bill S. 7371, also with the views of the Post Office Department as 
expressed in Document H. E. 105, and in behalf of our company wish 
to indorse the position taken by the committee on railway pay in 
respect to these matters as set forth in document entitled "Mail 
carrying railways underpaid," which has already been introduced 
in evidence by the chairman of the committee on railway mail pay. 

The Southern Pacific Co. operates 10,052 miles of railway in the 
States of Louisiana, Texas, New Mexico, Arizona, California, Ne- 
vada, Utah, and Oregon. There are about 120 mail routes on this mile- 
age, the average daily weight of each of these routes ranging from 
24 pounds on the smallest to 93,613 pounds on the route of the densest 
traffic between Ogden and San Francisco; the total revenue from 
mail for the year ending June 30, 1912, was $2,472,769; the earnings 
from mail for each of the years from 1907 to 1912, inclusive, as com- 
pared with the earnings from other passenger train service being 
as follows : • 



Year ending June 30— 


Mails. 


Other pas- 
senger-train 
service. 


1907 


$2,488,286 
2,369,763 
2,397,166 
2,409,503 
2,474,263 
2,472,769 


$36,062,955 
38,251,443 
36,576,434 
42,811,625 
43,506,086 
42,786,324 


1908 


1909 


1910 


1911 


1912 




Increase, 1912 over 1907 




6,723,369 


Decrease, 1912 from 1907 


15,517 






Per cent 


0.62 


18.64 







The Chairman. Was your apportionment each year the same be- 
tween your mail revenue and the passenger % All your deductions are 
on the same basis ? 

Mr. Worthington. Yes; exactly. They are taken from the an- 
nual reports of the company. In these five years, the mail revenue 
decreased 0.62 per cent, and other passenger- train revenue increased 
1 8.64 per cent. 

The Chairman. Those are your gross revenues ? 

Mr. Worthington. Yes, sir. 

The Chairman. Not net at all ? 

Mr. Worthington. No ; gross. 

The Chairman. You did not try to work that down? 

Mr. Worthington. No ; I have reached that afterwards. 

The Chairman. That is gross revenue ? 

Mr. Worthington. That is gross revenue. That is simply put in 
to show while our mail pay has been declining to a slight extent our 
earnings from other passenger service have increased materially. 



RAILWAY MAIL PAY. 327 

The Chairman. That is gross? 

Mr. Worthington. Yes. The total number of postal cars owned 
on June 30, 1912, was 64. 

The annual report for the Southern Pacific Co. for 1912 not hav- 
ing been issued when these data were prepared (the ratio of oper- 
ating expenses to earnings for that year was greater than in the 
previous year), the following statistics are presented for the South- 
ern Pacific Co. for year ending June 30, 1911, showing service per- 
formed in handling the mails as compared with revenues received in 
contrast with similar information for other traffic. 

Mail service, Southern Pacific Go., year ending June 30, 1911. 

Received for mail transportation $2, 272, 791 

Received for railway post-office cars 201, 472 

Total 2, 474, 263 

Ton-mileage of mails transported 25, 773, 572 

Car-foot miles occupied by mails 610, 929, 100 

Gross ton-miles : 

Car weight at three-fourths ton per car-foot mile 458, 196, 683 

Ton-miles clerks, at 3 men per car (8 pounds per car-foot mile) 2, 443, 716 

Revenue ton-miles of mail 25, 773, 572 






Total 486, 413, 971 

The Chairman. How do you get the gross weight of the clerks ? 

Mr. Worthington. I estimate that by three men per car, 8 pounds 
per car-foot mile. 

The Chairman. How do you estimate the average weight of the 
three men ? 

Mr. Worthington. At an estimated average weight on the postal 
cars. We have them in our statistics. 

The Chairman. I understand you to say gross weight of clerks. 

Mr. Worthington. You mean how much do I estimate for each 
man? 

The Chairman. Yes. 

Mr. Worthington. I think 160 pounds. It is 8 pounds per car- 
foot mile. 

The Chairman. That is an arbitrary figure ? 

Mr. Worthington. Yes ; that would be arbitrary. 

Mail pay per revenue ton-mile, excluding railway post-office car 

pay cents— 8.818 

Mail pay per revenue ton-mile, including railway post-office car 

pay cents— 9. 600 

Mail pay per gross ton-mile, including railway post-office car pay mills 5. 086 

Mail pay per car-foot mile, including railway post-office car pay do 4.05 

Mail pay per 60 car-foot miles cents 24.30 

The Chairman. In that connection, do vou receive compensation 
for the 60 feet or only 50 feet ? 

Mr. Worthington. This, of course, includes car-foot mileage, 
which we reported to the department, and does not include the 
deductions made by the Post Office Department in the car-foot mile- 
age which they considered not required. 

The Chairman. That is dead space you credit to yourself ? 

Mr. Worthington. Yes. 



328 BAIL WAY MAIL PAY. 

The Chairman. And debit the Government as well. The depart- 
ment reverses that ? 
Mr. Worthington. Yes. 

Mail pay per 350 car-foot miles (the average passenger train inside 
length) 1 $1. 42 

Tons of gross weight per ton of paying weight 18. 87 

Tons of dead weight per ton of paying weight 17. 87 

Average tons mail per 60 feet of car space 2. 53 

PASSENGER SERVICE OTHER THAN MAILS. 

Revenue from passengers and express $43,506,080 

Car-foot mile? for passengers and express , 8, 334, 500, 000 

Ton-miles weight of passengers and baggage at 200 pounds 

per passenger 180, 813, 360 

Ton-miles weight of express 52,063,558 

Total revenue ton-miles 232, S76, 918 

Ton-miles weight of cars at § ton per car-foot mile 6, 250, 875,000 

Total gross ton-miles 6, 483, 751, 91S 

Revenue per revenue ton-mile cents__ 18. 68 

Revenue per gross ton-mile mills 6.71 

Revenue per car-foot mile do 5. 22 

Revenue per 60 car-foot miles cents 31. 32 

Revenue per 350 car-foot miles (the average passenger train 

inside length) $1. 83 

FREIGHT SERVICE. 

Total miles run by freight cars 529, 341, 793 

Car-foot miles run by freight cars at 38 feet average length_ __ 20, 098, 988, 134 

Total miles revenue freight 7, 479, 204, 761 

Ton-miles dead weight, at 18 tons per car 9,528,152,274 

Total miles gross weight 17,007,357,035 

Revenue received for transporting freight $73, 677, 293 

Revenue received per car-mile, loaded and empty cents 13. 92. 

Revenue received per car-foot mile mills__ 3. 07 

Eliminating space used by company freight (17 per cent) the 
freight revenue becomes 4.36 mills per car-foot mile, or more than 
from mails. 

In other words, we received more for hauling freight on freight 
trains than we do for hauling mail on passenger trains per car- 
foot mile. 

The Chairman. You receive more for hauling freight than you 
do for your passengers, per car-foot mile ? 

Mr. Worthington. No, sir. For passengers we receive 5.22 mills. 

The Chairman. You receive more for passengers than you do for 
freight ? 

Mr. Worthington. Yes; but less for mail than we do for freight 
per car-foot mile. 

The Chairman. And less for mail than you do for passenger or 
freight, per car- foot mile? 

Mr. Worthington. Yes, sir; considerably less. 



KAIL WAY MAIL PAY. 



329 



Revenue received per ton-mile of freight (commercial) ^cents 1.175 

Revenue received per gross ton mile mills__ 4.33 

Tons of gross weight per ton of paying weight 2.27 

Tons of dead weight per ton of paying weight 1. 27 

Length of average freight train feet 1, 272 

Revenue of average freight train (including space used by company 
freight) $4. 67 

Following is an estimate for passenger train service on the 
Southern Pacific Co. for the year ending June 30, 1911, comparing 
the operating revenues from mails and from other passenger-train 
service hereinbefore referred to, with the operating expenses charge- 
able to the respective services. The estimate for operating ex- 
penses is made on the basis used by the railroad company in furnish- 
ing for November, 1909, to the Postmaster General an apportion- 
ment of operating expenses of passenger-train service. In brief, this 
apportionment first considered expenses which might be altogether 
charged direct to passenger-train service, then withdrew from con- 
sideration similar items chargeable altogether to freight service, 
the remaining operating expenses being apportioned to passenger- 
train service on a train-mileage basis. This basis was considered 
carefully in view of the fact that many of these expenses are greater 
per train-mile for passenger than for freight, such as expenses for 
casualties, the necessity for expensive terminals, delays to other 
traffic through preference given to passenger trains, additional main 
tracks, and, particularly, higher standards of maintenance of road- 
bed required for higher speed passenger-train movement. 

Southern Pacific Co. — Summary of results, passenger-train service. 





Mails. 


Other. 


Total. 


Operating revenue 


$2,474,263 
2,871,367 


$43, 506, 086 
39,200,652 


$45,980,348 
42, 072, 019 


Operating expenses 




Operating income 




4,305,434 


3,908,329 






Operating loss 


397, 104 
1,099,672 








14, 993, 450 


16,093,122 




Deficit 


1,496,776 


10,688,016 


12, 184, 793 




Ratio to revenues: 

Operating expenses 


Per cent. 
115.9 
44.4 


Per cent. 

89.9 
34.5 


Per cent. 

91.5 


Taxes, fixed charges, and dividends 


35.0 






Total 


160.3 


124.4 


126.5 






Revenue ton-miles 


25, 773, 572 
486, 413, 971 
610, 929, 100 


232,876,918 
6, 483, 751, 918 
8, 334, 500, 000 


258, 650, 490 
6, 970, 165, 889 
8,945,429,100 


Gross ton-miles 


Car-foot miles 




Per revenue ton-mile (cents): 


9.60 
11.14 


18.68 
16.83 


17.78 


Operating expenses .' 


16.27 






Operating income 




1.85 


1.51 


Operating loss 


1.54 

4.27 




Taxes, fixed charges, and dividends .' 


6.44 


6.22 






Deficit 


5.81 


4.59 


4.71 







1 Taxes, interest, and dividends have been apportioned to passenger service on basis of operating reve- 
nue, although it would be equally fair to apportion these expenses on basis of train mileage, in which case 
the amount so apportioned to passenger-train service would have been over 50 per cent greater than the 
totals apportioned on the basis of revenue. Nothing charged to passenger for company freight. Ratio 
of operating expenses to operating revenue for all traffic, 64.10. 



330 EAILWAY MAIL PAY. 

Senator Weeks. What do you mean by " operating " ? 

Mr. Worthington. That is the proportion of operating expenses 
chargeable to the transportation of mails. 

Senator Weeks. What does that include? 

Mr. Worthington. It includes all of the operating expenses as 
classified by the Interstate Commerce Commission, following that 
classification, maintenance of way and structures, maintenance of 
equipment, transportation expenses, traffic, and general expenses. 

Senator Weeeks. It is the Interstate Commerce Commission basis ? 

Mr. Worthington. The Interstate Commerce Commission classi- 
fication of operating expenses. 

The Chairman. Let me ask you, as a railroad representative, do 
you think it is material to the railroad company from what source 
they receive their revenue, providing their revenue received is suffi- 
cient to pay operating expenses and dividends ? 

Mr. Worthington. Why, I think it is. I think that the railroads 
should, wherever practicable receive from any class of traffic revenue 
sufficient to cover its proper share of all the operating expenses and 
the fixed charges, for the reason that if they do not it means that 
the other classes of traffic will have to bear that burden — in other 
words, the shippers of freight are really paying more than their 
share as compared with traffic received from passenger trains. 

The Chairman. That is a matter for the citizens. I am speaking 
from the railroad standpoint purely. The desideratum of the rail- 
roads is to receive sufficient earnings to enable them to pay all fixed 
charges and expenses and dividends on the investment, is it not ? 
. Mr. Worthington. Yes, sir. 

The Chairman. You make your apportionment of your earnings, 
you know what your gross earnings are in determining the profit on 
the freight or the passenger or the mail or express? And your de- 
termination as to your apportionment is arbitrary, more or less, 
principally more? 

Mr. Worthington. Yes. Practically half of the operating ex- 
penses have to be apportioned arbitrarily. 

The Chairman. So from the railroad standpoint it is not so im- 
porant as to the source from which the "revenue comes, provided 
the burden is not placed on the revenue-producing source to such an 
extent as to eliminate that as a factor, is it ? 

Mr. Worthington. I think it is, Mr. Chairman, because we have 
constantly to defend rate cases for example, and it would be rather 
difficult to defend them, if it is conceded to be proper to operate 
certain classes of traffic for an unduly low rate and throw all the 
burdens of the fixed expenses on the freight shippers. 

The Chairman. According to your statement, if I correctly un- 
stand it, you show a loss there in round figures of some $12,000,000 
from the passenger service, including in your passenger service, I 
assume, express and mail. 

Mr. Worthington. Yes. 

The Chairman. On presentation of that to the Interstate Com- 
merce Commission for your freight rates the freight has to bear that 
burden, and presumably the allowance would be made before its 
permission would be granted to increase your passenger rates from 
somebody in authority, would it not? 



RAILWAY MAIL PAY. 331 

Mr. Worthington. Yes ; but we find it pretty difficult to increase 
the passenger rates. We have not been able to do it. 

The Chairman. Why, if you can make a showing and demonstrate 
the correctness of the fact that you are carrying it at a loss of 
$12,000,000? 

Mr. Worthington. We are constantly met with State legislation 
fixing 2-cent passenger fares, which we have defeated, in some cases. 

The Chairman. Have you tried at all to get relief from the Inter- 
state Commerce Commission? 

Mr. Worthington. They have not any jurisdiction in the States. 

The Chairman. Would they have in interstate passenger business? 

Mr. Worthington. Yes. 

The Chairman. Has that question ever been brought up before 
the commission? 

Mr. Worthington. I do not know that it has. 

The Chairman. When did the Southern Pacific initiate this system 
of bookkeeping by which you show a loss in the passenger and mail 
service ? 

Mr. Worthington. The system of bookkeeping was not initiated 
by the Southern Pacific Co. As I before explained, the apportion- 
ment was made following the method we used in answering the re- 
quest of the ex-Postmaster General for the month of November, 1909. 
We followed a suggestion made by the committee on railway mail 
pay. 

The Chairman. In the information that you secured, yourselves, 
in answering the questions of the ex-Postmaster General in 1909, it 
is on that information that you base your conclusions in the loss of 
the passenger service of $12,000,000, in round numbers ? 

Mr. Worthington. Yes. 

The Chairman. But you had no method of bookkeeping prior to 
that by which you showed a loss in the passenger service, or a loss in 
the carriage of the mails ? 

Mr. Worthington. We do not regularly apportion expenses to 
passenger and freight, because we know such an apportionment has 
to be, in its end, largely arbitrary. In fact, 50 per cent of it has to 
be apportioned, or a very large portion of it, in that way. 

The Chairman. Then you would not consider the information that 
you obtained under requests, or in answering the questions pro- 
pounded by ex-Postmaster General Hitchcock in 1909, of any prac- 
tical benefit and value to your company in operating your railroad? 
You do not change your accounts to comply with that ? 

Mr. Worthington. No, sir. We do not consider it necessary to 
keep accounts separate as to passenger and freight train service, but 
in answering the requests of 1909 we adopted the basis which we 
thought was fairest for apportioning these fixed expenses. 

The Chairman. You have to make an apportionment between 
freight and passenger to go before the Interstate Commerce Com- 
mission to show that your freight rates are, from your viewpoint, too 
low in asking for an increase in rates, do you not ? 

Mr. Worthington. I do not know that I have made any appor- 
tionment of that sort. I do not understand what case you refer to. 

The Chairman. I am not referring to any particular concrete 
case, but it seems to me, if you appear before the Interstate Com- 
merce Commission to defend, if you please, or to secure authority 



332 



RAILWAY MAIL PAY. 



for an increase in a freight rate, you have to take into consideration 
in your presentation an apportionment between the revenue and the 
cost of freight and passenger in some way. How is that apportion- 
ment made, practically on arbitrary figures? 

Mr. Wortiiington. The only cases I have any recollection of, of 
that sort, are in relation to some concrete cases and we have never 
taken up the question of freight rates as a whole. In those special 
cases we have made estimates of cost of handling particular com- 
modities. I recall several cases where we have made estimates, but 
I do not recall any case where we have asked for an increase in 
freight rates as a whole, which would involve any general appor- 
tionment of the expenses, as between passenger and freight. 

The Chairman. In connection with the merits of your applica- 
tion for an increase of a particular freight rate, how do you demon- 
strate your case, if you have not somewhere in your calculations an 
apportionment between your passenger and freight revenues and 
expenses ? 

Mr. Worthington. We have made an apportionment similar to 
this in those cases, and of course in those cases we also have to con- 
sider the local conditions. We have to consider the carloading of 
the commodity in question, the length of the train that we haul with 
that commodity, and there are a great many other factors that are 
considered in the same connection. 

The Chairman. But nowhere in the calculation is there an arbi- 
trary apportionment made, as, for instance, your gross revenues, so 
many tens of millions, 70 per cent freight and 30 per cent passenger, 
or whatever percentage it may be, your expenses so many tens of 
millions, and an arbitrary percentage is charged to passenger serv- 
ice and an arbitrary percentage to freight ? 

Mr. Worthington. Yes; of course it is necessary to make some 
apportionment of your expenses if you want to make any exhibit 
as to the result in any particular class of traffic. 

The Chairman. What is your apportionment, in percentage, be- 
tween freight and passenger? 

Mr. Worthington. It varies. Of course, I could not say offhand, 
because it varies with every class of traffic we are moving. 

The Chairman. How does it vary? Supposing you are handling 
lumber or handling tea ? What has that to do with what your pas- 
senger revenues are ? 

Mr. Worthington. Your trainload may be greater according to 
the class of commodities handled, and you may have 50 per cent 
more tonnage of freight in a car of one commodity than another, and 
naturally your tonnage expenses would be less. 

The Chairman. But nowhere in that presentation is there a gen- 
eral apportionment between passenger and freight on the earnings 
and expenses of the system as a whole ? 

Mr. Worthington. The only general apportionment I recollect 
that we have made on that subject is the one for November, 1909, 
and that is the one that was made to ex-Postmaster General Hitch- 
cock. 

The Chairman. And it has never been required to furnish to the 
Interstate Commerce Commission in any way ? 



RAILWAY MAIL PAY. 



333 



Mr. Worthington. No. I think the Interstate Commerce Com- 
mission, up to 1893, appprtioned expenses between passenger and 
freight. That is the only apportionment that I know of. The Inter- 
state Commerce Commission themselves, you recall, up to 1893, did 
require the railroads to make an apportionment between passenger 
and freight service, and they dropped it in 1894. 

The Chairman. As impracticable ? 

Mr. Worthington. Yes. It was unsatisfactory and unreliable. I 
do not recall what their reason was. That apportionment was the 
only general one that I know of, except this one of November, 1909. 

Southern Pacific Co. — Summary of results, passenger-train service. 





Mails. 


Other. 


Total. 




Mails. 


Other. 


Total. 


Per gross ton-mile (mills): 
Operating revenues.. 
Operating expenses.. 


5.09 
5.90 


6.71 
6.05 


6.60 
6.04 


Per car-foot mile (mills): 
Operating revenues.. 
Operating expenses.. 


4.05 
4.70 


5.22 
4.70 


5.14 
4.70 






.66 


.56 




.52 
1.80 


.44 


Operating loss 

Taxes, fixed charges, and 


.82 
2. 26 


Operating loss 

Taxes, fixed charges, and 


.65 
1.80 




2.33 


2.31 


1.80 




Deficit 




Deficit 


3.08 


1.67 


1.75 


2.45 


1.28 


1.36 









The Chairman. In your operating losses for mail, as contained in 
your statement, all deductions are based on your investigation or 
ascertainment made in 1909 in answering the Postmaster General's 
questions ? 

Mr. Worthington. Yes, sir. Special information worked up at 
that time. 

The Chairman. And your apportionments are arbitrary — made by 
your company's representative? Your dead space is charged to the 
mail ? 

Mr. Worthington. I would qualify that by saying that the mail's 
dead space is charged to the mail. Of course, dead space in connec- 
tion with passenger-train service is charged to the passenger-train 
service. Mail is not the only service that has dead space, and the 
mail dead space is the space the Postmaster General has charged to 
passenger service where it has no connection whatever. 

The Chairman. Taking your deductions in submitting your 
premises to the Post Office Department, your inference would be that 
they would not show the same apparent loss to your company in 
compensation received for mail transportation that you do? 

Mr. Worthington. Certainly not, because they have excluded the 
dead space and thereby increased the receipts per car-foot mile to 
that extent. 

The Chairman. They not only excluded the dead space which you 
claim should be credited to the mail, but that exclusion has been 
adopted as to passenger, thereby not only diminishing your deduction 
as to your revenues from maii service, but increasing the apparent 
computation as to revenue from other passenger service? 

Mr. Worthington. Precisely. 

The Chairman. So your contention is that the Postal Department 
has not used the proper basis ; in other words, they have charged you 
with two debits in securing deductions by which the information will 



49396—14- 



-29 



334 RAILWAY MAIL PAY. 

present the difference between the percentage of passenger compen- 
sation and mail compensation, and if anv deduction is to be made 
at all for dead space it should be made in ooth instances, both in the 
mail and in the passenger ? 

Mr. Worthington. We have included dead space chargeable to 
passenger and express service, and we think that similar dead space 
should be included by the department when it comes to mail. 

The Chairman. In your presentation you have included dead 
space in all three — passenger, mail, and express ? 

Mr. Worthington. Yes. 

Senator Weeks. The Southern Pacific Eailroad knew, before 1909, 
that it was losing money in the transportation* of the mail? 

Mr. Worthington. I would not claim that the Southern Pacific 
were actually losing money in the transportation of the mail. I 
claim that the mail revenue is insufficient to pay not alone the direct 
cost of movement but its proper pro rata of the fixed expenses. 

Senator Weeks. When I say "losing" I am including all ex- 
penses, including overhead charges. 

Mr. Worthlngton. Yes, Senator, we did that. 

Senator Weeks. How did you know ? 

Mr. Worthington. Through computations of this kind, which we 
made ourselves and through a presentation which we made about 
13 or 14 years ago before the first congressional commission to in- 
vestigate the mail service. At that time the Southern Pacific made 
a presentation, and Mr. Kruttschnitt made one later, in New York, 
for all the railroads of the United States, and the results were about 
the same as this. 

Senator Weeks. Then this information obtained in 1909 did not 
give you any new information on that subject? 

Mr. Worthington. No, sir. Nothing. We were quite sure that 
would be the result. 

Senator Weeks. Do you think that is true of all railroads — that 
they had that information before ? 

- Mr. Worthington. Of course, I would not want to speak for other 
railroads with which I am not connected. I suppose there are some 
railroads which probably had the same impression. 

The Chairman. In your elucidation, I understood you in reply- 
ing to Senator Weeks's question, to state that you would not claim 
that the Southern Pacific was actually losing money in mail trans- 
portation under the present compensation that you receive, and 
yet in your statement a little while ago, according to my under- 
standing, you make a showing of about two millions loss on mail, or 
twelve million in passenger, including mail. 

Mr. Worthington. Passenger train service, including mail serv- 
ice, does not return a sufficient gross amount to pay its pro rata 
of operating expenses, which was, to a certain extent, independent 
of train mileage. We will take, for example, maintenance of way 
and structures, which is, I think, 22 or 23 per cent of the total op- 
erating expenses; that means the upkeep of the road, renewal of rail, 
ties, and ballast. That is something it is absolutely impossible to 
put to train mileage, and we think that it is proper it should be 
apportioned to all classes of service. We might run an additional 
train over the road without, perhaps, adding directly to that par- 
ticular item of expense, but that is an item of expense that has to be 



RAILWAY MAIL PAY. 335 

apportioned to some class of traffic, and we think it should be appor- 
tioned to all classes of traffic and that no one class should bear the 
entire burden. 

The Chairman. Do you think it is possible to work out an appor- 
tionment on a percentage basis of charge against mail service that 
would be permanent, or would it have to be changed from year to 
year as conditions vary? 

Mr. Worthington. You mean on a cost basis, on the so-called cost 
basis ? 

The Chairman. Yes. 

Mr. Worthington. It would have to be changed from year to 
year and be charged out on a different basis for practically every 
railroad in the country, to be entirely fair. The local conditions are 
so different. I will come into that very soon. You were asking 
a, moment ago whether the difference between the results shown on 
this system and those shown by the ex-Postmaster General were 
due to the handling of the dead space. That is one reason for the 
difference. The other reason is on account of the difference in ap- 
portionment that he used for his operating expenses to mail serv- 
ice as compared to that used by the railroads. His basis apportioned 
less to passenger train service than any method of which I have any 
knowledge. He apportioned less expense to passenger train service. 

The Chairman. How much would that account for in the seeming 
discrepancy in the result obtained? 

Mr. Worthington. Ex-Postmaster General Hitchcock shows, in 
House Document No. 105, that they were making considerable profit 
in handling the mails. 

The Chairman. Is that profit due to his method of handling dead 
space, or is it due principally to his method of apportionment ? 

Mr. Worthington. To both, I think, but principally to the appor- 
tionment. I will say, I think it is almost half and half. I know he 
cut out a very large amount of dead space, but I think mostly to the 
apportionment of expenses. 

The Chairman. Then I had an incorrect impression. I supposed 
that the apparent difference was due primarily to the method of 
handling dead space. 

SPECIAL COMPARISON BETWEEN MAIL, PASSENGER AND EXPRESS. 

According to the information prepared by the company for No- 
vember, 1909, in response to inquiry of the Postmaster General, the 
revenue per car-foot mile for the Southern Pacific Co. averaged from 
mails 4.05 mills; from express 3.84 mills; and from passengers 5.34 
mills. The Southern Pacific Co. under its express contract receives 
only 40 per cent of the express rate on account of having received 
when the contract was made a cash and stock bonus. It is, therefore, 
fairer to compare the revenue per car-foot mile on the Union Pacific 
system where the usual contract is in effect. On that system the mail 
revenue per car-foot mile is 4.03 mills, or practically the same as on 
the Southern Pacific Co., whilst the express revenue per car-foot mile 
is 4.48 mills. The conditions surrounding the transportation of mails 
are particularly expensive. Our present common standard steel car, 
60 feet long, weighs 116,000 pounds, or 37 per cent heavier than a 



336 RAILWAY MAIL PAY. 

similar car not built to the Post Office Department's specifications, 
including post-office fixtures. Such a car, which we use for baggage 
or express, weighs when built of steel and of the same length as the 
postal car, only 84,500 pounds. The average weight of load in an 
express car is about five tons, or from TO per cent to 100 per cent 
greater than the load in a mail car. The ratio of dead to paying 
weight is twice as great for mail as for express, whilst the first cost 
of the mail car is 40 per cent greater than the car without the postal 
facilities, which is used for baggage and express, and the cost of 
ownership and maintenance is therefore greater. 

Senator Weeks. Is that true of all kinds of cars? 

Mr. Worthington. I am simply making a comparison between 
cars used for express and those used for mail. 

Senator Weeks. Would that be true of steel cars? 

Mr. Worthington. Passengers cars? 

Senator Weeks. No ; I am speaking of steel cars. 

Mr. Worthington. I am speaking of steel cars in this case, steel 
baggage car and steel express car. A steel postal car on our road is 
37 per cent heavier than a baggage car without the postal features. 

Special expenses incident to the mails are also greater, such as the 
large number of employees moved in proportion to tonnage account 
of mail clerks distributing enroute ; the liability of accidents to these 
clerks borne by the railroad; free transportation granted to postal 
inspectors on all trains; and particularly side and terminal mail 
service required of the railroads. The railroads are also subject to 
fines for delays. 

In comparing mails with passengers, the space charged to passen- 
gers includes baggage cars, dining cars from which special revenue 
is received, observation and sleeping cars. For the latter more space 
and weight per passenger is required than for ordinary passenger 
cars, additional revenue being collected from passengers for the 
special facilities, most of which is paid to a sleeping-car company, 
but in consideration of which the railroad is relieved of the cost 
of ownership and maintenance of the space in the sleeping cars. If 
allowances were made for revenue collected from passengers outside 
of the strict railroad fare, the revenue paid by passengers per car- 
foot mile would be considerably greater than shown. 

Comparison of mails with freight. 

Revenue per car-foot mile from mail mills 4.05 

Revenue per car-foot mile from commercial and company freight^_do 3. 67 

Revenue per car-foot mile from commercial freight only do 4. 36 

Revenue per car-foot mile — commercial freight in loaded cars only_do 6. 14 

Average length of a passenger train feet— 350 

Average length of a freight train do 1,272 

Average revenue from mail space equal to the length of an average pas- 
senger train $1.42 

Average revenue from a freight train carrying both commercial and 

company freight $4. 67 

Average revenue from a freight train carrying commercial freight 5. 55 

Average revenue from a freight train carrying loaded cars of commer- 
cial freight only $7. 81 

Company freight is handled as much for account of passenger serv- 
ice as for freight service, this freight including fuel used by loco- 
motives, rails, ties, lumber, and metals for maintenance of structures 



E AIL WAY MAIL PAY. 337 

and equipment. After making proper allowance for the space used 
by company freight, which brings in no revenue to the railroads, the 
freight revenue per car-foot mile is actually greater than the mail 
revenue after including the car space in empty cars, which represents 
a considerable part of the freight service. The freight train is three 
and one-half times as long as the passenger train, whilst the speed 
at which mail is transported while the train is moving is two or 
three times as great as freight; and the speed of transportation after 
including station and terminal delays is three to five times as great 
in the case of mails as with freight. That under the conditions at- 
tending its transportation we are permitted to earn only one-third 
as much for a train length of mail equaling the average passenger 
train as we do in the case of a freight train, whilst we must incur 
large special expenses and obligations incident to mails, is, it seems 
to us, conclusive evidence of the inadequate compensation for the 
handling the mail traffic as compared with freight traffic. Incident- 
ally, this is also true as to passenger-train service as a whole when 
compared with freight, although the mails are less remunerative than 
any other class of service. 

During the past 10 or 15 years rising labor and material prices 
have largely increased the unit cost of railroad transportation. In 
the case of freight, where the loading and movement is largely within 
the control of the carrier, the railroads have been able to offset this 
in great degree by building larger capacity cars and hauling more or 
lass of them in a train through the use of heavier locomotives. In 
passenger service the rising costs of operations have been similarly 
attended by an increase in weight and cost of cars, the latter due to 
higher prices coupled with substitution of steel for wood construc- 
tion, this equipment likewise requiring heavier locomotives, but it 
has been impossible to materially increase the carrying capacity of 
passenger cars or the loads in them, which would be the only way in 
which the railroads could recoup themselves for higher operating 
costs. This is particularly so in the case of mail transportation ; the 
method of handling it is beyond the control of the railroads, the 
loading of cars being limited, due to the requirement for furnishing 
postal facilities and space for clerks distributing mail en route. 
Instead of increasing the payments to the railroads for the R. P. O. 
cars as an offset to the higher operating costs and increased weight 
and cost of equipment, the act of Congress of March 2. 1907. reduced 
the R. P. O. car rates about 16 per cent. 



,. 



RAILWAY POST-OFFICE CARS. 



In some quarters there seems to be an impression that the addi- 
onal compensation allowed the railroad company for railway postal 
cars represents a rent" 1 on the value of these cars and is. therefore, 
excessive, as the usual compensation for a car making the normal 
mileage will equal the value of a car in about two years. Payment 
to the railroad, however, includes not only payment of rental to cover 
interest on investment, depreciation, and cost of maintenance, but 
also is supposed to cover the extra cost imposed on the railroads of 
hauling in trains the great weight and space due to moving a dis- 
tributing post office on wheels, with necessary working space for 
clerks, as compared with transporting the mails merely as weight. 



338 RAILWAY MAIL PAY. 

in which case far less space would be required, and that in much 
lighter cars. Indeed, it is likely that but for the traveling post offices 
the available space elsewhere on the train might be sufficient for most 
of the tonnage now carried in the R. P. O. cars. 

Senator Weeks. Do you know how much cheaper the Southern 
Pacific Railroad could carry solid mail trains, or cars filled with mail, 
than they can R. P. O. cars with distribution facilities? 

Mr. Worthington. They could carry the aggregate mails, of 
course, very much cheaper, and if the cars were loaded solid they 
would probably hold from 20 to 25 tons of mail. It would be very 
easy to get that much mail, loading the cars to the roof, whereas in 
the R. P. O. car Ave get only 2J tons. 

In other words, a load of 10 R. P. O. cars would go into a single 
baggage car. In other words, there would be about one-tenth as 
much. 

Senator Weeks. How much lower would the rate be if all mail 
were transported in solid carloads ? Did you ever figure that out ? 

Mr. Worthington. No. Under the present law I suppose the 
only saving would be in the R. P. O. car pay. 

Senator Weeks. I understand, under the present law, but I mean 
as a practical railroad, proposition. 

Mr. Worthington. I have never figured it out, but the cost would 
only be a fraction as much as hauling cars loaded solid with mail 
as compared with hauling mail in R. P. O. cars with 2-J tons to a car. 

Senator Weeks. How many such trains do you have on the South- 
ern Pacific Railroad; that is, solid mail trains? 

Mr. Worthington. We have not any solid mail trains. We have 
the mail train which has some storage mail in addition to the R. P. O. 
cars. We have no sold mail trains without distributing cars in them. 

The Chairman. How many trains have you which do not carry 
passengers and express ? 

Mr. Worthington. On the Southern Pacific I think we have not 
any train that does not carry some express with it. We put express 
cars on our mail trains on the Southern Pacific. 

Senator Weeks. But 3^011 have trains which do not carry passen- 
gers ? 

Mr. Worthington. That train. Then we have a train of that 
sort which does not carry passengers. There is one train only, and 
that is the train on the route from Ogden to San Francisco. We 
have not any other trains that carry mails only and no passengers. 

The cost of a 60-foot steel R. P. O. car at the present time is be- 
tween $10,000 and $11,000. Senate Document No. 810, Sixty-first 
Congress, third session, covering letter of the chairman of the Inter- 
state Commerce Commission of February 2, 1911, gives this cost as 
$9,500 to $10,500. Ten thousand dollars may be taken as rather be- 
low than above the average price. This same letter gives the cost of 
repairs to postal cars as $7.50 per 1,000 miles. This is less than our 
experience, and, as the railroads are often obliged to make changes 
in interior arrangement by direction of the department, we believe 
it is too low, but have nevertheless adopted it for this purpose. The 
eost of cleaning, lighting, and heating the car is given in the docu- 
ment referred to as $4.75 per 1,000 miles. These cars make an aver- 
age mileage of 90,000 to 100,000 yearlj^ the Interstate Commerce 



KAILWAY MAIL PAY. 339 

Commission using the latter figure in its computations by which they 
determine that the annual cost of maintenance per postal car amounts 
to $1,225. 

The Chairman. Do they determine the annual deterioration? 

Mr. Worthington. That is maintenance only. They do not deter- 
mine that. 

The Chairman. What do you figure the life of a postal car? 

Mr. Worthington. If we allow only 8 per cent for interest on the 
investment and depreciation, that would be, I should say, from 20 to 
30 years ; I should say not more than that. 

If we allow only 8 per cent for interest on investment and de- 
preciation — a low figure — $800 must be set aside for this purpose. 
A conservative estimate of the actual cost of hauling in trains — that 
is to say, train hauling cost, excluding station and road forces and all 
other operating expenses — would be 15 cents per mile run, or $15,000 
per annum. This would make an aggregate for direct train haul 
and maintenance per annum of $17,025, or, say, 17 cents per mile run. 

To cover these expenses the railroads receive from the department 
for railway post-office car pay for 60-foot car $40 per mile per an- 
num, or 10.96 cents per day for furnishing a car, maintaining it, and 
hauling it both ways over a mile of railroad, this being equivalent 
to 5.46 cents per car-mile run. Assuming an average annual mileage, 
of 100,000, the total R. P. O. car pay per annum would be $5,480, or 
about one-third of the above expenses. In the case of half lines, 
where no pay is received for return movement, the revenue would be 
only one-half of this. 

The following comparison is made of rates per mile received by* 
us for 60-foot E. P. O. cars as compared with rates we would receive 
under our published tariff from Chicago to California for moving 
empty cars belonging to other railroads: 

Cents. 

Railway postal-car pay for 60-foot car, per mile run 5. 5 

Tariff rates for empty sleeping and dining cars, per mile run 16. 7 

Tariff rates for passenger coaches, per mile run 15. 4 

Tariff rates for empty freight cars moving in freight trains, per mile run__ 8. 3 

The Chairman. That is what you receive from other roads? 

Mr. Worthington. Yes, sir; in other words, the tariff rate for an 
empty freight car in a freight train is more than the R. P. O. car pay. 

It should be borne in mind that the tariff rates referred to are for 
hauling in trains only, and do not include any obligation on the part 
of the carrying railroad for maintenance or cost of car ownership. 

The Chairman. In that connection, your computation is based 
entirely there on R. P. O. revenue? 

Mr. Worthington. Yes, sir. 

The Chairman. Should you not take into consideration also the 
revenue you receive in the railway mail, for the mail that you carry 
in the R, P. O. car? 

Mr. Worthington. This comparison I have made here is also with 
hauling empty passenger cars and empty freight cars. There is no 
tonnage in those cars. In other words, we get that much for hauling 
an empty car. 

The Chairman. From other railroads? 

Mr. Worthington. From other railroads. 



340 KAILWAY MAIL PAY. 

The Chairman. You think your comparison there is absolutely 
fair, do you? In other words, do you not think, to make a compari- 
son of greater value, you should include an estimate as to the indirect 
compensation that you receive in railway mail pay for the 2^ tons 
of mail that you figure the R. P. O. car will carry on an average ? 

Mr. Worthington. We included that. I think it would also be 
fair to include what we receive for a loaded passenger car or a loaded 
freight car. I do not think it would be fair to compare what we 
receive for R. P. O. car pay with freight in it with a rate for empty 
passenger cars or empty freight cars. 

The Chairman. In your tariff sheets on freight and also on pas- 
senger, do you not take into consideration, in making your tariff, 
a tariff sufficiently high to pay the expenses of figuring that one- 
third of your freight cars are probably empty on your return trip 
and that 75 per cent of the full carrying capacity of your passenger 
cars are empty on the average? 

Mr. Worthington. I think you misunderstood me, Senator. This 
is not a rate for hauling an average empty freight car. This is a 
rate we would make like this : We make a rate for hauling a through 
freight car for some railroad which might purchase a car. It does 
not include the ordinary interchange of average empty and loaded 
freight cars. It is simply our tariff rate. If some one offers us for 
'transportation an empty freight car or a passenger car to reach 
some destination 

The Chairman. For a concrete case, suppose the New York, New 
Haven & Hartford sent 100 cars of freight over your line to the 
Pacific coast and 20 of those come back empty. They ask to have 
them returned. 

Mr. Worthington. They would be hauled free. 

The Chairman. They would be hauled free? 

Mr. Worthington. If we receive a load in one direction. 

The Chairman. Then your compensation in one direction covers 
the contemplated return empty? 

Mr. Worthington. Yes, sir. The entire transportation. I have 
already quoted what we receive on an average freight car per car- 
foot mile as compared with passenger cars. 

Senator Weeks. You spoke of fines, did you not? How much 
was the Southern Pacific Railroad fined on account of delays dur- 
ing the last fiscal year ? 

Mr. Worthington. I have not that in mind. 

Senator Weeks. Was it any considerable amount? 

Mr. Worthington. I really do not know. I do not think it was. 
The fines have not been as severe as they formerly were. Answer- 
ing Senator Bourne's question, I think if we included the weight in 
the R. P. O. cars with R. P. O. car pay on those routes, the average 
rate would not be more than 6 cents a ton mile, and they are not 
more than about 2J tons. That would add about 15 cents. 

The Chairman. Figure 2^ tons. 

Mr. Worthington. That would make a total rate, including pay, 
of about 20 cents a car-mile for those cars. We receive on our pas- 
senger cars 31.3 cents. 

The Chairman. What would you receive from another road? I 
want to get the relativeness ? 



RAILWAY MAIL PAY. 



341 



Mr. Worthington. We would receive, if we were handling a car 
for another road, 18 first-class fares. 

The Chairman. Which would be 36 cents? 

Mr. Worthington. Yes. We do not handle any passenger cars 
except at the minimum basis of 18 fares. I have some charts here 
which you might be interested in. 

The Chairman. We are glad to get all the information we possi- 
bly can on the subject. 

The chart, marked "A," attached, shows the percentage of total 
postal receipts which the railroads of the United States have re- 
ceived for each year from 1900 to 1911, inclusive, and the per- 
centage of the total postal receipts which have been expended for 
other purposes, as shown by Post Office Department annual reports. 
In looking over the operations of the Post Office Department it might 
be observed that in the 10 years from 1901 to 1911 the receipts have 
more than doubled, and the following statement shows to what ex- 
tent this large increase in receipts went to the railroads : 



Postal receipts 

Postal expenditures: 

To railroads 

Other purposes. 



Total. 

Surplus 

Deficit 



1911 



$237,879,823 

50,583,123 
187,065,803 



237,648,926 
230,897 



1901 



§111,631,193 

38,158,969 
77,395,952 



115,554,921 
" 3,' 923," 728" 



Increase 1911 
over 1901. 



8126,248,630 



12,424,154 
109,669,851 



122,094,005 



Per cent. 



113 

33 

142 



106 



The above shows that out of the total postal receipts of $112,000,000 
in 1901, $38,000,000, or 34 per cent, went to the railroads, whilst out 
of the $126,000,000 increase in 1911 over 1901 only $12,000,000, or 
less than 10 per cent, was paid to the railroads. As the volume of 
service rendered by the railroads in hauling tonnage increased very 
much in proportion to the receipts, they received only about one-third 
as much for the added traffic since 1901 as they -received on the total 
traffic of 10 years ago. This saving to the Government, however, was 
more than oifset by the increased expenditures for other purposes, 
Avhich, while only $77,000,000 in 1901, were $187,000,000 in 1911. 
In other words, of the total postal receipts of 1901, 69 per cent was 
expended for purposes other than railroad compensation, whilst of 
the increase since 1901, amounting to $126,000,000, 87 per cent was 
expended for other than railroad transportation. 

Chart B shows a distribution of expenditures of the Post Office 
Department for years 1900 and 1911 as between railroad and other 
expenditures; the relative service rendered for an increase of only a 
little more than one-third in compensation. 

Chart C illustrates graphically for years 1900, 1907, and 1911, the 
great increase in receipts of the Post Office Department as compared 
with the increase in total railroad revenue, in total operating ex- 

Ipenses, and in taxes paid by the railroads, and as compared with the 
relatively small increase in the railways' compensation for carrying 
the mail. It also shows per 1,000 passenger train -miles run on the 
railways of the United States that from 1900 to 1911 there was a 



342 RAILWAY MAIL PAY. 

decrease of 14 per cent in mail revenue, compared with an increase of 
31 per cent in revenue from passengers, 45 per cent in revenue from 
freight, and 61 per cent in revenue from express; during the same 
time railway operating expenses per 1,000 train-miles increased 44 
per cent. 

This chart strikingly illustrates the slight extent in which the rail- 
ways have shared in the available greater revenue of the Post Office 
Department and the actual decrease in payments for carrying mail in 
proportion to the volume of passenger-train service. As is well 
known, railway wages are very much higher than formerly, prices of 
material have advanced, the cost of building steel mail cars and oper- 
ating them is much greater than formerly, yet railway mail pay per 
unit of traffic has been very greatly decreased during the past 10 or 
15 years in the face of changes in industrial conditions that should 
have increased it. 

Senator Weeks. That is assuming that the rate paid 10 or 12 
years ago was an adequate one. 

Mr. Worthington. Assuming that it should have been. 

Senator Weeks. That it was a fair one at that time. 

Mr. Worthington. The commission that investigated at that time 
did not see fit to make any decrease. 

Chart D illustrates, in 1895, 1900, 1905, and 1910, as compared 
with 1890, changes that have taken place in railway freight revenue, 
passenger-train revenue, and railway operating expenses and taxes 
per train-mile. The latter, which in 1900 were below the passenger- 
train revenue, were in 1910 considerably above it, showing that there 
is little for the railways in passenger-train service as a whole and 
least of all in the conduct of the mail. This chart also shows that 
for the year ending June 30, 1910, although 46.6 per cent of the total 
train mileage was run for account of passenger-train service, only 
27.8 per cent of the revenue was contributed by passenger trains. 

Chart E shows, for the railroads of the United States, relative 
revenue per unit of traffic from mails, passengers, and freight during 
the past 21 years, the year 1890 being taken as unity, or 100. This 
illustrates graphically the wide divergence that has taken place in 
the last 15 years in railway operating expenses as compared with the 
pay received for carrying mails. The cost of operating railways 
per train-mile during this period increased over 60 per cent, the rail- 
way revenue per passenger train-mile increased 20 per cent, the pas- 
senger earnings per passenger carried 1 mile decreased slightly, but 
the railway mail pay per ton-mile of mail was nearly cut in two, 
using the same divisor throughout the period. The ton-mileage rate 
for mails was obtainable up to and including 1898 from statement 
of Mr. Henry C. Adams in 1899 before the commission to investi- 
gate the postal service. In order to secure later figures, ton mileage 
on all the mail routes was compiled by us for 1905, 1907, 1908, and 
1911, figures for other years being approximated, as the decline in 
railway mail pay under the natural law is fairly uniform. 

Chart F illustrates graphically the fairness of the railways' request 
for annual instead of quadrennial weighing. It shows for the Western 
States, called the fourth contract section, the results of weighings from 
1878 to date, the heavy line indicating the actual payments and the 



ALL RA/LROADS OP UN/TED STATES \ 
Percentage of Total Postal Receipts paid to Railroads and Expended for Other Purposes 1 


■TEAR 


AMOUNT 


S ■'■"'"«' 'IJJ^JMlM^J 


S5id5a!»°™SS!««'"lii{S85J 


ISOO 
ISO 1 
ISOZ 
1903 
ISO* 
I90S 
1906 
1907 

I90S 
191 
1911 


* 31,3l5.7Z5 
3B.ISB.9G9 
3S.SIB.BI-I 
41.311,18* 
43.971.843 
45,0*0,564 
*6.9S3,*39 
*S. 758. Oil 
4 8.4S6.ZSS 
49.869.375 
49.40S.3I 1 
S0.S83.IZ3 


Ml! i 1 

Paid to Railroa 


1 
OS 
















































1 


1900 

ISOZ 
ISOZ 
ISO-* 
IS OS 
1906 
ISO! 
IS08 
IS OS 


10,4Z*,54Z 
77.195,952 
95,266.8*0 
97,*07,303 
/OS,390,26« 
IZZ.3S8.60S 
131, .* 96,3 3 9 
'41,284.6*9 
ISS.3S3.e3l 
I7I.I34.7Z1 
I80.S1I.9I3 
187.065,8 3 


Expended for othl 


v? Purposes 




















, 










e *- s — ———_____ 




s *l — — — ____ 























49396—11. (T 


3 face page 342.) 





342 

decre 

31 p€ 

freig 

time 

per c< 

Th: 

ways 

Depa: 

propo 

know] 

mater 

ating 

unit o 

15 yea 

have i 

Sem 

years i 

Mr. 

Sens 

Mr. 

did nol 

Chai 

with 11 

passen| 

per tra 

(rain rt 

is little 

least of 

for the 

train m 

27.8 per 

Chart 

revenue 

the past 

illustrat 

the last 

pay rect 

per trair 

way rev( 

senger ei 

the raih 7 

using th* 

for maiL 

of Mr. 1 

gate the 

on all th( 

1911, figi 

railway n 

Chart 1 

for annua 

States, ca] 

1878 to d; 



DISTRIBUTION OF EXPENDITURES OF POST OFFICE DEPARTMENT 




:D $237,648,926 




DISTRIBUTION OF THE INCREASE IN EXPENSES OF POST OFFICE DEPARTMENT IN 19 11 OVER 1900. 

TOTAL INCREASE $ 129,908,659 




TOTAL SERVICE RENDERED BY RAILROADS, i.e., TONS OF MAIL MAULED ONE MILE 





49396—14. (To face page 342.) 



all Railroads of United States 

Statistics or Railway Mail Service and Other Classes of Traffic 



}TAL Receipts a 
Post Or f tern 
Department 



Total Revenues 



Total Railway 
Operating Expenses 



IB3.SBS.OOS 



2.589. /OS 



to Post Office: 
Department Receipts 



Taxes Paid b) 
Railroads 



Revenue 



Passenger 
Revenue 



Freight Revenue 

per 1,000 Freiqht 

train Miles 

(All Service 
Operating Expenses 
Per 1,000 Average 
Train Miles 



TAB.SIS.BI* 182 
3IS,OS*,00S IS9 



* 37.3IS. 
49.7S8.07I 
S0.SS3. 



80,3I-2.,3TS 
I0B.303.SIZ 



49396—14. (To face page 342.) 





Trend during 


Twenty Years o 


fRe 


VEN 


A 

UE FROM 


LI R 

Pas 


MLROADS OF 
SEN6ER AND 


United States 
Freight Trains, anc 


of Operating Cost per Train Mile. 


" 


YEAR 

1890 
1895 

1900 
1905 
1910 


PER TRAIN MILE 








1 » 


S f 


a 


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Freight Revenue 
Passenoer Train Revenue 

OPERATINO ExPS. 8.TAXE3 

Freiomt Revenue 
Passenger Train Revenue 
Operating Exps.8, Taxes 

Freioht Revenue 
Passenoer Train Revenue 
Operating Exps.jTaxes 

Freioht Revenue 
PassengerTrain Revenue 
Operating ExpS- a Taxes 

Freiomt Revenue 
PassengerTrain Revenue 
OperatingExps.sTaxes 


1 .85 

1 .03 
LOO 

1.61 

.98 
,91 

2.00 
1.01 
1.07 

2.50 
1.16 
1.38 

2.86 
1.30 
1.56 
























































































































































T 














































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For Year Ending June 30,1910. 




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s 


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i 


s 






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Per CENT OfTOTAL REVENUE CONTR1- 

juteo by Passenger Trains 

Percent ofTotalTrain Mileage 
«un by Passenger Trains (a) 


27.8 
46.6 












































































































































Note :. (a) Mixed Trains counted both as passenger and freight. 
Authority: /.C.CStatistics of/rai/tyays of United Stares. 



49396-14. (To face page 342.) 





ALL RAILROADS OF UNITED STATES 

Relative Revenue per Unit of Traffic from Mails, Passengers and Freight 
Year 1890 taken as loo. 








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! , 

D/A6RAM SHOWING LOSS //V A54/Z. REVENUE TO RAILROADS 

by We/en/NG Mail Quadrennially Instead of Annually 

i (Oregon 
Montana Colorado | 1 Washington 

N. Dakota Missouri | Texas ' \(/tah 

S.Dakota Arkansas \ New Mexico \ Nevada 

Nebraska Oklahoma [ [Arizona 4 California 








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40386 — 14, (To 


face page 342.) 





























































ALL RAILROADS OF UNITED STATES 

Annual Gain to Government and Loss to the Railroads since leao through decreased Mail Pay per Ton Mile 
through automatic operation of the law and because of other reductions by Goverment authority commencing in I907. 



I LOST BY RAILROADS 



. Z30.SOO.OOO 



77V777, 




y/w/M. 



- v/'/wm 

^///////////////////////////////////////^^^^ 



A/oTer: On bayij of same c/iyisor throughout errtire pet-it 



/Vff*v YorA.Jr/i.jo./f/J. 



49396 — 14, (To face page 342.) 



RAILWAY MAIL PAY. 343 

dotted line the amounts to which the railways were fairly entitled, the 
triangles formed between the heavy lines and dotted line represent- 
ing the losses to the railroads through quadrennial weighings, these 
losses being expressed in figures on the chart. The growth in the 
western group of States was no doubt in greater ratio than the re- 
mainder of the country, but the chart is presented to illustrate the 
service rendered by the railroads for which they received no com- 
pensation whatever. 

The Chairman. Why did you take only the fourth division for 
your Chart F? 

Mr. Worthington. Because it is the division in which we operate, 
and the weighings are at different periods, so I would have to have 
separate charts. I think that is greater than what would result in 
the United States as a whole, because that group has grown faster. 

Senator Weeks. Do you think the amount of mail has grown faster 
in that group ? 

Mr. Wobthington. I think it has. 

Senator Weeks. I should have some doubt about that. 

Mr. Worthington. Possibly not. The population has increased, I 
think, faster than the United States as a whole. 

Chart G illustrates graphically the gain to the Government and 
loss to the railroads by years since 1890 through decreased mail pay 
per ton-mile on account of the natural or automatic operation of the 
law and because of other reductions made by Government authority 
since the beginning of 1907. This chart shows that the amount of 
these reductions for the IT years from 1891 to 1907, inclusive, was 
$143,700,000, while for the four years from 1908 to 1911, inclusive, it 
was $146,800,000, or a total for the 21 years of $290,500,000. These 
figures are obtained by applying the average rate per ton-mile effec- 
tive in 1890 to the traffic handled in subsequent years, the difference 
between the amount so obtained and the actual compensation repre- 
senting the amount saved to the Government and lost to the railroads 
through reduction in rates per ton-mile. It also demonstrates that 
the Government was sharing quite generously in reduced rates 
through the automatic or natural operation of the law without im- 
posing the additional reductions by Government authority com- 
mencing in 1907, when it is considered that through most of this 
period the railroads were contending with higher operating cost per 
traffic unit through causes beyond their control. It further demon- 
strates that the present law has been a most favorable one to the 
Government in securing greater reductions for carrying mail than 
were effective for any other class of railway traffic. 

The Chairman. Let me ask you this in that connection : Does not 
your ton-mile revenue decrease in an inverse ratio to the density of 
your traffic? 

Mr. Worthington. As density of traffic increases ton mileage rates 
decrease. 

The Chairman. Hence, is not this apparent rate change to the rail- 
roads due to a law of transportation? 

Mr. Worthington. During the same period our ton mileage of 
freight has increased also very largely, but the freight rate has been 
maintained. 



344 RAILWAY MAIL PAY. 

The Chairman. Then your profits should have increased? 

Mr. Worthington. They ought not, because the gain in that re- 
spect was offset by the higher operating cost for increased labor and 
material. In other words, if it had not been for the economy we 
were able to effect in freight service by loading trains heavier and 
increasing our earnings per freight train-mile, we would have been 
in pretty bad straights by this time and we could have not paid the 
higher labor and material prices. 

The Chairman. Is chart G, without an explanation, an absolutely 
fair presentation ? In other words, the ton-mile basis is not the fair 
unit as to the actual net revenue of a railroad, is it ? 

Mr. Worthington. Why not? I think so. We use the ton-mile 
basis in freight service. 

The Chairman. As the density of your traffic increases your com- 
pensation per ton-mile is less? 

Mr. Worthington. Is less. 

The Chairman. Yet jour actual net earnings at the end of the 
year may be much greater, due to the increase of density, may they 
not? 

Mr. Worthington. They may be greater if we are able to handle 
the traffic economically such as we have been in the case of freight, 
but they are not greater when the load in a car is limited and flexible, 
you may say, through the fact that not more than two and one-half 
tons are carried in R. P. O. cars. As traffic increases we have to put 
on more service. 

The Chairman. But you only get less than 10 per cent of the total 
compensation paid by the Government in R. P. O. compensation ? 

Mr. Worthington. But the expenses are increased more than 10 
per cent. That represents more than 10 per cent of the cost. 

The Chairman. How much of the total mail is carried in the 
R. P.O. cars? 

Mr. Worthington. I do not know. Quite a large part, but I could 
not say offhand. I do not think that has ever been computed, because 
the mail is transferred en route from storage cars to R. P. O. cars, 
and it would be a very difficult thing to say, as the mail is taken out 
of the storage car and reworked in the R. P. O. car. 

The plan advocated by the Postmaster General in document 105, 
of the Sixty-second Congress, involves two vital principles that we 
deem unfair to the railroads as a just compensation for the services 
they render, these being as follows 

The Chairman. If I may interrupt you just there ; in starting in 
with your testimony you referred to Senate bill 7371, which was the 
first suggested plan emanating from the Post Office Department. 

Mr. Worthington. That was the one I had before me. 

The Chairman. Are you familiar with the modification or second 
suggested plan as submitted by ex-Postmaster General Hitchcock 
to this committee under date of January 20, 1913 ? 

Mr. Worthington. I understand the plan was amended and am 
familiar with that, Mr. Chairman. 

The Chairman. Then, is your testimony applicable to the modi- 
fied plan as well as to the originally suggested plan ? 

Mr. Worthington. It is, because I refer to that amendment in 
this memorandum further over. 

The Chairman. Verv well. 









KAIL WAY MAIL PAY. 345 

Mr. Worthington. 1. Payment of compensation according to the 
car feet of space used on trains. 

The Chairman. In view of the fact that the Postal Department, 
as represented by ex-Postmaster General Hitchcock, has modified the 
plan contained in Document 105, I think it would be well, if you are 
able, to make your comments refer to the second or modified plan. 

Mr. Worthington. I will modify that as I go along. As I under- 
stand this plan, he included allowance on the investment, plus 6 
per cent. 

The Chairman. That is, he suggested a reasonable allowance on 
the capital invested, provided there was no duplication to it, 6 per 
cent on the operating expenses and a reasonable allowance on the 
capital invested without attempting to indicate to Congress what, 
in his opinion, would be a just allowance on capital. 

Mr. Worthington. 2. Payment on basis of the cost to each indi- 
vidual railroad, plus 6 per cent. 

The adoption of this plan would be not only inequitable to the 
railroads, but we believe would be a disadvantage rather than an 
advantage to the public service. Before reciting a few of the prin- 
cipal objections to these methods, I would say the argument is some- 
times made in favor of the space basis that it would adjust inequali- 
ties that now exist in the pay received by the various roads, House 
of Representatives Document 105 apparently showing that some east- 
ern lines are handling the mails at a loss, whilst some western lines are 
making a large profit. This conclusion is, on its face, difficult to under- 
stand, when it is remembered that the existing basis of compensation is 
the same throughout the country, whilst labor and material costs are 
very much higher in the West than in the East, and the cost of oper- 
ating railroads per train-mile, according to statistics of the Interstate 
Commerce Commission, amounts to $1.81 in the far western group 
I. C. C. 10, as compared with $1.49 in the eastern group 1, $1.57 in 
group 2, and $1.44 in group 3. 

In other words, the commission says that it costs more to operate 
railroads in the West than the ex-Postmaster General says we can 
operate the mails for. An analysis of the methods used in produc- 
ing the cost for mail service in Document 105, on which the Post- 
master General's conclusion is based, shows that the more favorable 
results he reaches for the western lines are due entirely to the pe- 
culiar method followed by the department in apportioning to pas- 
senger and to mail service that part of the operating expenses which 
can not be directly apportioned to either freight or passenger serv- 
ice. As is well known, only a portion of the operating costs can be 
so allocated, and at least one-half of the expenses must be appor- 
tioned in an arbitrary manner, and the fact is that any basis of appor- 
tionment, even though fair to the railroads as a whole, would be unfair 
if applied to individual railroads operating under difficult local con- 
ditions. For example, a railroad carrying large passenger train- 
loads and small freight trainloads would show cost per train-mile 
for the items that can be directly assigned approximately equal for 
freight as for passenger service. On the other hand, a railroad 
which moves very heavy freight trainloads and light passenger train- 
loads would show very much greater cost per train-mile for these 
direct expenses in case of freight than for passenger service. 



346 RAILWAY MAIL PAY. 

In other words, 50 per cent of the operating expenses we might 
call direct, and where the freight trains are light and passenger 
trains heavy those expenses will run about the same per train-mile. 
Where conditions are reversed on a railroad handling very heavy 
freight trains and lighter passenger trains, those costs are much 
greater for the freight. In other words, there is quite a difference 
in those expenses on certain railroads as compared to other railroads, 
and these direct expenses are used by the former Postmaster General 
Hitchcock to apply to the indirect expenses. In other words, he 
finds that 50 per cent of the expenses on one road ma}^ be equal to 
the passenger or freight on another road ; it may be 50 per cent more 
on freight, and he applies this same ratio to the indirect expenses 
and produces a result that is not fair to both roads. I will show 
you that result further on. As to the most of the unallocated, or 
so-called " indirect," expenses the Post Office Department apportions 
these on the basis of the cost of the " direct " expenses. Conse- 
quently a railroad having light freight trainloads and heavy pas- 
senger trainloads would be charged with very heavy costs per pas- 
senger-train mile for the indirect expenses, which had no particular 
relation to train mileage, than in the case of a road having heavy 
freight trainloads and light passenger trainloads. We find these 
differences in conditions typified, for example, in the case of two 
eastern roads, on which passenger traffic is very large, which I will 
term road A and road B, compared with the Union Pacific system, 
a very heavy freight carrier. The relative passenger trainloads on 
these roads are: Road A, NH 96; road LI, B — 93; Union Pacific 
system, 66. The relative freight trainloads are: Union Pacific sys- 
tem, 488 ; road A, 291 ; road B, 168. 

By the plan of the Postmaster General the cost per car-foot mile 
is made for road B 5.34 mills, road A 4.72 mills, and for the Union 
Pacific system 3.06 mills, the cost given for road B being 74 per 
cent greater than the Union Pacific, as a result of which he shows a 
considerable profit to the Union Pacific. Referring to Interstate 
Commerce Commission Statistics of Railways of the United States 
for 1910, however, it is found the operating expenses for the average 
train mile of road B are $1.29, whilst on the Union Pacific system 
they were $1.64. Thus, though the commission finds the cost of 
operating a train on the Union Pacific system is nearly 50 per cent 
greater than on eastern road B, the Postmaster General finds that 
the operating cost per unit as applied to mail service was "74 per 
cent greater on the eastern line; hence it is not difficult to under- 
stand how unfair to the Union Pacific would be his space basis for 
compensating the railroads for carrying the mails. 

In other words, the differences are so tremendous. That is the real 
reason why some of these lines, for instance, the New York, New 
Haven & Hartford show a loss, and others, for instance, the Southern 
Pacific, shows a profit. I think the impression has gone from 
House Document 105 that the Union Pacific and Southern Pacific 
were showing large profits from handling the mails, and I am trying 
to show just the method used apportioning the expense. 

The Chairman. You are commenting on the different methods 
used by the Interstate Commerce Commission and the Post Office 
Department ? 



KAILWAY MAIL PAY. 34? 

Mr. Worthington. Yes. An examination of Document H. R. 105 
will show similar great disparities in the Postmaster General's 
estimate of operating cost per car-foot mile on different railroads, 
on which he would base their compensation. For example : On the 
West Jersey & Seashore, a passenger line of the Pennsylvania, he 
shows a cost per car-foot mile of 4.72 mills, whilst on the Pennsyl- 
vania Railroad proper he shows a cost of only 2.94 mills; in other 
words, the mail pay on his basis would be very much more on the 
West Jersey & Seashore than on the Pennsylvania, although the 
operating expense ratio on the former line is shown by the Inter- 
state Commerce Commission to be 75.76 per cent, compared with 
78.60 on the Pennsylvania Railroad proper. Again, referring to 
the lines comprising the New York Central system, the Postmaster 
General computes a cost for the Pittsburgh & Lake Erie Railroad 
of 6.23 mills and for its connection, the Lake Shore & Michigan 
Southern, only 2.02 mills; on his basis the Pittsburgh & Lake Erie 
would receive three times the pay per car-foot mile based on operat- 
ing costs, although the Interstate Commerce Commission shows its 
operating expense ratio is only 42.38 per cent, as compared with 
64.81 per cent for the Lake Shore. Although we understand since 
the publication of Document H. R. 105 the Post Office Department 
is willing to concede that a return on the investment should be 
allowed the railroads in fixing mail compensation as well as com- 
pensation for operating expenses, it is apparent that the methods 
used by the Postmaster General for determining the operating costs 
are too unfair to the western railroads, as well as to any other lines 
which are heavy freight carriers, to be used as a measure for ade- 
quacy of their mail compensation. 

As to the Southern Pacific Co., the department showed the rev- 
enue from mails per car-foot mile to be 5.25 mills, after crediting 
the railroad with only 38,589,000 car feet of space in mail service 
and after excluding from the divisor 8,844,000 car-foot miles of 
" dead " mail space, which though they admitted was furnished by 
the railroads incident to mail transportation, but which it claimed 
was not actually required to hold the mails, which dead space it 
added to passenger service. 

The Chairman. Although not used by passenger service in any way 1 

Mr. Worthington. Yes ; although not used by passenger service 
in any way. If only this dead space incident to mail service was in- 
cluded in the divisor the Southern Pacific's revenue from mail per 
car-foot mile would have been reduced to 4.27 mills. The Southern 
Pacific Co. reported to the department that 49,981,437 car-foot miles 
were used for the mails in November, 1909, from which it received 
compensation averaging 4.05 mills per car-foot mile. Nowhere in 
the United States is railroad labor and material higher than in the 
territory traversed by the Southern Pacific Co., and if the depart- 
ment had allowed us the same cost of operating per car-foot mile 
as the two eastern roads designated as roads A and B included the 
dead space incident to handling mails, it would have shown a large 
deficit for mail transportation on the Southern Pacific Co. after 
allowing for operating expenses only. 

Whereas, if they had allowed the same costs per car-foot mile, we 
would have shown a deficit in place of a considerable profit, as 
shown. 



348 KAIL WAY MAIL PAY. 

We believe compensation for mail service based on cost is wrong 
in principle and impracticable for the following reasons : 

1. It is impossible to exactly allocate operating expenses and fixed 
charges to each class of service. Fixed charges can not be allocated 
at all, whilst only about one-half of the operating expenses can be 
-allocated between passenger and freight service. The remainder 
must be approximated and this approximation varies widely, ac- 
cording to the judgment of the individual making it. No two ex- 
perts would agree on this apportionment, and whilst expressing great 
confidence in the Interstate Commerce Commission, we believe it 
would have similar difficulty in reaching results that would be fair 
to ail roads and that successive statisticians of that commission would 
not hold the same views as to methods. As a consequence, the fig- 
ures when produced could not otherwise be regarded as not exact, 
and, therefore, not sufficiently reliable to be used as a basis for rate 
making. 

The Chairman. If mail compensation is not to be based either 
wholly or partially on cost, upon what is it to be based ? 

Mr. Worthington. There is no compensation the railroad receives 
based on cost for any class of traffic. There is no reason why the 
adequacy of the pay as a whole can not be gauged in some way at 
an estimate of cost, but I would not say that as a rate-making propo- 
sition. 

The Chairman. Is not the trend of rate determination toward the 
necessitated ascertainment of the cost ? 

Mr. Worthington. Mr. Chairman, in my opinion, it is absolutely 
impossible to anywhere nearly ascertain a cost. You can obtain an 
estimate of cost, but that will vary with the person who makes the 
estimate, and it hardly seems to us that that is a good rate-making 
proposition. 

The Chairman. Will you kindly answer my question. If cost is 
not a factor in determination of mail compensation, what are the 
factors on which equitable mail compensation can be adjusted? 

Mr. Worthington. I am personally of the opinion that, figured on 
a fair basis as to cost, it would be necessary to very largely increase 
the compensation to railroads, according to the railroads' method of 
ascertainment. 

The Chairman. That does not answer my question. What are the 
factors to be taken into consideration to determine a fair compensa- 
tion to the transportation companies, for transportation of mail, to 
be paid by the Government ? 

Mr. Worthington. I think the value of the service to the Govern- 
ment as compared with the relative returns and revenue which the 
railroads are receiving for other class of traffic. We are not asking 
more for the mails than we get for other classes of traffic. 

Senator Weeks. Supposing the Government decided to transfer 
the Cavalry regiment which is now stationed at Fort Myer, Va., to 
San Francisco, Cal. How would the rate be determined for trans- 
porting the men, horses, and equipment? 

Mr. Worthington. I really am not familiar with the question of 
rates. I am not a traffic man, and I do not know what arrangement 
the Government has with our railroads for rates. I do not think I 
would be competent to answer that question. I have nothing to do 
with rates at all. My duties are entirely operating. 



, 



RAILWAY MAIL PAY. 349 

2. Even if it were possible to secure a proper basis for the rail- 
roads as a whole such basis would unduly favor some roads and be 
unfair to others, as local conditions vary greatly, there being wide 
differences in the relative volume of passenger and freight traffic on 
different roads, in average size of trains, in the requirements for 
passenger traffic, etc., as shown by pamphlet "Mail-carrying rail- 
ways underpaid," which has been introduced in evidence. 

Senator Weeks. You come to the conclusion up to that point that 
a fixed rate for the whole of the country must necessarily be unfair 
to some road, by paying some roads more than they should be paid 
or some roads less ? In other words, it is impossible to make a fixed 
rate which is just to everyone, the Government included? 

Mr. Worthington. I think it would be impossible to make any 
rate that would, for example, allow an extravagantly operated road, 
we might say, as large net compensation as another road which might 
be more economically operated. 

Senator Weeks. Even assuming that they were operating with 
the same economy ? 

Mr. Worthington. Certainly. It would be impossible to fix any 
universal rate that would not return to one carrier more than it would 
to another. 

Senator Weeks. That is exactly what we do. 

Mr. Worthington. For the reason that the cost of operating rail- 
roads is different in different sections of the country. 

Senator Weeks. That is exactly what we have done in the past, 
and that is the only suggestion we have before us now, to make a 
fixed rate for the whole of the country. 

Mr. Worthington. At the same time I think that is more equitable 
than to attempt to fix a different rate for every railroad, based on its 
operating cost, but I think that is wholly impracticable. For ex- 
ample, take two different railroads ; a large system of railroads may 
have a number of branch lines and one of the branch lines might be 
competing with a short-line railroad. The operating cost on that 
system would be the same and the mail pay for the large system 
would be based on the operating cost of the system as a whole. The 
short-line railroad would necessarily have a much higher operating 
cost and would be at a disadvantage in competing for the mail. The 
railroads' expenses are not kept for all their branch lines, or for dif- 
ferent parts of their main lines. 

Senator Weeks. Why do you think it would be impossible to make 
a rate for every railroad or every group of railroads, depending on 
the conditions? 

Mr. Worthington. Because I think you would have to adopt a 
different method for estimating cost on different railroads. 

Senator Weeks. Is not that done in the case of other traffic ? 

Mr. Worthington. It would leave the door open for discrimina- 
tion, and it would be a tremendous task, it seems to me, to so adjust 
your difference of apportionment to make up for the difference in 
local operating conditions on different roads. 

Senator Weeks. Would it be any more difficult than it is to arrive 
at the same conclusion in regard to freight and different classes of 
freight? 

Mr. Worthington. We do not do that as to freight. Freight 
rates are not based on cost. 

49396—14 30 



350 RAILWAY MAIL PAY. 

The Chairman. What are they based on? 

Mr. Worthington. Only in a general way. High-class freight 
would be moved at almost the same rate as low-class freight, if they 
were. There are so many other considerations to be taken into ac- 
count — the value of the commodity transported, the rate it will stand, 
etc. A low-grade commodity would not stand a rate based on cost. 
If this rate was based on cost of transportation the rate would be 
lower than it is for high-grade commodities, whereas on the low- 
grade commodities, such as coal, the rate would have to be increased. 

The Chairman. Would it be any more difficult to arrive at a proper 
rate in the case of mail than it is to arrive at a proper rate in the 
case of coal or vegetables or any other commodity ? 

Mr. Worthington. No ; I do not think it would be more difficult 
to arrive at a proper rate, but I would not base that on cost, that 
individual rate. 

Senator Weeks. I do not care what you base it on, if it is a suit- 
able rate for the service performed by the road. 

Mr. Worthington. I think the only practicable basis is something 
like we have at the present time, the uniform rate, and the test of 
the adequacy of that rate might be obtained by determination. Let 
the Interstate Commerce Commission determine and make an estimate 
for the mail, as to whether the mail rate was adequate or inadequate. 

Senator Weeks. Would not that do serious injustice to some rail- 
roads ? 

Mr. Worthington. I do not think so. 

Senator Weeks. Do you not think that there are a great many rail- 
roads in this country that are performing this service for less than 
cost? 

Mr. Worthington. Cost is something that has to be interpreted. 
If you mean the actual cost of the transportation, I do not think so ; 
but if you mean an apportionment of the other charges, yes. 

Senator Weeks. I will take the actual cost so far as some of the 
short-line railroads are concerned. 

Mr. Worthington. There may be some short-line railroads that 
are. I could not say as to that. I do not know. 

The plan of paying each railroad according to its own expenses is 
very unfair to roads which may reduce operating costs through in- 
creased efficiency and better management, as compared with roads 
which can not do this and which have higher operating costs. In 
other words, it penalizes efficiency, and as the cost of operating is 
brought down by better methods the allowance for mail transporta- 
tion would be reduced. On the other hand, it would be increased if 
the railroad is extravagant. If the commission believes there should 
be a difference in the rate of compensation to make up for differences 
in operating costs in different sections of the country, we think the 
rate should be uniform, at least within the confines of the 10 inter- 
state commerce group of States, and the present statistics of the 
Interstate Commerce Commission give a fair index of the relative 
operating costs per train-mile in each of these different groups. If it 
is in doubt whether the mail pa}^ compensation as a whole in the 
United States is adequate or inadequate, it seems to us this could be 
determined by the Interstate Commerce Commission making an ap- 
portionment of the operating expenses, taxes, and fixed charges to 



BAILWAY MAIL PAY. 351 

all service for the railroads as a whole. We believe this apportion- 
ment, if fairly made, would demonstrate conclusively that the pres- 
ent mail pay is inadequate as compared with revenue from other 
kinds of railroad traffic. It should be understood, however, that any 
apportionment made must be largely on estimate and that an appor- 
tionment made for the railroads of the United States as a whole 
would not, on account of differences in local conditions, be applicable 
to individual roads, as it would represent merely an average of all 
roads. 

OBJECTIONS TO ABANDONMENT OF PRESENT WEIGHT BASIS AND SUBSTITU- 
TION OF SPACE BASIS. 

The greatest objection to the space basis is that it places in the 
hands of a single individual, i. e., the Postmaster General, the regu- 
lation at will of the total compensation to the railroads; and inas- 
much as in this case this individual also represents the shipper — that 
is, the Government — it is hardly to be conceived that the results 
would be as fair to the railroads as under a weight basis, as under 
the present plan the pay to the railroads is regulated by weight car- 
ried, and is therefore regulated by an impartial tribunal, i. e., the 
public. 

When the shipper — that is, the Government — also states how much 
space he will pay for, it is apparent payment would be based on 
minimum space and not the space which the railroad might have to 
furnish to move the tonnage. 

Under a space basis it is probable the Government would expect 
to pay the same rate per foot whether the service furnished covered 
a full car or only fraction of a car, in the latter case paying the rail- 
roads nothing for space they would always, on an average, have to 
furnish in excess of that actually required when the volume of traffic 
is light. In freight service the latter consideration is adjusted by 
charging higher proportionate rates for less-than-carload than for 
carload traffic. 

Space is not the sole consideration used in fixing rates on any other 
class of railroad transportation, whether passengers, express, or 
freight. Weight is the principal factor, although space is also taken 
into account in fixing rates in freight service on bulky commodities. 
This policy agrees with the principle recognized by the present basis 
of mail pay, which takes into account the weight carried and the 
space used for distributing post offices on wheels. 

Under the present basis, where weight is the controlling factor of 
railway mail pay, about nine-tenths of the railroad's compensation is 
based on weight, the remaining one-tenth representing R. P. O. car 
pay. The latter is subject to control by the Post Office Department, 
and the effect of this control is illustrated by frequent arbitrary 
changes ordered by the department in R. P. 0. car space, most of 
which have been decidedly unfair to 'the railroads. Through these 
changes half lines have been substituted for full lines, depriving the 
railroads of compensation for empty return of R. P. O. cars, allow- 
ances once made for 60-foot cars have been reduced to cars of shorter 
lengths when it is imposible for the railroads to make physical reduc- 
tion in space, and in some onses R. P. O. car pay has been done away 



352 KAIL WAY MAIL PAY, 

with altogether by substituting apartment cars without pay after 
the R. P. 0. lines have been established. In this way many roads 
have suffered by losses in R. P. O. car pay of 25 per cent or more. 

The Chairman. But the right of appeal exists there under the 
suggested plan? 

Mr. Worthington. Yes. But the right of appeal would be after 
giving us too little space instead of too much. 

The Chairman. You mean in space authorized rather than in the 
compensation ? 

Mr. Worthington. Yes; in the amount of space authorized. 

The Chairman. Your criticism on the bill is because the space 
authorization is determined by the postal department and that no 
relief would come in the right of appeal to the Interstate Commerce 
Commission, because they would not pass upon that ? 

Mr. Worthington. I do not think so. I think that we would be at 
a disadvantage, and I think in most cases we would be allowed the 
minimum space and not the space which we might be required to use 
to move the tonnage. 

The Chairman. I think that could be easily overcome by putting 
in the law the method of what space shall be paid for; that is, 
clearly stated, let the law state what space shall be paid for; the 
amount of space to be required has to be initiated by the Government 
representatives. The railroads could not say; the Interstate Com- 
merce Commission could not say; and that is necessarily so. The 
presumption is that the department would call for the space that in 
their opinion would be required, based upon experience of the pre- 
vious year, with an allowance for the growth of the business. You 
would not expect the departmental representative to call and pay for 
space that they did not think would be required or was required. As 
additional space was required by the postal department, it would 
be called for and furnished by the railroads and paid for by the 
Government. The law, if it clearly stated how those payments were 
to be made, so that there could be no question between the Govern- 
ment's representatives and the railroad's representatives, it seems 
to me, would eliminate the difficulty which you mention. I think 
that could be worked out. 

Mr. Worthington. It is easy to see that on a space basis tempta- 
tion to save in payments to the railroads might lead to sacrifice of 
efficiency and quality of service given the public through discon- 
tinuing distribution of mail en route, and even the abolition cf the 
latter on some routes in favor of carriage in pouches. Again, at the 
present time the mail is handled between important cities on a large 
number of trains, giving improved service to the public and frequent 
deliveries. It would be quite easy to concentrate the mails, if pay- 
ments were made on a space basis, on fewer trains in order to reduce 
the railroad's pay, but it is hardly necessary to point out the dis- 
advantage of this to the public. 

The Chairman. In that connection would not the departmental 
representatives be held responsible by an insistent public? 

Mr. Worthington. If they wanted to make a record for economy, 
they are liable to impair the service. 

The Chairman. Wouldn't they also get a red-letter criticism on 
account of the inefficient service ? 



EAILWAY MAIL PAY. 353 

Mr. WORTHINGTON. No. 

In case of light traffic routes railroads are generally obliged to 
furnish whole cars in which mail, baggage, and express are carried, 
there being necessarily a considerable amount of empty space in such 
cars not required by any of the three classes of traffic. Under a space 
basis it would probably be claimed that mails should be charged only 
with space they occupy, leaving the empty space a burden on other 
classes of traffic. The Government receives its pay for carrying mails 
on a weight basis, and should not object to paying the railroads on the 
same basis, as the Government's revenue increases with the weight 
of mails. Operating expenses of railroads have been increasing for 
10 or 15 vears, due to higher wages and higher prices of material. 
In freight service they have offset this effect by hauling greater 
weights per foot. On a space basis for mails they would be denied 
any additional revenue for hauling greater tonnage per foot, which 
is unfair, as the railroads ought to be permitted to offset rising 
operating costs in this way. 

In other words, the E. P. O. pay is comparatively small at the 
present time, and while that continues the small part of the compen- 
sation the department is more apt to ask for increased services, as 
they can get it cheaper than they Avould if the total compensation 
was based on space. It seems to me if it was based on space the 
department would hesitate a long time before they would ask for 
more space on any route, because that would increase their rate 
directly, whereas under the present conditions they can get more 
space at comparatively little more charge ; that is, more distributing 
space. Suppose, for example, on a space basis another E. P. O. car 
was required on any route. That would increase the pay directly 
in proportion to the number of feet of space, and the department, 
I think, would hesitate on ordering that car on, as compared with 
the present conditions, whereas they can get that car by practically 
a nominal compensation. That is another point that occurs to me. 
No matter how much tonnage we put in a foot of space, if we were 
paid on a space basis we would get no more compensation for it, 
and as the Government can double the weight per foot, they can pay 
the railroads much smaller percentage of the revenue. 

The Chairman. Let me ask you in that connection a question. 
You say the governmental receipts themselves are a factor in de- 
termination? In other words, what the Government can pay, to 
your mind, is a large factor in the determination of what the Gov- 
ernment shall pay? 

Mr. Worthington. I think so. In other words, it is the ability 
of the Government to compensate the railroads for handling the 
mail. I think that is a factor just as much as the cost of service 
or anything else. In other words, if in 10 years they can double 
their revenue it only seems fair, if the railroads are hauling twice 
the ton mileage on a space basis, w'e could get nothing more for 
that. 

The Chairman. And your premises for that opinion are what? 
That the people have to pay it in any event, whether they pay it 
for freight or passenger or mail? 

Mr. Worthington. No. I think the service rendered to the Gov- 
ernment by the railroads is measured more in proportion to the 



354 RAILWAY MAIL PAY. 

tonnage they handle than anything else; that is, the service they 
give the Government ; they haul a certain tonnage of mail. 

The Chairman. You put the Government on a par with the ordi- 
nary citizen; the Government, is not supposed to operate the mail 
for profit to the Government. Personally I believe that the Postal 
Department should be absolutely self-supporting and rates should be 
established which would enable it to be self-supporting, but that is 
only my own personal opinion. 

Mr. Worthington. You will find a great many roads where the 
existing rates, per car-foot mile, on one road, is double what it is 
on another. In other words, those roads carrying twice the rates 
per car-foot mile are now performing twice the service not only 
in transportation but in terminal service. Those roads are also 
the roads furnishing the special mail trains. In other words, the 
road hauling the double tonnage would get the same pay per car- 
foot mile and would get nothing for additional special mail trains 
they run on account of the business they are handling and on account 
of the amount of it. 

The Chairman. Why does not that objection apply to your present 
system ? 

Mr. Worthington. Under the present system we do get more as 
we increase our weight per foot. We divide with the Government. 
In other words, we get more, but through the automatic reduction 
of the present law, as density increases the Government pays less, 
so it is a sort of division. The present law is admirable in that re 
spect. We get something and the Government gets something; on 
the space basis the Government would get it all. That is the prop- 
osition. I have a memorandum with regard to the railway mail pay 
on heavy traffic routes. 

There is an impression in some quarters that where mail trans- 
portation is concentrated on heavy traffic routes the service is very 
remunerative to the railroads, on account of the apparently large 
compensation as compared with the amount paid on light traffic 
routes. 

There are 70 routes in the United States on which the total pay for 
transportation is $100,000 or more per annum, and 3,308 routes on 
which it is less than $100,000. On these 3,308 routes the total pay 
for transportation is $23,515,258; on the 70 heavy traffic routes the 
pay is slightly less, or $22,982,742. When we come to work done for 
this compensation, however, it is found on the 3,308 routes only 
168,368,512 ton-miles of mail are handled, while on the 70 heavy 
traffic routes 381,479,461 ton-miles are handled, or two and one-fifth 
times the service rendered the Government on the heavy traffic routes 
for less money received. Per ton-mile of mail the pay for transporta- 
tion is 14 cents for the 3,308 routes and only 6 cents for the 70 heavy 
traffic routes, or less than half as much. If the railway postal car 
pay is included the pay per ton-mile for the 3,308 routes becomes 
14.8 cents and for the 70 routes 6.8 cents, R. P. O. car pay being 
the same per ton-mile in each case. 

Even on the space basis the pay on these 70 heavy traffic routes 
compares unfavorably with the others, as the transportation pay 
per car-foot mile for the 70 routes is only 4 mills, while it is 4.3 mills 
for the 3,308 light traffic routes, using the car-foot mileage contained 



EAILWAY MAIL PAY. 355 

in Document 105, which does not take into account all the car-foot 
space reported by the railroads. This shows the benefits received 
by the Government through the automatic reduction in rate as ton- 
nage increases and also shows that the heavy traffic routes are per- 
forming vastly more service to the Government in proportion to the 
money the railroads receive than any other routes. Not only this, 
but on a great many of these routes the railroads are maintaining 
exclusive mail trains, which add materially to their expenses. 

Therefore, although one-half of the mail pay goes to only 2 per 
cent of the total number of routes, covering about 12 per cent of the 
railroad mileage, these routes are not overpaid, but are really under- 
paid. This being so, is not the conclusion justified that the compen- 
sation is inadequate on the 98 per cent of the routes with 88 per cent 
of the road mileage that receive only 50 per cent of the pay ? 

I just made that computation as to TO of the heaviest traffic routes 
to see how much business they were hauling. They were hauling 
twice the ton mileage and this shows how this automatic rate works 
out on the heavy traffic routes. 

Under a space basis, as pointed out, a parsimonious administration 
would be able to reduce payments to the railroads, often with in- 
justice to the railroads, by cutting down space after it is once au- 
thorized; by not allowing pay for necessary empty movements, etc., 
and also at the expense of efficiency in service to the public. A sub- 
sequent administration might, on the other hand, be too extravagant 
in the space allowances to the railroads. A weight basis is not open 
to either of these criticisms. Only a small part of the railroads' mail 
pay compensation is based on the space required in R. P. O. cars, 
this being under the control of the department. As a consequence 
with the constant growth of the country, requiring increased dis- 
tribution space on trains for the public benefit, the Postmaster Gen- 
eral can secure this space from the railways with a minimum of cost 
to the department. Under a space basis plan the added facilities 
would be very expensive to the department and it can be conceived 
that the expense would be sufficient in many instances to determine 
the department against giving the public this greater service on 
account of higher cost involved. Whilst we are contending that the 
railways are now carrying the mails for much less comparative 
remuneration than that received from other classes of service, we 
believe a continuance of the present plan with annual weighing and 
pay for apartment cars, as well as some compensation for the side 
and terminal delivery service, is fair and more acceptable to the 
roads as a whole than the proposed space basis. If the commission 
should find, as we believe they will, that the railroads should receive 
more compensation than they are now getting, we think this could 
best be brought about by restoring the losses incurred by the reduc- 
tions in their pay commencing in 1907,, which we have always thought 
were unjustified. 

The Chairman. Your presentation was very able, Mr. Worthing- 
ton, and we thank you very much. 

Thereupon, at 2 o'clock p. m., the committee took a recess until 
2.30 o'clock p. m. 



356 KAIL WAY MAIL PAY. 

AFTER RECESS. 

The hearing was resumed at the expiration of recess at 2.30 o'clock 
p. m. 

The Chairman. Now, Mr. Worthington, to resume and summarize, 
I infer from the statement that you have made to the committee that 
it is your conclusion and conviction that either of the suggested plans 
of former Postmaster General Hitchcock, contained in Document 105, 
and submitted to this committee under date of January 13, 1913, the 
adoption of which would be the substitution of space for weight as 
the measure of the service rendered, is undesirable from the govern- 
mental standpoint as being impracticable of administration and from 
the transportation standpoint as being inequitable to the transporta- 
tion companies and necessitating a very expensive method of account- 
ing in the transportation companies, and that it is your opinion that 
no improvement can be made on the present system of practically 
determining the measure of the service rendered for 90 per cent of 
the mail by weight and 10 per cent by space governed in the R. P. O. 
service ? 

Mr. Worthington. The present method, with the amendment sug- 
gested by the committee on railway mail pay, which are annual 
weighing, or the equivalent of that, and pay for apartment cars. 

The Chairman. And compensation or relief from side service. 

Mr. Worthington. Compensation and relief from side or terminal 
delivery service. I really think what the railroads are asking for is 
more than reasonable, for even if they are given both of these addi- 
tional payments, the compensation for handling the mails will be 
very reasonable as compared with what they receive for other classes 
of traffic. 

The Chairman. If I understand what the railroads are asking for 
it is a continuance of the present system of weight as the measure of 
service and compensation for apartment cars, annual weighing, and 
compensation or relief from side service. 

Mr. Worthington. Yes, sir. 

The Chairman. That briefly covers it all? 

Mr. Worthington. Yes, sir. I really believe if it were possible 
to exactly apportion expenses to passenger and freight, on a basis 
that would be fair to everyone, it would be found that they were 
asking for less than the Government would determine, if it were 
feasible to determine cost. 

The Chairman. It is your conviction, is it, that in the adoption of 
the suggested departmental plan a separate calculation or considera- 
tion would haA^e to be made or given to each route, or at least to each 
one of the 795 railroads with whom the Government has a mail 
contract ? 

Mr. Worthington. I think a separate method of apportionment 
would have to be observed to allow for the difference in local condi- 
tions which exist on one road as compared with another, and that 
would leave too great discretion in the hands of any individual 
charged with the duty of making these apportionments. 

The Chairman. Why does not that objection apply with equal 
force to the existing method ? 



RAILWAY MAIL PAY. 357 

Mr. Worthington. Well, the existing method is a certain rate 
fixed by law that is not subject to the opinion of any individual, whilst 
the proposed method would leave it altogether to the discretion of 
some individual, whoever was charged with the duty of fixing the 
basis of apportionment, to vary at will the compensation to the rail- 
roads 10 or 20 per cent either way, according to his ideas as to the 
methods to be followed. 

The Chairman. Suppose the law specified, if one should be en- 
acted, adopting in effect substitution of space for weight, the per- 
centage of compensation on capital invested and on operating cost, 
to be specified in the law, a method on which that compensation was 
to be adjusted as the measure of the service rendered — and by that I 
mean the number of linear feet authorized and used by the depart- 
ment — so that you would know that you would receive so much an- 
nually for each linear foot authorized, and the law stated that you 
would receive that compensation for a number of feet that the de- 
partment authorized and required you to furnish at the beginning 
of every fiscal year, with an allowance in the law for compensation 
for such additional authorization as conditions might require in ex- 
cess of the estimated authorization made by the department that 
covering, say, a period of days or a period included in the round 
trip; would you not then have, theoretically at least, your annual 
weighing and your weighing feature taken care of by your compensa- 
tion being based on annual authorization for the linear number of 
feet called for, be relieved of the burden which you claim you now 
have to bear in getting no compensation for apartment cars, and 
while, of course, the side service and terminal feature is not dealt 
with in the suggested plan, yet theoretically does it not cover and 
furnish relief for apartment car and quadrennial weighing ? 

Mr. Worthington. Such a plan might remove some of the objec- 
tions to control by the Postmaster General or to unreasonable control 
or regulation and it might do away with the apartment car feature, 
but it is open, I think, to the very serious objection that it does not 
equalize the difference in existing conditions on different railroads 
as to weights carried per foot ; in other words, as to service rendered 
to the Government in handling tonnage. There are some roads that 
haul much larger amounts per foot than other roads, and it does 
seem to me they ought to receive more compensation than the roads 
furnishing the same car space and hauling less tonnage, because those 
roads also are the roads that are running the fast mail trains, whereas 
the other lines are furnishing most of their space on trains with 
passengers and express. 

The Chairman. Does the Government require you to put on fast 
mail trains? 

Mr. Worthington. No. They do not require us to put on fast 
mail trains. 

The Chairman. You do that of your own initiation ? 

Mr. Worthington. Yes, sir. 

The Chairman. You do it because you expect to receive an indU 
rect benefit by so doing? 

Mr. Worthington. Yes. 

The Chairman. Should the Government pay for that, as long as 
you, of your own volition, initiate and improve that activity ? 



358 RAILWAY MAIL PAY. 

Mr. Worthington. Suppose the pay would be reduced on a space 
basis on a line like the Union Pacific. In order for them to make 
both ends meet, it would be necessary for them to take off trains of 
that kind, otherwise if they did not do that the pay would be en- 
tirely inadequate. They are hauling very large tonnage per foot 
and are getting enough money out of the business now, in a way, 
to reasonably compensate them for this mail train, but if that amount 
is going to be largely reduced, as a space basis is going to reduce it, 
they could not afford to run the train. 

The Chairman. You are predicating your position with the as- 
sumption that by the substitution of space for weight your com- 
pensation is going to be reduced. 

Mr. Worthington. It would be on lines which are carrying the 
larger weights per car foot, and the lines which are carrying the less 
weight per car foot would be raised. I think it would be rather 
unjust to the lines that are performing the greater service per foot, 
and besides that it would mean that they would not participate at 
all in future economies through heavier carloading per foot. They 
would get the same return whereas the Government would receive 
directly in proportion to weight, as this is, on a weight basis. I 
think if any change is going to be made it ought to consider both 
space and weight. I do not think that the weight feature ought to 
be left entirely out of consideration. 

The Chairman. As I understand, you have both to-day — space and 
weight, 

Mr. Worthington. Yes. 

The Chairman. Ninety per cent weight and 10 per cent space 
represented by the R. P. O. cars. The adoption of the suggested 
plan of former Postmaster General Hitchcock would simply reverse 
those percentages ? 

Mr. Worthington. It would not consider weight at all, would it? 

The Chairman. Reverse those percentages, it would consider 
weight simply as in the pouch service, which represents, as I under- 
stand, a very small percentage of the total weight of all mail. 

Mr. Worthington. It seems to me there would be little inducement 
on the part of the large lines to run fast mail trains because they 
would get practically as much pay even though they would lose a 
considerable part of that tonnage, because they would still get paid 
-on a space basis and even if their weights per foot were reduced, they 
would get as much money for it on a space basis. 

The Chairman. Would they? These authorizations are made 
annually. Of two competing lines, if one gave superior service to the 
other, at the expiration of' the year the Government would make its 
contract with the railroad showing the greatest efficiency. Therefore, 
the inducement would be there just the same to run your fast mail 
trains. Your competition now is not in the rate received per ton 
of mail, but in the service rendered to the Government. That is the 
only competition there is between the railroad companies in the way 
of getting the mail contract in the United States, is it not ? 

Mr. Worthington. Yes, sir. 

The Chairman. There is quite a distinction. It is an efficiency 
competition and not a cost competition. 






RAILWAY MAIL PAY. 359 

Mr. Worthington. That is about all the competition we have in 
any class of service nowadays. There is no more rate competition, 
but it is competition of service. 

The Chairman. So, if you fail to give as efficient service as a com- 
petitor of yours did, while you might carry in that zone of activity 
90 per cent of the mail for this year, you would lose that 90 per cent 
next year. Hence, your inducement would be there to continue your 
fast mail service in order to hold prestige over your competitor. 
The inducement of putting on fast mail service is to make you a more 
effective competitor in the way of efficiency. Should the Government 
pay for that additional cost that you yourself, of your own volition, 
saw fit to incur because you believe, I assume, that the business is of 
some value to you, either directly or indirectly — the carrying of 
that mail ? 

Mr. Worthington. Well, we of course handle the mail on a special 
mail train largely on account of its volume and, as you say, it is com- 
petition of service and we feel we have to maintain the mail train on 
the heavy traffic route in order to keep the mail to our line. But if 
the mail compensation was made inadequate, or our compensation 
was reduced, I do not think we could afford to compete for that mail 
as actively as we have done before ; the business would not be worth 
so much to us and it is questionable whether it would be worth the 
additional expense of running a mail train, or whether we could not 
put the mail on the regular train, whatever we get. 

The Chairman. That is optional, entirely with you. 

Mr. Worthington. Yes. But the rate might be brought down to 
the point where we would do that. 

The Chairman. Should the Government take that into consid- 
eration ? 

Mr. Worthington. I think if the mail trains are taken off it would 
be a more serious disadvantage to the Government, or to the people, 
because the mail trains are run at a faster speed than are other trains. 
The mail is handled more expeditiously, but, as I say, if the rates are 
going to be brought down, it is questionable whether there will be 
enough new business to maintain them, and the rates would be 
brought down on such lines as the Union Pacific and the Southern 
Pacific, if we are to be equalized with roads which are hauling less 
weight per foot than we are. I know that the Santa Fe, which is 
compared with the Southern Pacific, hauls considerably less per foot 
than the Southern Pacific, and gets considerably more out of the 
mails. If we were put on a space basis it would make quite a dif- 
ference in our compensation. Another thing I do not quite under- 
stand is this : I have an idea that any space plan is necessarily con- 
nected with a cost plan. If it is, that makes the space plan more 
objectionable, because it would fix a different rate for the space per 
foot on different lines, on competing lines, and wherever two lines 
compete between two commercial centers, it would mean that the 
rate fixed necessarily would be the rate of the lowest cost line, because 
the high cost line could not afford to ask for more money than its 
competitor. If the high cost line wanted to get any mail business it 
would have to come down in the rate. 

The Chairman. In other words, if I catch the trend of your mind 
there, it is this: That on a compensatory basis of percentage allow- 
ance on operating charges and capital charges in competing territory, 



360 RAILWAY MAIL PAY. 

one road would get all of the business providing it had a smaller 
capitalization for the service rendered and its operating costs were 
the same. 

Mr. Wosthington. Yes. That is, it would have a lower cost and 
I presume the department would, for the purpose of economy, give 
the mail to the road showing the lowest cost. 

The Chairman. We thank you very much, Mr. Worthington, for 
presenting your views. 

The Chairman. I insert in the record a copy of a letter which 
I addressed to Mr. Peters, chairman of the committee on railway- 
mail pay, under date of March 13, 1913, as follows: 

March 13, 1913. 
Mr. Ralph Peters, 

Chair man Committee on Railway Mail Pay, 

Pennsylvania Station, Neiv York, N. Y. 
My Dear Sir: In the consideration of the question of railway mail pay, there 
has frequently arisen a question as to the relative rates paid to the railroads 
for transportation of express and of mail matter. It has been frequently asserted 
that the mail rates are much in excess of the express rates. I wish to ask you 
to advise the joint committee how the rates compare, and in what particulars 
and to what extent the service rendered to the Post Office Department differs 
from the service rendered to the express companies. I wish this to include a 
statement, if any, in the amount of responsibility the railroad companies assume 
in base of injury to mail or express or employees. 
Thanking you for your courtesy in the matter, I am, 
Yours, very truly, 

, Chairman. 

The Chairman. I herewith insert in the record a copy of Mr. 
Peters's letter under elate of March 26, 1913, in reply to my letter to 
him under date of March 13 : 

March 26, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail Matter 

and Compensation for the Transportation of Mail, Washington, D. C. 

My Dear Sir: Answering your letter of March 13, I am very glad that you 
give us an opportunity to answer the question in regard to the relative rates 
paid to the railroads for the transportation of express and of mail matter, as 
there seems to be much misunderstanding and misinformation concerning these 
matters. 

The railroads do not participate in the rates made for express. The express 
companies setle with the railroads, as a rule, on a percentage basis, the con- 
tracts providing that the railroads shall have a given percentage of the gross 
revenue from the express business handled over such railroads, the rates made 
by the express companies in no case to be less than from one and a half up to 
two and a half times the first-class freight rates. These percentages vary from 
40 to 56 per cent. I believe the average for the country in 1910 was about 47 
per cent. 

The only way we have had to compare the relative revenues derived by the 
railroads from express and mail matter was that brought out by the investiga- 
tion of the Postmaster General in November, 1909. In our preliminary report, 
which is reproduced in Document No. 1 of the hearings before your joint com- 
mittee, there is a statement, on page 52, showing the average revenue per 1,000 
foot mile, for mail $3.23, for passenger $4.42, and for express $3.86— the total 
average revenue per 1,000 car-foot mile for passenger trains $4.25. 

The Second Assistant Postmaster General has made a report to you as the 
result of the work of the joint committees suggested by you at our hearing in 
February, using the car-foot miles reported by the railroads in November, 1909, 
without any of the changes and modifications made by the Post Office Depart- 
ment, showing the earnings from mail service per 1,000 car-foot mile $3.37, 
and the earnings from all other passenger services $4.34. He does not give 
the express separately. I think, however, it will be found by using the same 



RAILWAY MAIL PAY. 361 

car-foot mileage figures that the revenue per 1,000 car-foot mile for express 
service was very near the figure given in the preliminary report of our com- 
mittee, namely, $3.86 per 1,000 car-foot mile. 

This is the first time that any real comparison has been made of the revenues 
from the two classes of service. 

The revenue from express service as shown in these figures refers strictly 
to the railroad companies' proportion received from the express business under 
their respective contracts. Under these contracts the railroad companies assume 
no responsibility whatever for damage or loss of express goods or for responsi- 
bility of personal injuries to the express employees. The railroad companies 
furnish the cars and haul them, but the cars furnished for the mails are much 
heavier and more expensive. The express traffic is loaded in and loaded out 
by employees of the express companies. Where any special station facilities 
are furnished exclusively for the express companies, the railroads receive addi- 
tional compensation. Where a railroad employee performs any service for the 
express company, like train baggage men, additional compensation is paid 
either to the railroad company or to the employee direct; likewise in the case of 
the station agents. 

In the case of the mail the railroad companies are responsible for the safety 
of the mail clerks and employees while upon the trains or at the stations. 
The railroads furnish the cars for hauling the mail, but receive special pay for 
the special post-office cars of 40 feet or more in leugth, but this pay is included 
in the revenue per car-foot mile given above. Station employees must handle 
the mails to and from trains and to and from all post offices located within 80 
rods of the stations. The railroads and their employees receive no compen- 
sation for such extra service. Postal cars are placed in the terminal stations 
many hours in advance of the departure of trains for the purpose of permit- 
ting the assorting of mails; cars under these conditions have to be lighted 
and heated and kept in good condition for such service. 

l)i soine cases express cars are placed at the express platform in advance 
of the departure of trains. On heavy routes express cars are loaded to their 
capacity, which is very different from the case of the R. P. O. car, where the 
space required for assorting the mails limits the amount of the load that can be 
carried. 

A great many more postal clerks are hauled with the mails than there are 
of messengers carried with the express. 

There is no comparison whatever between the incidental expense assumed by 
the railroads on account of the express at its terminals and local stations and 
that incurred in caring for and handling the mails. The railroads do have an 
expense in checking over the waybills, including the checking of weights and 
rates and tabulations, to ascertain the revenues derived by the express com- 
panies on business handled over each line from which the railroads are to 
receive their proportion under the contracts. This expense, however, is small 
when the aggregate payments made by the express companies are considered. 

From these statements you will see that the railroads get more revenue 
per car-foot mile out of the express business and assume less responsibility 
and risk on account of same than in the case of the mails. 

I might say further that so far the railroads have not assumed any respon- 
sibility whatever for any loss in the mails due to accident or otherwise while 
being handled by the railroads, although attempts are being made by the Post- 
Office Department to place such responsibility upon them. There is great re- 
sponsibility and loss to the railroads in caring for the employees of the Post 
Office Department. 

Very truly, yours, Ralph Peters, Chairman. 

The Chairman. I also desire to insert in the record a copy of my 
letter to the Interstate Commerce Commission under date of March 
20, 1913, and a copy of the reply from the Interstate Commerce 
Commission thereto under date of March 24, 1913, as follows : 

March 20, 1913. 
Interstate Commerce Commission, 

Washington, D. C. 
Gentlemen : It has been suggested that from data on file with your commis- 
sion can be reached an estimate of 25.51 cents per car-mile for the whole coun- 
try as the average car-mile revenue for passenger service, including mail and 
express. If such an estimate is correct, the joint committee will thank you for an 



362 KAIL WAY MAIL PAY. 

official statement in verification of same, or such other estimate as may be found 
upon ascertainment to be correct. 

While recognizing the fact that no segregation has been made of the car 
mileage made in the passenger, mail, and express service, the joint committee 
would like to have an estimate, even though an arbitrary one, of the revenue 
derived from the passenger service per car mile, the mail and express service 
being eliminated therefrom, provided the request is feasible as to compliance 
and will not necessitate any appreciable expenditure of the public fund. 
Yours, very truly, 

Jonathan Bourne, Chairman. 



March 24, 1913. 
Hon. Jonathan Bourne, 

Chairman Joint Committee on Transportation of Mail, 

United States Senate, Washington, D. C. 

Dear Sir : Answering yours of the 20th instant inquiring concerning the aver- 
age car-mile revenue for passenger-train service, I have to say that from compila- 
tions made in the Division of Statistics of this commission from annual reports 
of railway companies for the year ended June 30, 1911, it appears that for what 
we denominate class 1 roads, being those whose operating revenues for the 
year exceeded $1,000,000, the average revenue per car-mile from passenger-train 
service is 25.35 cents ; for class 2 roads, being those having operating revenues 
for the year below $1,000,000 and above $100,000, the corresponding figure is 
28.59 cents; for class 3 roads, being those whose operating revenues for the 
year were less than $100,000, the corresponding figure is 27.45 cents, and for 
all three classes the figure averages at 25.43 cents. 

Owing to the fact that the reports of car mileage and revenues made to this 
commission in the annual reports of common carriers are not segregated with 
sufficient detail to enable us to state the revenue derived from the passenger 
service per car-mile, we are unable to comply with the second request contained 
in your letter. To get any reliable information on that point would require a 
collection of special data from the carriers and the analysis and compilation of 
such data. This would be a matter requiring a considerable amount of time, for 
the reason that the carriers in their accounts do not make segregations which 
would enable them to state from their present records the figures which you 
seek. To show precisely what you desire would require the setting up of 
special records by the carriers for a time sufficient to furnish reliable data. 
Respectfully, 

G. B. McGinty, Secretary. 

Mr. W. W. Sa fiord, general mail and express agent of the Sea- 
board Air Line Railway Co., submitted the following statement 
under oath : 

seaboard air line railway. 

The question has been raised by your committee whether in the matter of 
railway mail pay the Government should be treated as a shipper or whether the 
railroads owe a patriotic duty to the Government which should be considered 
as justifying a lower rate for the transportation of mails than they are en- 
titled to receive from their commercial business. 

A great danger in the consideration of the subject from this point of view 
before a congressional committee is that a precedent may be established in a 
matter affecting 1.78 per cent of our revenue, which might be seized upon by 
other legislative bodies and commissions and applied disadvantageously to us 
as to the other 98.22 per cent of our business. 

If the postal service were a free public service the argument might have 
some force, but it is not. It is a commercial proposition all the way through. 
Rates of postage and charges for other postal service are arranged upon a uni- 
form cost to the public for each unit of service, and there would seem to be no 
moral foundation for a conclusion that the railroads should be called upon to 
adopt an attitude in a purely commercial relation with the Government, the 
principle of which the Government itself does not recognize in its dealings with 
the public. 

The courts have held that the relation of the railroads with the Post Offict 
Department is a relation of contract, and it would, therefore, appear that the 



RAILWAY MAIL PAY. 363 

same conditions should govern the question of pay for the transportation of 
mail on railroads as apply generally to others having contractual relations with 
the Government. 

The first and most important purpose of the postal service is to facilitate 
communication between the people, and the transportaton of the mails on 
railroads is its most valuable and important agency to that end. It has been 
shown that but 21 per cent of the revenue of the Post Office Department is 
expended for that purpose, while 79 per cent is used for conducting the service, 
administration, etc. If the object of this inquiry is to ascertain whether the 
expenses of the Post Office Department can be reduced, would not true economic 
principles suggest the 79 per cent item as the proper and more promising field, 
particularly since by far the greater portion of postal revenue is derived from 
transportation? 

The plan proposed by the Postmaster General in his " Tentative draft of 
proposed law for regulation of railway mail pay " contemplates the ascertain- 
ment annually by him of the cost of the service on each railroad and the ad- 
justment of compensation at a rate per annum equal to the cost to the railroads 
of carrying the mails and 6 per cent of such cost; and, in addition, com- 
panies may (not shall) be allowed such " additional amounts , if any be neces- 
sary, as shall render the whole a proper proportion of a fair and reasonable 
return on the value of the property necessarily employed in connection with the 
mail service," said cost and adjustment of pay to be respectively ascertained 
and made upon a space or car-foot mile basis. The proposed law also provides 
for practically unlimited administrative authority over railroads and terminal 
companies with incidental penalties which smack strongly of confiscation. 

It is scarcely to be believed that Congress will be disposed to so far sur- 
render its prerogatives as to confer upon a single executive officer the deter- 
mination of all the elements which enter into this question, particularly when 
it is realized that if the bill proposed by the Postmaster General were enacted 
into law, it would be impracticable of administration, undoubtedly expensive* 
and would place Congress in the position of making appropriations at the 
will of an individual. There would be no " yardstick." 

If any doubts exist as to the progressive increase in the cost of the postal 
service under the proposed plan, one needs but examine the constantly increas- 
ing cost of railroad operation. Since the data covering the cost of operation 
for the month of November, 1909, was furnished the Postmaster General the 
cost of labor alone to this company has increased over $1,000,000 per annum. 
Does Congress desire to take the responsibility for possible extravagance or 
incompetence on the part of railroads? Does it desire to indorse a principle 
in rate making which would tend to remove all inducement to economical 
management? 

I have stated the proposed law would be impracticable of administration. 
My reason for that statement is that in the estimates for space made by the 
Post Office Department it very naturally and perhaps properly limits its 
demands and authorization to minimum or at best the average requirements 
of the service. Under the present weight and space plan railroad companies 
are compelled to furnish transportation for all mail offered on a given train 
without regard to the space estimated to be necessary for distribution pur- 
poses. Railroads are compelled frequently either to leave baggage behind or 
to put an extra car in their trains on account of overflow mail carried m 
baggage cars on trains carrying postal cars. With the pay based on space 
alone a railroad would be under no obligation to transport any mail beyond 
the capacity of the space specifically authorized, and the quantities of mail 
vary so greatly on different days of the week, and in different directions, that 
it would be practically impossible for the Post Office Department, without 
great extravagance, to provide for maximum requirements which are now 
taken care of by the railroads as occasion requires. 

The possibility of disadvantage to the Government having been shown it is 
only fair to state what may happen to the railroads from a space basis. The 
power to do a thing consciously or unconsciously creates a desire to do it, 
and that inclination influenced by the point of view, prompts one to argue 
himself into the position that it is right to exercise his power in the manner 
nost advantageous to the interest he represents. A particularly zealous or 
economical administration could work great disadvantage to the postal service 
through inadequate allowance for space. We suffer from this now, and it is a 
constant matter of contention between the railroads and the Post Office De- 
partment, as well as between different officers of the department when only 10 



864 RAILWAY MAIL PAY. 

per cent of the railroad mail pay is represented by space, what might we 
not anticipate if all our pay were based on space? 

We come now to the question of cost in which we must also disagree with 
the proposed plan of the Postmaster General. The fact that, space may be 
used in passenger-train service as a factor in the ascertaining of cost does not 
make it a controlling factor in fixing rates; it may be and undoubtedly is 
used incidentally in fixing some rates, particularly for the same commodity 
in different forms, but it is a relic of the early days of transportation on water 
routes when it was an important element in the determination of a boatload, 
and with the building of railroads with improved facilities for transportation 
there has been a growing tendency to get away from it and to use weight alone 
as far as practicable. Our passenger rates are fixed by law and do not neces- 
sarily afford a fair basis of revenue upon which to determine the value of any 
other transportation conducted in passenger trains. 

The suggestion of a level rate of return for all railroads is not a sound 
economical proposition. The transportation of the mails is a universal service 
throughout the country. A given unit of service is of the same value to the 
Government by whomsoever performed, and the Government should be con- 
cerned in securing the service it requires at a fair average rate of compen- 
sation regardless of the cost to the party performiDg it. The value of a rail- 
road depends upon its efficiency and the Government is under no obligation 
to protect a badly located, poorly equipped, or inefficiently managed railroad, 
nor should it place a penalty upon the capital, enterprise, and efficiency em- 
ployed by a well-located, well-equipped, and well-managed railroad by paying 
a high rate to the one and a low rate to the other. It follows from this that 
a level rate of profit, or specified rate of return upon the cost of service, plus 
an allowance for capital or the value of the property employed in the per- 
formance of the service would be unjust to the Government on the one hand 
and to the efficient property on the other. " The laborer is worthy of his 
hire," and if one railroad is able to perform a given unit of service for the 
Government more economically than another, it is entitled to the benefit 
accruing from its efficiency. The Government charges the public the same for 
each similar unit of service it renders, why should it seek to employ a differ- 
ent principle in fixing rates for the transportation of mail on railroads? 

As to what constitutes compensation, I beg to submit the fololwing: 

" Compensation includes as a minimum, cost of service, interest on bonds, 
and legal rate of interest on bona fide investment where property is located." 

Mr. Justice Brewer, in the case of C. & N. W. Ry. Co. v. Dey (35 Fed. Rep., 
866, 879), says: 

" But where the rates prescribed will not pay some compensation to the 
owners, then it is the duty of the courts to interfere, and to protect the com- 
panies from such rates. Compensation implies three things : Payment of cost 
of service, interest on bonds, an'cl then some dividend. The fixed charges are 
the interest on the bonds. This must be paid for otherwise foreclosure would 
follow and the interest of the mortgagor swept out of existence. The property 
of the stockholder can not be destroyed any more than the property of the 
bondholder. Each has a fixed and vested interest, which can not be taken 
away. I know that often the stockholder and the bondholder are regarded 
and spoken of as having but a single interest; but the law recognizes a clear 
distinction. A mortgage on a railroad creates the same rights in mortgagor 
and mortgagee as a mortgage on my homestead. The legislature can not de- 
stroy my property in my homestead simply because it is mortgaged, neither can 
it destroy the stockholders' property because the railroad is mortgaged." 

W. W. Safford, 
General Mail and Express Agent. 

STATEMENT OF MAX OTTO LORENZ. 

The Chairman. Mr. Lorenz, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you please state your full name, residence, 
occupation, and the official position that you hold with the United 
States Government ? 



E AIL WAY MAIL PAY. 365 

Mr. Lorenz. Max Otto Lorenz, associate statistician. Interstate 
Commerce Commission, residing at Washington, D. C. 

The Chairman. You have heard the testimony submitted by Mr. 
Worthington in the hearings to-day as a representative of the South- 
ern Pacific Railway, have you not ? 

Mr. Lorenz. Yes, sir. 

The Chairman. What additional questions do you think could be 
asked of Mr. Worthington in connection with testimony submitted 
by him that would give elucidation on the general subject that we 
have under study now ? 

Mr. Lorenz. There are a number of things that might be discussed. 
I was very much interested in following Mr. Worthington's argument, 
and would like especially to have him elucidate a little further in 
answer to your questions regarding the basis which might be used 
in determining the amount of railway mail pay if the cost of the 
service is not that basis; that is to say, if you do not directly or indi- 
rectly make an apportionment of expenses between passenger and 
freight, and then between passenger proper, express, and mail, so as 
to get an idea of what the proper portion is which the mails should 
bear of the total operating expenses and of capital charges, what 
other basis could a person really get by which you could judge of 
the fairness of the pay either for the service as a whole or on any 
individual road ? 

The Chaieman. I will ask Mr. Worthington if he will answer 
Mr. Lorenz 's inferential question there, and if both he and Mr. Lorenz 
will, in effect, have a debate on this particular subject in order to get 
it into the record and to have the benefit of any new viewpoints that 
may be brought out in such a discussion. 

Mr. Wobthington. I think I have already stated I see no objection 
to testing the adequacy of the mail pay of the country as a whole by 
making an estimate of the expenses, but I think it should not go any 
further than that, for the reason principally that about half of the 
operating expenses and all of the fixed charges have had to be de- 
termined arbitrarily. I would like to ask Mr. Lorenz if he thinks 
there is any one man competent to determine with equal justness to 
all of the railroads of the United States a fair apportionment of those 
expenses to passenger and freight service, and subsequently a fair 
apportionment to mail service, if there is any one man who has that 
ability? 

Mr. Loeenz. No, sir ; I would not trust any one man- with making 
such an apportionment, but I do think that it would be possible to 
arrive at a conclusion as to what is a fair apportionment by having 
some competent body consider the argument for and against each 
basis and determine under all circumstances which is the fairest basis 
to be used. 

Mr. Worthington. Has not the commission now up with some of 
the accounting officers that very question, the apportionment of ex- 
penses between passenger and freight-? 

Mr. Lorenz. It is being discussed with them; yes, sir; and the 
accounting officers have recommended a method of apportioning or 
determining those expenses which are definitely assignable to each 
service, but have made no recommendation as to the common ex- 
penses. 

49396—14 31 



366 KAIL WAY MAIL PAY. 

Mr. Worthington. I have never attended any of the meetings, but 
I have understood that they do not wish to make any recommenda- 
tion as to the common expenses and prefer that the commission shall 
outline the expenses. They are willing to apportion common ex- 
penses on any basis which the commission may outline, but they dis- 
claim any responsibilities themselves for such apportionment. That 
is really the crux of the whole situation. That is the one point that 
must rest on the judgment of some other individual. 

Mr. Lorenz. In other words, how to determine the division of all 
the common expenses is not simply a question of accounting, but a 
question of justice, and that necessarily presumes adjustment by 
some one who is in a more or less judicial position, and I think very 
properly that would have to be made a matter of arbitrary decision, 
in the sense that a jury finally arbitrarily decides a case in view of 
all the facts as to what is right and what is wrong. 

Mr. Worthington. Do you not think it would be difficult to reach 
any basis that would be fair to roads operating under different con- 
ditions in that apportionment? 

Mr. Lorenz. I am not sure but what some of the bases that have 
been used would operate unfairly with respect to different roads, but 
I am not sure but what some basis could be found which might be 
flexible enough to adjust itself. I think, for example, the revenue 
train-mile method, which is so commonly used, perhaps works fairly 
well on some railroad, while at the same time it would not be so on 
others. It might be that some basis which combines various factors 
which represent different conditions or a combination unit of some 
kind might possibly be devised which would be reasonably fair for 
different roads. However, that is a matter of special study. So far 
as the present problem is concerned, I think that you perhaps have 
submitted all that is essential in really saying that as a general guide 
it is possible that a cost determination might be of service. Your 
principal objection, as I understand it, is that an individual deter- 
mination of cost for each road and an inflexible application of that 
cost in determining railway mail pay would be unsatisfactory. 

Mr. Worthington. Yes. That was my personal objection to the 
cost basis. It is the individual application to each railroad. 

The Chairman. Would that be obviated or minimized in any way 
by grouping the roads ? 

Mr. Worthington. It would be minimized, probably. 

The Chairman. Have you any idea as to the number of groups? 
Do you think the 10 groups the Interstate Commerce Commission has 
heretofore used would meet your objections wholly or nearly wholly? 

Mr. Worthington. That would remove a great many of them. 

Mr. Lorenz. Would it be possible to make those groups not geo- 
graphically, but according to operating conditions, such as density of 
traffic, number of revenue train miles per mile of line, for example? 

Mr. Worthington. I do not think it would, for the reason that the 
geographical conditions are the same on parallel lines; as to wages 
they pay their employees where the line with less dense traffic pays 
the same wages in the geographical section and their expenses gen- 
erally run along about the same. If you make it vary with the 
density of traffic, then the roads would be classified in different 
groups, which might compete with each other between two common 



RAILWAY MAIL PAY. 367 

points; one line would be in one group and one line in another be- 
cause it had a different density of traffic. 

The Chairman. You think a geographical grouping would answer 
all purposes and is the simplest way and would be the most equitable 
and efficient way ? 

Mr. Worthington. It is obviously better than individual basis. 

The Chairman. And better than an effort to comply with Mr. 
Lorenz's suggestion here as to grouping based on density of traffic ? 

Mr. Worthington. I think so. 

The Chairman. You think the 10 groups used by the Interstate 
Commerce Commission heretofore would meet most of your ob- 
jections ? 

Mr. Worthington. They would meet the objection to using a cost 
basis for different roads. It seems to me, though, if a plan is to be 
devised of apportioning the expenses by anyone, that that plan ought 
to be discussed with some of the railroad people first before it should 
be put in to see if that plan is objectionable to them; in other words, 
to see if there are some objections which they can raise which are 
good objections. 

The Chairman. Have not the railroads' representatives had every 
possible opportunity of 'appearing before this committee? 

Mr. Worthington. Mr. Lorenz is speaking of some plan that 
might be devised to apportion expenses between passenger and 
freight for this purpose. 

The Chairman. But I assume that the suggestion would cover an 
interchange of ideas between the railroad companies and the govern- 
mental representatives, would it not, Mr. Lorenz ? 

Mr. Lorenz. Yes, sir. 

Mr. Worthington. I think a group basis would be far less objec- 
tionable than a cost basis for each railroad. 

Mr. Lorenz. How would that compare with the present method in 
simplicity of administration? Would it mean that you would have 
one rate for each geographic group ? 

Mr. Worthington. Well, necessarily, if the roads are grouped. 

Mr. Lorenz. Would that not be simpler than the present basis 
where you have to determine a separate rate according to the density 
of the mail route? 

Mr. Worthington. I do not know that it would, because that at 
the present time is done only every four years over a short period of 
time. 

Mr. Lorenz. You ask that it be done annually. On that basis it 
would be simpler. If your request was granted for an annual weigh- 
ing you would every year have to determine the density of each mail 
route and then apply a separate rate to each one. 

Mr. Worthington. Yes. 

Mr. Lorenz. Under the plan of having a cost determination for 
each group, would it not be much simpler, because then you would 
simply have your rate 

Mr. Worthington. It depends on how much accounting we would 
have to do to determine the cost. It depends a great deal on the 
methods specified in getting at this cost. 

Mr. Lorenz. Supposing that were made a part of the regular re- 
ports of the Interstate Commerce Commission, would not the group 



368 KAILWAY MAIL PAY. 

plan be pro tanto simpler than the present method, in that at the 
present time you have the separate rates not only for each railroad, 
but for each mail route? A separate rate is not specified in the 
present law, but the law requires the department to determine first 
the density of each route and then the rate, 

Mr. Worthington. It is a difficult question to answer, whether 
the weighing of the mails is more or less difficult than the detailed 
method of keeping accounts separate between passenger and freight, 
without having any knowledge of how much detail the commission 
would require. If they mean that we would have to start out at the 
fundamentals and separate every item of expense and apportion the 
time then by every man at a station between passenger and freight 
service and go into a great deal of detail, it would mean a great 
deal of labor. 

Mr. Lorenz. I am assuming that labor will be done anyhow, as 
a general accounting practice requires on the part of the commission ? 

Mr. Worthington. If we have to do it anyhow, it would not add 
anything to our work, necessarily. 

Mr. Lorenz. Then so far as the railway-mail pay administration 
is concerned, it would be simpler? 

Mr. Worthington. Yes, if the commission is going to make us 
do this accounting anyhow, as you have qualified your question. I 
would like you to understand that I am not saying that there are not 
objections to this cost basis in itself. The great objection is that 
in any event, all of the operating expenses and fixed charges have to 
be left to the determination of some individual, and the railway- 
mail pay to that extent is really in the hands of that person or that 
commission, whoever it is, that makes this apportionment. 

Mr. Lorenz. But a general apportionment, if made by the Inter- 
state Commerce Commission, or some other competent body, would 
naturally be used, not merely in determining the cost for the purpose 
of determining the railway-mail pay, but would also be used in 
freight-rate cases where cost was important and in passenger-rate 
cases, so that whatever injustice was done in one direction would be 
counterbalanced in the other direction in the other class of cases. 

Mr. Worthington. Well, to a certain extent, yes; because when it 
comes to freight or passenger rate cases cost is only an incidental 
factor. The value of the service is considered there, whereas, as I 
understand, the commission's opinion seems to be as to mail that 
nothing but the cost of the service should be a factor, and the value 
of the service to the Government should not be a factor. 

The Chairman. In that connection, in order that no mistake may 
appear in your testimony, do you refer in your remarks to the Inter- 
state Commerce Commission or do you refer to this committee ? 

Mr. Worthington. Your committee. 

The Chairman. I would not want to put the committee in that 
attitude. I know not what the committee's opinion or impression 
may be. That is only my impression and not a conviction. 

Mr. Worthington. Well, I will modify my remarks to that ex- 
tent — that is, what I have just said. But Senator Bourne gave the 
impression to me to-day that he individually considered that the cost 
of the service was the prime factor as to the amount the Government 
should pay rather than the value of the service to the Government. 
Is my understanding correct, Senator? 



RAILWAY In I. VI L PAY. 369 

The Chairman. Yes. That is my present impression. 

Mr. Worthington. We have always maintained, you know, there 
are a great many factors in our rate cases, not alone the cost of serv- 
ice but value of service to the Government; the value of the com- 
modity and everything else ought to be considered. In other words, 
we might take a railroad plant worth $60,000 a mile and another 
railroad of the same value, and one of them might be performing 
double the service with its plant that the other road is, and I have 
always maintained that that line is entitled to a larger percentage of 
profit, whereas on a cost basis purely the two railroads would be 
allowed the same profit, no matter how much service they happened 
to render, because it would cost them alike. It is the same as Mr. 
Lorenz's proposition — two men running two stores on two corners 
opposite each other, their plant might be worth the same, but one 
man might have three or four times the business the other fellow has, 
and he would think he was entitled to a little more money. 

The Chairman. That is the wholesale and retail principle, is it 
not? 

Mr. Worthington. Exactly. 

The Chairman. Is not your wholesale and retail principle covered 
in the present laws in a sliding scale of compensation based on rates ? 

Mr. Worthington. The present law recognizes that. 

The Chairman. Would it not be equally recognized in the sug- 
gested plan as modified by former Postmaster General Hitchcock 
under the space basis ? 

Mr. Worthington. I do not think so, Senator, because under that 
plan, as I understand it, the railroads would be allowed a certain 
fixed return on their cost, no matter how much they might transport. 
If their service to the Government should increase space, for exam- 
ple, they should be allowed a greater return on their cost above the 
per cent or 4 per cent, no matter if the volume of their business 
should double. Is not that true ? 

The Chairman. Why? They would require double the amount 
of space, and the space would determine the amount that they would 
receive. The basis of computation is revenue on cost and capitaliza- 
tion; the apportionment of that basis is on the service rendered. 
The service rendered is measured according to the space furnished 
and used. 

Mr. Worthington. Plus a fixed allowance on the investment, as I 
understand, in addition to the operating expenses. 

The Chairman. What was your viewpoint, Mr. Lorenz? 

Mr. Lorenz. There are two ways of looking at it. If you take the 
position that a public utility is entitled to the cost of the service 
which it renders, in addition to a reasonable return on capital and 
a provision for surplus, then it seems to me the mere fact that one 
road might be rendering more service because there was a better 
loading per car is not to be considered except in so far as that in- 
creased loading per car causes more expense; to some extent, I sup- 
pose, the denser traffic would cause more expense to each road, and to 
that extent the cost basis would take it into account. But if the Post 
Office Department can obtain better utilization of the cars, that would 
seem to me, from that cost standpoint, a matter of profit or advantage 
to the Post Office Department, and properly so. 



370 RAILWAY MAIL PAY. 

Mr. Worthington. In other words, you think the railroads should 
not be entitled to any of that advantage? 

Mr. Lorenz. I think not, if your purpose is to base your compen- 
sation upon the complete cost, including a provision for surplus, to 
the public utility. 

Mr. Worthington. In other words, if the Government in one of 
our cars should load 25 tons of mail, you do not think the railroad 
should get any more compensation than if that car was loaded with 
only 1 ton of mail? 

Mr. Lorenz. Not except in so far as that increased weight of mail 
required more expense in handling or hauling it. 

Mr. Worthington. But for the transportation of that 25 tons 
you would not allow the railroad any more than you would for a 
single ton on the same car, I suppose? 

Mr. Lorenz. Not except as you can prove that the increased weight 
increased the train expenses, more fuel and more lubricants. It 
takes more fuel. Certainly to that extent the cost basis would pay 
you more for hauling such a car. 

Mr. Worthington. Very little. 

Mr. Lorenz. In other words, it seems to me your objection there 
is not to the cost basis so much as the straight space basis. In other 
words, you yourself suggested in your paper, I think, a comparison 
on the basis of the gross weight of car and ton, and I think from 
one standpoint that would be fairer than a straight space basis, but 
it may be less practicable than the other. 

Mr. Worthington. Under the proposed apportionment of ex- 
penses, which you say the commission may order, would not that ap- 
ply only to the apportionment between freight and passenger serv- 
ice ? Is not that all the commission has in mind. They have not in 
mind making a further apportionment between the different classes 
of passenger service? 

Mr. Lorenz. I, of course, do not know what the commission has 
in mind, whether they will enter upon that policy, but so far as the 
order which they have issued is concerned it is true that relates 
only to freight and passengers, but if they enter upon that policy 
it would be but a slight extension of the general principle and indeed 
would be doubtless desirable to have an apportionment to the various 
parts of the passenger train service. 

Mr. Worthington. In order to make that further apportionment 
to the mail service, would it not be necessary for railroads to keep 
records of space in the trains at all times in order to comply with 
the commission's requirements in applying the expenses of mail 
service, if we have to go further? 

Mr. Lorenz. It would require that much additional accounting 
undoubtedly, either a current record or a record obtained by taking 
the space at a certain date a certain number of times a year, or some- 
thing of that sort. 

Mr. Worthington. In other words, the railroads should, by the 
mere expedient, for example, of lengthening out the size of their 
passenger cars, it would reduce the proportion which they would 
receive for mail, assuming that their mail cars were not of similar 
togth ? 

Mr. Lorenz. That doubtless is one objection to the space basis and 
may not be the fairest basis. 



RAILWAY MAIL PAY. 371 

Mr. Worthington. We have been putting on longer cars. I guess 
we will have to shorten them up to get more pay for mail on the 
space basis. 

The Chairman. In railroad operations, is it not a fact that it is 
desirable to have in your passenger trains cars of a uniform length ? 

Mr. Worthington. That does not make so much difference, Sen- 
ator. The Pullman Co. are getting cars pretty long. 

The Chairman. Do you not build your passenger cars, your mail, 
and your express cars a uniform length ; I mean your new cars ? 

Mr. Worthington. We have different lengths. We have different 
standards. We have a 60-foot baggage car and a 70-foot baggage 
car, and of course the sleepers are around 75 feet now. The dining 
cars and observation cars are about the same length. 

The Chairman. I would like in this connection to ask Mr. Lorenz 
if he thinks the wholesale and retail feature, as provided for in the 
varying compensation based on weight from 200 pounds minimum up 
to 48,000 pounds and excess under existing laws, would be similarly 
taken care of and provided for in the suggested plan of former Post- 
master General Hitchcock? 

Mr. Lorenz. It would be taken account of to a considerable extent; 
that is to say, to the extent that increased density of the traffic lowers 
the cost per car-foot mile or increases the load per car-foot mile at 
the same cost. But I am not convinced that that is a very great 
difficulty. At any rate I should like first to see some statistics re- 
garding the trend in the average loading per postal car or per 
storage car. My impression is the loading per car is not very great 
in the postal service. 

Mr. Worthington. I should not think it would be very great 
unless it would be possible for the department to do away with some 
of the distribution; in other words, to increase the proportion of 
tonnage handled in storage cars. I think, though, as the country is 
growing, judging from the past, we know there has been a large in- 
crease in second-class matter, and it is my impression there is a larger 
percentage in those cars now than formerly; if so, it means the 
weights per car foot are more now than formerly, because that 
weight comes in to be divided by the total car-foot space. So, even 
though there is no real increase in the loads in the postal car, there 
may be an increase in the weight per foot, due to the fact that more 
mail is handled in storage cars. 

Mr. Lorenz. I should like to come back to your suggestion of 
geographic groups rather than groups of density of traffic. Would 
it do justice as between the various railroads in any one group, hav- 
ing in mind, for example, a branch road, a very small road with very 
sparse traffic and a main-line road in that same geographic group 
with a dense traffic? Would not there be an injustice upon any 
uniform payment within that group. 

Mr. Worthington. I should think the injustice, if any, would be 
against the heavy traffic line, if the branch line was to get the same 
pay per car- foot mile. 

Mr. Lorenz. The injustice, however, would exist against some of 
the lines. 

Mr. Worthington. Yes; but I think that would be far less in- 
justice than in the original plan of having different rates for differ- 
ent roads under that plan. The branch line would have to compete 



372 KAIL WAY MAIL PAY. 

with the large system which would have a number of branches, one 
of which branches might parallel this independent branch line and 
which would be sufficient to shut it out altogether from handling all 
mail, because the branch it competes with is part of the large system 
which would have the advantage of the lower cost, figured for that 
system. 

The Chairman. You say, Mr. Worthington, " I should think the 
injustice, if any, would be against the heavy traffic line, if the branch 
line was to get the same pay per car-foot mile." Does the branch 
line get the same pay per car-foot mile under this contemplated plan % 

Mr. Worthington. Under a group plan it would. 

The Chairman. Under the suggested plan? The pay that the 
branch line would receive would be a percentage on the capital cost 
and a percentage of the operating expenses of that particular branch 
line, measured on the car-foot mile of space taken or authorized by 
the department. 

Mr. Worthington. Well, not under the plan of grouping the 
roads, Senator. All the roads in a particular group would be taken 
together, all of their expenses and their fixed charges would be taken 
together and a uniform rate made for that group, as I understand. 
Is not that correct, Mr. Lorenz? 

Mr. Lorenz. The Senator's question applies to the modified plan 
as proposed by the ex-Postmaster General. There, it is true, you 
would take the operating expenses and the capital charges of each 
particular road by itself and my objection would not hold, but what 
we were discussing was that to avoid the difficulty and complexity 
of taking each road by itself, we would take one group of roads in 
a geographic district and find the average cost upon all the roads 
in a district and proceed in the same manner. The question is 
whether that average cost would not be injurious to some roads and 
unduly advantageous to others in that same district. 

The Chairman. The cause of the difference in the value received 
from the money invested in capital in different roads and the differ- 
ence of efficiency of administration and operating costs. Is that it? 

Mr. Lorenz. This would be among the reasons. I had in mind 
especially the difference in traffic density which might effect the 
charges per car-mile, so that if the average for the whole geographic 
group gave you a reasonably low cost per car-foot mile, that might 
be an injustice to that road with sparse traffic which had a high 
cost per car-foot mile in that same district. 

The Chairman. And such injustice does not apply, then, under the 
present method of weight carried? 

Mr. Lorenz. No, sir. The present method of weight is supposed 
to take account of the different density upon each road. 

Mr. Worthington. Is it not a fact now the light-traffic roads get 
less per car-foot mile than the heavy-traffic roads, or do they get 
more ? 

Mr. Lorenz. I think that the present method may, in some cases, 
work out unjustly. 

Mr. Worthington. Would it not be equally unjust, under the prop- 
osition, of having different rates for each road? For 'the small-traffic 
line I pointed out the situation before. If cases where the small- 
traffic line had to compete for mail business with the branch of a 
large system they would be at a disadvantage. Would it not, in that 



BAILWAY MAIL PAY. 373 

case, have to either come down to the low rate of the branch of the 
large system or go without handling the mail, speaking of the little 
road. 

Mr. Lorenz. If the department attempted to make them complete, 
I suppose that is true. 

Mr. Worthington. Is the department liable to give mail to a road 
where the rate was materially higher than to another road between 
the same points? 

Mr. Lorenz. I suppose the larger proportion of the mail would 
go upon a certain mail route, irrespective of the rate. I do not know 
what proportion of the total that would be. 

Mr. Worthington. Do you not foresee a great many difficulties 
and a good deal of accounting in the plan proposed by ex-Postmaster 
General Hitchcock to determine a different rate for each of the 
different roads in the United States on a cost basis ? 

Mr. Lorenz. It would occasion many accounting difficulties, un- 
doubtedly, and possibly might not be expedient unless it could be 
made a part of some general system of accounting so that it would 
be determined more or less automatically each year. 

Mr. Worthington. It seems to me until such time as the com- 
mission does require the railroad to apportion their expenses in this 
manner, that it would impose additional expense on them to do it 
merely for the mail. It may be the commission may decide not to 
ask the railroads to apportion expenses between passenger and freight 
at all. If that is so. I think all expenses would be chargeable, if it is 
done primarily to determine the mail cost, to this bill. 

Mr. Lorenz. A short cut might be justified for some years, but it 
would not be recognized as being the permanent solution. 

Mr. Worthington. I do not think a short cut would be equitable 
to different railroads. If you are going to base the pay of the mail 
on cost, I think the cost ought to be very carefully determined. 

Mr. Lorenz. How, if you -retain the present law, would you do 
justice as between the various railroads? I think it is commonly 
stated that the present law works inequitably as between different 
railroads, that some railroads get more perhaps than they ought and 
others less. 

Mr. Worthington. I think there is a good deal of misunderstand- 
ing on that point, and I think that misunderstanding was added to by 
the figures presented in Document 105, whereas certain roads show- 
ing they are incurring large losses, according to the method of sub- 
dividing expenses between passenger and freight, would produce 
quite a different result. 

Mr. Lorenz. But is it not shown that certain railroads actually 
pay out for the expenses difinitely assigned to the mail service, tak- 
ing the time of employees, and so forth, into consideration more than 
they get in actual revenue? 

Mr. Worthington. No. I never heard of that. I never heard of 
any road presenting a statement of that kind. They may have done 
so. I do not think any road could actually show they had paid out 
more in service to the employees than they got for the mail, unless it 
was a very short line with large terminal services, I do not know of 
any important road that has done that. 

Mr. Lorenz. In order to eliminate that particular difficulty would 
you make a separate consideration of the terminal service ? 



374 RAILWAY MAIL PAY. 

Mr. Worthington. Yes. I think the proposition of the railroads 
that the roads should receive relief for side and terminal handling 
would cover that point. It would cover the cases of the small roads 
which had an enlarged amount of terminal or side delivery. Other- 
wise, I do not see anything particularly inequitable between different 
roads on a present basis of pay. They are all paid on the same basis, 
and I am saying that from the standpoint of a road where operating 
costs are high, as they are on the Southern Pacific. 

Mr. Lorenz. But is it not true that the proportion of storage mail 
and apartment car service is different on different roads ? 

Mr. Worthington. Oh, yes. 

Mr. Lorenz. And would not a straight tonnage payment basis 
work injustice on that account? 

Mr. Worthington. Perhaps that is offset by the present law pro- 
viding for a material reduction in rates per ton-mile as the weight 
increases. The result of that is on TO of the heaviest traffic routes 
the rate per ton-mile is 6 cents, and on 33 of the routes it is 14 cents, 
and the 70 routes are receiving just half the amount of the other 
routes and they are hauling two and one-fifth times the ton mileage. 

Mr. Lorenz. Would you say that was injustice to one group or the 
other group ? 

Mr. Worthington. Well, that is rather a difficult thing to say 
without going into the work done on those 70 groups as compared 
with the work done on the others. 

Mr. Lorenz. In other words, you come back again to the com- 
pensation for the work done on the cost basis before you can tell 
whether an injustice is done to one group or the other group. You 
come back to the work done ? 

Mr. Worthington. You necessarily have to take into consideration 
service rendered; yes. 

Mr. Lorenz. And that has to be measured not by the ton-miles, 
because that is in your computation ? 

Mr. Worthington. The cost basis is not so objectionable in itself, 
but it is objectionable on account of the impracticability of obtaining 
it, so far as I know, in any definite manner, except by estimates for 
the larger part of the expense. If cost was a matter of known de- 
termination, if it was absolute and we knew just what it would cost 
for passenger and mail service, it would be an entirely different 
thing, but we do not know that. 

Mr. Lorenz. Subject to your claim that the railroad ought to get 
the benefit of the economy in loading, even if it did not cost any 
more ? 

Mr. Worthington. That has not any particular connection with 
the cost basis. That is connected with the space basis. The objec- 
tion to the cost basis is it is impracticable, or rather the fact that it is 
a mere guess. It is not any more than a guess. It can not be dis- 
tinguished by anything better than that. 

The Chairman. Must it always necessarily be a guess? 

Mr. Worthington. I think so. 

The Chairman. You think it is absolutely unattainable ? 

Mr. Worthington. It is absolutely a guess, and that is all it is. 
It is a question of how one man guesses as compared with another, 
when you come down to fixed expenses, and how much capital charged 
should be apportioned to the mails. 



RAILWAY MAIL PAY. 375 

Mr. Lorenz. Is the word "guess" a suitable term? Would it not 
be better to say it is a matter of judgment as to the fair measures or 
utilization of common facilities ? For example, suppose we rented an 
office together for $50 a month. There is a joint expense for a com- 
mon facility. We have before us a statement of the number of square 
feet of that office that each of us has used, and if we told a body of 
umpires that we wanted a fair method of dividing that $50 between 
us, and it seemed to them that the floor space, considering that you 
had the same amount of other advantages in the office, was a fair 
measure of division, could you say that that was a guess ? 

Mr. Worthington. I think that is an entirely different proposition. 
You have something to work on in that case. 

Mr. Lorenz. Let us see whether you haven't something to work on 
in the other case. Take for example the rails, the track upon which 
the trains run. There you have a common facility which causes a 
common expense. That track is utilized by passenger and freight 
trains. For a certain distance on each end of a train you may say 
the track is monopolized by the train passing over it. However, the 
amount of monopolization seems to depend on other factors than the 
mere presence of the train, because a train moving rapidly will 
monopolize a given space a less time than a train moving slowty. In 
other words, by presenting to a judicial mind all of the reasons why 
en a given railroad the passenger service gets more utilization, you 
might say, out of that track than the freight service does, could you 
say that the final judgment rendered as to the proper basis of division 
was a mere guess ? 

Mr. Worthington. Would you consider in that case — a proper 
basis — a train-mileage basis a proper one ? 

Mr. Lorenz. I would not attempt here to say what is a proper 
basis, but my point is that after hearing the arguments in favor of 
the various bases, a fair determination of what seemed a fair basis 
would not be in the nature of a mere guess. 

Mr. Worthington. But haven't you formed in your own mind any 
preference or any inclination toward any measure for proportioning 
expenses of that kind ? 

Mr. Lorenz. Not any definite conclusions, although it seems to me 
that the basis which pays some attention to the weight carried and the 
speed with which it is carried would perhaps be not so extreme in the 
one direction as train-miles, or so extreme in the other direction as 
car-miles, and might possibly form the basis for a compromise, but I 
am not prepared to state just what the conclusions should be. It 
seems to me any result we arrive at would not be wholly a guess, but 
it at least could be defended as not being capricious or wholly unfair. 

Mr. Worthington. I think if some local railroad man familiar 
with the conditions on his own railroad, or some one else unbiased who 
was familiar with the conditions on that particular railroad, might 
be able to make a fairer estimate ; but if the duty is given to one man 
or one body of men to fix a basis to be applied to all the railroads of 
the United States, I think you can hardly distinguish it in any other 
term than as a mere guess, because the man making the basis has no 
knowledge whatever of the conditions on the different railroads; he 
possibly has not had any practical railroad experience, and it seems 
to me rather a stupendous proposition to put up to him. A great 
part of the operating expenses represent decay or obsolescence. Only 



376 RAILWAY MAIL PAY. 

a portion of tie renewal is due to crushing out under ^_ wheels and 
rails, and a good part of it is due^o decay materially the same as to 
structures, fencing, and things of that sort. Now, for any man to say 
what basis of apportionment those expenses should be between pas- 
senger and freight, it is hard to conceive of. 

Mr. Lorenz. It is obvious to me neither the passenger nor the 
freight trains cause the decay of the ties. As you say, it is due to 
the weather stress. But do they not utilize those ties while the 
trains are passing over them, and possibly for that portion of the 
expense the train-mile basis would be a fair one. In other words, 
instead of trying to determine the extent to which each one causes 
that expense, try to determine the extent to which each one utilizes 
this. 

Mr. Worthington. This expense aggregates to a considerable 
amount and it may make quite a difference whether you use one 
basis or another, whether you use train mileage or earnings. The 
aggregate of these operating expenses is large. Take, for example, 
the flood damage to the railroads in Ohio. The cost of repairing 
them is going to be from $25,000,000 to $50,000,000, possibly, on all 
of the railroads. How would you apportion work of that sort be- 
tween passenger and freight? 

Mr. Lorenz. That is simpty an illustration of expense caused by 
weather stress, we will say, and would be apportioned on a basis 
measuring the use which each class of service made of this track 
which would have to be repaired. 

Mr. Worthington. Now, consider return on investment, those ex- 
penses are about 50 per cent as large as the entire operating expenses 
and as to that large proportion of the expenses which would have 
to be used in making the mail rate there is absolutely no definite 
basis of apportionment. It is altogether a matter of judgment. 

Mr. Lorenz. I think the capital charges are not quite so difficult 
in theory as frequently represented. If you can apportion the main- 
tenance of way and maintenance of the different charges between 
the two services in any satisfactory way at all the interest on the 
capital invested in the property maintained might be apportioned 
in the same ratio. In other words, you simply apportion capital 
charges in the same manner in which you apportion maintenance 
charges. 

Mr. Worthington. Is not that a mere approximation? 

Mr. Lorenz. Doubtless. 

Mr. Worthington. Some one else might come along who had au- 
thority and apportion them on a train-mile basis or on a mainte- 
nance basis. 

Mr. Lorenz. Of course these different bases, as I say, have to be 
presented and defended. 

Mr. Worthington. In other words, I think you have to admit it 
would be within the power of the individual or the commission who 
fixes the mail pay on this basis to change that from 10 or 20 per cent 
by specifying changes in the method of apportioning expenses. I 
thing that is so. 

Mr. Lorenz. I think it doubtless is true that if the body which is 
important enough and which has authority enough to determine 
the basis in the first instance, believed that the new basis was better, 



RAILWAY MAIL PAY. 377 

why then the whole matter should be so decided and it would be 
entirely proper. 

Mr. Worthington. That is our real objection to the cost basis. 
There is too much a matter of approximation. 

The Chairman. Too much personal equation. 

Mr. Worthington. Too much altogether. 

The Chairman. The discussion between you gentlemen seems to 
be whether it will be an approximation or a guess. 

It is now time for adjournment and we will meet again to-morrow 
morning at 10.30 o'clock. 

Thereupon, at 5.30 o'clock p. m., the hearing was adjourned until 
10.30 o'clock a. m, Friday, March 28, 1913. 



FRIDAY, MARCH 28, 1913. 

Committee on Second-Class Mail Matter, 

Washington, D. C. 
The hearing was resumed, according to adjournment, at 10.30 
o'clock a. m. 

Present: Senator Jonathan Bourne, jr. (chairman), and Senator 
John W. Weeks. 

The Chairman. I had expected that General Stewart and Mr. Mc- 
Bride, as representing the Post Office Department, would be present 
at both the hearings held yesterday and to-day, but because of the 
awful catastrophe of floods and tornadoes in the Middle West it was 
impossible for them to leave their office because of the duties devolved 
upon them in endeavoring to handle the mail or route mail in accord- 
ance with the changed conditions incident to the catastrophe. The 
committee realizes the desirability of having representatives of all 
parties at interest present at the hearings of this kind, and will fur- 
nish the departmental representatives later an opportunity of giving 
comments upon testimony submitted yesterday and testimony to be 
submitted to-day by representatives of the railroads and Mr. Lorenz 
as associate statistician for the Interstate Commerce Commission. 

For the purpose of expediting the hearing and getting a better 
interchange of ideas by initiating a running debate between the 
parties at interest here, I suggest and will request you gentlemen who 
wish to express your views in the studj^ to-day to be sworn. 

Thereupon the following were duly sworn by the chairman: Mr. 
Ralph Peters, chairman of the railway mail committee; Mr. V. J. 
Bradley, general supervisor of mail traffic of the Pennsylvania Rail- 
road system; Mr. W. W. Safford, general mail and express agent, 
Seaboard Air Line Railway; Mr. Russell H. Snead, manager of ex- 
press traffic of the Chesapeake & Ohio Railway Co. 

The Chairman. Gentlemen, I will read a memorandum in the 
nature of a suggestion submitted to me by Mr. Lorenz, the associate 
statistician of the Interstate Commerce Commission, presenting views 
or thought for consideration, and I would like to take them up for 
discussion. 



378 KAILWAY MAIL PAY. 

POSSIBLE PLAN FOR RAILWAY MAIL PAY LEGISLATION. 

1. It is inexpedient to have the Post Office Department determine the cost and 
apply that cost to each case, because that might do injustice in many cases 
where there is something peculiar or abnormal about the average cost. The 
cost results should have weight, but not in an inflexible way. 

2. It is at present inexpedient to turn the whole matter over to the Interstate 
Commerce Commission because its annual report form has not yet been suitably 
developed. 

3. From the compilation of cost data by the Post Office Department, as given 
in Document 105 and from a comparison of car-mile earnings, the committee 
may form a judgment that the railways are underpaid and about how much 
additional they should receive. 

4. From the preceding a judgment can be formed as to the fair amount which, 
on an average, for the country as a whole, a car-foot mile should earn. 

5. The committee then could prepare a table showing for each of the 795 
roads for which the Post Office has contracts such facts as the following : The 
passenger-train density, mail density, passenger-train car-mile revenue, cost as 
determined by the Post Office Department, etc. 

6. Then they could say and actually state in the law what would be a fair 
rate to pay per car-foot mile for each of these roads, having taken into account 
the factors mentioned under paragraph 5. The roads could be given a chance 
to point out injustices, as could also the Post Office Department. 

7. This rate is to remain in force five years. 

8. The Interstate Commerce Commission shall be directed to modify its annual 
report form so as to yield the best possible information regarding the cost of 
carrying the mails. 

9. As soon as practicable the commission shall report to Congress a compari- 
son of the rates prescribed in the law with the cost as determined from the 
improved annual report form. 

Those are concrete suggestions emanating from an individual and 
I think this a very valuable way of proceeding in this study, of not 
making criticisms but making suggestions as they occur to the differ- 
ent individuals interested in the subject and then taking them up and 
discussing them either in informal hearings or in a formal hearing 
like the present. This, as I understand, in no way represents the 
opinion or views of the Interstate Commerce Commission but repre- 
sents ideas that have come to Mr. Lorenz in a few weeks' study and 
close attention which he has given this subject. Mr. Lorenz has been 
in conference with the committee nearly every day and with the 
representatives of the Post Office Department and with some of the 
representatives of the railway mail-pay committee. Taking these nine 
suggestions, Mr. Worthington, and looking them over, what comments 
would you have to make regarding each one ? 

Mr. Worthington. Well, I think without doubt Mr. Lorenz in 
preparing these suggestions has aimed to be fair, but I think there is 
a very serious objection to the third one. 

The Chairman. Let us take them up seriatim. What do you say 
of suggestion No. 1? 

Mr. Worthington. I think that is correct; that it is inexpedient 
vto have the Post Office Department determine the cost. 

The Chairman. You concur in that? 

Mr. Worthington. I concur as to the first suggestion. The 
second one, if the commission is to take into consideration the mat- 
ter of cost, I would very much prefer that they would consider a 
compilation made by authority of the Interstate Commerce Com- 
mission rather than one made by the Postmaster General, which 
can hardly be regarded except as biased, in my opinion. 



KAIL WAY MAIL PAY. 379 

The Chairman. By the " commission " you mean the joint con- 
gressional committee? 

Mr. Worthington. The joint congressional commission; yes, sir. 

As to the third suggestion, I think it would be unfair to the rail- 
roads for this commission to reach their conclusion as to the rate 
of compensation for mails from the evidence contained in Docu- 
ment 105. I do not see any reason why they should give any greater 
weight to that separation of expenses, as to freight, passenger, and 
mail, than they should to that made by the railroads. In other 
words, this means that they shall give no consideration at all to 
the figures considered by the railroad. 

Mr. Lorenz. Perhaps you misunderstood me there. I mean from 
the data contained in Document 105, rather than necessarily the 
interpretation put upon this data by the Post Office Department. 

Mr. Worthington. It says: 

From the compilation of cost data from the Post Office Department as given 
in Document 105. 

Mr. Lorenz. I did not state just what I meant. I assumed that 
the interpretations put upon that data would be subject to argument. 

Mr. Worthington. I think the cost data in Document 105 is so 
wholly unreliable it can not be used in fixing mail rates, and I think 
that has been demonstrated by the evidence we have put in. 

Mr. Lorenz. Perhaps the Post Office Department would welcome 
that view, inasmuch as that document seems to demonstrate the fact 
that the railways are underpaid. 

Mr. Worthington. I do not think this commission ought to be 
guided entirely by the Post Office Department. 

The Chairman. In that connection, taking the whole of the nine 
suggestions made there by Mr. Lorenz, such impression as you have 
indicated was not left on my mind at all. On the contrary, as Mr. 
Lorenz has stated, his idea was simply to take the information which 
was submitted by the railroad companies as presented, in part at 
least, in Document 105. 

Mr. Worthington. If Mr. Lorenz would amend his suggestion 
by including in the consideration the cost data submitted by the 
railroads, I should think it would be all right, and not as amended 
by the Post Office Department. 

Mr. Lorenz. Certainly ; that would be the idea. 

Mr. Peters. If Mr. Lorenz would add one other section there as 
helping you in the study of this question, the rule adopted by the 
Post, Office Department in fixing the allotment of space on the 
trains 

Mr. Worthington. I think that is very important. 

Mr. Peters. We differ in our conclusions on the information sub- 
mitted in Document 105, because we did not know the method 
adopted by them in assorting that space after we had reported it. 
We allotted the space to the best of our knowledge and belief based 
on the facts. 

The Chairman. Based on your experience and according to the 
custom usually used in your operation. 

Mr. Peters. Our observation of how the mails were handled. 
When that space went in the department took hard and fast rules, 
were allowing us to have only a 40-foot car, yet they were using a 



380 EAILWAY MAIL PAY. 

60-foot car and they were paying for 40, 50, or 60. We counted in 
the entire size of the car. To make any sort of comparison we 
should have the rules that govern them or must have a statement of 
the space that they are allowed for each of the routes. Then we 
can make a comparison between the space that they allow, how they 
got their space in comparison with the space that we counted. 

Mr. Lorenz. Undoubtedly those different interpretations should be 
considered and not be ignored by simply taking the result of the 
Post Office Department. I agree with you thoroughly. 

Mr. Peters. I think that suggestion ought to go in as one of the 
vital features in this discussion. 

Mr. Snead. There is one thing that occurs to me, and that is, 
Document 105 was the first compilation of the Post Office Depart- 
ment. It was also the first report rendered by the railroads under 
the particular forms furnished by the department and I never saw 
a change yet in which the first reports were of any particular value. 
I would not base any conclusions upon the first reports that were 
rendered by anybody. They are unfamiliar with the forms, every- 
one does not construe the construction alike, and as you no doubt 
know by your own experience it is not the proper way. When I 
was with the commission, the first reports we received for almost 
any class of carriage were totally worthless for the purpose of com- 
pilation. The post-office employees themselves would differ about it. 
It took some ruling to settle those things and undoubtedly the same 
question came up in the carriers' office here, and no representative 
would construe instruction on any form in one way, and would fill 
it out accordingly. Another would construe it in possibly an en- 
tirely different manner. This is a vital matter, and I do not think 
any conclusion based upon the methods developed in this one docu- 
ment would be very good for anybody. 

Mr. Worthington. Is it not a fact that since November, 1909, 
there have been further reductions in mail pay on account of the 
divisor in some of the routes. In other words, they were not in effect 
on all of the railroads at the time, November, 1909, so that to-day 
the mail pay is really less per car-foot mile than is shown in that 
document. 

Mr. Snead. Because other roads in these sections are coming in 
under the divisor law. 

Mr. Worthington. So it really ought to be essential to make a new 
compilation up to the present time. The E. P. O. car pay has been 
decreased 25 per cent on our lines within the last year. 

Mr. Safford. The railroads are not able, for a number of reasons, 
to withdraw those cars. The department cuts out the space and the 
allowance for space, but we will have to operate the car because we 
are not able to take it out of the train at the point where they cut 
off our pay. For instance, they are operating 70-foot cars from 
Washington to Jacksonville. 

The Chairman. On the Seaboard Air Line ? 

Mr. Safford. On the Seaboard Air Line ; and we only get pay for 
those cars to Hamlet. In other words, we are operating those cars 
over our own track 640 miles, approximately, and we are getting pay 
for them for only 258 miles. 

The Chairman. The reason being what? 



RAILWAY MAIL PAY. 381 

Mr. S afford. The Postmaster General determined in his judgment 
what was necessary to pay for that car space, and decided that the 
service could be performed in a 30-foot car south of Hamlet. As a 
matter of fact, we could not withdraw the car, so they are still get- 
ting the space in the service from us and our space stops for 384 miles 
this side of the operating run of the car. 

The Chairman. You operate what distance? 

Mr. Safford. Six hundred and forty-odd miles. 

The Chairman. You get pay for how many miles? 

Mr. Safford. Two hundred and fifty-eight ; and for operating rea- 
sons it is absolutely impossible for us to withdraw that car at the end 
of the 258 miles. 

The Chairman. Do you carry mail all of the 640 miles ? 

Mr. Safford. The whole way — mail and clerks. 

The Chairman. And you only receive pay for carrying the mail 
258 miles? 

Mr. Safford. That is all. 

The Chairman. The reason being what, as presented by the depart- 
ment ? 

Mr. Safford. They could perform the necessary distribution for 
the last 384 miles of this route in a 30-foot apartment car. 

The Chairman. But they do perform the necessary distributions 
for the whole 640 miles in the car that you furnish ? 

Mr. Safford. Absolutely; yes, sir. 

The Chairman. They call for a car for 258 miles of the size you 
furnish them? 

Mr. Safford. We furnish them 10 feet more than they ask for. 

The Chairman. What do they ask for? 

Mr. Safford. Sixty feet. That is the maximum authorization, the 
maximum length of car provided for in the law, at the present. 

The Chairman. They ask for a 60-foot car for 258 miles? 

Mr. Safford. Yes, sir. 

The Chairman. And for the remaining 384 miles they pay for 
only 30 feet? 

Mr. Safford. That is all they say they need for the purpose of their 
distribution. At the same time it would be impossible for them to 
transmit the mail in the 30-foot car. They can not carry their work- 
ing mail for local delivery in a 30-foot car. 

The Chairman. That is for the 384 miles for which they only ask 
for 30 feet? 

Mr. Safford. Yes, sir. 

The Chairman. You say if it were possible to transfer at the end 
of 258 miles for which they call for a 60-foot car, the mail remaining 
in that car at the end of 258 miles, into a 30-foot car, that 30-foot 
car would not contain the mail thus transferred and enable the postal 
department to work the mail on the 384 miles remaining of the 640- 
mile route. 

Mr. Safford. Absolutely not, in my judgment, after careful inspec- 
tion of the circumstances. 

The Chairman. Have you presented that view to the Post Office 
Department ? 

Mr. Safford. Yes, sir. 

The Chairman. What reply have you received? 

49396—14 32 



382 RAILWAY MAIL PAY. 

Mr. Safford. There has not been any reply. As I understand, the 
two division superintendents are riding up and down the road to 
find out whether or not the conditions can be taken care of under the 
present authorization. 

Mr. Peters. Senator, Mr. Albright in his testimony called atten- 
tion to pretty nearly the same situation on the Coast Line where they 
were handling mail into Jacksonville they have to run those cars 
through from Washington to Jacksonville, but the pay for the car 
ceases several hundred miles «ast of Jacksonville. It ceases, I think, 
at Fayetteville, N. C. The department ruled that mail should be 
handled in a 30-foot car. To stop those trains in the middle of the 
run, cut out the postal car, substitute an apartment car and transfer 
mail means a great delay and at the same time they would not have 
a car that would accommodate the mails. That was the result of an 
overzealous effort to reduce the expenses of the department, and I 
think they realized they carried it too far, and I think those are 
things that they will correct. I have seen a statement to the effect 
that on the Chesapeake & Ohio there are several rulings where a 
through car from Washington to Cincinnati is rated as a 60-foot 
car on one end of the line and a 40- foot car on the other end of the 
line and a 30-foot car on the other end, yet the same car runs through. 

The Chairman. All of you gentlemen representing the railroad 
companies, I assume, must concede that the departmental representa- 
tive has got to be the individual who will determine the amount of 
space that the Government requires to transport the mail, and that 
the Government should only pay for such service as is requested by 
the governmental representatives. I assume from the testimony that 
we have had that it is your contention that the facilities that the 
railroad company itself possesses should be a factor in considering 
the compensation received? 

Mr. Peters. And in the facilities that we originally furnish at the 
request of the Government and subsequently curtailed by the Govern- 
ment without any ability on the part of the railroad to curtail it. 

The Chairman. Would you hold, if the Government had made a 
requisition on a railroad for cars under the present or any other 
modified system, that the Government would be bound, or should be 
bound, either legally or ethically, to continue rendering compensation 
to the railroads for those cars even after they were not used by the 
Government in the transportation of mails because of a changed 
condition ? 

Mr. Peters. Oh, no. 

Mr. Worthington. I think in practice the volume of mail is gen- 
erally increasing all the time rather than decreasing, and after a 
car has once been provided at the request of the Government on a 
route the volume of mail in that route as a rule does not diminish, 
and if the Government owned those cars themselves and the rail- 
roads ran them it is not very likely the Government would cast them 
aside and build new cars for the purpose of cutting down the space, 
say, 10 feet. 

The Chairman. No. If the Government owned the cars they 
would simply transfer them to the other routes to which the mail is 
diverted, but if the railroad owned the cars, as they do to-day, and 
the Government pays them a compensation for the use of them, you 
mean that the Government should continue that compensation, 



■RAILWAY MAIL PAY. 383 

assuming that the life of the car, as I understood you to state in 
your testimony of yesterday, was practically 30 years or a little over, 
if the Government only used those cars 10 years, that they should 
continue to pay for the whole 30 years ? 

Mr. Worthington. Not at all. But I think they should be han- 
dled within reasonable limits. There should not be an arbitrary 
10 feet of space cut off of that car pay when there is not any change 
of density on the route after the car has once been requested, but I 
think in most cases that has been done. It has not been due to any 
diversion of traffic from one route to the other. 

The Chairman. Suppose a railroad discontinued the fast-mail 
trains and because of that discontinuance there is a large amount 
of mail matter that has to be taken care of by other roads, and that 
mail is diverted to the other roads. There is a change in your density 
of traffic. 

Mr. Worthington. I think you are entirely right, but that is a 
different condition. 

The Chairman. These conditions are liable to be changed. You 
just take the risk on the assumption that the mail is going to steadily 
increase and you believe that the efficiency of your service will result 
in the continuance of your getting your portion of the mail and your 
proportion of the accumulation incident to the development of the 
country. Now, the Government should not pay that. That is a 
risk that you take in your business. That is a risk that the indi- 
vidual management takes and there should be no compensation for 
that from the Government. 

Mr. Peters. That is very true, but there is no pay allowed for 
apartment cars, and in the effort to bring about economy they 
order in a 30-foot apartment car that they do not pay for, which 
results in the railroad having to continue the 60-foot car and count 
it as a 30-foot car and get no pay for it. 

The Chairman. Then, without any reflection on any individual 
representative of the Government, I assume Mr. Safford's concrete 
illustration here on the Seaboard Air Line brings him to the conclu- 
sion of the possibility of a governmental representative taking ad- 
vantage of a situation in the interest of economy of the management 
of the department under his administration. 

Mr. Peters. Which should always be done. 

The Chairman. With no recourse on the part of the railroads. 

Mr. Peters. The department should always take advantage of 
every opportunity to reach economy, but they should have due re- 
gard to the service and to what is just to the other party to the 
contract. Now, it is impossible to stop these through trains, shift 
our cars, substitute others, and transfer the mail and not cause a 
great delay. If only a 30-foot car is needed on a part of the line, 
the Government should pay for a 30-foot car, but if they need a 60- 
foot car on the other part of the run they should pay for the 60-foot 
car and let the car go then on the continuous run. 

The Chairman. Now, in that connection, the relief which you 
gentlemen have practically unanimously claimed you are entitled to 
is compensation for apartment cars. How would such legislation 
cure the concrete illustration Mr. Safford has mentioned? 

Mr. Safford. We would have a very distinct remedial influence. 



384 RAILWAY MAIL PAY. 

The Chairman. Would you operate your 30-foot car? 

Mr. Safford. I would have to. 

The Chairman. Sixty feet of which was required for 258 miles 
and only 30 feet, according to the department's estimate, required 
for 348 miles. You would get the compensation for your 30 feet 
for 384 miles and your compensation for the 60 feet for the 258 miles, 
but you would be operating your 70-foot car for the whole of the 
640 miles. Now, where does your relief come, other than getting 
compensation for the 30 feet for 384 miles? 

Mr. Safford. There would be just that much inclination to dis- 
continue or to change the pay ; that is to say, if they knew that they 
had to pay for 30 feet anyhow, there would probably be less inclina- 
tion to discontinue this 60-foot authorization. Now, Senator, I would 
like to put in the record, then, there is no difference of opinion, in 
my mind, in regard to this thing with regard to the department. 
I do not want to appear in any sense antagonistic to a proper ad- 
ministration of the Railway Mail Service, for we are interested in that ; 
that is a partnership business, and, after all, it is not solely a ques- 
tion between the railroads and the Post Office Department, but it is 
the larger question which you represent — the service that is ren- 
dered to the people — and anything that impairs our schedule or im- 
pairs the efficiency of the mail service defeats the primary purpose 
for which the post office was provided in the Constitution. The 
service for the people is the primary object of the Post Office Depart- 
ment — the intercommunication. I do not believe that the Post Office 
Department should pay for car space under the present law for any 
greater length of mileage than their requirements demand. If they 
can on this last 384 miles of service give the people the service they 
are entitled to and conduct their operations in the 30 feet of space, I 
would not find any fault. It is not the question simply of operating 
with us. The department should not pay for any more service than 
the proper operation of the postal service requires. 

The Chairman. Then, your sole contention, under the concrete 
illustration you have given us, is that you should receive compensa- 
tion for the 30 feet for the sorting and distribution of the mail for 
which, under the present law, you receive no compensation ? 

Mr. Safford. Not entirely; because if they require more than 30 
feet they ought to pay for it. I would not make the contention in 
this case or any other unless I felt satisfied that the requirements 
of the service demanded it. 

The Chairman. But the departmental representatives themselves 
have to determine first the service required, and the responsibility is 
with them. 

Mr. Safford. Yes, sir ; but the loss is with us. 

The Chairman. The loss would not be with you if they used more 
than the 30 feet. If you had a 30-foot car to put on there, and it 
was found that they did not take and work the mail or could not 
carry the mail in that 30-foot car, then the responsibility would be 
with them, would it not? 

Mr. Safford. Yes. 

The Chairman. And they would have to ask for more space. The 
fact that you have not a 30-foot car in your equipment to make that 
exchange at the end of the 238 miles, for which they call for 60 feet, 
is not a reason why the Government should pay for that. 



KAILWAY MAIL PAY. 885 

Mr. Safford. We have a 30-foot car. 

The Chairman. Why do you not put it on? 

Mr. Safford. Because we can not do it without destroying our 
schedule, because it would involve a delay of possibly from 45 min- 
utes to one hour and a half to make the transfer. They transfer at 
this point as high as 20,000 pounds of mail. 

The Chairman. You have the election, then, of that transfer. You 
decide that because of your other service it would be impracticable 
or undesirable for you to make that transfer. It is you who deter- 
mines that and not the department. Why should the department 
pay for it, or, rather, the Government? 

Mr. Safford. I do not contend that they should pay for it unless 
they need it or unless they use it, but unless we made that transfer 
we would operate the whole car. If we put a 30-foot apartment car 
in there we would have to use the baggage end of it to carry storage 
mail and the apartment car end of it to work the mail and I doubt 
very much whether it would work. But here is the point: The mail 
pay represents approximately 8 per cent of our passenger train 
revenue. Now, we have to resort to inconvenience and it would ser- 
iously impair 92 per cent of the passenger train service in order to 
take care of a burdensome operating proposition connected with the 
8 per cent. 

The Chairman. Consequently you elect to lose ,the earning power 
of the 30 or 40 feet of space on which you receive no return because 
you do not want to inconvenience 92 per cent of your business. 

Mr. Safford. We have to. It is practically a compulsory proposi- 
tion. 

The Chairman. But it is elective with you ? 

Mr. Safford. We do not consider that we have a choice. We have 
to serve the public. 

The Chairman. But you take the choice. You choose to take and 
run that 70-foot car, for which you receive compensation for only 60 
feet a portion of the way and 30 feet for the balance of the way and 
your balance for the 30 feet is simply the railway mail pay that you 
receive for the weight carried in that 30 feet without any E. P. O. 
car pay because of the present law. That is true ? 

Mr. Safford. That is true, but we do not feel that we have any 
choice. That is just the condition. 

The Chairman. You do have the choice because you say — pardon 
me, for I do not want to contradict you — you have a 30-foot car but 
you do not choose to make the transfer because you do not want to 
delay or change your time schedule 45 minutes. 

Mr. Safford. From our point of view, Senator, it is simply an 
operating proposition, and we consequently are forced to the con- 
tinued operation of that car, and I want to repeat that I would not 
raise the question now if I believed that the service could be properly 
conducted, if we could conduct our operations consistently with the 
Post Office Department's authorization of space. 

The Chairman. Do you believe that the Government should pay 
for the additional cost of all service in the delay incident or result- 
ing from stopping the train to put on or take off mail, from sloAving 
down the train in order to take the mail from the mail cranes along 
the route? Do vou think those factors should be taken into con- 



386 EAILWAY MAIL PAY. 

sideration in the determination as to the rates that shall be paid the 
transportation companies handling mail? 

Mr. Safford. I think any difficulty of operation or impairment of 
service incident to the conduct of the mail service ought to be given 
due consideration in fixing any rate of mail pay. 

The Chairman. But there should not be a specific pay because of 
the interference with the service; you should not say that the inter- 
ference with the service should be considered in making up what the 
general pay shall be and the factors in that as to the liberality, if you 
please, or justice from your viewpoint, that the Government arbi- 
trarily within certain limitations fixes your compensation? 

Mr. Safford. I think so, sir, and I think the variations are so great 
that it would be impossible for anybody to anticipate all of them. 
I think it should be given general consideration. 

Mr. Worthington. I would like to ask Mr. Safford if it is not a* 
ver}^ important element in that question whether if a delay of an 
hour to the mail is an important consideration and one that would 
impair the service to the public to that extent ? 

Mr. Safford. Certainty. It impairs connection and probably 
would, in some instances, result in the loss of a whole business day to 
the public. 

Mr. Worthington. In other words, your mails would arrive at 
destination that much later ? 

Mr. Safford. Yes ; and possibly not make connections. 

Mr. Worthington. That is worth something to the department ? 

Mr. Safford. It is worth a great deal to the department. 

The Chairman. But it is wholly intangible. 

Mr. Worthington. The point is rather lost sight of in that since 
November, 1909, when the department prescribed these statistics, 
there had been quite a material reduction in the railway mail pay, due 
to the fact that the divisor was not in effect all over the country in 
November, 1909. The divisor, as you know, made quite a difference 
in rates per car-foot. 

The Chairman. Because the weighing had not taken place. 

Mr. Worthington. Had not taken effect all over the country. 

The Chairman. The question of the divisor of 7, instead of 6, was 
in effect 

Mr. Worthington. It took four years to get it in, and it seems to 
me we ought to have statistics up to date or revise these statistics on 
the basis of the new divisor. It makes quite a difference in the earn- 
ings per car-foot-mile for mail. 

Mr. Safford. There is another factor — the factor of cost. The 
cost of labor alone has been increased greatly. 

The Chairman. Those facts were clearly brought out by Mr. 
Worthington yesterday in submitting the cost on behalf of the South- 
ern Pacific. 

Mr. Peters. On the Seaboard Air Line alone their wages have in- 
creased a million dollars a year, and it is practically on the same 
ratio with every railroad. There it would be a difficult matter to 
get a correct conclusion from the figures contained in Document 105. 
That is why I suggested once before, even though it cost a lot of 
money to make other compilations of the cost of the figures, in the 
light of the experience we have had in the past, we should take it 
over again. I do not think the railroads would object. They want 



RAILWAY MAIL PAY. 387 

to get at the actual facts, and the compilations could be under the 
supervision of Mr. Lorenz or under the supervision of the Interstate 
Commerce Commission. 

The Chairman. I doubt if the Government would be justified in 
going to an expenditure of $20,000, even if the railroads then were 
willing to go to an expenditure of a quarter of a million dollars to 
get another month's compilation or computation of information and 
data. I do not see where that additional information would be 
worth that much to the Government in elucidating this study. What 
do you think of that particular phase, Mr. Lorenz ? 

Mr. Lorenz. I think that all attainable information along this line 
would be of assistance. 

The Chairman. Answer, if you will, kindly, specifically that ques- 
tion, whether you think the Government, assuming that the railroads 
were willing to go to an expense of a quarter of a million dollars to 
collate more information and data for another month, now would be 
justified in going to an expenditure of $20,000 for the compilation and 
tabulation of that data when received. Is that going to furnish the 
key to this problem? 

Mr. Lorenz. I think it would not furnish the key. It would help 
solely on the single question of whether the railroads were overpaid 
or underpaid. It would not solve the problem of the manner in which 
they are to be paid. 

The Chairman. You say it would help. It would simply help this 
way, to my mind: In getting the relative percentage of revenue as 
between mail pay and the passenger pa}^. It would not elucidate in 
any manner the problem as to whether the railroads were entitled to 
the same or less pay for mail than they are for passenger service. 

Mr. Lorenz. In addition to what you say, it would elucidate the 
question of whether they were getting more than it cost them. 

The Chairman. Would it, if they have not got the accounts and 
everything to determine what it is costing them — and all the evidence 
submitted to the committee from every source has been the fact that 
they do not know what the cost is. I think it was pretty generally 
agreed, if I correctly understand the various opinions, it was abso- 
lutely impossible to ever obtain knowledge actually as to what the 
cost is. 

Mr. Lorenz. I do not agree that it is impossible to obtain the actual 
knowledge. I would say that it was impossible to obtain a specific 
minute determination, but that it would be possible to state that the 
cost is between certain limits. 

Mr. Peters. An approximate fair estimate of the cost can be ob- 
tained by keeping the record and compiling the cost for a month. It 
would be the cost for that month and it would give you a fairly ac- 
curate approximation on which to base conclusions. A month is only 
an indication, but a month this year would be entirely different from 
what a month was in 1909, conditions having changed very mate- 
rially since then. 

Mr. Worthington. As I remember the ratio of operating expense 
in 1909, it was quite low, and now it is quite high. That would make 
a difference on the net earnings. 

Mr. Lorenz. It is certainly dangerous to base conclusions on the 
result of one month. That is the reason that I have suggested that 
before, that any final and authoritative conclusion based upon cost. 



388 RAILWAY MAIL PAY. 

that such cost data be obtained by annual compilations obtained 
according to fixed rules and well thrashed out rules. In other words, 
that at the present time it perhaps is inexpedient to give too much 
weight to such cost calculations. 

Mr. Worthington. Do you think the commission, from the data 
furnished in November, 1909, could fix rates based on cost which 
would be fair if applied to present conditions ? 

The Chairman. By " commission " you mean the congressional 
commission or the Interstate Commerce Commission? 

Mr. Worthington. The congressional commission. 

Mr. Lorenz. I do not think they could fix them by taking into 
account solely those cost results, but the information which the de- 
partment has might be of use and might be considered along with 
other questions of fact regarding each railroad. 

Mr. Worthington. In other words, they could not comply with 
the requirements of the last suggestion to base the rates on cost, plus 
6 per cent with interest on investment, without first obtaining addi- 
tional data as to what the present costs are. Is that the idea ? They 
have not the data available at the present time to do that. 

Senator Weeks. Let me ask Mr. Lorenz this question: Suppose 
Congress asked the Interstate Commerce Commission what rate it 
should pay the Southern Pacific Kailroad for transporting the 
mails; how would the Interstate Commerce Commission proceed to 
get the information in order to furnish it to Congress ? 

Mr. Loeenz. My own opinion is all that I can express as to how 
they would proceed, but I think they would doubtless proceed by 
calling for such data as would be necessary to make an estimate of 
the cost of the service. 

The Chairman. After determining what that data was, in order 
to determine it they first determine in their own minds as to what 
information it was necessary for them to find out, and then they 
would request that information. Plow long would it take for the 
Interstate Commerce Commission to come to a conclusion ? It would 
take quite a long time before they could get the necessary informa- 
tion on which to make a scientific determination, would it not ? 

Mr. Lorenz. It might take considerable time, in view of the fact 
that the accounting prescribed by the commission has not been shaped 
to that end. 

The Chairman. Then it would take the railroads a long time to 
get the information to conform to the new system of accounting? 

Mr. Lorenz. Yes, sir. 

The Chairman. Now let us look at this viewpoint. Taking Mr. 
Peters's suggestion and Mr. Lorenz's opinion as here expressed, sup- 
pose the suggestion is acted on, the railroad secured full information 
based on the questions asked in 1909 by the Post Office Department, 
so as to get the comparison between the two months — November, 
1909, and July, 1913. Do you imagine that the submission of that 
information to your own representatives and to the postal representa- 
tives .would bring you any closer as between your 3.23 mills and 
your 4.16 mills, the 3.23 mills being your opinion as to the revenue 
you were receiving per car-mile and the 4.16 mills being the opinion 
that the postal representatives claim you were receiving per car- 
mile? Would there not be exactly the same differences between you 






KAILWAY MAIL PAY. 389 

in the allotment of dead space and other factors, accounting for that 
difference in deduction? 

Mr. Peters. My suggestion, Mr. Chairman, was that you should, 
in determining this, also prescribe the method for the allotment of 
space. Have that determined in advance, so that the records could be 
kept accordingly, and not allot' your space after the reports have 
been made. 

Mr. Snead. There is a hinging point right there. Somebody has 
to settle the dead-space question. 

The Chairman. To my mind it would be wasteful of your money 
and the Government's money to proceed along and get another lot 
of information, and then make your tabulations, until you deter- 
mined in advance what allotments were to be made under given 
information. 

Mr. Peters. I suggested those points because Mr. Lorenz's thoughts 
and ideas as set forth in the memorandum as to how to proceed in 
this matter were based on the consideration of the information fur- 
nished through Document 105, and I said that we all felt that that 
information was so unreliable to this extent: That it was a new 
method, possibly crude in many ways, so faulty in its execution, and 
it certainly was faulty in its deductions, and the allotment of the 
space was determined after we had, reported the facts, and we do 
not know now on what basis the departmental representatives al- 
lotted the space that was reported, and we have not been able to get 
the department's committee and our committee to make an agreed 
statement of facts as to the conditions in the allotment, or recom- 
mendation as to how to apportion that disputed space. 

The Chairman. You succeeded in getting a letter signed by six 
representatives ? 

Mr. Peters. We got a letter signed, taking the space as originally 
reported, before it was allotted. The department confirmed the 
figures that we did — we made it 3.23 and they made it 3.37 as the 
revenue per car-foot-mile for the mail. I do not think it is of any 
use to go to all that expense. I still feel that the basis of pay for the 
mail is the weight basis, but you asked us to consider these points 
suggested by Mr. Lorenz, and I say to consider these fairly and 
properly you must have absolutely correct data, and you do not have 
it in Document 105. 

The Chairman. Would it not be well to qualify that statement, 
Mr. Peters ? That is an inferential reflection, it seems to me, on you 
gentlemen, and also on the department when you say we do not have 
correct data in Document 105. Would it not be well to qualify that, 
and say that you do not have complete data in Document 105 ? 

Mr: Peters. I will be very glad to correct my statement to that 
effect. 

The Chairman. Would not that be better expressed in that way, 
what you have in mind ? 

Mr. Peters. Yes. 

Mr. Worthington. I think it is unfortunate the railroads' figures 
were never printed by the department and set against their own. 

Mr. Peters. We asked you originally that Congress call for all of 
these figures and submit them to the interstate Commerce Commis- 
sion, and take the deductions the department has made, and give us 
from impartial sources the correct analysis of those figures, but that 



390 EAILWAY MAIL PAY. 

means money and time, yet it is water over the dam. That was the 
condition in 1909. This is 1913, and conditions have absolutely 
changed as to cost. They have all gone up. 

The Chairman. Conditions will continue to change as to cost. 

Mr. Peters. Yes; they will change all the time. 

Mr. Worthington. We were at a disadvantage in 1909 in House 
Document No. 105 statistics, because we had the old divisor in effect 
on our lines. The eastern roads had the new divisor, so the results 
were compared on the basis of the old divisor, while other roads have 
the new divisor, because at that time the new divisor was not in 
effect throughout the country. 

The Chairman. By "we " you mean the Southern Pacific Rail- 
road? 

Mr. Worthington. Yes. 

The Chairman. Now, to return to the tentative suggestion of Mr. 
Lorenz, what would you say in reference to suggestion No. 1? 

Mr. Worthington. Is not that covered by suggestion 3 ? I under- 
stand Mr. Lorenz has modified his suggestion as to No. 3 by stating 
that the statistics presented by the railroad should also be taken into 
consideration, as well as the changes in conditions which have taken 
place since November, 1909, as to the increased cost in operating 
railroads, and the effect of the new divisors in the sections of the 
country where it was not in effect in November, 1909. Is not that 
correct ? 

Mr. Lorenz. Certainly all factors you could bring together foi 
the available use of the committee should be considered. 

Mr. Worthington. I think if the congressional committee had 
all these factors available, it could determine their amount on an 
average for the mail as a whole, that a car-foot mile should earn to 
equal the cost as they determine it with that information. 

The Chairman. How about No. 5? 

Mr. Worthington. Of course, if they had available the data, they 
could prepare information of that kind, although I, personally, do 
not see any particular connection between train density and the cost 
of handling the mail. If there is to be a classification, as I presume 
Mr. Lorenz indicates from that, I would prefer a geographic group- 
ing of roads, rather than a grouping based on density, because you 
would not know where to start in or leave off on a grouping as to 
density. You would not know where your classification would go, 
where your rate would change, by what density it would be changed, 
for example; and the operating costs of railroads are controlled 
principally by grouping conditions and by cost of labor and ma- 
terial, and they differ in different sections of the country. 

Senator Weeks. Are there not many cases where twice as many 
trains are run on one road as on another operating in the same ter- 
ritory, and would not that have some effect on the cost ? 

Mr. Worthington. Some roads have a large passenger-train den- 
sity, and perhaps a total less density than other roads for freight 
carriage, for example. 

Senator Weeks. What have other trains to do with it ? 

Mr. Worthington. They have a great deal to do with the cost of 
maintenance of way. If you have 100 trains, and 90 of those are 
freight trains and 10 are passenger trains, you have as many trains 
to take care of as if the conditions were reversed. 



RAILWAY MAIL PAY. 391 

Mr. Lorenz. My idea was that all railway statistics that would be 
pertinent showing the nature of the operations would be included in 
that " and so forth." 

Mr. Worthington. There would be no objection if the commission 
wished to collect that data. I see no objections to their doing that. 
Do you, Mr. Peters, see any objection, if the commission wants to 
collect all these data for the different lines? Would you see any 
objection to that? 

Mr. Peters. No ; I would not. Collect all the information possible 
that will throw any light on the subject. The thought that was 
running through my mind was whether it would be possible for the 
department, from its records, to show the amount of space allotted 
to each mail route to-day, and then let us make a tabulation of the 
795 lines and the allotment of space to each one of those, and take 
an arbitrary of so much per car-foot mile for each road that we 
think fair, and make the calculation, and see what it would amount 
to as compared to the present time. 

Mr. Lorenz. Do you not think that would be quite pertinent, and 
should be done along with these other tabulations ? My idea was that 
all that was suggested there could be obtained from the existing rec- 
ords filed with the Interstate Commerce Commission and also with 
the Post Office Department. 

Mr. Worthington. I think I would add to that also the general 
operating ratio of these different lines, because I notice in going over 
Document 105 some roads are given a very low ratio for mail ex- 
penses, which have at the same time a very high ratio for their gen- 
eral operating results., and it seems rather inconsistent. Suggestion 
No. 6 says: 

Then they could say and actually state in the law what would be a fair rate 
to pay per car foot-mile for each of these roads, having taken into account the 
factors mentioned under paragraph 5. The roads could be given a chance to 
point out injustices, as could also the Post Office Department. 

I rather gather from the discussion it would be absolutely impos- 
sible for the commission to fix a rate based on cost without additional 
information. 

The Chairman. You mean the congressional committee? 

Mr. Worthington. Yes; to fix a rate based on cost without addi- 
tional information showing the cost at the present time. 

Mr. Lorenz. The idea was not to base it solely upon cost, but upon 
all these facts. 

Mr. Worthington. Would that apply to a different rate on each 
road? 

Mr. Lorenz. Exactly. The difficulties that we discussed yesterday 
of finding a satisfactory grouping of the roads, either geographically 
or by density, or some other basis, simply led me to think the simplest 
way out is to make 795 groups, and while it would take two or three 
weeks or a month more hard work on' the part of the Postal Commis- 
sion, it would in the end do more exact justice, for the reason that 
you would fix the rate that seemed just for each particular road. 

Senator Weeks. Would it not be possible that there might be 40 
roads where this would be so nearly alike that the rate could be made 
the same on the 40 roads? 

Mr. Lorenz. There would not have to be 795 rates, necessarily. 



392 EAILWAY MAIL PAY. 

Mr. Worthington. Would these rates be maximum rates or mini- 
mum rates? Could the Post Office Department accept less than these 
rates if the roads offer to haul the mail for less, or would they have 
to take the mail at those rates? 

Mr. Lorenz. My idea would be that the rate determined by the 
commission would be the only rate the Post Office Department could 
accept or pay. 

Mr. Worthington. In other words, between New York and Chi- 
cago, if they determined the cost was different on the Pennsylvania 
Railroad from what it was on the New York Central, the road with 
the lowest rate would have an advantage under that scheme and in 
securing the mails, would it not ? 

Mr. Lorenz. No, sir; because the cost was not the only considera- 
tion, but this competitive condition which you mention would be 
another factor, and if they concluded it would be unwise to have two 
rates on roads, constituted as you have described^ they then would 
simply make the same rate on those two roads. 

Mr. Worthington. But, as I understand, the cost factor would be 
practically the determining consideration in fixing the rates. 

Mr. Lorenz. Not necessarily ; but it could be varied, and the rates 
could be made equal wherever it would seem to work satisfactorily. 

Senator Weeks. Where would be the injustice in a case like the 
one referred to by Mr. Worthington, to make it a competitive propo- 
sition ? 

Mr. Lorenz. That is to say, you could make both rates according 
to the lower cost if it could be done ? 

Mr. Worthington. If rates could be made, as I presume they 
ought properly to be made, between large centers, uniform and made 
on the basis of the lower cost, would that not have a tendency to 
lower the general average of mail rates throughout the county ? 

Mr. Lorenz. But if it did that and lowered it unduly the com- 
mittee would have discovered that fact, because before it would put 
these rates into effect it would provide a table which would show 
the amount of pay which would accrue to each road according to the 
recent statistics of business done, and how that differed with the 
present pay, and so forth. In other words, they could revise their 
rates so that it would work out justly. 

The Chairman. But your suggestion, according to item 7, is that 
the .rate determined upon shall be in force five years. 

Mr. Lorenz. Yes, sir; the idea is it would hardly be practicable 
for Congress to go through this work each year, and the injustice 
that might be done in the course of five years would not be corrected. 

Mr. Peters. That is a year longer than we suffer under now. 

Mr. Lorenz. Please understand the amount paid would automati- 
cally increase with the amount of business. 

Mr. Peters. With the amount of space? 

Mr. Lorenz. Yes. 

Mr. Peters. You are considering space alone in this and not 
weight ? 

Mr. Worthington. There is not much difference between this plan 
and the present one where that rate applies to density, whereas one 
might vary between commercial centers. 

Senator Weeks. The present rate is not a scientific rate at all, but 
it is an arbitrary one. 



RAILWAY MAIL PAY. 393 

Mr. Peters. It is a scientific one. 

Mr. Worthington. The present rate brings the Government an 
advantage in securing a decrease in the ten mileage rate where ton- 
nage grows, whereas it has been maintained here — I have not main- 
tained it, but some of the others have — that there would not be any 
material increase in the weight per foot, but as the weights grow 
from now on additional space will have to be taken up. If that is so, 
there would not be any further gain to the Government, would there, 
as density grows, such as exists through the present system ? 

The Chairman. By substitution of space for weight? 

Mr. Lorenz. On that matter of economies to be achieved from the 
fact that more can be loaded into a car, I think we should take into 
account the fact that of a total space to-day devoted to the mails a 
very large proportion of the space — perhaps on some roads 90 per 
cent and on other roads at least 75 per cent of the space — is for mail 
cars and apartment cars, and the storage space and closed-out space 
is a very small factor. So that the amount of the economy that can 
be achieved by increased loading has very decided limits. 

Mr. Worthington. Whereas there is now a substantial economy 
on the heavy routes to the Government through the automatic revi- 
sion in the rate per ton-mile regardless of how much space is used. 

Mr. Lorenz. Yes, sir. And in that respect it seems to me payment 
on a space basis measures a little more closely the actual work per- 
formed by the railroad, and is therefore more just to the railroad. 

Mr. Worthington. Do you think it would be as favorable to the 
Government as the existing rates on the different routes? 

Mr. Lorenz. I think so. 

Mr. Snead. Assuming, of course, that a fair rate per car foot-mile 
was started with. 

Mr. Worthington. There is another point in making different 
rates on different roads, or different routes based on the lowest costs 
between two commercial centers, that I think I have referred to be- 
fore, and that is a fact that the road which is efficient in its opera- 
tions gets no advantage from that, and as it becomes more efficient 
the pay for carrying the mails would decrease, whereas if the reverse 
was the case it would increase if the rate is based on cost. 

Mr. Lorenz. The question whether the lowest cost in a region 
should be taken, or the highest cost, or the average cost, is one of the 
things the committee could see for itself. The question has been up, 
I think, before the Interstate Commerce Commission. If I remember 
correctly, the opinions in the advanced-rate cases dealt to some ex- 
tent with that question. 

Mr. Worthington. There is still another question I would like to 
ask as to that. In fixing rates on a space basis the compensation for 
mails would be practically the percentage of the space which the 
mails occupy in proportion to the total space in the train, would 
it not? ' 

Mr. Lorenz. Yes, sir. 

Mr. Worthington. In other words, a railroad, such as a transcon- 
tinental line, which on account of the long haul has to take in more 
baggage, space for passengers, furnish more sleeping cars, and fur- 
nish for the convenience of the passengers more dining cars — in some 
cases observation cars — allows for its space for passengers very 
much more than roads with short hauls. In other words, there are 



2*94 RAILWAY MAIL PAY. 

cases in this country where the average size of a passenger train is 6 
cars and the average passenger trainload is about 60. There are 
other roads with an average-size train of 4 cars and an average load 
of 100. The space for passengers in one case is two and one-half times 
as great as in the other. On the roads that are furnishing these con- 
veniences to passengers they would receive on that account less for 
handling mails than the other lines. In other words, if they could 
cut out their diner and make their passengers eat at eating stations 
they could raise their mail rate, or if they cut off their observation 
cars they could do the same, or if they decreased the number of pas- 
senger trains they run they could accomplish the same result. In 
other words, if they decrease the facilities they give the traveling 
public they would increase their mail compensation. 

The Chairman. But would they do that when the mail compensa- 
tion was less than 2 per cent of the total compensation? 

Mr. Worthington. I was saying it hardly seems to me to be fair 
in principle — a rate that would have that effect. I think if the roads 
are grouped or regarded for the country as a whole they are not open 
to that objection, as it would be when you have so many different 
rates. 

Mr. Lorenz. Why would not the same objection hold, so far as a 
matter of principle is concerned, whether you group them or not? 
One of your bases of determining a fair rate was the relative space 
required in passenger trains. In other words, you would have before 
you, instead of the statistics of one particular road, the statistics for 
that whole group of roads, and your reasoning would be the same. 

Mr. Worthington. It would affect some lines to a less extent. I 
know in our territory we run very long passenger trains with a 
comparatively small passenger load, and we furnish a great deal of 
space per passenger. Part of that space is contributed by the Pull- 
man Co., which builds the sleepers and maintains them without any 
cost to us, }^et all that space is going in to reduce our mail pay. 

Mr. Lorenz. I should say these are factors which might well be 
brought out in considering a great system like the Southern Pacific. 

Mr. Worthington. I think if rates were made on this basis that 
nonrevenue cars in passenger trains ought to be left out of considera- 
tion altogether. Take dining cars, for instance; they bring in no 
revenue, and in fact they are sources of expense to the railroads. The 
same is true of an observation car, which we put on our trains simply 
in order that the passengers might look out of the rear of the train. 

Mr. Weeks. Is that universally true of dining cars? 

Mr. Worthington. I think practically so. I think there are a 
very few lines which make a profit out of the dining cars. I think, 
taking the roads as a whole, there would be a loss. That is simply 
including the commissary expenses and the car repairs and excluding 
the cost of ownership. 

Mr. Lorenz. But do not the peculiarities you mention regarding 
the particular systems simply shows how hopeless it is to find one 
rate or one simple formula for rates which will work out justly in 
every case? 

Mr. Worthington. I am simply mentioning that a rate on the 
space basis does have that effect on certain roads, and that is an 
objection to it. 

The Chairman. Now kindly take up question No. 7. 



RAILWAY MAIL PAY. 39S 

Mr. Worthington. Personally I do not see any objections to that 
if a rate is fixed based on space. If we had to have a rate of that 
sort, and the total compensation varies during the five years with 
the amount of space that is furnished, the only objection to that 
could be that there might be during that time an increase in the cost, 
of operating railroads. 

Mr. Lorenz. You notice the passenger fares do not change very 
much and probably will not change very much. 

Mr. Worthington. Maybe some of the other gentlemen may have 
some suggestions on that point. 

Mr. Snead. By extending this period to five years, assuming that 
the determinant factor is to be the cost of it, we should bear in mind 
the cost question never Avould be anything better than an approxi- 
mation. In the event that an error was made in the approximation, 
you are perpetuating that error a good long period of time before we 
would have an opportunity to rectify it. If the cost feature is sim- 
ply one element to be taken into consideration and not given undue 
weight, it is a different proposition. If it is to be a determinant 
factor, I think I see quite a decided objection to that five-year period. 

Mr. Worthington. Personally I see no objections to the sugges- 
tion No. 8 if a rate of this sort should be put in on this basis. 

The Chairman. That is taking the whole nine suggestions col- 
lectively ? 

Mr. Worthington. Yes; taking them all collectively. Sugges- 
tion 9 reads as follows : 

9. As soon as practicable the commission shall report to Congress a com- 
parison of the rates prescribed in the law with the cost as determined from 
the improved annual report form. 

That is, the Interstate Commerce Commission shall report that ? 

Mr. Lorenz. Yes. 

Mr. Worthington. I would not think that is objectionable. 

Senator Weeks. I want to ask Mr. Worthington a question. Sup- 
pose Congress authorizes the appointment of an official in the Post 
Office Department, call him a traffic manager or a director of posts, 
or whatever you like, and that it should be his business to arrange 
with railroad companies for the transportation of the mails and to 
fix the compensation for doing it, without any law whatever as to 
what the compensation should be, assuming, of course, if the railroad 
company and the traffic manager did not agree on a rate, that it 
should be referred to the Interstate Commerce Commission for ad- 
justment. Now, having all that as an assumption and knowing, as 
you probably do, about what the compensation for a traffic man is, 
as paid by railroads, how much would the Government have to pay 
a competent man for that service? 

Mr. Worthington. I do not think I would want to answer the 
question of salary, because I do not know. 

Senator Weeks. Well, what would it have to pay a competent man 
in order to secure his services for a term of years? 

Mr. Peters. $25,000 a year. 

Mr. Worthington. At least that much; but it seems to me it is 
open to this objection: That there are a great many roads in the 
country that are not now handling the mails that would probably 
regard that traffic as in the light of additional traffic if they can 



396 



BAIL WAY MAIL PAY. 



secure it from some of the trunk lines which are handling the mails, 
and for that reason they could rather feel that they could afford to 
offer terms better than the existing roads are handling the mails for ; 
and, as to them, it would represent traffic on which at the present 
time they are earning nothing, and on additional traffic, if the rail- 
road can obtain something above the bare cost of movement, there 
is a little something in the business to apply to their fixed expenses. 

Senator Weeks. Is not that a benefit to the Government ? 

Mr. Worthington. No ; I do not think so, because I do not think 
these roads that would do that are the roads that would give the 
service as the present lines are giving. For example, there are a 
number of freight lines between New York and Chicago that are 
handling little mail. The Government has wisely given greater ton- 
nage to the lines which are able to take it more expeditiously and 
give them better service, because they have a larger number of pas- 
senger trains, they have multiple tracks, and all the facilities for 
handling it promptly. 

Senator Weeks. But this director of posts would not be able to 
lessen the efficiency of the mail service, because there would imme- 
diately arise a complaint from the public and he would have to main- 
tain the service on the roads which could perform it most efficiently. 

Mr. Worthington. I do not think the roads which are handling 
the mails now would feel that they were able to perform the service 
at any less rate than they are doing it for at the present time. I do 
not believe they would offer any better terms. 

Senator Weeks. If they did not offer any better terms, or if an 
agreement could not be reached between the road and the traffic 
manager, is not the proper place for it to go to the Interstate Com- 
merce Commission? 

Mr. Worthington. You say the commission would determine the 
rate, or the road? 

Senator Weeks. I mean the road and the representative of the 
Post Office Department could agree on a rate, if possible, and if they 
do not agree on a rate the matter then goes to the Interstate Com- 
merce Commission, which fixes the rate. 

Mr. Worthington. There is an objection to that plan which just 
occurred to me ; it is quite different from the plan that has been advo- 
cated and which takes into consideration the element of cost of serv- 
ice principally. You would be handling the mails entirely on a 
traffic basis the same as freight and passenger if it becomes a matter 
of a bargain between some officer of the Government and the railroad 
to take the mail at any rate that they may agree upon. I would pre- 
fer the present method to that. 

Senator Weeks. What is your objection to that method? 

Mr. Worthington. One objection is that it leaves the rate to be 
fixed largely by an individual. 

Senator Weeks. Do you not think an individual apt to be more 
competent to fix rates than Congress? 

Mr. Worthington. In a matter of this sort I would not think a 
single individual was. 

Senator Weeks. Why is this any different from any other class of 
traffic? 



RAILWAY MAIL PAY. 397 

Mr. Wosthington. Because this is a case of fixing rates on all of 
the railroads in the United States, and a man to do that ought to be 
familiar with all of the conditions on the different roads. 

Senator Weeks. All the railroads in the United States perform 
some kind of similar traffic; they all carry passengers. 

Mr. Worthington. They all have their own traffic people, and the 
rates are different, of course, on the different roads. For example, 
in the western part of the country they are generally higher than 
they are in the East. I doubt whether the Government would reap 
any advantages under a plan of that sort. Of course, I could not 
say how it would work out. 

Senator Weeks. It is not a question of the Government reaping 
advantages necessarily, but it is a question of arriving at some method 
of adjusting these rates which would be fair to the Government 
and fair to the transportation companies. I think Senator Bourne 
would bear me out in saying that we are not here necessarily to find 
some cheaper way for the Government to transport the maii, but we 
are here for the purpose of adjusting this important question, which 
is one of controversy all the time and will be until it is scientifically 
adjusted. 

The Chairman. Absolutely. 

Mr. Wortiitngton. Of course, I think it would be impossible to 
predict what would be the result under a plan of that sort. I could 
not predict it. 

Senator Weeks. Yet. of course, yon or no one else could tell what 
the result would be. 

Mr. Worthtngton. T would not wish to express a well-formed 
opinion because I have not considered it and I have not any idea 
what the result would be. 

Senator Weeks, I have gone into this enough to see how difficult 
it is to arrive at any fair basis, and in turning the whole question over 
in my mind I have not been able to work out, to my own satisfaction, 
why' that is not the businesslike way to adjust it. I do not mean 
to say that is final, even with me, but it seems to me that that is a 
way of adjusting this service which ought to be satisfactory to the 
Government and to the transportation companies, and I want to have 
some railroad man or somebody point out to me why it is not fair 
and just and businesslike. 

Mr. Worthington. The result would depend very largely on the 
personality of the individual. 

Senator Weeks. Every result depends on the personality of an 
individual. 

Mr. Worthington. It is a tremendous responsibility to put in one 
man's hands, to adjust rates all over the country. 

Mr. Peters. T think it would be a most excellent thing. 

Senator Weeks. We could have three men, if we chose. 

Mr. Wortiitngton. No. You have the Interstate Commerce Com- 
mission to appeal to. Have your director of posts a permanent offi- 
cer during good behavior. 

Senator Weeks. I am in favor of a director of posts, anyway. 

Mr. Peters. He can have a traffic man under him who can analyze 
and study the organization conditions, but have a director of posts 
make his contract with the railroads on a basis that is businesslike 

49396—14 33 



398 EAILWAY MAIL PAY. 

and fair to pay a compensation for the service performed, and if 
they can not agree, then the Interstate Commerce Commission to 
settle between them. Now, that is the basis that is used in England. 
The postmaster general there makes his contracts with the railroads. 
The compensation is paid direct to each railroad. In the parcel post 
55 per cent of the total receipts is paid into a pool and that is pro- 
rated by the board of trade according to the amount of traffic for 
each one, but I do think if the railroad has one traffic man — a busi- 
ness man in charge of the department — that we could make our con- 
tracts with, it would be a good thing. 

The Chairman. You say if the railroads had one. 

Mr. Peters. I say if they had one man to deal with who was in 
charge of the affairs for the Government, you could manage this 
thing in a more businesslike way, especially if you have the appeal 
to the Interstate Commerce Commission. 

Mr. Worthington. Is not that the situation to-day? They have 
one man to deal with — the Postmaster General ? 

Mr. Peters. He is an appointed man for practically a short period. 

Mr. Worthington. I would prefer leaving the determination to 
the Interstate Commission to leaving it to one man. They handle 
freight-rate questions and passenger-rate questions. 

Mr. Peters. They have to have an expert in charge of this busi- 
ness ? 

The Chairman. And if left to them the statistician would be the 
determining factor there. 

Senator Weeks. We have 100,000,000 to satisfy and the public 
to-day is satisfied with the work of the Interstate Commerce Com- 
mission, and I think the transportation lines are, toOj and we must 
have a final court to go to which is satisfactory not only to the 
Government but to the public and the transportation lines as well. 

Mr. Peters. If the Government can get any benefit out of compe- 
tition for the mail, they should have the opportunity to get it, but 
every road is going to have mail service to take care of — the local 
interests along its line. The proportion of the competitive service is 
not so large that a diversion of it would stop all the mail service on 
any railroad. There would be enough of it to enable one road to run 
through mail trains, while the other road would not. 

Mr. Worthington. There is only one difficulty I foresee, and 
that is this: Where there is competition between centers, of course 
such a man could obtain quite reasonable rates; but where there is 
only one road to serve the territory, I do not see just how he could. 
It seems to me he would have to accept any rate that that road should 
offer. 

Mr. Peters. If he is not satisfied with the rate the road offers, 
he goes to the Interstate Commerce Commission and says the road 
has offered an unreasonable rate. 

Senator Weeks. Is not the real competition limited to lines from 
New York to Chicago and from Chicago to certain western points ? 

Mr. Worthington. Practically ; yes. Between the large centers. 

The Chairman. And further limited to the efficiency only ? 

Mr. Worthington. Of course, the railroads serve themselves, with- 
out competition, a very large area of the country through branch lines 
and locally. 



RAILWAY MAIL PAY. 399 

Mr. Snead. The Government in that respect would be in the posi- 
tion of any other shipper. They would get the advantage of com- 
petitive rates between competitive points. 

Mr. Worthington. They would get advantage of lower rates 
where there are competitive points, and they would get higher rates 
where there was no competition. It is a fact, however, that rates are 
lower to competitive points as to all classes of railroad traffic. 

Senator Weeks. What is your view of that, Mr. Bradley? 

Mr. Bradley. Senator, that is a subject I would rather give thought 
to before giving an expression of opinion. As the discussion was 
proceeding, it seems to me, according to the present temper of the 
public mind and of the attitude of Congress as I see it by reading 
its proceedings, as though it were placing too much power in one 
individual. The thought occurs to me whether the point would not 
be illuminated by asking a counter question: Would the Congress 
be willing to impose upon that official the responsibility of fixing the 
rates of postage ? 

Senator Weeks. It is comparatively a simple matter to fix the rates 
of postage. We base that on the fundamental principle that the same 
postage shall carry to every section of the United States. Of course, 
that is not businesslike, in a way, because there are places where 
it costs the Government a dollar to deliver a letter with a 2-cent 
stamp on it. 

Mr. Bradley. As a businesslike arrangement of course it com- 
mends itself to have one well-informed manager deal with the trans- 
portation agency and make the best terms he could for the Govern- 
ment on a reasonable basis, subject to appeal to a judicial body. Yet 
in England when they adopted the parcel post they did not continue 
that method of bargaining between the postmaster general and the 
railroads, although there it is a comparatively small thing as com- 
pared with this country. 

Senator Weeks. The parcel post is merchandise. It is a different 
proposition from the ordinary mail service. 

Mr. Peters. It was treated as such in England, but not so here. 

The Chairman. I beg your pardon. It is in a way so here, from 
the fact that the zone system is adopted in the method of rates. That 
principle is recognized in the adoption of the zone system. It was 
merchandise, but, according to the opinion of Congress, evidently 
treated as a convenience rather than as a method of transportation. 

Mr. Worthington. I would like to ask a question as to mail trans- 
portation entirely within a State, whether the Interstate Commerce 
Commission has jurisdiction to decide on that if there was a case at 
issue between this gentleman and the railroad. 

The Chairman. They would have nothing to do with the mail in 
a State. 

Mr. Worthington. Would the Interstate Commerce Commission 
have authority to pass on that question ? 

The Chairman. If Congress directed or prescribed a rule, they 
would have authority to act under the rule, I assume. 

Senator Weeks. It does not strike me that the limitations of the 
State or county line would affect the power of Congress to fix rates 
for carrying its mail and determining what body should have the 
final determination of the rate paid. 



400 RAILWAY MAIL PAY. 

Mr. Peters. In the New York State law I think they reserve the 
right to determine the rates for the railroads to carry the mail? 

Mr. Safford. Constitutional authority over post roads would give 
the Postmaster General authority over certain intrastate roads. 

Mr. Bradley. Would not the Interstate Commerce Commission be 
acting in an unofficial way, as a board of arbitration, just as the law 
may provide for any body of men to act as a board of arbitration, 
just as the Interstate Commerce Commission may act to-day un- 
officially through its members in the railroad field? I do not think 
it would affect the original province of the Interstate Commerce 
Commission when they were acting in this special capacity purely as 
a board of referees. 

Senator Weeks. There are plenty of precedents to indicate that 
Congress would have ample power to place that authority in the 
hands of the Interstate Commerce Commission or any other commis- 
sion. For instance, before we put a free-delivery service in a town 
we make requirements as to sidewalks, that boxes shall be placed out- 
side of the houses, and other conditions that are entirely local. 

Mr. Bradley. The streets must be named and houses numbered. 

Senator Weeks. Yes. 

The Chairman. There is no question whatever in regard to con- 
gressional authority. 

Mr. Safeord. I like a government of law. I do not like a govern- 
ment of individuals. 

Mr. Worthington. You would not object if he was a railroad 
man? 

Mr. Safford. I do not know about that. When railroad men get 
into Government positions they are biased about as much as anybody 
else, due to their environments. 

Mr. Peters. I think if you could get the pick of your traffic men at 
$25,000 a year and give him a good continuous office and hold him 
strictly responsible for it no railroad could hold him up on rates for 
carrying the mail, because he can appeal to the commission; he can 
not hold up any railroad and force them to confiscatory rates, because 
the railroads could appeal to the commission, and I think that would 
be a most excellent solution of this whole question. 

Senator Weeks. Suppose it were charged there was collusion be- 
tween the railroads and the official ? 

Mr. Peters. The commission can determine. 

Senator Weeks. Who is going to make the appeal in that case? 
Do you provide for a public appeal to the Postmaster General ? 

The Chairman. Congress, by resolution. 

Mr. Safford. You would reach him by impeachment, I should 
think. 

STATEMENT OF MR. V. J. BRADLEY. 

The Chairman. Mr. Bradley, will you kindly state your name and 
your official occupation ? 

Mr. Bradley. V. J. Bradley, general supervisor of mail traffic of 
the Pennsylvania Kailroad, Philadelphia, Pa. I have a statement 
which is an analysis of the application of Document 105 to the mail 
service on the Pennsylvania Kailroad system. It is entitled " Kail- 
way mail pay — An examination of the methods empLoyed by the Post 



RAILWAY MAIL PAY. 401 

Office Department in arranging and tabulating the statistics of mail 
transportation furnished by the railroads for the month of November, 
1909, and the result as applying to the Pennsylvania Railroad 
system." 

Railway Mail Pay — The Pennsylvania Railroad System. 

an examination of the methods employed by the post office de- 
partment in arranging and tabulating the statistics of mail 
transportation furnished by the railroads for the month of 
november, 19 09, and the results as applying to the pennsyl- 
vania railroad system. 

On August 12, 1911, the Postmaster General sent a letter to the 
Speaker of the House of Representatives presenting a report and 
tabulated statement transmitting the results of an inquiry by the 
Post Office Department as to the operation, receipts, and expendi- 
tures of railroad companies transporting the mails, and recommend- 
ing legislation on the subject. The newspapers at that time pub- 
lished the announcement that the investigation developed the fact 
that some roads were overpaid and others underpaid, but if the exist- 
ing laws were in accordance with the specific recommendations of 
the Postmaster General fixing the rate of pay so as to cover the cost 
and 6 per cent profit, the readjustment would result in a saving to 
the Government of about $9,000,000 per annum. The document was 
not published until about December 8, 1911, the delay being ex- 
plained as due to frequent changes and corrections in the proof. The 
volume of tabulated data (H. Doc. No. 105), consisting of about 300 
printed pages, represents an enormous amount of work, both by the 
railroad companies and the Post Office Department, and any general 
analysis or discussion concerning it can not well escape being some- 
what lengthy. 

BRIEF HISTORY. 

The investigation was in accordance with an old law (March 3, 
1879). which had not previously been complied with. It read as 
follows : 

The Postmaster General shall request all railroad companies transporting the 
mails to furnish, under seal, such data relating to the operating, receipts, and 
expenditures of such roads as may, in his judgment, be deemed necessary to 
enable him to ascertain the cost of mail transportation and the proper compen- 
sation to be paid for the same ; and he shall, in his annual report to Congress, 
make such recommendations, founded on the information obtained under this 
section, as shall in his opinion be just and equitable. 

The chronology of important events in connection with railway 
mail pay may be briefly set forth as follows : 

1873, March 2. Enactment of law (still in effect) fixing the method of paying 
for railway mail transportation and postal cars. 

1876, July 12. Law passed reducing rates for mail transportation 10 per cent. 

1878, April. The Hubbard Commission (appointed by Congress) reported in fa- 
vor of a new method of paying railroad companies based on space 
limited by the average weight carried. 

1878, June 17. Law passed reducing rates for mail transportation 5 per cent. 

1879, March 3. Law requiring Postmaster General to request data from railroad 

companies, etc., as above set forth. 



402 KAIL WAY MAIL PAY. 

1883, March 3. Law enacted requiring Postmaster General to make thorough in- 
vestigation into the Railway Mail Service and report a more complete 
system of gauging the rates of pay for carrying the mails on railroad 
routes. 

1883, December 3. Postmaster General reports to Congress the findings of the 
Elmer, Thompson and Slater Commission, proposing a new method of 
paying the railroad companies based on weight and space. (This re- 
port was regarded by the Post Office Department as in some measure a 
compliance with the law of March 3, 1879.) 

1898, January 13. Law enacted appointing a joint commission of the House and 
Senate for the investigation of railway mail pay and other postal 
subjects. 

1901, January 14. This joint commission (the Wolcott-Loud Commission) re- 
ported to Congress, stating substantially that the railroads were not 
overpaid for their mail transportation or postal-car service. 

1906, December 1. Postmaster General Cortelyou, in his annual report, states 

that forms of inquiry are being prepared so as to request railroad com- 
panies to furnish information in response to the law of March 3, 1879. 

1907, March 2. Law enacted reducing pay of railroad companies for mail trans- 

portation 5 per cent on all weights over 5,000 to 48,000 pounds, and 10 
per cent on other weights over 48,000 pounds; also reducing postal-car 
pay 8f per cent for 45-foot cars, ISf per cent for 50-foot cars, and 20 
per cent for cars of 55 feet or over. 
1907, June 7. Postmaster General issues an order changing the divisor (from 6 
to 7) in computing the average daily weight of mails, thus resulting in 
a reduction of about 8 per cent in the pay of railroad companies for 
mail transportation. 

1907, November 30. Postmaster General Meyer, in his annual report, announces 

that letters of inquiry and tabular forms were sent to all railroad 
companies to obtain data for three months, beginning July 1, 1907. in 
accordance with the terms of the law of March 3, 1879. However, at 
the request of several leading companies, this period was postponed to 
reach an agreement upon a uniform method of considering and furnish- 
ing the data. 

1908, November 30. Postmaster General Meyer, in his annual report, announces 

that the period for obtaining data from railroad companies is not yet 
fixed. 

1909, December 1. Postmaster General Hitchcock, in his annual report, announces 

that railroad companies have now been requested to furnish the de- 
partment with comprehensive data as to cost, etc., as per law of March 
3, 1879. This to cover the month of November, 1909. 

1910, December 1. Postmaster General Hitchcock, in his annual report, describes 

the details of data supplied by railroad companies for the month of 
November, 1909, and mentions that reports have been received from 
2,850 out of 3,300 mail routes. The checking and tabulation has been 
in progress since July 1, 1910, and computations have been completed 
showing the total car-foot miles for each of the three classes of serv- 
ice — passenger, express, and mail. A careful consideration of the rail- 
road companies' assignment and apportionment of operating expenses 
to freight, passenger, mail, and express service is in progress, and when 
finished it will provide a comparison of the cost of passenger, mail, and 
express service " on an ascertained unit basis." 

It is explained that the same process will be followed as to revenue 
derived from the three classes of service, and this will make possible 
a comparison of the revenue with the cost of service for each class. It 
is said that many discrepancies were found in the reports of the rail- 
road companies, so that a complete check and verification was found 
necessary to insure accuracy. 



It will be noticed from the above record that the Post Office Depart- 
ment was making preparations to obtain the desired information as 
early as 1906, and that conferences were had with representatives of 
railway companies in regard to the forms that could be employed 
practically. 






RAILWAY MAIL PAY. 403 

The forms that were intended for the test beginning July 1, 1907, 
were found to be impracticable to obtain satisfactory results. The 
forms and instructions finally prepared called for a statement in the 
most minute detail, covering the daily operation of each train run 
during the month of November, 1909. This including the distance of 
operation, frequency, average speed, the number and length of pas- 
senger cars, express cars, postal cars, and of any car space used for 
any of the three purposes in combination cars; also a statement cov- 
ering the train and car mileage, the total revenue of passenger, express 
and mail service, the total operating expenses, and the total passenger 
operating expenses; the original cost and present value of railway 
post-office and mail-apartment cars. It also called for a detailed 
statement of expenditures for station service and station and terminal 
facilities; also for information concerning the personal transporta- 
tion of officers and employees of the Post Office Department when in 
charge of the mails and when traveling as passengers. 

Later the railroad companies were called upon for additional in- 
formation as to operating expenses under 116 primary-expense ac- 
counts, recognized by the Interstate Commerce Commission; to show 
for each item the amounts assignable directly to mail, express, pas- 
senger or freight service, and the amount of remainders apportioned 
to the passenger service (including mail and express), and the basis 
for such apportionments. 

The essence of the Post Office Department's apparent intention was 
to ascertain for a definite period the relative proportion of car space 
in passenger trains assigned to mail service, in comparison with the 
amount of car space assigned to passenger or express service, and 
accept the result as indicating the proper ratio to be used in establish- 
ing the relative cost of mail transportation. The statistical elements 
for the final solution of the problem would therefore be — 

First. The total operating expenses. 

Second. The proportion of these expenses chargeable to passenger- 
train service as distinguished from freight-train service. 

Third. The proportion of passenger-train operating expenses 
chargeable to mail service on the basis of the car space assigned to 
that service. 

Fourth. The proportion of capital cost or fixed charges that should 
be fairly apportioned to the mail service. 

Fifth. The allowance of a suitable rate of interest to insure a fair 
profit for the utilization of the facilities. 

MAGNITUDE OF THE WORK. 



The enormous amount of labor involved in collecting and tabulat- 
ing the statistics desired for the month of November, 1909, may be 
judged from the fact that on the Pennsylvania Railroad system it 
was necessary to consider 146,262 trains (East of Pittsburgh, 115,548; 
west of Pittsburgh, 30,714), this representing 7,323 individual trains 
running daily or less frequently. These trains traveled on over 200 
different mail routes, for each of which the desired information had 
to be specifically stated. 

The final results were shown on about 800 large sheets, and it is 
estimated that there were between 300,000 and 400.000 calculations 



404 RAILWAY MAIL PAY. 

necessary, either -by divisional officers or else at the railroad head- 
quarters, before the work was finished. This included not only the 
calculations in regard to car space on trains, but also in regard to 
station and terminal space and employees. 

At the general headquarters of the company the final tabulations 
required the services of about 10 clerks for a period of seven months. 
The Post Office Department obtained an appropriation from Con- 
gress of $20,000 to cover the extra expense for its clerical work, and 
it is safe to assume that the railroad companies were obliged to 
undergo an expense of several times that amount to furnish the origi- 
nal data to the department. 

The law of 1879 was not mandatory upon the railroad companies, 
but they appear to have willingly undertaken the labor in order to 
cooperate with the Post Office Department in a joint effort to ascer- 
tain approximately the cost of performing mail service in relation to 
passenger and express service upon the basis originally outlined. 

It was inevitable in a work of such a great extent that errors would 
occur, both on the part of the railroad companies and the Post Office 
Department; but it has been gratifying to note that the rechecking 
of the figures for the Pennsylvania Railroad system has discovered 
only 11 errors — most of these comparatively small — in a total of 
nearly 200,000 items and calculations. The Post Office Department 
has already conceded a number of errors made at Washington, aggre- 
gating nearly 19,000,000 car-foot miles. 

CAUTION NECESSARY. 

It would naturally occur to a prudent statistician, in taking up a 
work of such novelty and extent, that the greatest of caution would 
be advisable, both as to calculations and the deductions to be drawn 
therefrom : 

1. As to the range of possible error due to misunderstanding of 
the instructions or as to the correct application of the instructions 
or because of the unusual character of the experimental test that was 
being undertaken. 

2. As to whether the mathematical ratio of car space used for mail 
purposes in comparison with similar space used for passenger or 
express services was really a dependable and trustworthy ratio for 
general conclusions, except as modified by other considerations, such 
as speed and frequency, to which factors no positive value was 
accredited. 

3. As to whether a period of 30 days is sufficiently long to obtain 
a trustworthy ratio between the three classes of service, and espe- 
cially whether the particular month selected — November, 1909 — 
should have been accepted as a representative period upon which 
any fixed conclusions could be safely reached. 

4. In view of the opinions held by many able economists that it is 
not feasible to ascertain with exact accuracy the cost of particular 
services in railroad transportation because of the many items of 
joint expense which must be arbitrarily apportioned and for which 
there is as yet no generally accepted method of apportionment, it 
might be rash to assume, even if all the foregoing precautions had 
been observed, that the cost had been ascertained with any degree of 
exactitude. 



RAILWAY MAIL PAY. 405 

5. Any tentative conclusions in regard to the approximate cost 
should at least have been checked by comparison with the relative 
revenues derived from each class of business (this factor being abso- 
lutely known) in comparison with the car space assigned to each of 
the services. 

JOINT CONFERENCES DISCONTINUED. 

The joint conferences between the Post Office Department officials 
and the railroad officials were only held during the preliminary 
stages while the blank forms were being prepared, and the confer- 
ences were obviously beneficial in enabling the inquiry to be started 
on practical lines. The forms and inquiries were sent to railroad 
companies on September 28, 1909. 

Soon thereafter the railroads appointed the committee on rail- 
way mail pay representing 282 railroads with 208,000 miles of line, 
for the purpose of securing uniformity in the basis of compilation 
and to prevent, as far as possible, misunderstanding relative to the 
method to be used in securing and tabulating the data. After this 
committee was formed it called upon the Postmaster General to 
explain its object and to offer its cooperation with the department in 
securing the necessary information. 

It suggested to the department that all railroads, instead of a few, 
be requested to furnish information for all mail routes, which sug- 
gestion was accepted. However, the suggestion for continued cooper- 
ation was not accepted, the Post Office Department preferring to 
develop its own final methods and to deal with the information re- 
ceived according to its own judgment. It can now be seen that if 
the cooperation of the committee on railway mail pay had been 
accepted the results would have been more accurate and the conclu- 
sions derived therefrom more acceptable. 



When Document No. 105 was published, in December. 1911, it was 
at once noticed — 

First. That essential data for a complete understanding had been 
withheld from Congress. There was no publication of the items of 
revenue received by railroad companies from passenger or express 
business so that Congress could make a comparison between these 
and the revenue from mail business; there was no disclosure of the 
expense of railroad station and terminal service, or of personal trans- 
portation of officers and employees of the Post Office Department, 
although this information was furnished to the Postmaster General; 
nor was there any statement of the full extent of the car space as 
originally reported by the railroad companies to the Postmaster Gen- 
eral as being devoted to passenger, mail, and express service. 

Second. It was also observed that. the Post Office Department had 
refused to recognize and accept a large portion of the car space 
devoted to mail purposes on trains, as reported by the railroad com- 
panies, and had made reductions from the railroad companies' re- 
ports entirely on its own opinions and without sufficient regard to 
the actual facts or the operating conditions. 

Third. It was further observed that the car space devoted to the 
mails, which the Post OfhVe Department had refused to recognize or 



406 RAILWAY MAIL PAY. 

accept, had been deliberately transferred to the car space credited 
to the passenger service, thus changing the relative ratios of one to 
the other. The explanation of the Postmaster General was based 
upon a discrimination between car space directly used by the mails, 
and deemed absolutely necessary, and car space incidentally required 
in connection with the mails, the latter being denominated " dead 
space," and thus transferred to the passenger service. The fact is, that 
it is not* dead space, but just as active as any other car space in the 
trains, and is just as much an attendant feature of the mail service as 
similar unoccupied space in the passenger or express cars is to those 
services, and which the railroad companies, of course, charge to either 
of those services. 

Fourth. It was also discovered that the Post Office Department had 
not accepted the apportionment of operating expenses as between 
the freight and passenger services in accordance with the long stand- 
ing and approved methods of the railroad companies in making up 
their accounts, but had substituted a new method devised by the Post 
Office Department and for which there was no authoritative standard. 
Here the Post Office Department entered into the field of the Inter- 
state Commerce Commission and undertook to give a quasi govern- 
mental indorsement to a special method of apportionment, although 
the Interstate Commerce Commission has refrained from laying down 
any general rule, notwithstanding the fact that it has been studying 
this intricate and important question for over 25 years. 

Fifth. It was finally observed that the Post Office Department was 
sufficiently satisfied with the results of its inquiry and with its novel 
method of apportionment that it felt warranted in recommending to 
Congress a new law to empower the Postmaster General to deter- 
mine annually, the cost to railroad companies of carrying the mail 
by this method and to fix the compensation at such cost plus 6 per 
cent. Even if the method of treating the inquiry and the method of 
apportionment could be given approval, it was still evident that the 
Post Office Department was content to fix the compensation at the 
operating cost plus 6 per cent, thus overlooking the fixed charges 
and other capital cost and practically ignoring the value of the 
piece of machinery employed for the purpose of transportation. 

CAR SPACE CAR-FOOT MILEAGE. 

As already explained, the whole structure of the Postmaster Gen- 
eral's recommendation is supposed to be based upon relative amount 
of car space used for the United States mail service as compared 
with the amount of car space used for the passenger service and the 
express service, in order to establish a ratio of cost. As an example: 
If a passenger train had 5 cars, 3 of which were devoted to passenger 
service, 1 to mail service, and 1 to express service, the ratios would 
be 60 per cent, 20 per cent, and 20 per cent, respectively. In actual 
practice, however, note must be taken of the distance traveled, of the 
different lengths of cars, and of combination cars in which the 
passenger, mail, or express business occupies only a fractional part 
of the entire car. 

In working out the result no particular note was taken of the 
varying widths of cars, because the variation is comparatively slight; 
nor was any note taken of the height of the space in cars, because 






RAILWAY MAIL PAY. 



407 



of the comparative uniformity in this respect. Therefore the car 
space computed for either the passenger, mail, or express service was 
based upon linear feet of car space, multiplied by the distance 
traveled by each train, thus reaching a total of (linear) car-foot 
miles. 

CAR-FOOT MILES PENNSYLVANIA RAILROAD SYSTEM. 

The total car-foot miles for the month of November, 1909, in pas- 
senger, mail, and express service reported by the railroad company 
for the Pennsylvania Kailroad system (including all companies east 
and west of Pittsburgh, except the Long Island Railroad Co.) was 
1,536,703,973. The Post Office Department's figures, as printed in 
December, 1911, were 1,525,747,296, a reduction by the Post Office 
Department of 10,956,677. Accordingly the railroad company re- 
checked and verified its figures, with the result that they were slightly 
increased (801,523) to 1,537,505,496. 

The Post Office Department, on January 22 and June 26, 1912, con- 
ceded that a number of important errors had been made in their 
tabulations, and in revising their calculations increased the total by 
11,604,111 car-foot miles, this resulting in a grand total of 1,537.351,- 
407.49 car-foot miles and proving the correctness of the railroad com- 
pany's total within one-hundredth of 1 per cent. 

Pennsylvania R. R. system (all companies east and west of Pittsburgh, except 
Long Island R. R.) — Comparison of car-foot miles for November, 1909,, 
between railroad company s original report and Post Office Department's re- 
adjustment of statistics. 





Pennsylvania R. R. Co.'s fig- 
ures (car-foot miles). 


Post Office Department's fig- 
ures (car-foot miles). 


Difference 
from railroad 


Character of service. 
(1) 


As originally 
reported. 

(2) 


Rechecked and 

revised 
February, 1912. 

(3) 


As printed 
December, 1911. 

(4) 


As revised 
since. 

(5) 


company's 
figures- 
column 3 

versus 
column 5. - 




1,174,768,949 
152,471,069 
209,463,955 


1,175,591,075 
152,434,570 
209,479,851 


1,195,975,851 
120,573,101 
209,198,344 


1,201,792,771 
126,279,179 
209,279,457 


+26,201,696 


Mail 


-26,155,391 


Express 


- 200,394 






Total 


1,536,703,973 


1,537,505,496 


1,525,747,296 


1,537,351,407 


- 154,089 




Result of corrections up 
to June 26, 1912 




+801,523 




+ 11,604,111 
- i 154,089 




Result of comparison 
after revision, June 
26, 1912 



















P. S.— The Long Island R. R. is omitted from this table because the Post Office Department state- 
ment treats the Long Island R. R. as entirely separate from the Pennsylvania R. R. system. 

1 This difference of 154,089 car-foot miles is only about one-hundredth of 1 per cent of the total passen- 
ger train space. 

Although a close agreement has finally been reached in the grand 
total of car-foot miles, it will be observed that there has been a very 
important readjustment by the Post Office Department of the figures 
as between passenger, mail, and express services. There is no ques- 
tion but that the railroad company reported the absolute facts, nor 
is it alleged that the apportionment of car space to each of the services 
during the month of November, 1909, was in any respect abnormal. 



408 



RAILWAY MAIL PAY. 



The Post Office Department has simply made its own determination 
that a certain proportion of the mail space was needed for its busi- 
ness and that another portion was not absolutely needed, and as a 
result it cut out about 20 per cent of the mail space, amounting to 
over 30,000,000 car-foot miles, and disallowed it, and this action was 
taken without conference with the railroad company. Subsequently, 
it admitted clerical errors the correction of which reduced the deduc- 
tion to 26,000,000 car-foot miles, or about 17 per cent of the mail- 
car space. 

In addition to this reduction of the mail-car space as reported, the 
Post Office Department made a second unwarranted readjustment by 
adding the 26,000,000 car-foot miles to the passenger space, thus dis- 
torting the correct ratio as between the passenger, mail, and express 
services. 

The successive steps between the original presentation of the data 
by the railroad company and its revision by the Post Office Depart- 
ment are shown in the following table : 

Total car-foot miles, Pennsylvania R. R. system (all lines east and west of 
Pittsburgh except Long Island R. R.), as reported by railroad company and 
as reported and altered by Post Office Department. 



Passenger. 



Mail. 



Express. 



Total. 



1. Railroad company's figures: Original 

computation as reported to Post 
Office Department 

2. Railroad company's figures: Recheeked 

February , 1912 

3. Post Office Department's figures: Origi- 

nally published December, 1911, de- 
ducting 20 per cent of mail space. . . 

4. Post Office Department's figures: Show- 

ing transfer of rejected mail space to 
passenger service 

5. Post Office Department's figures: Cor- 

rected by Post Office Department, 
June 26, 1912, to show 17 per cent de- 
duction of mail space 

6. Post Office Department's figures: Show- 

ing transfer of rejected mail space to 
passenger service 



1, 174, 76S, 949 
(76.45) 

1,175,591,075 

(76. 46) 

1, 166, 299, 427 
(77. 96) 

1,195,975,851 
(78.39) 

1,177,775,366 

(77.83) 

1,201,792,771 

(78.18) 



152,471,069 
(9. 92) 

152,434.570 
(9.91) 

120,573,101 
(8. 06) 

120,573,101 
(7.90) 

126,279,179 
(8.34) 

126, 279, 179 
(8.21 



209,463,955 
(13.63) 

209,479,851 
(13.63) 

209,198,344 
(13.98) 

209, 198, 344 
(13.71) 

209,279,457 
(13.83) 

209,279,457 
(13.61) 



1,536,703,973 
1,537,505,496 
(1,496,070,872) 

1,525,747,296 
(1,513,334,002) 
1,537,351,407 



The relative percentages of car space devoted to the passenger, 
mail, and express services derived from the preceding table would 
be as follows: 

Percentage of total car space as ascertained by railroad company and revised by 

Post Office Department. 



Basis of— 



Passen- 
ger. 



Man. 



1. Railroad company's figures, originally computed 

2. Railroad company's figures, recheeked (Feb., 1912) 

3. Post Office Department's figures, originally published December, 1911, 

showing a deduction of 20 per cent mail space 

4. Post Office Department's figures, originally published showing a de- 

duction of 20 per cent of mail space and the transfer of the rejected 
space to the passenger service 

5 Post Office Department's figures, corrected June 26, 1912, by Post Office 
Department to 17 per cent deduction of mail space 

6. Post Office Department's figures, corrected by Post Office Department 
to a 17 per cent deduction of mail space and the transfer of the re- 
jected space to the passenger service 



Per cent. 
76.45 
76.46 

77.96 



78.39 
77.83 

78.18 



Per cent. 
9.92 
9.91 



7.90 
8.34 



3.21 



Per cent. 
13.63 
13.63 

13.98 



13.7 
13.83 

13.61 



KAIL WAY MAIL PAY. 409 

APPLICATION OF MAIL RATIO TO PASSENGER TRAIN EXPENSES. 

The extraordinary importance of the variation in the percentages 
of mail space will be appreciated when it is pointed out that the 
passenger train operating expenses (and taxes) for the Pennsylvania 
Eailroad system for the month of November, 1909, was $5,535,546.49. 
Applying the several mail ratios to this amount we obtain the 
following : 



Basis of— 



1. Railroad company's figures, original 

2. Railroad company's figures, rechecked 

3. Post Office Department's figures, original, 20 per cent space reduction 

4. Post Office Department's figures, adding this 20 per cent to passenger space 

5. Post Office Department's figures, revised, 17 per cent space reduction 

6. Post Office Department's figures, revised, adding this 17 per cent to passenger 

space 



Per cent. 



9.92 
9.91 
8.06 
7.90 
8.34 

8.21 



Proportion 
of expenses. 



•1549, 126. 21 
548. 572. 66 
446, 165. 05 
437,308.17 
461, 664. 58 

454,358.37 



It can now be seen (comparing items 2 and 3) that the unwar- 
ranted rejection of mail space by the Post Office Department to the 
extent of 20 per cent would have reduced the mail expenses 
$102,407.61 per month, or $1,228,891.32 per year; also by comparing 
items 2 and 4, that the transfer of the rejected space to the passenger 
service would still further reduce the mail expenses by changing the 
amount to $111,264.49 per month, or $1,335,173.88 per year, and of 
course correspondingly increase the passenger service expenses. 

By comparing items 2 and 6 it will be seen that by reducing its 
subtraction of mail space from 20 per cent to 17 per cent the expenses 
rejected are reduced from $111,264.49 to $94,214.29, a difference of 
$17,050.20 per month, or $204,602.40 a year. This large amount 
measures the result of some clerical errors made in the Post Office 
Department's calculations and recently admitted and corrected by the 
department. 

MAIL-CAR SPACE DISALLOWANCE BY POST OFFICE DEPARTMENT. 

The failure of the Post Office Department to publish in its printed 
document the full data submitted by the railroad company in regard 
to car space devoted to the United States mails in comparison with 
the car space which the Post Office Department was willing to recog- 
nize for this purpose, makes it extremely difficult to analyze partic- 
ular cases in order to disclose the methods pursued by the depart- 
ment and the effect of those methods. However, a general explana- 
tion can be made, and certain examples can be submitted which should 
be sufficient to show that the methods of the Post Office Department 
were not founded on correct principles of transportation, and their 
use would produce unfair results. 



410 EAILWAY MAIL PAY. 

MAIL-CAR SPACE POST OFFICE DEPARTMENT METHODS. 

In the letter of the Second Assistant Postmaster General, printed 
on pages 5-7 of Document No. 105, the method pursued by the Post 
Office Department in recognizing or disallowing mail-car space, as 
reported by the railroad companies, is explained as follows : 

In the mail service, the car-foot mileage has been subdivided to show that 
performed in the full railway post-office car service, apartment-car service, 
closed-pouch service, storage-car service, and deadhead service. The space in 
the full railway post-office car service was based upon the actual length of the 
cars authorized. In cases where cars of greater length than authorized were 
operated, the excess space, if used by the department for the storage of mails, 
was charged to storage space, and if not so used was considered as dead space 
and charged to the passenger service. In cases where a full railway post-office 
car was necessary in one direction and not used by the department on its 
return, such return movement being necessary to maintain the service, its length 
was considered as deadhead space and charged to the mail service. In the 
apartment-car service the space reported by the Railway Mail Service as being 
necessary for the needs of the particular train was used, the remaining space 
being charged to storage or dead space the same as in the full railway post- 
office car service. It early developed that there was no uniformity in the 
manner of reporting the amount of space devoted to closed-pouch service by 
the companies. Therefore it was necessary to fix a basis for the arbitrary 
assignment of space in cars to that service. After careful consideration, and 
from information obtained by actual tests, weighings and measurements, the 
following rule was laid down: For weights of 100 pounds or less allow 6 linear 
inches; for weights above 100 pounds and not exceeding 200 pounds allow 10 
linear inches; for weights above 200 pounds allow 5 linear inches for each 
additional 100 pounds. The weights were ascertained by multiplying the 
maximum number of pouches and sacks reported by the company as carried at 
any one time on a train by the average weight of pouches and sacks, namely. 
20 pounds, as fixed by an actual weighing for 10 days of closed pouches on 
express trains. In cases where companies reported space less than the space 
which would be allowed upon the above rule, but in accordance with actual 
measurement or careful estimate, the company's report was accepted. 

MAIL-CAR SPACE ANALYSIS OF RAILROAD COMPANY AND POST OFFICE 

DEPARTMENT FIGURES. 

In Table No. 4 of the document the Post Office Department pub- 
lishes its own computation of mail-car space under five subdivisions, 
i. e. ; (1) R. P. O. car service; (2) apartment-car service; (3) closed- 
pouch space; (4) storage space; and (5) deadhead space. It does 
not, however, publish the railroad company's figures for the same 
subdivisions, nor does it set forth the additional subdivisions which 
are indicated in the description of the method employed as above 
explained. The additional subdivisions would be: (6) Excess space 
used for storage ; (7) excess space not used ; (8) deadhead cars return- 
ing (according to authorized length or according to actual length). 
These additional subdivisions would be justified under the head of 
R. P. O. car service and apartment-car service. 

In order to reveal the extent and character of the reductions made 
by the Post Office Department from the mail-car space as reported by 
the railroad company, the following table has been prepared : 



RAILWAY MAIL PAY. 



411 



Pennsylvania R. R. system {except Long Island R. R.) — Mail car-foot miles 
for November, 1909, as reported by the railroad company and as published by 
the Post Office Department. 





Railroad 
company 
figures. 


Post Office 

Department 

figures. 


Disallowed. 


Per cent 
of disal- 
lowance. 


R. P. 0. cars: 

Space authorized 


63,423,463 
5,325,943 
1,853,549 
5,166,540 


63,180,868.73 


4,990,866.18 
11, 523, 180. 54 

7,454,213.94 
2, 187, 130. 29 














Deadhead cars returning ; . . 


7,597,760.09 








Total 


75,769,495 


70,778,628.82 


6.58 






Storage cars: 

Loaded 


22,703,692 
13,546,378 


24, 726, 889. 46 




Deadhead cars returning 










Total 


36,250,070 


24, 726, 889. 46 


31.78 






Apartment cars: 

Space required 


28,494,624 

932, 543 

2, 249, 022 

1, 506, 847 


25,728,822.06 




Excess space used for storage 










Deadhead cars returning 












Total 


33,183,036 


25,728,822.06 


22.46 






Closed pouch space: 

In use 


7, 222, 178 
9,791 


5,044,838.71 




Deadhead 










Total 


7,231,969 


5,044,838.71 


30.24 






Grand total 


152, 434, 570 


126, 279, 179. 05 


26, 155, 390. 95 


17.15 







This table shows that the Post Office Department has disallowed 
mail-car space on the Pennsylvania Railroad system to the extent of 
26,155,390 car-foot miles, this being 17 per cent of the total mail-car 
space. It is also obvious that this method of reduction has been 
pursued in each class of mail-car space, there being a disallowance 
of 6.58 per cent in R. P. O. cars, 31.78 per cent in storage cars, 22.46 
per cent in apartment cars, and 30.24 per cent in closed pouch space. 

The theory upon which the Post Office Department makes this 
reduction in the first three items either minimizes or ignores the 
operating conditions which necessarily control the railroad company. 
The maximum necessities of the service must be provided for at all 
times, while the Post Office Department apparently bases its calcula- 
tions upon almost the minimum necessities. Their theory also fails 
to recognize the operating requirements of standard car equipment of 
uniform sizes and patterns; also that mail apartment cars (which 
are combination baggage and mail cars or combination baggage, mail, 
and passenger cars) must be run to the terminal of the division and 
can not be eliminated from the trains at an intermediate place that 
may suit the convenience of the mail, but would not suit the con- 
venience of the passenger service. 

The greatest reduction in car space disallowance was made in the 
R. P. O. and storage cars. These together represent a total of 16,514,- 
046 out of a total disallowance of 26,155,390 car- foot miles. An effort 
has been made to analyze the methods and results of the action of 
the Post Office Department in these respects on route No. 110001, 
Philadelphia to Pittsburgh, where a heavy cut of this character has 
been made. The Post Office Department's report in Table No. 4 shows 



412 



RAILWAY MAIL PAY. 



only three subdivisions of R. P. O. and storage spaces under Che 
heads: (1) Railway post office car service; (2) storage space; (3) 
deadhead space, and even here the deadhead space evidently include.:; 
some apartment-car space not credited as being actually needed. The 
railroad company's figures for R. P. O. and storage space have been 
tabulated and subdivided into six items, which refer exclusively to 
R. P. O. and storage space, and do not include any apartment-car 
space. However, by ^careful comparison and analysis the items have 
been adjusted in relation to each other, so that it is believed a fair 
approximation has been achieved. 

Mail car-foot miles for November, 1909 — Route No. 110001, Philadelphia to Pitts- 
burgh, Pa. — Comparing railroad company's figures with Post Office Depart- 
ment's figures. 

[Length, railroad company, 34.8.8 miles; Post Office Department, 349.02 miles.] 



Character of mail space. 


Railroad 

company 

figures. 


Post Office 

Department 

figures. 


Difference. 


Alleged 
dead space. 


R. P. 0. cars: 


16,355,894 

1,301,307 

404,182 

1,443,513 


16,465,327.90 
693, 960. 20 


+ 109,433.90 

- 607,346.80 

- 404,182.00 

- 81,673.00 






607,346.80 




404,182.00 




1,361,840.00 


81,673.00 






Total 


19,504.896 


18,521,128.10 


- 983,767.90 


1.093.201.80 






Storage cars: 


8, 626. 631 
6,013,134 


8,626,631.00 








- 6,013,134.00 


6.013,134.00 








Total 


14,639,765 


8.626,631.00 


- 6,013,134.00 


6,013,134.00 






Total R. P. 0. and storage 


34,144,661 


27,147,759.10 


- 6,996,901.90 


7.106.335.80 



On this route the Post Office Department's requirements in R. P. O. 
cars were — 

Westbound : 

60-foot cars, daily including Sundays 11 

50-foot cars, daily including Sundays 2 

40-foot car, daily including Sundays 1 

60-foot car, daily except Sundays 1 

Total cars, equivalent to 852 feet daily for 30 days 15 

Eastbound : 

60-foot cars, daily including Sundays 8 

50-foot cars, daily including Sundays 2 

40-foot cars, daily including Sundays 2 

60-foot car, daily except Sundays 1 

Total cars, equivalent to 720 feet daily for 30 days 13 

The car-foot miles calculated on this (the minimum) basis would 
be — 

852 feet X 30 days X 349.02 miles 8,920,951.20 

720 feet X 30 days X 349.02 miles 7, 538, 832. 00 

Total 16, 459, 783. 20 



EAILWAY MAIL PAY. 413 

However, the Post Office Department says, in House Document 
No. 105: 

In cases where a full railway post-office car was necessary in one direction 
and not used by the department on its return, such return movements being 
necessary to maintain the service, its length was considered as deadhead space 
and charged to the mail service. 

Under this ruling the car-foot miles would be computed according 
to the westbound authorization, thus : 
852 feet X 2 X 30 days X 349.02 miles 17,841,902.40 

That this method was used is confirmed by the fact that if we add 
the two items shown in the department's statement, Table 5-1 — 

Distribution space 16,465,327.90 

Deadhead space 1,361,840.00 



We have a total of 17,827,167.90 

But the railroad company, to meet the maximum necessities of the 
department and to provide uniform facilities under all operating 
conditions and exigencies, supplied in all cases E. P. O. cars of 60 
feet inside length, and in fact had already introduced into the service 
a number of the new 70-foot all-steel R. P. O. cars. Therefore the 15 
cars authorized westbound were represented by eleven 60-foot cars and 
four 70-foot cars, and these cars were run every day both ways, except 
that one of the 60- foot cars was not required to go west on Sundays 
(train No. 33), because the department did not require it. Hence, 
the railroad company made provision for an equivalent of 932 feet 
westbound and, of course, the same car space eastbound. The calcu- 
lation would be — 
932 feet X 2 X 30 days X 34S.8 miles 19,504,896 

Here is an apparent discrepancy between what the railroad com- 
pany furnished and what the Post Office Department recognized of 
1,677,728.10. 

The department, in Document No. 105, says that the excess space 
in postal cars, if used for storage of mail, was charged to the mail 
service, and if not was charged to the passenger service. 

We find that the department allowed as storage space (i. e., in 
storage cars as well as E. P. O. cars) 9,320,591.20 car- foot miles, while 
the company reported for storage cars loaded 8,626,631 ; therefore the 
difference — 693,960.20 — may be regarded as representing the depart- 
ment's allowance of credit for storage space in R. P. O. cars. Adding 
this to the department's figures, we obtain a total for R. P. O. space 
recognized of 18,521,128.10. There would still be left 983,767.90 car- 
foot miles not allowed, and therefore cast back upon the passenger 
service. 

This remainder just quoted, when reduced to the daily space per 
mile, would be 94 feet both ways, or 47 feet per mile one way. Remem- 
bering that the number of R. P. O. -cars required are 15 daily west- 
bound, the disallowance is tantamount to refusing to recognize an 
average of 3 linear feet for each 60-foot car. This is a revelation of 
the minuteness of the discrimination which finally resulted from the 
method pursued. Of course the railroad company could make no 
use of this fractional space in postal cars for other traffic. 
49396—14 34 



414 RAILWAY MAIL PAY. 

It is interesting to observe that the railroad company's figures for 
this same item, " Excess space in R. P. O. cars not used," was 404,182 
car-foot miles, which would be equivalent to 20 feet each way per mile 
to be spread over 15 R. P. O. cars, or an average of only 1J linear feet 
of space in each 60-foot car not found to be in actual use. 

The storage cars are usually 60-foot steel cars, specially fitted with 
stanchions to mark off stalls in which the bulk mail can be kept sepa- 
rate in piles for prompt delivery. These cars carry working mail 
as well as other mail. They are usually run in association with 
R. P. O. cars and are practically tenders to these cars or an exten- 
sion of the storage space. The railroad company's figures for No- 
vember, 1909, show : 

Car-foot miles. 

Storage cars loaded 8,626,631 

Empty storage cars returning 6,013,134 

Total 14, 639, 765 

The Post Office Department gives no recognition to the return dead- 
head movement of these cars, and cuts out in this one item 6,013,134 
car-foot miles. The movement of mail traffic is very much heavier 
in the westbound direction than in the eastbound, about 78 per cent 
of the total load being moved westbound on this route and only 22 
per cent eastbound. Neither the railroad company nor the Post 
Office Department is responsible for this condition, but it can not 
be ignored in arranging for the traffic, and it is necessary to take note 
of the deadhead and empty space returning and charge it with its 
proper proportion of the cost of operation. 

The conclusion in regard to route No. 110001 is that the figures as 
submitted by the railroad company should have been fully accepted 
by the Post Office Department, and it is confidently believed that 
any disinterested referee in possession of the above facts and with 
a proper understanding of the matter would recognize and accept 
the entire car space as reported. 

In the item of apartment cars the railroad company reported 
1,264,949 car-foot miles and the Post Office Department published 
1,268,240.90. The difference is comparatively slight and requires no 
discussion. 

In closed-pouch service the railroad company reported 1,170,732 
car-foot miles as the result of actual measurement, while the Post 
Office Department reports 831,785.07 as the result of the employment 
of an arbitrary obtained from a special and limited test of their own, 
including the assumption that the average weight of a pouch or sack 
was 20 pounds. 

The method followed by the railroad company seems the more 
dependable. It would be easy to reach a satisfactory understanding 
regarding an item like this if the larger questions of R. P. O. stor- 
age and apartment car space could be adjusted by securing the 
recognition by the department of the operating conditions which are 
mandatory upon the railroad management. 



EAILWAY MAIL PAY. 



415 



ERRORS CONCEDED IN PART BY POST OFFICE DEPARTMENT. 

Similar analyses of other mail routes of the Pennsylvania Railroad 
s} 7 stem would only result in similar conclusions as regards the sub- 
traction by the Post Office Department of mail-car space from the 
original data reported by the railroad company. 

Since Document No. 105 was printed the attention of the Post 
Office Department has been called to a number of obvious errors in 
computing mail space, and it has corrected some of the errors in a 
revised edition of the statement so as to allow additional mail space 
as follows: 

Car-foot miles. 

Route No. 113001, Philadelphia and Washington 58, 512. 60 

Route No. 131002, Pittsburgh and Chicago 1,075,046.85 

Route No. 131011, Xenia and Richmond 178, 644. 18 

Route No. 131014, Columbus and Cincinnati 273,195.90 

Route No. 131015, Columbus and Indianapolis 1, 014, 370. 00 

Route No. 131032, Pittsburgh and Columbus 1.704,376.00 

Route No. 133002, Indianapolis and East St. Louis 1,389,898.88 

Route No. 135097, Willows and Madison Tower 12, 032. 93 

Total 5, 706. 077. 34 

These corrections recognize and give credit for the mail space in 
deadhead postal cars returning in the light direction to the extent of 
the full R. P. O. car space authorized in the heavy direction. An 
acceptance of the same principle in regard to deadhead mail-storage 
cars would he perfectly logical. 

MAIL-CAR SPACE SUMMARY. 

The total mail car space is shown on page 14 of this state- 
ment, classified according to its character. The figures as reported 
by the railroad company and the disallowance by the Post Office 
Department in each class is as follows: 



Railroad com- 
pany figures- 
total. 



R. P. O. space 

Storage cars 

Apartment cars — 
Closed-pouch space 

Total 



75,769,495 

36,250,070 

33,183,036 

7,231,969 



152,434,570 



Disallowed 

by depart- 

" ment. 



4, 990, 866 

11,523,180 

7,454,214 

2,187.130 



26.155.390 



Percentage 
of disal- 
lowance. 



6.-58 
31.78 
22.46 
30.24 



17.16 



In R. P. O. space the disallowance of 4,990,866 car-foot miles (or 
6.58 per cent) represents the distinction between the standard 70-foot 
postal car furnished by the railroad company and the practice of the 
department on a few trains to authorize a less amount of space than 
70 feet. In view of the fact that it requires considerably over 100 
postal cars to perform the service, the recognition of a standard type 
of car would be entirely reasonable on the part of the department m 
lieu of making casual deviations from the standard to meet the mini- 
mum conditions. It will be observed that in this particular class of 



416 



RAILWAY MAIL PAY. 



mail-car space, where the Post Office Department has for years made 
a definite recognition of space and with which it is most familiar, 
there is the least variance between the space reported by the company 
and the space accepted by the department. 

In regard to storage-car space, where the disallowance is 11,523,180 
car-foot miles (or 31.78 per cent), the deficiency is due to the Post 
Office Department failing to recognize the deadhead storage cars 
returning, necessitated by the uneven character of the traffic which 
ranges from 60 to 85 per cent in the heavy direction and only 15 to 
40 per cent in the light direction. A simple recognition of the un- 
avoidable facts of the case would necessitate an agreement from the 
Post Office Department to the figures reported by the railroad com- 
pany. 

In regard to mail-apartment cars, the disallowance amounts to 
7,454,214 car-foot miles (or 22.46 per cent), and is due to the fact 
that the Post Office Department has reduced the figures actually used 
to correspond with a space which it thinks would be adequate, be- 
cause its local officials upon reviewing the figures have so reported. 
The revision is therefore made on a theoretical basis and represents 
an expectancy of minimum conditions or, at most, average conditions. 
The provision of a mail apartment in a combination car, the re- 
mainder of which may be used for baggage, express, or passengers, 
must necessarily be gauged to some extent by the varying demands 
and the varying volume of the other business. It must also be subject 
to the standardization of combination cars, which would involve an 
occasional necessity for using "a mail apartment somewhat larger than 
the need of the day or the hour or the route, because of the impos- 
sibility of contracting or expanding an inclosed apartment to meet 
the fluctuating requirements of the service. It is believed that a 
fair discussion of the allotment and recognition of mail-apartment 
car space, and of all the conditions affecting the question, would re- 
sult in the acceptance by the Post Office Department of all the space, 
or nearly all the space, reported by the company as being actually 
provided during November, 1909. 

In closed-pouch space the disallowance amounts to 2,187,130 car- 
foot miles (or 30.24 per cent of the total). This class of service rep- 
resents the mails that are carried in the baggage car in the custody 
of the baggage-master. The reports of the railroad company for this 
class of service were based upon actual measurements. The Post 
Office Department, according to its report, made use of an arbitrary 
formula on the assumption that the average mail pouch or sack 
weighed 20 pounds, and this is deemed to have been a less trustworthy 
method. 

Test cases could readily be submitted showing the inadequacy of 
the Post Office Department method to do justice. For example, on 
the New York and Philadelphia route there was an actual weighing 
of the mails for 105 days in the spring of 1909, as a result of which 
the Post Office Department certified that the average weight carried 
over the whole line was 473,230 pounds daily. The Post Office De- 
partment also estimated that 17.75 per cent of this weight was 
so-called closed-pouch mail in care of the baggage-master: this 
would be 83,525 pounds. According to the department's space ratio 
of 50 linear inches to 1,000 pounds used in Document No. 105, the 



KAIL WAY MAIL PAY. 417 

weight just mentioned for a period of 30 days would have been equal 
to 932,765 car-foot miles. 

The railroad company reported for closed-pouch service on this 
route in the November statistical report 837,174 car-foot miles. The 
railroad company's figures were, therefore, very conservative — 95,000 
car-foot miles less than the weight of mail would indicate. The Post 
Office Department, by revising the railroad company's figures, allowed 
for this route only 779,996 car-foot miles, which was less than the 
weight would justify by over 150,000 car-foot miles. 

Therefore in this class of mail space, as in all the other which are 
reviewed above, it is very clear that consultation and comparison of 
figures are necessary between both parties in interest in order to 
arrive at accurate and acceptable results. 

The respective statements of car space devoted to passenger, mail, 
and express service for each company embraced in the Pennsylvania 
Railroad system, both as measured and reported by the railroad com- 
pany and as rearranged by the Post Office Department, are shown 
in close comparison in the following table. In a succeeding table are 
shown the relative percentages of car space for passenger, mail, and 
express service, based on both the railroad company's figures and 
upon the Post Office Department's rearrangement of the figures. 






418 



KAILWAY MAIL PAY 



Pennsylvania R. R. system east and west of Pittsburgh (except Long 
Island R. R.) — Car space for November, 1909, expressed in car-foot miles by 
companies — Railroad company's figures as verified and recheclced, and Post 
Office Department figures as shown in revised edition of House Document 
No. 105. 



Company. 


Length 
of routes 
(miles). 


Car-foot miles. 


Passenger. 


Mail. 


Express. 


Total. 


Pennsylvania Lines East: 


3.056.67 
3,065.35 

663.95 
669.24 
445.61 
445.44 

310. as 

313.21 

111.60 
111.69 

87.10 
131.13 

78.00 
105.95 
162. 10 
164.38 


528,508,392 
539,255,118 

132,844,668 
133,683,273 
39,951,565 
40,233,546 
35.171,605 
35,572,410 

5,413,995 
5,436,194 

999,141 
1,028,091 

620, 165 

659,158 

9.492,880 

9,438,488 


57.819,376 
46,974,973 

8,336,728 
7,498,346 
2,894,693 
2,606,274 
1,132,387 
693,987 

423,166 
392,202 

141,764 
113,207 

92,772 

53,825 

501,010 

495,300 


91,624,080 
91,272,822 

15,638,456 
15,646,654 
7,549,442 
7,549,439 
1,827,845 
1,823.137 

1,550.697 
1,547,077 

177.092 
177,153 

125,255 

125,255 

1,067,108 

1,060,235 


677,951,848 
677,502,913 

156,819,852 
156.828,273 
50,395,700 
50,389,259 
38,131,837 
38,089,534 

7,387,85b 
7,375,473 

1,317,997 
1,318,451 

838,192 


Post Office Department 

Philadelphia, Baltimore & Wash- 
ington R. R 


Post Office Department 


Post Office Department 

West Jersey & Sea Shore R. R 

Post Office Department 

New York, Philadelphia & Nor- 
folk R. R 


Post Office Department 

Baltimore, Chesapeake & Atlan- 
tic Ry 


Post Office Department 

Maryland, Delaware & Virginia 
Ry 


Post Office Department 

Cumberland Valley R. R 


838.238 
11,060,998 
10,994,023 


Post Office Department 


Total, Lines East 


4,915.36 
5,006.39 


753,002,411 
765,306,278 


71,341,896 
58,828,114 


119,559,975 
119,201,772 


943,904,282 


Total, Post Office Depart- 
ment 


943,336,164 






Pennsylvania Lines West: 


1,354.08 
1,358.20 

1,460.17 
1,465.24 
818.26 
821.20 
547.10 
547.92 

29.43 
29.79 

148.25 
148.80 
177. 60 
178.89 
248.01 
249. 46 
28.16 
28.73 


173,181,441 
177,848,715 

158,968,990 
164,300,777 
45,790,484 
48,301,111 
25,792,537 
26,228,201 

898,709 
912,339 

2,978,759 
3,097,806 
8,589,730 
8,949,406 
5,694.455 
6,108,682 
693,559 
739.456 


28,747,137 
24,363,892 

32,381,282 
27,225,190 
14,827,412 
12,310,731 

2,708,457 
2,272,777 

31,092 
17,459 

415,309 

296,240 

757,699 

398, 015 

1,139,212 

527,598 

85,074 

39,163 


41,437,614 
41,429,675 

33,434,990 
33,615,137 
8,491,357 
8.491,361 
3,501,207 
3,501,204 

43,660 
43,660 

620,074 

620,072 

1,734,569 

1,734,572 

622,233 

607,835 

34,172 

34,169 


243,366,192 


Post Office Department 

Pittsburgh, Cincinnati, Chicago 
& St. Louis Ry 


243,642,282 
224,785,262 


Post Office Department 

Vandalia R. R 


225,141,104 
69,109,253 


Post Office Department 

Grand Rapids & Indiana Ry 

Post Office Department 

Cincinnati, Lebanon & Northern 
Ry 


69,103,203 
32,002,201 
32,002,182 

973,461 


Post Office Department 

Cincinnati & Muskingum Valley 
R. R 


973,458 
4,014.142 


Post Office Department 

Cleveland, Akron & Columbus Ry. 

Post Office Department 

Toledo, Peoria & Western Ry 

Post Office Department 

Waynesburg & Washington R.R. 

Post Office Department 


4,014,118 

11,081,998 

11,081,993 

7,455,900 

7,244,115 

812,805 

812,788 


Total, Lines West 


4,811.06 
4,828.23 


422, 588, 664 
436,486,493 


81,092,674 
67,451,065 


89,919,876 
90,077,685 


593,601,214 


Total, Post Office Depart- 
ment 


594,015,243 






Grand total, Lines East and West 

Grand total, Post Office Department.. 


9, 726. 42 
9,834.62 


1,175,591,075 
1,201,792,771 


152,434,570 
126,279,179 


209,479,851 
209,279,457 


1,537,505,496 
1,537,351,407 



RAILWAY MAIL PAY, 



419 



Pennsylvania R. R. system East and West of Pittsburgh (except Long Island 
R. R.) — Car space for November, J 009, showing ratio between passenger, 
mail, and express service based on preceding table. 



Company. 



Pennsylvania Lines East: 

Pennsylvania R. R 

Post Office Department 

Philadelphia, Baltimore & Washington R. R„ . 

Post Office Department 

Northern Central Ry 

Post Office Department 

West Jersey & Seashore R . R 

Post Office Department 

New York, Philadelphia & Norfolk R. R 

Post Office Department 

Baltimore, Chesapeake & Atlantic Ry 

Post Office Department 

Maryland , Delaware & Virginia Ry 

Post Office Department 

Cumberland Valley R. R 

Post Office Department 

Total. Lines East 

Total, Post Office Department 

Pennsylvania Lines West: 

Pennsylvania Co 

Post Office Department 

Pittsburgh, Cincinnati, Chicago & St. Louis Ry 

Post Office Department 

Vandalia R. R 

Post Office Department 

Grand Rapids <fc Indiana Ry 

Post Office Department 

Cincinnati, Lebanon & Northern Ry 

Post Office Department 

Cincinnati & Muskingum Valley R. R 

Post Office Department 

Cleveland, Akron & Columbus Ry 

Post Office Department 

Toledo, Peoria & Western Ry 

Post Office Department 

Waynesburg & Washington R. R 

Post Office Department 

Total, Lines West 

Total, Post Office Department 

Grand total, Lines East and West 

Grand total, Post Office Department 



Mail. 



Passen- 



of total. I 



of total. 



77.96 
79.60 
84.71 
85.24 
79.28 
79.85 
92.24 
93.39 
73.28 
73.71 
75.81 
77.98 
73.99 
78.64 
85.82 
85.86 



79.77 
81.13 



71.16 
73.00 
70.72 
72.98 
66.26 
69.90 
80.60 
81.96 
92.32 
93.72 
74.20 
77.17 
77.51 
80.76 
76.38 
84.33 
85.33 



71.19 

73.48 



76.46 

78.18 



8.53 
6.93 
5.32 
4.78 
5.74 
5.17 
2.97 
1.82 
5.73 
5.32 

10.75 
8.58 

11.07 
6.42 
4.53 
4.50 



7.56 
6.23 



per cent 
of total. 



13.51 
13.47 
9.97 
9.98 
14.98 
14.98 
4.79 
4.79 
20.99 
20.97 
13.44 
13.44 
14.94 
14.94 
9.65 
9.64 



Total 
per ceut , 



12.67 
12.64 



11.81 
10.00 
14.41 
12.09 
21.45 
17.81 
8.46 
7.10 
3.19 
1.79 
10.35 
7.38 
6.84 
3.59 
15.28 
7.28 
10.47 
4.82 



13.66 
11.36 



J. 91 
5.21 



17.03 
17.00 
14.87 
14.93 
12.29 
12.29 
10.94 
10.94 
4.49 
4.49 
15.45 
15.45 
15.65 
15.65 
8.34 
8.39 
4.20 
4.20 



15.15 
15.16 



13.63 
13.61 



100. 00 
100.00 
100. 00 
100.00 
100.00 
100.00 
100. 00 
100.00 
100. 00 
100. 00 
100.00 
100. 00 
100. 00 
100. 00 
100. 00 
100. 00 



100.00 
100. 00 



100. 00 
100.00 
100. 00 
100. 00 
100. 00 
100.00 
100. 00 
100.00 
100.00 
100.00 
100.00 
100.00 
100. 00 
100.00 
100. 00 
100.00 
100.00 
100. 00 



100.00 
100.00 



100.00 
100. 00 



MAIL-CAR SPACE RATIO FOR EACH COMPANY. 



After ascertaining the relative amount of car space devoted to the 
mail service as compared with the amount devoted to passenger and 
express service, the next step would be to apply the ratio of mail space 
to the total expenses of the passenger-train service to learn the amount 
of these expenses properly chargeable to the mail service. The origi- 
nal intention of the Post Office Department was to secure the data of 
operating expenses so that the cost of operation could be segregated 
to each individual mail route (there, are over 200 routes in the Penn- 
sylvania Railroad system), but it learned that this would be impos- 
sible, because the railroads do not have their accounts subdivided so 
minutely. 

Therefore the application of the mail -space ratio to the operating 
expenses is made for each railroad company in the system and not for 
the railroad system as a whole nor for any particular route. On page 



420 



RAILWAY MAIL PAY. 



11 the mail-space ratio for the Pennsylvania Railroad system is ap- 
plied to the total passenger-train expenses for the system, but this 
was done only for illustrative purposes. 

The percentage of mail-car space for each of the companies east 
and west of Pittsburgh is shown in the following table, first giving 
the railroad company's figures, original and revised, then the Post 
Office Department's figures, both original and corrected, and finally 
the Post Office Department expense ratio, which is usually lower than 
its mail-space ratio because of excluding certain items in the expenses 
as having no relation to the mail service in their opinion. 

Mail car space ratios, Pennsylvania R. R. system (all companies East and West 
of Pittsburgh except Long Island R. R.). 



Company. 



Railroad company's 
figures. 



Original. Revised 



Post Office Depart- 
ment's figures. 



Original. Corrected, 



Post 
Office 
Depart- 
ment's 
expense 
ratio. 



East of Pittsburgh: 

Pennsylvania R. R. Co 

Northern Central Ry . Co 

Philadelphia, Baltimore & Washington R. R. Co 

West Jersey & Seashore R.R.Co 

Baltimore, Chesapeake & Atlantic Ry. Co 

Cumberland Valley R. R. Co 

Maryland, Delaware & Virginia Ry. Co 

New York, Philadelphia & Norfolk R. R. Co. . . 
West of Pittsburgh: 

Pennsylvania Co 

Pittsburgh, Cincinnati, Chicago & St. Louis 
Ry. Co 

Vandalia R. R. Co 

Cincinnati & Muskingum Valley R. R. Co 

Cincinnati, Lebanon & Northern Ry. Co 

Cleveland, Akron & Columbus Ry. Co 

Grand Rapids & Indiana Ry. Co 

Toledo, Peoria & Western R. R. Co 

Waynesburg & Washington R. R. Co 

Total, Lines East and West 



Per cent. 
8.53 
5.75 
5.33 
2.97 

10.64 
4.53 

10.60 
5.73 

11.85 

14.41 

21.45 

10.35 

3.33 

6.84 

8.46 

15.28 

10.47 



Per cent. 
8.53 
5.74 
5.32 
2.97 

10.75 
4.53 

11.07 
5.73 

11.81 

14.41 

21.45 

10.35 

3.19 

6.84 
8.46 
15.28 
10.47 



Per cent. 
7.04 
5.17 
4.77 
1.82 
8.58 
4.50 
6.42 
5.32 

9.56 

10.68 
15.78 
7.38 
1.79 
3.59 
7.10 
7.28 
4.82 



Per cent. 
6.93 
5.17 
4.78 
1.82 
8.58 
4.50 
6.42 
5.32 

10.00 

12.09 
17.81 
7.38 
1.79 
3.59 
7.10 
7.28 
4.82 



Per cent. 
6.74 
5.07 
4.46 
1.76 
8.56 
4.42 
6.03 
4.45 

9.65 

11.65 

17.06 
7.36 
1.78 
3.54 
6.93 
7.19 



).92 



9.91 



8.21 



7.44 



DIVISION OF OPERATING EXPENSES BETWEEN FREIGHT AND PASSENGER 

SERVICES. 



After the mail space ratio is correctly ascertained (in comparison 
with the corresponding car space ratios for the passenger and ex- 
press services) the next step would be to find out the amount of 
operating expenses (including taxes) justly chargeable to the pas- 
senger-train service. Then the application of the mail space ratio 
to the passenger-train expenses should reveal the portion of these 
expenses which should be charged to the mail service. 

It is first necessary to take the total operating expenses which in- 
clude both the freight and passenger train expenses and divide these 
equitably between the freight and passenger services. During this 
process it will be found that many items can be definitely recognized 
as belonging quite clearly to the one or the other classification, and 
are therefore called " directly assignable." There are other items, 
however, of a joint character wherein the line of division is not so 
obvious. These are therefore called " nonassignable," and it is nee- 



RAILWAY MAIL PAY. 



421 



essary to accept some reasonable rule for their apportionment between 
the freight and passenger services. 

The rule most generally accepted is to take revenue train mileage 
performed in each of the services separately (freight and passenger) 
and use the relative percentage of each to establish the apportion- 
ment of joint expenses to each service. 

The Post Office Department called upon the railroads to furnish 
on Form 2603 the desired data as to revenue and expenses for the 
month of November, 1909, embracing, among other things, the total 
operating expenses, the total passenger-train operating expenses, the 
items directly assignable, the items not directly assignable, and as to 
the latter, the proportion allotted to the passenger-train service and 
the basis for such apportionment. 

In response, the following information from the books of the com- 
panies included in the Pennsylvania Kailroad system was furnished : 

Operating expenses and taxes, November, 1909, Pennsylvania R. R. system 
(except Long Island R. R.). 



[Total: Passenger train and per cent 


of latter to total.j 




Company. 


Total operating 
expenses (and 
taxes), freight 
and passenger. 


Total operating 
expenses (and 
taxes) charge- 
able to passen- 
ger-train 
service. 


Per cent 
of total. 


Pennsylvania Lines East of Pittsburgh: 


§9,079,325.81 
829, 891. 35 
1,109,540.84 
338,268.23 
i 14,181.89 
150,418.55 
i 10,072.64 
194,731.63 


82,743,857.49 
204,993.77 
583,635.13 
216,999.51 
9,058.84 
59,931.03 
6,741.44 
40,505.02 


30.22 


Northern Central Ry 


24.70 


Philadelphia, Baltimore & Washington R. R 


51.70 




64.15 




63. 8& 


Cumberland Valley R. R 


39.84 




66. 95 


New York. Philadelphia & Norfolk R. R 


23. 88- 






Pennsylvania Lines West of Pittsburgh: 
Pp.nnsylvaxiia R. R 


2,974,405.48 

2,214,180.83 

633,064.90 

66,061.67 

20, 128. 21 

171,128.61 

327,167.47 

86,787.48 

9,320.47 


630,821.19 
621,819.84 
201,457.09 
23,824.43 
4,234.30 
37,684.00 
117,055.77 
33,382.06 
3.815.58 


21.21 


Pittsburgh, Cincinnati, Chicago & St. Louis Ry 


28.08; 


Vandalia R. R 


31.82 


Cincinnati & Muskingum Valley R . R 


36.37 


Cincinnati. Lebanon & Northern Ry 


21.04 




22.02 


Grand Rapids & Indiana Ry 


35.7a 


Toledo, Peoria & Western R v 


38.46 


Waynesburg & Washington R. R 


40.94 


Pennsylvania Lines East of Pittsburgh 


11,726.430.94 
6,502,245.12 


3,861,722.23 
1,674,094.26 


32.93 


Pennsylvania Lines West of Pittsburgh 


25. 75 






Pennsylvania Lines East and West 


18,228,676.06 


5,535,816.49 


30. 36 







Taxes are not included in this amount. 



The passenger-train expenses shown above were also subdivided 
between the assignable and nonassignable costs and reported from 
the books of the companies, as per the following statement . 



422 



- RAILWAY MAIL PAY. 



Passenger operating expenses and taxes, November, 1909, Pennsylvania R. R. 
system (except Long Island R. R.), reported by railroad companies. 

[Total : Assignable and nonassignable and per cent of each to the total.] 





Passenger operating expenses (and taxes). 


Company. 


Total. 


Assignable. 


Per cent 
of total. 


Non- 
assignable. 


Percent 
of total. 


Pennsylvania Lines East: 

Pennsylvania R. R 


$2,743,857.49 

573,635.13 
204.993.77 
216,999.51 

46,505.02 
59,931.03 

9,058.84 
6, 741. 44 


$1,765,854.86 

351,664.20 
140,469.87 
140,785.86 

27,007.35 
30, 440. 82 

2,612.44 
2,073.16 


64.36 

61.30 
68.52 
64.88 

58.07 
50.79 

28.84 
30. 75 


$978,002.63 

221.970.93 
64:523.90 
76,213.65 

19, 497. 67 
29,490.21 

6.446.40 
4,668.28 




Philadelphia, Baltimore & Wash- 
ington R. R 


38 70 


Northern Central Ry 


31 48 


West Jersey & Seashore R. R 

New York, Philadelphia & Norfolk 
R. R 


35. 12 
41 93 


Cumberland Valley R. R 


49 21 


Baltimore, Chesapeake & Atlantic 
Ry 


71.16 


Maryland, Delaware & Virginia Ry. 


69.25 


Pennsylvania Lines West: 

Pennsylvania R. R 


630,821.19 

621,819.84 
201,457.09 
117,055.77 

23,824.43 
37,684.00 

4, 234. 30 
33,382.06 

3,815.58 


360, 836. 16 

360, 727. 99 
103,982.42 
59,412.96 

13,490.93 
20, 167. 55 

2,435.89 
13, 196. 01 

2,020.87 


57.20 

58.01 
51. 62 
50.76 

56.63 
53.52 
57.53 
39.53 
52.96 


269,985.03 

261,091.85 
97, 474. 67 
57,642.81 

10,333.50 
17.516.45 

1,798.41 
20, 186. 05 

1,794.71 


42.80 


Pittsburgh, Cincinnati, Chicago & 
St. Louis Rv 


41.99 


Vandalia R. R 


48.38 


Grand Rapids & Indiana Ry 

Cincinnati & Muskingum' Valley 
R. R 


49.24 
43. 37 


Cleveland, Akron & Columbus Ry. . 
Cincinnati, Lebanon & Northern Ry 

Toledo, Peoria & Western Ry 

Waynesburg <& Washington R. R... 


46.48 
42.47 
60.47 
47.04 


Pennsylvania Lines East 

Pennsylvania Lines West 


3.861,722.23 
1,674,094.26 


2, 460, 908. 56 
936, 270. 78 


63.73 
55.93 


1,400,813.67 
737,823.48 


36. 27 
44.07 






Pennsylvania Lines East and West 


5,535,816.49 


3,397,179.34 


61.37 


2,138,637.15 


38.63 



The basis of the apportionment was shown in each case, and for 
the sake of brevity is sufficiently indicated by citing the instance 
of the Pennsylvania Railroad Co., as illustrated in the following 
table : 

Passenger operating expenses and taxes, November, 1909, Pennsylvania R. R. 
Co., apportioned to each class of expense and reported by railroad company. 

[Total: Assignable and nonassignable and per cent of each to the total.] 



(a) Maintenance of way and structures 

(b) Maintenance of equipment 

Traffic 

(c) Transportation 

(d) General 

(«) Taxes 

Total 



Total. 



$428,569.19 

869,565.27 

76,627.50 

1,107,030.38 

114,795.49 

147,269.66 



2,743,857.49 



Assignable. 



$30,418.34 
744,475.45 

76,627.50 
885,602.59 

28,730.98 



1,765,854.86 



Per cent 
of total. 



7.10 
85.61 
100.00 
80.00 
25.03 



64.36 



Nonassigna- 
ble. 



$398, 150. 85 
125,089.82 



221,427.79 
86,064.51 
147,269.66 



978,002.63 



Percent 
of total. 



92.90 
14.39 



20.00 
74.97 
100.00 



35.64 



BASIS OF APPORTIONMENT FOE NONASSIGNABLE ITEMS. 



(a) Divided on revenue train mileage. 

(5) Divided, generally, on revenue train mileage ; a few items on the divided mainte- 
nance of equipment items. 

(c) Divided, generally, on revenue train mileage ; a few items on the yard and loco- 
motive mileage. 

(d) Divided on revenue train mileage. 

(e) Divided on various classes of taxes — tax on gross receipts and tax on net earnings 
on gross passenger earnings to total passenger and freight earnings ; other taxes on main- 
tenance of way and structures. 



RAILWAY MAIL PAY. 423 

DIVISION OF EXPENSES — FIRST REPORTS INADEQUATE. 

The Post Office Department states in its report that the data sup- 
plied by the railroad companies on Forms 2603 and 2604 was found 
to be inadequate for the purposes needed. Accordingly request was 
made for the information as to expenses in greater detail, a new 
Form 2608 being printed, in which the total operating expenses for 
November, 1909, were requested to be shown subdivided into the 116 
primary operating expense accounts recognized by the Interstate 
Commerce Commission. It was also desired that for each item the 
amounts assignable directly to mail, express, passenger, and freight 
services be stated and the amounts of remainders apportioned and 
the basis of such apportionment. 

DIVISION OF EXPENSES — POST OFFICE DEPARTMENT INTRODUCES ITS OWN 

METHOD. 

From this information the Post Office Department divided by its 
own method the total operating expenses between the passenger and 
freight services and determined what amounts were directly charge- 
able to the mail, express, and passenger services. The remainder of 
the passenger operating expenses (which were not directly assigned) 
were apportioned on the basis of the car-foot mileage recognized in 
each service. 

The effect of the departmental method of dividing the expenses 
between freight and passenger service is shown as to each of the 
companies in the following table : 



424 



RAILWAY MAIL PAY. 



Division of expenses by railroad company and Post Office Department — Com- 
parison of results. 



Company. 



Pennsylvania Lines East of Pittsburgh: 

Pennsylvania R. R 

Post Office Department 

Northern Central Ry 

Post Office Department 

Philadelphia, Baltimore & Washington R. R. . 

Post Office Department 

West Jersey & Seashore R. R 

Post Office Department 

Baltimore, Chesapeake & Atlantic Ry 

Post Office Department 

Cumberland Valley R. R 

Post Office Department 

Maryland, Delaware & Virginia Ry 

Post Office Department 

New York, Philadelphia & Norfolk R. R 

Post Office Department 

Pennsylvania Lines West of Pittsburgh: 

Pennsylvania Co 

Post Office Department 

Pittsburgh, Cincinnati, Chicago & St. Louis Ry 

Post Office Department 

Vandalia R. R 

Post Office Department 

Cincinnati & Muskingum Valley R. R 

Post Office Department 

Cincinnati, Lebanon & Northern Ry 

Post Office Department 

Cleveland, Akron & Columbus Ry 

Post Office Department 

Grand Rapids & Indiana Ry 

Post Office Department 

Toledo, Peoria & Western Ry 

Post Office Department 

Waynesburg & Washington R. R 

Post Office Department 

Pennsylvania Lines East and West, total 

Post Office Department, total 

Difference 



Total operat- 
ing expenses 
(and taxes), 
freight and 
passenger. 



?9,079, 

9,079, 

829, 

829, 

1,109, 

1,109, 

338, 

335, 

1 14, 

15, 

150, 

149, 

1 10, 

10, 

194, 

158, 



325. 81 
325. 81 
891. 35 
891. 35 
540.84 
540.84 
268. 23 
686. 37 
181. 89 
744.42 
418. 55 
90S. 69 
072.64 
486. 81 
731. 63 
052. 48 



974, 105. 48 

974,405.48 

214, 180. 83 

214, 180. 83 

633,064.90 

633,064.90 

66. 061. 67 

66,061.67 

20, 128. 21 

20, 128. 21 

171,128.61 

171,128.61 

327,167.47 

327,167.47 

86,787.48 

86,787.48 

9,320.47 

9,320.47 



18,228.676.06 
18,190,881.89 



37,794.17 



Operating 

expenses 

(and taxes) 

chargeable to 
passenger 

train service. 



$2,743,857.49 

2,056,327.76 

204,993.77 

163,266.93 

583,635.13 

409, 729. 03 

216,999.51 

187,581.24 

9,058.84 

8,662.94 

59.931.03 

52,426.25 

6,741.44 

6,729.14 

• 46, 505. 02 

27,025.93 



630,821.19 

513,350.50 

621,819.84 

525,545.13 

201,457.09 

144,261.49 

23.824.43 

20;314.92 

4,234.30 

4,229.14 

37,684.00 

28, 143. 06 

117,055.77 

92,828.38 

33,382.06 

26,928.89 

3,815.58 

2,851.76 



5,535,816.49 
4,330,202.49 



1,205,614.00 



Per 
cent of 
total. 



30.22 
22.65 
24.70 
19.67 
51.70 
42.34 
64.15 
55. 88 
63.88 
55.02 
39.84 
34.97 
66.93 
64.17 
23.88 
17.10 



21.21 
17.26 
28.08 
23.74 
31.82 
22.79 
36.37 
30.75 
21.04 
21.01 
22.02 
16.45 
35.78 
28.37 
38.46 
31.03 
40.94 
30.60 



30.36 

23.80 



Taxes are not included in this amount. 



Upon examining the foregoing comparison it is immediately notice- 
able that by the method devised by the Post Office Department for 
this occasion the passenger train operating expenses are made much 
lower in each case than the amount reported by the railroad com- 
pany. The total for the 17 companies shows that the department's 
method eliminated $1,205,614 from the passenger-train expenses, or 
21.77 per cent of the amount reported. In the case of the Pennsyl- 
vania Kailroad Co. the amount is reduced from $2,743,857.49 to 
$2,056,327.76, a reduction of $687,529.73, or 25.05 per cent. As these 
amounts are for the single month of November, 1909, the reduction 
in the case of the Pennsylvania Railroad Co. was equivalent to over 
$8,000,000 per year, and for all of the 17 companies to over $14,000,000 
for the year. This important alteration in the fundamental financial 
basis of the inquiry was made by the department without any con- 
sultation with the railroad company to obtain its views or its explana- 
tions. 

The method of apportionment of expenses used by the Pennsyl- 
vania Railroad Co. was not created for the statistical inquiry of 



RAILWAY MAIL PAY. 



425 



November, 1909, undertaken by the Post Office Department. It had 
been in effect for over 40 years, and during that time it was fre- 
quently the subject of discussion and verification by its expert ac- 
counting officers, not only among themselves, but also in association 
with the experts of other railroads in annual conventions as well as 
in conference with the Interstate Commerce Commission and State 
railroad commissions. The results reached from year to year from 
this long-established method were the statistical guide for measuring 
efficiency and for gauging expenditures many times greater than the 
revenue derived from transporting the mails. 

Consequently, the company would be fully warranted in conclud- 
ing that in this particular inquiry its statement of passenger-train 
expenses should have been accepted by the Post Office Department 
because of the greater experience of its officers in dealing with such 
matters and their greater intimacy with the financial and operating 
factors involved than could possibly be possessed by those in the 
postal service who were designated to give this subject their study 
and consideration. Further, the company's method of between 40 
and 50 years' duration was at least neutral as to this particular in- 
quiry, while a special and peculiar method, such as that used by the 
Post Office Department, devised for this inquiry, would need to be 
closely scrutinized. The fact that it produces uniformly lower ex- 
penses for the passenger train service (and consequently for the mail 
service on passenger trains) would not lead one to conclude that it 
was adopted for its abstract qualities regardless of its concrete 
results. 



AVERAGE CONDITIONS. 

If all other computations and methods had been correct, it would 
still be essential to verify the statistical results for November. 1909, 
to ascertain whether they were truly representative of average con- 
ditions throughout the year. It is contended that no unit less than 
one year can correctly indicate a dependable ratio as to revenues and 
expenses, and in some cases a series of years would be necessary. The 
following table shows a comparison between November, 1909, and the 
average 30 days of the calendar year 1909, for the principal com- 
panies of the Pennsylvania Railroad system : 



Company. 



Pennsylvania R. R 

Philadelphia, Baltimore & Washington R. R 

Northern Central Ry 

West Jersey & Seashore R. R 

Pennsylvania Co 

Pittsburgh, Cincinnati, Chicago & St. Louis Ry. 

Vandalia R. R 

Grand Rapids & Indiana Ry 



Revenue. 



November, 

1909, 

higher than 

average 3G 

days of year 

1909 by— 



Per cent. 



November, 

1909, 
lower than 
average 30 

davs of vear 
1909 by— 



Per cent. 



35 

1 

1 

6 I 
10 I 



Expenses. 



November, 

1909, 

higher than 

average 30 

davs of year 

1909 by— 



Per cent. 



November, 

1909, 

lower than 

average 30 

davs of year 

1909 by— 



Per cent. 



426 



KAIL WAY MAIL PAY. 



This shows a wide variation as between the different companies and 
illustrates that it was rather precipitate to base a final judgment as 
to profit or loss and a prediction of a $9,000,000 saving upon the 
statistics of a single month unverified as to its truly representative 
character. 

COMPARATIVE REVENUES FROM PASSENGER, MAIL, AND EXPRESS. 

Although the revenues from the passenger, mail, and express busi- 
ness for November, 1909, were reported to the Post Office Department 
as requested, they are not published in Document No. 105, but only 
the revenue from the mails. It is certainly important for Congress 
to know how the railway mail pay compares with the revenue from 
passenger and express service in relation to the car space devoted 
to each service. The following table gives separately the earnings 
from passenger, mail, and express traffic for each company : 

Revenues for November, 1900, from passenger, mail, and express business. 



Company. 



Pennsylvania Lines East of Pittsburgh: 

Pennsylvania R. R 

Philadelphia, Baltimore & Washington 

R.R 

Northern Central Ry , 

West Jersey & Seashore R.R 

New York, Philadelphia & Norfolk R. R.i. 

Baltimore, Chesapeake & Atlantic Ry 

Mar viand, Delaware & Virginia Ry 

Cumberland Valley R. R.* 

Total, Pennsylvania Lines East 

Pennsylvania Lines West of Pittsburgh: 

Pennsylvania Co 

Pittsburgh, Cincinnati, Chicago & St. 

Louis Ry 

Vandalia R.R 

Grand Rapids & Indiana Ry. 3 

Cincinnati, Lebanon & Northern Ry. 3 

Cincinnati & Muskingum Valley R * R. 3 . . 

Cleveland, Akron & Columbus Ry. 3 

Toledo. Peoria & Western Ry. 3 

Waynesburg & Washington R.R. 3 

Total, Pennsylvania Lines West 

Grand total, Pennsylvania Lines East 
and West 



Passenger. 



,$2, 623, 967. 32 

604, 170. 75 
178, 733. 67 
186, 072. 99 
32,494.53 
5,504.34 
3.013.08 
42, 821. 07 



3, 676, 777. 75 



607, 938. 74 

589,627.40 

170,690.05 

116,251.75 

4,515.61 

19,366.72 

38,775.58 

34, 078. 65 

6,109.32 



1,587,353.82 



5,264,131.57 



Mail. 



$202, 688. 86 
29,594.18 



899. 47 
723. 79 
448.46 
297. 29 
768. 15 



250,281.09 



83, 



.93 



98,794.03 

43, 208. 68 

7,517.09 

180. 40 

1,219.16 

1,710.94 

1,879.58 

251.77 



238,428.58 



488,709.67 



Express. 



$403,474.39 

88,848.70 

30,501.27 

12,492.55 

9,628.52 

703. 01 

389.53 

5,844.80 



551.882.77 



112, 023. 02 

118,180.34 

17, 218. 81 

9,980.92 

575. 00 

2.253.24 

7, 687. 83 

1,500.00 

273.00 



269, 692. 16 



821,574.93 



Total. 



$3,230,130.57 

722,613.63 
219,095.83 
201,465.01 
44, 846. 84 
6, 655. 81 
3,699.90 
50,434.02 



4,478,941.61 



803, 628. 69 

806, 601. 77 
231,117.54 
133, 749. 76 
5,271.01 
22, 839. 12 
48,174.35 
37,458.23 
6,634.09 



2,095,474.56 



6,574,416.17 



1 Data furnished for December, 1909. 

2 Data furnished for January, 1910. 

3 Data furnished for period, Dec. 6, 1 



to Jan. 4, 1910. 



If we measure these revenues according to the car space (car- foot 
miles) assigned to each service during November, 1909, we would 
use the following figures as reported for the different companies and 
carefully revised and rechecked . 



RAILWAY MAIL PAY. 427 

Car space for November, 1909, expressed in ear-foot miles, by companies. 



Company. 


Passenger. 


Mail. 


Express. 


Total. 


Pennsylvania Lines East of Pittsburgh: 


528,508,392 

132,844,668 

39,951,565 

35,171,605 

5, 413, 995 

999, 141 

620, 165 

9,492,8S0 


57,819,376 

8,336,728 

2, 894, 693 

1,132,387 

423, 166 

141,764 

92, 772 

501,010 


91,624,080 

15,638,456 
7,549,442 
1,827,845 
1,550,697 
177, 092 
125, 255 
1,067,108 


677,951,848 

156,819,852 

50,395,700 

38,131,837 

7,387,858 

1,317,997 

838, 192 

11,060,998 


Philadelphia, Baltimore & Washington 
R. R 


Northern Central Ry 


West Jersey & Seashore R. R 


New York, Philadelphia & Norfolk R. R.i. 

Baltimore, Chesapeake & Atlantic Ry 

Maryland, Delaware & Virginia Ry 

Cumberland Valley R. R. 2 




Total, Pennsylvania Lines East 


753,002,411 


71, 341, 896 


119,559,975 


943, 904, 282 




Pennsylvania Lines West of Pittsburgh: 


173,181,441 

158,968,990 
45, 790, 4S4 
25, 792, 537 
898, 709 
2, 978, 759 
8, 589, 730 
5, 694, 455 
693, 559 


28, 747, 137 

32,381,282 

14,827,412 

2, 708, 457 

31,092 

415,509 

757, 699 

1,139,212 

85, 074 


41,437,614 

33,434,990 

8,491,357 

3,501,207 

43,660 

020, 074 

1 , 734, 569 

622, 233 

34,172 


243,366,192 

224,785,262 

69,109,253 

32,002,201 

973,461 

4, 014, 142 

11,081,998 

7, 455, 900 

812,805 


Pittsburgh, Cincinnati, Chicago & St. 
Louis Ry 


Vandalia R. R 


Grand Rapids & Indiana Ry. 3 


Cincinnati, Lebanon & Northern Ry. 3 

Cincinnati & Muskingum Valley R. R. 3 

Cleveland, Akron & Columbus Ry. 3 


Waynesburg & Washington R. R. 3 


Total, Pennsylvania Lines West 


422, 588, 664 


81,092,674 


89,919,876 


593,601,214 




Grand total, Pennsylvania Lines East 
and West 


1,175,591,075 


152, 434, 570 


209,479,851 


1,537,505,496 





1 Data furnished for December, 1909. 

2 Data furnished for January, 1910. 

3 Data furnished for period Dec. 6, 1909, to Jan. 4, 1910. 

Dividing the revenues by the car- foot miles, we obtain the average 
earnings from each class of service on the common unit, the car-foot 
mile. 

Revenues for November, 1909, per car-foot mile from each class of service. 



Company. 



Pennsylvania Lines East of Pittsburgh: 

Pennsylvania R . R 

Philadelphia, Baltimore & Washington R. R . 

Northern Central Ry 

West Jersey & Seashore R . R 

New York, Philadelphia & Norfolk R. R 

Baltimore, Chesapeake & Atlantic Ry 

Maryland, Delaware & Virginia Ry 

Cumberland Valley R. R 

Total, Pennsylvania Lines East 

Pennsylvania Lines West of Pittsburgh: 

Pennsylvania Co 

Pittsburgh, Cincinnati, Chicago & St. Louis Ry 

Vandalia R. R 

Grand Rapids & Indiana Ry 

Cincinnati, Lebanon & Northern Ry 

Cinqinnati & Muskingum Valley R. R 

Cleveland, Akron & Columbus Ry 

Toledo, Peoria & Western Ry 

Waynesburg & Washington R . R 

Total, Pennsylvania Lines West 

Grand total, Pennsylvania Lines East and 
West of Pittsburgh 



Passenger 



Mills. 
4.965 
4.548 
4.474 
5.290 
6.002 
5.509 
4.859 
4.511 



4.879 



3.510 

3. 709 
3.728 
4.507 
5. 025 
6.502 

4. 514 
5.985 
8. SOS 



3. 763 



Mail. 



Mills. 
3. 506 
3.550 
3.407 
2.560 
6. 437 
3.163 
3.204 
3.529 



3.490 



Express. 



Mills. 
4.404 
5.681 
4.040 
6.835 
6.209 
3.970 
3.110 
5.477 



Total. 



,591 



Mills. 
4.765 
4.607 
4.348 
5. 283 
6.070 
5.050 
4.414 
4.560 



4.737 



2.910 
3. 051 
2.914 
2.775 
5. 802 
2.936 
2. 258 
1.650 
2. 959 



2. 940 



3. 195 



2.703 ! 
3.534 ) 
2.028 I 
2.851 ! 
13.170 | 
3.634 
4.432 
2.411 



3.302 
3.588 
3.344 
4.179 
5.415 
5.690 
4.347 
5.024 
S.162 



2.998 I 3.535 



3. S98 



4.267 | 



Mail. 



Mills. 
4.324 
4.032 
3.789 
4.231 
3.766 
3.961 
8.063 
3.594 



4.255 



3.450 
3.616 
3.510 
3.417 
10. 333 
4.116 
4.448 
3.564 
6.429 



3.540 



3.873 



1 Mail earnings a .'calculated by the Post Office Department using reduced car-space figures. 



428 RAILWAY MAIL PAY. 

It thus appears that in 15 cases out of 17 the earnings from the 
mails, according to the company's figures, are lower than the earn- 
ings from the passenger service as measured by the car space devoted 
to each service. In 13 cases out of 17 the earnings from the mails are 
lower than the earnings from the express service, although the mail 
service enjoys greater speed and frequency of transmission than the 
express traffic and is much more exacting in its requirements. Even 
the Post Office Department's figures for mail earnings in the last 
column show that in 11 cases out of 17 the mail earnings are lower 
than passenger-train earnings per car-foot mile. 

In the case of the Pennsylvania Eailroad Co., if the mail car-foot 
miles (57,819,376) be multiplied by the average passenger earnings 
per car- foot mile (4.965 mills) the mail pay for November, 1909, 
would have been $287,073.50. The actual pay as stated by the Post 
Office Department was $203,126.54. Therefore there was a shortage 
of $83,946.96 for the month or an annual shortage of about $1,007,- 
363.52 as compared with passenger earnings. 

For the Pennsylvania Railroad system (both east and west of 
Pittsburgh) the average revenue per car-foot mile was 4.267 mills 
for all passenger-train service, including passenger, mail, and express 
traffic. The mail pay was only 3.195 mills, this amount being cal- 
culated by dividing the actual revenue from mail traffic by the num- 
ber of car-foot miles reported by the railroad compan}^ The mail 
pay was. therefore, 33 per cent below the average earnings of pas- 
senger trains. The revenue from the express service (a service much 
less expensive to the railroad company than the transportation of 
the mails) was 3.898 mills per car-foot mile, or 21 per cent higher 
than the revenue from the mails. 

If the Post Office Department's car-space total for the mail service 
(17 per cent below that reported by the railroad company) be divided 
into the mail pay, it will produce an average of 3.873 mills per car- 
foot mile, against the railroad company's figures of 3.195 mills, re- 
ferred to above. Even if the Post Office Department's figures could 
be accepted, the mail pay would still be 10 per cent below the average 
passenger-train earnings and slightly below the average earnings 
from express traffic. 

COMPARISON OF MAIL REVENUE AND MAIL EXPENSES FOR NOVEMBER, 1909. 

A comparison is made in the following table between the railroad 
company's earnings from the mail service and the expenses charge- 
able to the mail transportation as computed by the railroad company 
and the Post Office Department: 



RAILWAY MAIL PAY. 



429 



Comparison of mail revenue and mail expenses for November, 1909, as com- 
puted by the railroad company and by ilic Post Office Department. 



Company. 



Pennsylvania Lines East: 

Pennsylvania R. It 

Post Office Department 

Philadelphia, Baltimore & V'ash- 
ington It. R 

Post Office Department 

Northern Central Ry 

Post Office Department 

Vest Jersey & Seashore R. R 

Post Office Department 

Baltimore, Chesapeake & Atlantic 
Ry 

Post Office Department 

Maryland, Delaware & Virginia Ry 

Post Office Department 

Cumberland Valley R. R 

Post Office Department 

New York, Philadelphia & Nor- 
folk R. R 

Post Office Department 

Total, Pennsylvania Lines 
East 

Total, Post Office Depart- 
ment 

Pennsylvania Lines Vest: 

Pennsylvania Co 

Post Office Department 

Pittsburgh, Cincinnati, Chicago & 
St. Louis Ry i 

Post Office Department 

Vandalia R. R 

Post Office Department 

Grand Rapids & Indiana Ry 

Post Office Department 

Cincinnati, Lebanon & Northern 
Ry 

Post Office Department 

Cincinnati & Muskingum Vallev 
R. R 

Post Office Department 

Cleveland, Akron & Columbus R.R 

Post Office Department 

Toledo, Peoria & ~ "estern Ry 

Post Office Department 

Vaynesburg & ""ashington R. R. 

Post Office Department 

Total, Pennsylvania Lines 

Total, Post Office Depart- 
ment 

Grand total, lines East and 
Vest. 

Grand total,' Post "Office De- 
partment 



Mail 



ratio. 



Revenue 



!Pf : r I from mail 



Per ct. 
8. 53 



5.32 

4.78 
5.74 
5.17 
2.97 
1.82 

10.75 
8.58 

11.07 
6.42 
4.53 
4.50 

5. 73 
5.32 



7.56 
6.23 



11.81 
10.00 

14.41 
12. 09 
21.45 
17.81 
8.46 
7.10 

3.19 
1.79 

10.35 
7.38 
6.84 
3.59 

15.28 
7.28 

10.47 
4.82 



13. 66 
11.36 



9.91 

8.21 



3202, 688. 86 
203,126.54 

29,594.18 
30,239.04 
9,860.89 
9,874.12 
2,899.47 
2,936.11 

448.46 

448.46 

297. 29 

434. 02 

1,768.15 

1,780.17 

2, 723. 79 
1,477.16 



250,281.09 
250,315.62 



Ex- 
pense 
ratio. 



Per ct. 
8.53 
6.74 

5.32 
4.46 
5.74 
5.07 
2.97 
1.76 

10.75 

8.56 
11.07 
6.03 
4.53 
4.42 

5.73 
4.45 



7.56 



83,666.93 
84,043.34 

98, 794. 03 
98,434.79 
43,208.68 
43,209.69 
7.517.09 
7,766.70 

180. 40 
180.40 

1,219.16 
1,219.16 
1,710.94 
1,770.52 
1,879.58 
1,880.58 
251.77 
251.77 



488,709.67 
489,072.57 



11.81 
9.65 

14.41 
11.65 
21.45 
17.06 
8.46 
6.93 

3.19 
1.78 

10.35 
7.36 
6.84 
3.54 

15.28 
7.19 

10.47 
4.82 



13. 66 
10.78 

9.91 
7.44 



Passenger- 
train 
expenses 
chargeable 
to mail. 



5234,051.04 
138, 686. 11 

30,517.39 
20,933.51 
11,766.64 
8,277.96 
6,444.88 
3,295.13 

973.83 
741. 62 
716.39 
406. 10 
2, 714. 88 
2,315.74 

2,664.74 
1,205.21 



289,849.79 
175,861.38 



74,499.98 
49, 530. 56 

89,604.24 
61,242.34 
43,212.54 
24, 614. 75 
9,902.92 
6,435.57 

135.07 
75.43 

2,465.83 

1,495.12 

2,577.58 

997.37 

5, 1C0. 78 

1,935.40 

399. 49 

137.46 



227, 898. 43 
146,464.00 

517, 748. 22 
322,325.38 



Gain 



864, 440. 43 



9,305.53 



1,596.16 



27.92 



59.05 
271.95 



74, 454. 24 



9,166.95 
34,512.78 

9,189.79 

37, 192. 45 

'l8,'594.94 



1,331.13 



45.33 
104. 97 



773. 15 



114.31 



166, 747. 19 



Loss. 



§31,362.18 



923. 21 



1,905.75 



3,545.41 
359. 02 

525.37 
293.16 
419.10 



946. 73 
535. 57 



39,568.70 



3.86 
'2,"385.*83 



1,246.67 
275. 96 
866.64 



3,221.20 
54.82 
147. 72 



29,038.55 



49396—14- 



430 



KAILWAY MAIL PAY. 



Earnings and expenses per car-foot mile. Pennsylvania R. R. system, November, 
1909 (except Long Island R. R.) — Railroad company figures compared with 
Post Office Department figures. 





Earnings per car-foot mile. 


Expenses per car-foot mile. 






Mail space. 


Mail space. 


Company . 


Total 

passenger 

train. 


i 

Railroad 0f | c ° e S D e . 
company. ^» e t 


Railroad 
company. 


Post 
Office De- 
partment. 


Post 
Office De- 
partment 

plus 6 
per cent. 


Pennsylvania R. R 


Mills. 

4.765 

4.607 
4.348 
5.283 
5.050 
4.414 
4.560 
6.070 


Mills. Mills. 
3.506 i 4.324 

| 

3.550 ! 4.032 
3.407 1 3.789 
2.560 4.231 
3.163 3.961 
3.204 i 8.063 
3.529 i 3.594 
6.437 3.766 
• 


Mills. 

4.047 

3.658 

4. 068 
5.691 
6.873 
7.721 
5.418 
6.295 


Mills. 
2.952 

2.791 
3.176 
4.748 
6.552 
7.545 
4.675 
3.073 


Mills. 
3 129 


Philadelphia, Baltimore & Washington 
R. R 


2.958- 


Northern Central Ry 


3.367 




5 033 


Baltimore, Chesapeake & Atlantic Ry... 

Maryland, Delaware & Virginia Ry 

Cumberland Valley R. R 


6.945 
7.998 
4.955 


New York, Philadelphia & Norfolk R. R. 


3.263 


Pennsylvania Lines East 


4.74 


3. 49 | 4. 255 


4.063 


2.989 


3.169 






Pennsvlvania Co 


3.302 

3.588 
3.344 
4.179 
5.415 
5.690 
4.347 
5.024 
8.162 


2.910 

3.051 
2.914 
2.775 
5.802 
2.936 
2.25S 
1.650 
2.959 


3.450 

3.616 
3.510 
3.417 
10. 333 
4.116 
4.448 
3.564 
6.429 


2.592 

2.766 
2.915 
3.058 
4.350 
5.935 
3.400 
4.477 
4.694 


2.033 

2.250 
2.000 
2.832 
4.321 
5.047 
2.506 
3.668 
3.510 


2 155 


Pittsburgh, Cincinnati, Chicago & St. 
Louis Ry 


2.385 


Vandalia R. R 


2.120 


Grand Rapids & Indiana Rv 


3.002 


Cincinnati, Lebanon & Northern Ry 

Cincinnati & Muskingum Valley R. R . . . 

Cleveland, Akron & Columbus Ry 

Toledo, Peoria & Western Ry 


4.580 
5.350 
2. 656 
3.888 


Waynesburg & Washington R. R 


3.721 


Pennsylvania Lines West 


3.53 


2.94 


3.540 


2.810 


2.171 


2.302 






Pennsylvania Lines East and West. 


4.27 


3.20 


3.873 


3.397 


2.552 


2.706 



The railroad company found that the mail revenue was lower than 
^he operating expenses and taxes to the extent of $29,038.55 for the 
month, or $348,462.60 for the year. 

The Post Office Department, by reducing the space 17.16 per cent 
and by excluding 21.77 per cent of the expenses, found that the mail 
revenue was higher than the operating expenses and taxes to the 
extent of $166,747.19 for the month, or $2,000,966.28 for the year, 
equal to 51.7 per cent excess over operating expenses and taxes. 

But neither of these calculations is complete, because both stop 
at operating expenses and taxes and do not take into account the 
fixed charges nor a reasonable dividend on the investment. 

We must now seek the amount to be added to the operating ex- 
penses and taxes in order to fully cover fixed charges, additions, and 
betterments, a fair dividend and surplus for use in adversity, and 
for this purpose it seems fair to quote the supplemental ratio (46.86 
per cent) indicated in statement 43, page 70, of the annual report of 
the Interstate Commerce Commission for the fiscal year 1910. If we 
add 46.86 per cent to the expenses chargeable to mail transportation 
($517,742.22), we obtain $760,356.22 as representing the amount 
which the mail service should have paid the company in November, 
1909, if it rendered its proportionate share of both operating expenses 
and capital cost. This sum, in contrast with the actual revenue of 
$488,709.67, reveals a loss of $271,646.55 for the month, or $3,259,- 
758.60 for the year, equal to 36 per cent. 



RAILWAY MAIL PAY. 431 

The Post Office Department's figures for expenses chargeable to 
the mail ($322,325.38) are considered to be so indefensible as to 
render any extended calculations upon them entirely misleading; 
but if 46.86 per cent were added to cover fixed charges, etc., the 
amount would be raised to $473,367.05. or very little below the mail 
pay ($488,709.67) at that time. ' 

SUMMARY. 

Review. — Taking a retrospective view of the entire inquiry and its 
results, a doubt suggests itself as to the advisability of the Post Office 
Department having undertaken the inquiry at all. The law of 1879 
placed a judicial duty upon the Postmaster General regardless of the 
disadvantages of his position, first, that he was of necessity an inter- 
ested party as a shipper of mail traffic, and, second, that the ascer- 
tainment would require an exploration into a field where he and his 
officers were entirely unfamiliar. Eight years later, in 1887, the 
Interstate Commerce Commission was created, and it is probable that 
if the inquiry had again been directed by Congress the duty would 
have been laid upon the Interstate Commerce Commission. Thirty 
years had elapsed since the passage of the law before the statistics of 
November, 1909, were taken. 

Mail-car space. — However, in instituting the inquiry it was under- 
stood that the car space devoted to the mail service was to be used 
as the ratio for determining the amount of the expenses which should 
be charged to the mail service. So when the Postmaster General 
deducted 17.16 per cent of the mail-car space reported for the Penn- 
sylvania Kailroad system, without obtaining the company's views 
as to the operating necessity for that space, he was undertaking to 
protect his supposed rights as a shipper of mail and not treating the 
case in a judicial capacity. This attitude would involve the corollary 
that the railroad company should fix the tariff rate for the shipper, 
subject only to review by the Interstate Commerce Commission. 

Also, when the Postmaster General rejected this space he made a 
statistical mistake in adding it to the passenger-car space, because he 
ignored a statistical unit commonly used in railroad calculations 
and known as the " passenger train." This is a composite unit made 
up of passenger, mail, express, and miscellaneous car space. If he 
made the deduction at all, he should have made it from the entire 
train. But if he deducted what he called " dead space " for mail 
from the entire train he would be at the necessity of deducting sim- 
ilar " dead space " in the passenger and other particular services from 
the entire train, with the result that the ratio for mail space would 
be higher than if he ignored " dead space " entirely. These facts 
and conditions Avould all be familiar to the Interstate Commerce 
Commission. 

Ascertainment of cost. — The division of expenses between freight 
and passenger service, which the Interstate Commerce Commission 
discontinued 20 years ago, has been described as one of the greatest 
economic questions of modern times. The reluctance and caution 
shown by the Interstate Commerce Commission in considering the 
formulation and adoption of a general rule applicable to all rail- 
roads has been regarded as appropriate and wise by those who are 



432 



RAILWAY MAIL PAY. 



familiar with the enormous difficulties and stupendous possibilities 
of the question. The excursion of the Post Office Department into a 
field where the experts of the Interstate Commerce Commission fear 
to tread was a consequence, perhaps, of the effort to comply with the 
requirements of a very old law, but it is easily apparent that in any 
ascertainment of cost the Post Office Department is not qualified by 
knowledge of the subject and is not in a disinterested position to 
enable it to reach correct conclusions, either as to the division be- 
tween freight and passenger service or as to the subdivision between 
passenger, mail, and express services. 

Effect on the Pennsylvania Railroad system. — In applying the 
yardstick of mail space to measure the passenger train expenses 
chargeable to the mail service, if the companies' yardstick was 100 per 
cent of the mail-car space, the Post Office Department's was 82.84 per 
cent. This shrunken yardstick was applied not to 100 per cent of 
the passenger train expenses as reported, but to only 78.23 per cent. 
The result, therefore, was only 64.8 per cent of the correct total of 
the operating expenses and taxes chargeable to the mail service, and 
further omitted any allowance for fixed charges and interest on the 
investment. The conclusion reached by the company, that it was 
underpaid 36 per cent, or about $3,300,000, at that time, is based 
upon actual facts as to operating expenses and taxes and by using 
a formula for capital cost applicable to all the railroads of the 
country, as a whole. 

Mail pay in comparison with other revenues and expenses. — In 
January, 1901, the joint commission of the House and Senate, con- 
cluding an investigation of the postal service extending over three 
years, reported to Congress their conclusion that the pay of the 
railroad companies for the transportation of the mails was not exces- 
sive, and recommended that no reduction be made. The conditions 
existing on the Pennsylvania Railroad system and services by the 
company for the Post Office Department were given special study 
by the commission and its experts, as the printed proceedings show. 
Since that time the rate of pay has been reduced by law and by the 
regulations and practices of the Post Office Department, so that it 
does not now give a fair remuneration for the weight and car space 
carried and provided and for the auxiliary services in connection 
therewith. 

A comparison of a few principal items from the annual reports of 
the Pennsylvania Railroad Co. for 1900 and for 1911 will illustrate 
this point most forcibly : 

The Pennsylvania Railroad Go. 



Freight ton mileage 

Passengers carried 1 mile 

Freight revenue 

Passenger revenue 

Gross revenue 

Operating expenses (except taxes) 

Taxes 

United States mail ton mileage . . . 

United States mail revenue 

Express revenue 



1911 



19,419,779,983 

1, 722, 734, 924 

8114,069,932.34 

$34,113,529.48 

$163, 118, 139. 61 

$120,384,321.90 

$6, 826, 069. 53 

35,859,120 

$2,445,557.86 

$4, 376, 098. 81 



1900 



11,922,671,210 

918, 198, 602 

$64,390,452.51 

$18,181,081.77 

$88, 534, 107. 24 

$58,832,157.48 

$2,027,160.38 

17,608,063 

$1,537,384.63 

$1,817,358.75 



Increase. 



7,497,108,773 

804,536,322 

$49,679,479.83 

$15,932,447.71 

$74,584,032.37 

$61,552,164.42 

$4,798,909.15 

18,251,057 

$908, 173. 23 

$2,558,740.06 



Per cent 
of 



62.88 

87.62 

77.15 

87.63 

84.24 

104.62 

236. 37 

103.65 

59.07 

140. 79 



RAILWAY MAIL PAY. 433 

In the above statement the United States mail ton mileage is con- 
siderably below the true figures, because the latest weighing east of 
Pittsburgh took place in 1909, and there was a heavy increase in the 
following two years. But taking the figures as they stand, the mail 
traffic increased more than any other traffic in percentage, while the 
pay is the lowest in the scale of increase and is the only one that re- 
cedes as the volume of business advances. 

Postal-car pay. — During the past five years the company has en- 
tirely replaced its postal cars by new all-steel 70-foot cars at a cost 
for the 120 cars of about $1,500,000. It adopted the policy before 
there was any national law requiring steel cars. These cars cost 50 
per cent more to build, and as they are 50 per cent heavier they cost 
more to haul. The cost of maintenance (including electric lights) is 
also much greater. The interior facilities for sorting the mails are 
also considerably greater for the purposes of the Post Office Depart- 
ment. When one seeks to ascertain what was the additional re- 
muneration of this great improvement he finds : 

Annual pay to Pennsylvania R. R. system for R. P. O. cars : 

June 30, 1907 $920,721.15 

July 1, 1912 669,261.21 

Reduction 251, 459. 94 

Of this reduction about $172,000 was caused by the act of March 2, 
1907, reducing pay for B. P. O. cars. About $73,000 represents de- 
partmental reductions in pay, mainly without regard to the operating 
conditions. The present pay for R. P. O. cars on the Pennsylvania 
lines averages about 4.4 cents a running mile, and as the cost of re- 
pairs, light, heat, etc., is about 3.4 cents, only 1 cent a mile is left for 
the cost of hauling and a return on the capital investment of the road 
upon which they are hauled. 

Terminal service — New York, N. Y., etc. — Any doubt that one 
might entertain that the mail service should participate in the charges 
for expensive terminal service is readily removed upon a proper 
understanding of the subject. The Second Assistant Postmaster 
General, in his testimonv on January 28, 1913. alluded to the Penn- 
sylvania Station at New York, N. Y.. as costing nearly $100,000,000, 
the larger part of which might be admitted by everybody to be a 
passenger facility in which the mails are not interested at all, and 
drew a similar illustration as regards the Union Station at Wash- 
ington, D. C. In response it might be said that in these great ter- 
minals the facilities provided for the passengers, spacious in extent 
and beautiful in design and material, attract the eye and obscure 
for the moment the real facilities which perform the service. The 
terminal facilities at New York, which are included in the total for 
which over $100,000,000 was expended, extend from about Newark, 
N. J., to the Sunnyside yards in Long Island City, a distance of about 
12 miles. The Pennsylvania Station edifice and its appurtenances 
would represent perhaps 25 per cent of this amount. In connection 

I with the Pennsylvania Station and the general post office adjacent 
thereto there are provided spiral chutes, conveyors, and elevators for 
speedy handling of the mails, these having been installed at an ex- 
pense to the railroad company of approximately one-half million 
dollars. All of these upper facilities depend for their efficiencv upon 



434 KAIL WAY MAIL PAY. 

to the Long Island Railroad business, thus leaving 15 tracks for the 
Pennsylvania Railroad business. Of these 15 tracks there are 3 
largely devoted to the mails, the R. P. O. and storage cars occupying 
these tracks for hours at a time. It is estimated that track No. 8 is 
used by the mails to the extent of 40 per cent; track No. 14, 41 per 
cent; and track No. 15, 94 per cent. It would therefore seem that 
fully 10 per cent of the terminal facilities at New York are properly 
chargeable to the United States mails — i. e., rating the 15 tracks at 
100 per cent each, or 1,500 per cent for the whole, in contrast with 
175 per cent used by the mails. 

Conclusion. — The Pennsylvania Railroad system performs service 
for the Post Office Department on about 9,800 miles of road, supply- 
ing an area which comprises the most, important manufacturing, 
commercial, and agricultural portion of the country, as shown by the 
annexed map. 

It carries the mails on 2,700 trains daily, of which 160 are full 
R. P. O. trains, about 725 are mail-apartment trains, and about 1,815 
are closed-pouch trains. 

Two of these trains are exclusive mail trains of the greatest speed, 
making the run from New York to St. Louis in 24 hours. If these 
trains were paid for specially at $2 a mile (a moderate rate) for 
the round trip of 2,122 miles, they would cost the Post Office De- 
partment $3,098,120 per year, an amount equal to 53 per cent of the 
total mail pay received by the company. 

The frequency of its train service which gives the Post Office 
Department such extraordinary facilities in serving the public sat- 
isfactorily, may be seen in Table 3 of House Document No. 105, by 
comparing the columns giving the length of mail routes, the train 
mileage, the car mileage, and the total mail car-foot miles. It can 
be seen that the Pennsylvania Railroad system affords, as com- 
pared with the average of all the railroads of the country, 120 per 
cent more train-miles per mile of road, 138 per cent more car-miles, 
and 158 per cent more mail space per mile of road. 

It receives about 11 per cent of the total mail pay and carries about 
16 per cent of the mail ton-mileage. 

It is the main artery from New York to Washington for the mails 
of the Atlantic coast from Maine to Florida. It is likewise the main 
artery from New York to Pittsburgh, Columbus, Cincinnati, and St. 
Louis, for the entire mails from New York and the intervening 
country for the great Southwest from Missouri to Louisiana, and 
thence to southern California. It duplicates between New York, 
Philadelphia, and Chicago the fast-mail service which the New York 
Central lines provide from New York and the New England States 
to all the States lying west and northwest of Chicago. 

Its best efforts and its full resources have always been employed 
for the Post Office Department, because it is a service for the whole 
people and because the prosperity and happiness of the general com- 
munity is enhanced by a rapid and efficient postal service. 

What is fair remuneration? — The maximum rate of pay for a 
service rendered may be described as the value of the service to the 
purchaser; this maximum being moderated in commercial trans- 
actions by the law of supply and demand and the activity of com- 
petition. If the company were paid for the mails transported and 






RAILWAY MAIL PAY. 435 

the service performed in connection therewith in accordance with 
the value of this service to the Post Office Department or its value 
to the communities interested, the present rate of pay would have 
to be multiplied many times. 

. The minimum rate of pay for a service rendered might be described 
as the cost of performing the service, because this marks the limitation 
beyond which the person performing the service could not be ex- 
pected to go and any reward for the work performed is absent. 

Between these two extremes there is a middle ground where a fair 
and reasonable rate of pay can be expected and which would be 
justified according to a fair appraisement of the value of the service 
based upon the returns from other somewhat similar services. The 
expenditures made by the company are based on prices which rep- 
resent not the cost of the material furnished or of the personal 
services rendered but the fair commercial value thereof. It is be- 
lieved that Congress, after considering the testimony submitted bj' 
the railroads in comparison with the testimony submitted by the 
Post Office Department, can readjust the present rates for the trans- 
portation of the mails and for the payment of car space used for 
traveling post offices, both in full postal cars and in apartment cars, 
so that a fair remuneration can be approximated and granted. 

The recommendations already submitted by the railroad committee 
on railway mail pay in favor of annual weighings, pay for mail 
apartment cars, and relief from the side and terminal messenger 
service have our concurrence. 

Thereupon, at 2 o'clock p. m., the committee took a recess until 3 
o'clock p. m. 

AFTER RECESS. 

The hearing was resumed at the expiration of the recess at 3 o'clock 
p. m. 

The Chairman. Mr. Bradley, referring to that portion of your 
testimony, as contained in your table entitled " Pennsylvania Rail- 
road system (except Long Island Railroad) total car-foot miles, 
November, 1909, as reported by railroad company, and as reported 
and altered by Post Office Department," and the amount under your 
disallowance claim in the grand total of 26,155,391, the percentage of 
disallowance being 17. what is the principal difference between your 
figures and those of the Post Office Department? Is it because of 
your differences in reference to dead space? 

Mr. Bradley. Entirely due to differences as to what is to be re- 
garded as dead mail space. 

The Chairman. If you will turn to page 96 of the preliminary re- 
port, entitled " Railway mail pay," issued January 24, 1913, and the 
quoted letter from Mr. Hitchcock, under date of January 9, 1913, the 
second paragraph, subheaded " Second," reading as follows : " That 
in computing car-foot miles the mail service shall be charged in both 
directions for the line of railway post-office cars, with the maximum 
space authorized in either direction," would the adoption of that 
eliminate this difference of twenty-six million and odd car-foot miles? 

Mr. Bradley. No, sir. 

The Chairman. Why not? 



436 KAILWAY MAIL PAY. 

Mr. Bradley. Because that is simply a restatement by the former 
Postmaster General of the practice which the Post Office Department 
claimed to have pursued in preparing Document 105, in regard to 
recognition of space in full railway post-office cars. It is therefore 
not regarded as a modification. 

The Chairman. Read my letter to the Postmaster General, on page 
96, dated January 6, 1913, and kindly inform me if acquiescence of 
the department or by law in the terms of such letter would, if in 
effect, have wiped out this difference of twenty-six-odd millions ? 

Mr. Bradley. If the Post Office Department had given a plain 
affirmation to your second paragraph, reading, u In the'matter of car 
space, the railroad companies be credited with the maximum space in 
both directions," I would say that would have entirely settled the 
question at issue as regards dead mail space. 

The Chairman. I have a telegram from the then Postmaster Gen- 
eral, Mr. Hitchcock, referring to my letter of January 6, 1913, read- 
ing as follows : " Your letter of to-day is accurate in its statement of 
the modifications I favor." That telegram, you take it, is contradic- 
tory, taken in conjunction with my letter and the letter of Mr. Hitch- 
cock of January 9, which you have read? 

Mr. Bradley. It seems to me that the letter of the former Post- 
master General particularly limits the modification he is willing to 
make to the full railway post-office car, regarding which, in the case 
of the Pennsylvania Railroad Co., we had a difference with the Post 
Office Department of only 6J per cent, and that it does not propose or 
consent to any modification in regard to the other classes of mail-car 
space, storage cars, apartment cars, and closed-pouch space, which 
together represent 21,000,000 car-foot miles out of 26,000,000 dis- 
allowed. Therefore the modification, as I understand it, is only a 
very slight approach toward an adjustment of the differences. 

The Chairman. But all this difference of twenty-six-odd million 
car-foot miles would be dissipated by the allowance of car space by 
crediting the railroad company with maximum space in both direc- 
tions in the matter of car space. 

Mr. Bradley. Yes; and that would be, as I say, a simple recogni- 
tion of the space that was actually and necessarily operated for the 
mails during the month selected for the test — November, 1909. 

The Chairman. Such an allowance, by law or by the department, 
namely, crediting railroad companies with maximum space in both 
directions for all car space used, would rectify the discrepancy be- 
tween yourself and the department as represented by the nonallow- 
ance for 13,546,378 car-foot miles on empty storage cars running, 
would it not? 

Mr. Bradley. I believe so. 

The Chairman. So that really the main difference between you 
and the department in the results obtained on the information con- 
tained in Document 105 is the difference in allowance or nonallow- 
ance for maximum amount of space for the round trip ? 

Mr. Bradley. So far as the space is concerned ; yes, sir. 

The Chairman. And a law or a regulation providing for an allow- 
ance for part of the trip with a maximum space would cover that 
and bring you and the department closer together? 

Mr. Bradley. I am very much afraid that no law could be framed 
sufficiently definite to prevent serious differences of opinion under 



RAILWAY MAIL PAY. 



437 



the assumption which the Post Office Department entertains that it 
is its exclusive privilege and within its duty to specify what space it 
needs and what space it will pay for. I fear that the varied condi- 
tions on the different routes are so many that it would be practically 
impossible to frame a law which would remove the causes for mis- 
understanding and irritation. 

The Chairman. In your testimony you say : 

The revenue from the express service (a service much less expensive to the 
railroad company than the transportation of the mail) was 3.S98 mills per 
car-foot mile, or 21 per cent higher than the revenue from the mail. 

Would you kindly elucidate a little your statement to the effect 
that the express service is less expensive to the railroad company 
than the transportation of the mail ? 

Mr. Bradley. I understand that you have called for a formal 
statement on this phase of the matter from the chairman of the com- 
mittee on railway mail pay, and no doubt that will bring out a 
precise statement of the differences. It might, however, be said in a 
general way that the express service enjoys much less frequency of 
transportation than does the mail service. There is no doubt but that 
the loading is greater per car-mile, and therefore there is an oper- 
ating economy feasible in this class of traffic to a much greater extent 
than is noticeable in the mail traffic. The express company contrib- 
utes to the expense of station service; it pays rental for space occu- 
pied. It contributes toward the wages of train employees who as- 
sist in the performance of its service. It relieves the railroad com- 
pany from any responsibility for loss or damage to the property 
transported as express traffic, and also from any responsibility for 
injury to its employees, while they are traveling on the express com- 
pany's business. I understand it also performs a number of special 
services for railroad companies, such as the free transportation and 
distribution of tickets, money, etc. This is merely an offhand state- 
ment, because it is a subject on which I have only general informa- 
tion. 

The Chairman. But it will be followed up by a carefully prepared 
statement giving the differences and the relativeness as between the 
services in expense to the railroad company? 

Mr. Bradley. Will it be satisfactory for the chairman of the com- 
mittee to submit that statement, or is it desired that I should take 
special note of the inquiry to send in something individually on it ? 

The Chairman. I would like something individually, in order to 
get your particular views explanatory of the statement made by you 
in your testimony which I have just referred to. 

Mr. Bradley. I will be glad to do so. (Mr. Bradley subsequently 
furnished the following comparison:) 

Differences in the requirements imposed upon the railroad companies in the performance of 
United States Mail Service as compared with similar relations in the performance of 
service for the express companies. 



Subject. 


Post Office Department. 


Express companies. 


Con tracts 

Differences 


Post Office Department seeks to stip- 
ulate all the conditions and reserves 
the right to change many of them at 
will without consultation. 

Differences with Post Office Depart- 
ment not subject to arbitration as 
in England. 


Express companies formally contract 
with railroad companies, the railroad 
companies being the controlling party 
and reserving important powers. 




sorted to and many contracts so 
provide. 



438 



EAILWAY MAIL PAY. 



Differences in the requirements imposed upon the railroad companies in the performance of 
United States Mail Service as compared with similar relations in the performance of 
service for the express companies — Continued. 



Subject. 



Post Office Department. 



Express companies. 



3. Pay adjustments. 



4. Transporsation facili- 

ties. 

5. Car space 



6. Railway post office 
cars; mail apart- 
ment cars. 



7. Construction; main- 
tenance. 



8. Loading and un- 

loading. 

9. Employees accom- 

panying traffic en 
route. 



30. Station room. 



1. Side and terminal 
messenger service. 



12. Free or reciprocal 
service. 



13. Mail cranes and mail 
receivers. 



14. Advance loading of 
railway post office 
cars. 



15. Handling traffic . 



16. Responsibility for 
loss or damage. 



17. Fines and penalties . 



Post Office Department weighs the 
mails and adjusts the pay every four 
years and practically gives itself a 
rebate on the increased business for 
the intermediate period. 

Post Office Department demands un- 
limited frequency — practically on 
every train. 

Post Office Department requires ex- 
cess car space for sorting the mails en 
route far beyond what the load re- 
quires. 

The railway post office cars are largely 
occupied by pigeonholes and iron 
racks and are not available for gen- 
eral railroad use when not occupied 
by the mails. 

The law requires steel railway post 
office cars, and the Post Office De- 
partment prescribes the interior fit- 
tings and special sanitary fixtures 
and requirements. Light (electric 
or gas) is especially expensive, so 
much being needed. Hence, high 
cost of construction and main- 
tenance. 

The railroad companies pay for load- 
ing and unloading mail cars. 

Probably three or four times as many 
railway postal clerks are carried for 
sorting the mails en route. The rail- 
road companies are responsible for 
their lives and safety. Substantial 
amounts are paid annually on 
account of accidents. 

If the Post Office Department requires 
room for transfer clerks at stations, 

. the railroad companies provide them 
without special charge and also fur- 
nish them and supply heat, light, 
iced water, etc. 

Post Office Department requires rail- 
road companies to carry the mails 
between the station and the post 
office at many places. 

Post Office Department makes no con- 
cessions to railroad companies. 



Post Office Department requires rail- 
road companies to erect and main- 
tain these devices at several thou- 
sand places throughout the country. 

Post Office Department expects cars 
to be placed in terminals several 
hours before leaving time for distri- 
bution in addition to loading, and 
thereby avoids renting space in post 
offices for that purpose. 

Post Office Department pays nothing 
extra to train baggagemen nor to 
station baggagemen for handling the 
mail traffic. 

The Post Office Department has not, 
so far as known, asserted the claim 
that the railroad companies are 
pecuniarily responsible for the gen- 
eral mails, but have imposed fines to 
cover the loss of registered mail or of 
mail baes or locks lost or destroyed 
as in railroad wrecks. 

Post Office Department imposes fines 
and deductions in many cases, some 
of which are dependent upon the 
idea that the particular mail (per- 
haps relatively unimportant) must 
be given preference over passenger 
and other traffic. 



Express pay to railroad companies is 
automatically adjusted on the actual 
daily business. 



Express companies strictly limited to 
certain train movements. 

Express traffic loads more compactly 
and therefore more economically. 



Express traffic does not require specially 
equipped cars. Baggage cars serve 
the "purpose and are available for 
general use. 

The express company accepts the cars 
that the railroad company can supply 
and is content with ordinary service 
and very little artificial light. Hence 
low cost of construction and main- 
tenance. 



The express companies bear this ex 
pense themselves. 

Express companies relieve the railroad 
company from any responsibility for 
injury or death of its employees. 



The express company pays rent for 
any space occupied in stations or 
builds its own structures. 



No such service is performed for the 
express company. 



The express company usually carries 
free, money, tickets, valuable pack- 
ages, etc., for the railroad company, 
not only on the contracting railroads, 
but also over the connecting lines 
over which the express company op- 
erates. 

No such requirement exists in connec- 
tion with the express service. 



Express companies own or rent their 
own unloading or loading warehouses 
and pay all costs and expenses. 



Express company contributes to the 
salary of railroad employees acting 
in the joint capacity. 

Express company accepts all respon- 
sibility for loss or damage to express 
traffic. 



Express company accepts the railroad 
company's standard of efficiency and 
has no superior privileges of super- 
vision. 



RAILWAY MAIL PAY. 439 

Mr. Chairman, in response to your recent informal suggestion I 
have prepared a statement of views upon the question as to whether 
the carriage of the United States mails represents an intangible asset 
to the railroads which should be given weight in fixing the rates for 
transportation. I submit it herewith for such disposition as you may 
desire to make of it. 

The Chairman. On behalf of the committee, I am extremely 
obliged to you for your compliance with the request, and will insert 
in the record your views relative to that particular phase of the 
problem. 

A CONSIDERATION OF THE QUESTION AS TO WHETHER THE CARRIAGE OF THE UNITED 
STATES MAILS REPRESENTS AN INTANGIBLE ASSET TO THE RAILROADS WHICH 
SHOULD BE GIVEN WEIGHT IN FIXING THE RATES FOB TRANSPORTATION. 

This question requires some study as to the bnsic attitude of the United 
States Government toward the post office and of the resultant duties or privi- 
leges of the citizen in regard to the post office ; also an analysis of the relative 
standing of those who as contractors, messengers, postmasters, clerks, or letter 
carriers perform service for the Post Office Department. 

The first resolution of the Continental Congress regarding postal matters was 
passed on Monday, May 29, 1775, and reads: 

"As the present critical condition of the Colonies renders it highly necessary 
that ways and means should be devised for the speedy and secure conveyance 
of intelligence from one end of the continent to the other : 

" Resolved, That Benjamin Franklin and five other Members be appointed a 
committee to consider the best means of establishing posts for conveying letters 
and intelligence through this continent." 

Two months later the committee reported and Congress agreed that a Post- 
master Genera] be appointed for the United Colonies; that a line of posts be 
appointed from Falmouth, New England, to Savannah, Ga.. with as many cross 
posts as he shall think fit. That deputies should be paid 20 per cent of what 
they collect and pay into the General Post Office up to $1,000 per annum, and 
10 per cent on all sums beyond that amount, and the resolution continues: 

' And if the necessary expenses of this establishment should exceed the pro- 
duce of it, the deficiency shall be made good by the United Colonies." 

Later on — February 25, 1777 — a resolution was passed that $5,000 be advanced 
to the Postmaster General, and the language continues: 

"And if the profits of the said post offices shall not be sufficient to defray the 
expenses of some, the deficiency shall be supplied out of the Continental 
Treasury." 

We therefore find that the Continental Congress, as a military and national 
emergency, found it necessary to establish a postal service as an offset to the 
ministerial post office that was still maintained in the Colonies under royal 
authority. It is also evident that even at that time, when the new Nation was 
struggling in its birth, it was expected that profits in conducting the post office 
might be sufficient to defray expenses, and only in the event that they were not 
was it provided that the deficiency should be supplied out of the Treasury. 

After the adoption of the Constitution iu 1789, an act was passed on Sep- 
tember 22, 1789, for the temporary establishment of the post office until the 
end of the next session of Congress, and no longer. A similar act was passed 
in 1790, 1791, and 1792. and it was not until June 1, 1794, that a General Post 
Office was established at the seat of government. The Postmaster General did 
not become a member of the Cabinet until 1829, 35 years after the permanent 
establishment of the post office. 

Upon the permanent establishment of the post office, Congress limited the 
postal monopoly to the letter mail — which at present we call first-class matter — 
carried for the general public, and this limitation of monopoly still continues 
after nearly 120 years. It is well to note that the growth in the volume of the 
mails since that time has been largely in the second, third, and fourth class 
mail matter. In the special weighing of 1907 first-class matter constituted 7.29 
per cent of all mail matter and equipment, and 12.81 per cent of all mail matter 
excluding equipment. 



440 KAILWAY MAIL PAY. 

It is also to be noted that when the post office was established in 1794 com- 
munication by letter was practically the only means of communication, whereas 
since that time telegraph and telephone service have been established through 
private enterprise, and continue under private control except as restrained and 
regulated by the Government. 

The intention of Congress that all who performed the postal service should 
receive fair remuneration is indicated again and again from the very beginning, 
as is also the expectation that the system should be self-sustaining. The volume 
of postal laws published in 1810 which are understood to contain the legisla- 
tion of 1794 prescribes, among the duties of the Postmaster General : 

" He shall provide for the carriage of the mail on all post roads that are or 
may be established by law as often as he, having regard to the productiveness 
thereof and other circumstances, shall think proper." 

Also, in section 3, that: 

" It shall be lawful for the Postmaster General to provide by contract for 
the carriage of the mail on any road on which a stage wagon or other stage 
carriage shall be established, on condition that the expense thereof shall not 
exceed the revenue thence arising." 

A very interesting method of pay is quoted in this same paragraph when 
it says: 

" It shall also be lawful for the Postmaster General to enter into contracts, 
for terms not exceeding eight years, for extending the line of posts and to 
authorize the persons so contracting * * * to receive during the continu- 
ance of such contracts * * * all the postage which shall arise on letters, 
newspapers, magazines, pamphlets, and packets conveyed by any such posts." 

The principle of compensation for any specific service rendered to the Post 
Office Department has been constantly maintained by the Government from 
the beginning, and the expression " reasonable and just compensation " is fre- 
quently met with. In this respect it has been suggested that the United States 
Government, recognizing that the national and industrial life was adjusted to 
the principles of English jurisprudence, accepted the obligation of providing for 
compensation for services rendered, this view being also in accordance with 
the spirit of the fifth section of the amendments to the Constitution, which 
rends : 

" Nor shall private property be taken for public use without just compen- 
sation." 

It might be suggested that if this supreme law restrains the action of the 
Federal Government where its very sovereignty may be involved, it is all the 
more controlling where the Government is an agency for the performance of 
what has become largely a commercial service. 

In Great Britain it is observed that the Government pays the railroads for 
transporting the mails, including the parcel post, an amount equal to 21£ per 
cent of the total postal expenditures, although the service rendered in Great 
Britain by the railroads is obviously much less extensive and not nearly so 
essential as the similar service is in the United States. 

In 1838 a law was passed declaring every railroad a post road and authorizing 
the Postmaster General to have the mails conveyed by rail, provided he can 
have it done upon reasonable terms, and not paying therefore in any instance 
more than 25 per cent over and above what similar transportation would cost 
in post coaches. This shows that an attempt was made to measure the in- 
creased value of the service due to the greater speed and regularity to be 
expected from the railroads as compared with the post coach. 

It is frequently suggested that the railroad is benefited by carrying the 
United States mail because of the protection which the railroad is supposed to 
obtain from the National Government in case of strikes or labor troubles. In 
response it might be said that the National Government has not shown a dis- 
position to exert its sovereignty to uphold the regularity of the postal service. 
The usual course of the National Government is the withdrawal of the mail 
facilities where there is local disorder or the substitution of some other means 
of transportation where the disorder affects transportation lines. As recently 
as October 9, 1912. the General Superintendent, Railway Mail Service, published 
instructions of the Second Assistant Postmaster General on the subject of rail- 
road strikes. Under the head of "Duty required of postmasters" it is pre- 
scribed that the postmaster is expected to cooperate with United States district 
attorney and advise him in the premises, but not to advise action beyond the 
scope of his instructions without the approval of the Postmaster General. It 
is further prescribed : * 



RAILWAY MAIL PAY. 441 

"He shall require the contracting company to furnish adequate service, and 
if this can not be done on account of unlawful acts of the strikers, he must 
report the character of temporary service required and the lowest obtainable 
rate for such service to the Second Assistant Postmaster General." 

It therefore seems to be a fair inference tbat the sovereignty of the Govern- 
ment in connection with the Post Office Department is almost entirely latent, 
and that in the few cases where the National Government has intervened be- 
cause of widespread rioting and disorder and the entire suspension of trans- 
portation facilities that the governmental action is more clearly in fulfillment 
of Article IV, section 4, of the Constitution, which prescribes that the United 
States shall guarantee to every State in the Union a republican form of govern- 
ment and shall protect each of them against invasion and, on application, 
against domestic violence, than for the relief of the postal service. 

Conclusions. — First. It may be held that, strictly speaking, a service ren- 
dered to the Post Office Department by a citizen or group of citizens is not 
customarily performed because of any patriotic obligation. In the case of the 
railroads the United States Supreme Court has decided that they are not obliged 
to carry the mails. 

Second. It seems evident that so long as the Federal Government monopolizes 
the carriage of letters — a very essential form of communication — the railroads 
could not as a rule bear the odium of incommoding the communities dependent 
upon them by refusing to carry the mails, even though the service was per- 
formed at a loss. 

Third. It would seem that the monopoly is granted by Congress to the Post 
Office Department in the interest of all the people and that it carries with it 
the obligation to serve all of the commimities with mail and the avoidance of 
any oppression upon those whose services are essential in the performance of 
the duty. 

Fourth. The protection to the railroad from carrying the mails in the case 
of strikes or labor troubles is so remote as not to constitute a valuable factor 
for consideration. The preservation of order in the community and the preven- 
tion or suppression of industrial revolution which interferes with interstate 
commerce seems to be a more adequate and satisfactory basis for interven- 
tion by the National Government. 

Fifth. Aside from any cold analysis of the respective rights and obligations, 
it would seem that the citizens engaged in operating railroads should be as 
public spirited as other citizens in assisting cheerfully and even enthusiastically 
in any service that is for the public good. There seems to be no greater obli- 
gation upon them than upon their fellow citizens to make unnecessary sacri- 
fices in the exhibition of their public spirit. Even if it could be held that they 
should go further than their fellow citizens, it must be remembered that the 
railroads of the country do not constitute one compact system, but many of 
them are unable to pay dividends and some of them are struggling for existence, 
even in times of prosperity. 

Sixth. Keeping in mind the principle that the Post Office Department is 
expected to be self-sustaining and not to be a drain upon the National Treasury, 
it might be advanced that Congress in appropriating money for railway-mail 
pay is not expending public funds for public purposes in the usual sense, but 
rather distributing the postal revenues to those who have performed the service 
in accordance with the value of such service. 

Seventh. The development of the postal service in modern times into the 
commercial field, the recent establishment of the parcel post, and the agitation 
that is continuing for further extensions in the same direction emphasize the 
importance of paying adequately for all services rendered, because otherwise 
certain citizens would be unduly taxed for the convenience and the economy of 
others. 

Eighth. It is a commendable belief that it is the duty of any Government 
to especially reward those who are faithful or valiant in its service, as an 
incentive for further effort of the same character and as stimulating patriotism. 
It seems all the more necessary when the General Government engages in a 
commercial service that it should not only guarantee adequate remuneration 
for the work performed but also allow exemplary reward for special facilities. 

V. J. Bradley. 

March 26. 1913. 



442 



RAILWAY MAIL PAY. 



Mr. Kussell H. Snead, manager of express traffic for the Chesa- 
peake & Ohio Kail way Co., submitted under oath the following 
statement : 

Exhibit A. 



Exhibit A shows a comparison of revenues from the transportation of pas- 
sengers, mail, and express for certain specified years, 1893 to 1912, inclusive, 
covering a total period of 20 years. In order to avoid burdening the commission 
with a lengthy statement, which should show the figures in detail for each year, 
I have shown them for each of the three years 1912, 1911, and 1910, and then 
beginning with 1908 with five-year intervals. Upon the theory that passenger 
trains are run primarily for the transportation of passengers, I have shown the 
ratio of mail and express revenues to the revenue received from passengers 
for each of the years named, and invite your attention to the fact that while 
the ratio of express revenue increased from 5.04 per cent in 1893 to 10.64 per 
cent in 1912, the corresponding ratio for mail decreased from 8.75 per cent in 
1893 to 6.74 per cent in 1912, showing that the revenues received from express 
transportation are, relatively, increasing faster than passenger revenues, while 
mail revenues are decreasing. 

Comparing revenues from the three classes of traffic carried on passenger 
trains for 1912 with 1893, it is found that passenger revenue increased 133.51 
per cent and express revenue increased 393.55 per cent, while mail revenue 
increased only 79.92 per cent. It should be noted that in the same period of 
time the operated mileage of the road has increased 75.49 per cent, so that the 
per cent of increased mileage alone would very nearly account for the increased 
revenue from mail, even if there had been no increase whatever in the volume of 
mail matter transported. 

It should also be remembered that in the 20-year period the rate of mail 
pay has twice been reduced. 

Chesapeake & Ohio lines — Comparison of revenues from transportation of 
passengers, mail, and express for certain specified years, 1893 to 1912. 





Passenger revenue. 


Mail revenue. 


Express revenue. 


Per cent of increase 
1912 over 1893. 


Year. 


Amount. 


Ratio of 

increase 

over 

next pre- 
ceding 

year here 
shown. 


Amount. 


Ratio 
to pas- 
senger. 


Amount. 


Ratio 
to pas- 
senger. 


Passen- 
ger. 


Mail. 


Ex- 
press. 


1912 


$5,505,536 
5,512,931 
5,002,205 
5,120,529 
3, 474, 905 
1,954,863 
2,356,975 


Per ct. 
10.13 
10.21 
12.31 

47. 36 

77.76 

i 17. 06 


$371, 137 
371,338 
360, 223 
395, 714 
368,396 
321,959 
206,281 


Per ct. 
6.74 
6.74 
7.20 
7.73 
10.60 
16.47 
8.75 


$586, 021 
536, 907 
450, 772 
407, 976 
245, 490 
133,884 
118, 737 


Per ct. 
10.04 
9.74 
9.01 
7.97 
7.06 
6.85 
5.04 


Per ct. 
133.51 


Per ct. 
79.92 


Per ct. 
393.55 


1911... 




1910 








1908 








1903 








1898 








1893 



















Year. 


Mileage 
operated 

on 
June 30. 


Per cent of 
increase 

in mileage 

1912 over 

1893. 


Average 

mail 
revenue 
per mile 
of line. 


Average 
express 
revenue 
per mile 
of line. 


1912 


Miles. 

2,305.50 

2,241.60 

1,938.80 

1,841.30 

1, 641. 40 

1,453.30 

1,313.92 


75.49 


$161.01 
165. 63 
185. 78 
214.95 
224. 49 
221.58 
156. 99 


$254. 24 


1911 


239.58 


1910 




232. 60 


1908 




221.61 


1903 




149. 60 


1898 




92.14 


1893 




90.43 









The figures for the years 1911 ar 
flndiana. 



1 Decrease, 
d 1912 include revenues and mileage of the Chesapeake & Ohio Ry. Co. 



EAILWAY MAIL PAY. 



443 



Exhibit B. 

This table shows a comparison of passenger-train mileage for specified years 
covering the 20-year period 1893 to 1912, inclusive. As mails are carried on all 
our passenger trains, this table shows the relative importance of the transpor- 
tation furnished for the years named and of the revenues received therefrom. 
Comparing 1912 with 1893, it is found that there was an increase of 84.80 
per cent in passenger-train mileage, and of only 79.92 per cent in mail pay. 
Even if there were no increase whatever in the volume of mail transported, 
the revenue received from mail did not increase in proportion to the mileage 
such matter was transported. According to the reports of the Bureau of the 
Census, the population of the four States in which the bulk of the mail service 
rendered by this company is performed (Virginia, West Virginia, Kentucky, 
and Ohio) has increased, 1910 compared with 1890, by 2,390,013. It is a 
well-known fact that the volume of mail increases much more rapidly, propor- 
tionately, than does the population. 

Comparison of passenger-train mileage for certain specified years, 1893 to 1912. 



Year. 



I Passenger- 
train 
mileage. 



Ratio of in- 
crease in 
mileage over 
next preced- 
ing year here 
shown. 



Mail revenue 
received. 



Ratio of in- 
crease in 

mail revenue 

over next 

preceding 

year here 

shown. 



1912 
1911 
1910 
1908 
1903 
1898 
1893 



Miles. 
4.932,122 
4, 268, 762 
4, 128, 176 
3,970,427 
3,255,918 
2,604,271 
2,668,922 



Per cent. 

15.54 

3.41 

3.97 

21.94 

25.02 

2.42 



$371,137 
371,388 
360,223 
395, 714 
368, 396 
321,959 
206,281 



Per cent. 
10.05 

3.09 
18.97 

7.42 
14.42 






1 Decrease. 

Figures for the years 1911 and 1912 include mileage and revenues of the Chesapeake & Ohio Ry. Co. o f 
Indiana. 

Per cent of increase in passenger-train mileage 1912 over 1893, 84. 80. Per cent of increase in mail revenue, 
1912 over 1893, 79. 92. 

Exhibit C. 

This table is introduced as a matter of information and shows the mail reve- 
nue received, by years, for the 10-year period — 1903 to 1912, inclusive — and the 
per cent of increase or decrease for each year when compared with the next 
preceding year. 

I have compared the amount of floor space in both full cars and apartment 
cars devoted to mail use in 1903 with that used for the same purpose in 1912, 
and find that 949 feet were used in 1903 and 1,398 feet in 1912, an increase of 
47.31 per cent. Compare this increase in space used with the increase in reve- 
nue, which amounted to only 0.74 per cent, and it will be apparent that mail pay 
has not increased proportionately to the space occupied in the cars which trans- 
ported the mails. It should be noted that the above calculation disregards the 
space in baggage cars in which closed-pouch mail is carried which, if taken into 
account, would undoubtedly increase the disparity between the space occupied 
and the pay received. 

Statement showing mail revenue received for years 1903 to 1912, inclusive. 



Year. 


Amount. 


Increase 
or de- 
crease. 


Year. 


Amount. 


Increase 
or de- 
crease. 


1903 


8368,396 
372; 282 
393,528 
423,087 
416,553 


Per cent. 


1908' 

1909... 


8395,714 
388.453 
360,223 
371,338 
371.137 


Per cent. 

is.oo 


1904 . 


1.05 

5.71 

7.59 

U.54 


1 1.83 


1905 


1910 

1911 

1912 


l 7. 27 


1906 . 


3.09 


1907 


x 0.05 







1 Decrease. 

Figures for the years 1911 and 1912 include revenues of the Chesapeake & Ohio Ry. Co. of Indiana. 

Increase 1912 over 1903, 0.74 per cent. 

Pecrepse 1912, compared with 1906, 12.26 per cent. 



444 



RAILWAY MAIL PAY 



In 1893 this company owned 8 fall R. P. O. mail cars, which cost a total of 
$38,994, an average of $4,874 per car. In 1903 it owned 8 cars, costing $40,813, 
an average of $5,102. In 1912 it was necessary to own 15 cars, at a total cost 
of $102,692, an average of $6,846. It is thus apparent that in the 20-year period, 
1893 to 1912, the number of full R. P. O. cars necessary to handle the mail on 
this line has increased 87.50 per cent, the necessary investment in those cars 
has increased 163.36 per cent, and the average cost per car has increased 40.46 
per cent. Of the 15 cars owned and used on June 30, 1912, only 5 were of the 
steel type prescribed by the law passed in 1912. These cars cost an average of 
$9,977 each. The railway companies are required, under the law, to provide 
none but steel cars by the year 1917. Assuming that there will be no increase 
in the cost of the cars and that no more cars will be necessary at that time 
than are now in service, this company's investment in R. P. O. cars will be 
$149,654, an increase in investment on full R. P. O. cars alone, when compared 
with 1893, of nearly 284 per cent. This calculation disregards apartment cars 
entirely, and by far the greatest number of cars in mail service on this line 
are apartment cars. 

The Postmaster General's report to Congress, which gives the results of his 
inquiry into operations, receipts, and expenditures of railroad companies (H. 
Doc. No. 105), shows 32 mail routes on the Chesapeake & Ohio Railway, of 
which number 16, or 50 per cent, carry the lowest average daily weight recog- 
nized in the department's classification (200 pounds or less), and, therefore, 
receive the lowest pay, $42.75 per mile per annum. 

There are 3 routes on which 200 to 500 pounds are carried daily, 6 on which 
500 to 1,000 pounds are handled, and 1 on which 1,000 to 1,500 pounds are car- 
ried. It thus appears that '26 out of 32 mail routes handle only the lowest four 
classes of mail weights. The following table shows the classification according 
to average daily weights carried and the number of routes in each class : 

Number of 
Classification : routes. 

200 pounds and less 16 

200 to 500 pounds 3 

500 to 1,000 pounds 6 

1,000 to 1,500 pounds 1 

1,500 to 2,000 pounds 1 

2,000 to 3,500 pounds 

3,500 to 5,000 pounds 1 

Each additional 2,000 pounds above 5,000 pounds and less than 48,000 

pounds 4 

Each additional 2,000 pounds in excess of 48,000 pounds 

Total 32 

Of the total car-foot mileage made by the first four classes above shown 
over 91 per cent was made in apartment cars, for which no R. P. O. car pay 
was received, the remainder being closed-pouch mail. 

In order to allow for mail carried in closed pouches the Postmaster General's 
report states that for weights of 100 pounds or less 6 linear inches were 
allowed ; over 100 pounds and not over 200 pounds, 10 inches ; above 200 pounds, 
5 linear inches were allowed for each additional 100 pounds. Upon that basis 
he arrived at the car-foot mileage of closed pouches. The car-foot miles made 
in each character of service on the Chesapeake & Ohio Railway for the month 
of November, 1909, were as follows : 





Character of service. 


Car-foot 
miles. 


Per cent 
of total. 


Railway post-office cars 


4,314,687 

2,604,008 

123,367 

167,336 


60 


Apartment cars 


36 


Closed pouches 


2 


Deadhead space 


2 


Storage space 












Total 


7,209,398 


100 







RAILWAY MAIL PAY. 445 

From the above table it is apparent that 40 per cent of the total car-foot 
mileage made in November, 1909, was paid for on a weight basis only. That is 
to say, that no pay was received for space provided in apartment cars, for dead- 
head space, or for space occupied by closed pouches. 

Many of the requirements of the postal laws and regulations impose very con- 
siderable hardships upon us by requiring services other than transportation, a 
number of which cause additional expense and labor. For example, this com- 
pany is required to carry the mails between post offices and stations at 336 
places for which no additional compensation is received ; we are required to set 
mail cars for advance distribution of mails at 13 places (at some of them for 
as many as .6 trains per day), at periods varying from about one hour to four 
hours in advance of the departure of trains. The placing of these cars some- 
times necessitates an extra switch, requiring the services of an engine and 
switch crew. The usual charge for switching freight cars varies from $1 to $5 
per car, but no compensation whatever is received for the additional switching 
service performed in the case of mail cars. 

In addition to the services above named, baggagemen and station employees 
who handle mail are required to keep records of mail pouches received and 
dispatched, to report any and all shortages of pouches due, and to report and 
explain all irregularities in the receipt or dispatch of mail, which requirements 
frequently cause much telegraphing and correspondence between railway em- 
ployees and officials, and also between railway and post-office officials. 

It is respectfully submitted that the performance of the incidental and ac- 
cessorial services to which attention has been called without additional compen- 
sation therefor is unjust and unfair to the railway company. 

R. H. Snead. 

Thereupon (at 5 o'clock p. m.) the hearing adjourned to meet at 
the call of the chairman. 

49396—14 36 



RAILWAY MAIL PAY. 



TUESDAY, APRIL 8, 1913. 

Committee on Second-Class Mail Matter, 

Washington, D. C. 
The hearing was resumed, at the call of the chairman, at 10.30 
o'clock a. m. 

Present: Hon. Jonathan Bourne, jr. (chairman), Hon. Harry 
A. Richardson, and Eepresentative William E. Tuttle, jr. 

STATEMENT OF MR. JAMES PEABODY. 

The Chairman. Kindly state your full name, residence, and the 
official capacity in which you appear before the committee this morn- 
ing, if any? 

Mr. Peabody. James Peabody; 68 years of age. I reside in Chi- 
cago. I am statistician of the Atchison, Topeka & Santa Fe Railroad. 

The Chairman. How long have you been statistician for that sys- 
tem? 

Answer. Since 1896. 

The Chairman. You are familiar with what is known as House 
Document 105? 

Answer. Somewhat so. 

The Chairman. Are you familiar with the modified suggested plan 
of ex-Postmaster General Hitchcock of the substitution of space for 
weight in the determination of the value of the service rendered in 
railway mail pay, as set forth in my preliminary report to the joint 
committee on postage on second-class mail matter and compensation 
for the transportation of mail, page 109, as transmitted by Mr. Hitch- 
cock to this joint committee on January 20, 1913? 

Mr. Peabody. I have read this proposed law but have not analyzed 
it sufficiently to say that I would be familiar with it. 

The Chairman. Will you give the committee your views relative 
to an equitable basis of compensation on the part of the Government 
to the transportation companies of this country for railway mail pay 
and R. P. O. service ? 

Mr. Peabody. My investigations- have gone rather to the demon- 
stration of what we believe to be a fact, that the railway mail pay 
as at present adjusted is not compensatory to the railroads. I have 
not given the subject sufficient thought to be willing to suggest any 
plan by which that pay should be increased, but only that it ought to 
be increased in some wav. 

447 



448 BAIL WAY MAIL PAY. 

The Chairman. Your reasons being, for the latter statement, 
what? 

Mr. Peabody. That we are able to show that the amount of money 
which we receive for carrying the mail on the Santa Fe road is not 
compensatory ? 

The Chairman. The Santa Fe represents what mileage? 

Mr. Peabody. Somewhat over 10,000 miles of road. 

The Chairman. By the Santa Fe system, you mean all the branch 
lines and every other road affiliated with the system ? 

Mr. Peabody. All the property owned by the Santa Fe Co. over 
which mail routes run. 

The Chairman. Will you kindly proceed with the demonstration? 

Mr. Peabody. The report of the Postmaster General in Document 
105, as to the compensation allowed the roads, proceeds to determine 
for each road the amount of expense attaching to the mail service. 
It does that for the purpose of showing that the service is com- 
pensatory. In the outset the report says : 

In the determination of a basis for the apportionment of the remaining or 
nonassignable expenses of operation it was important that the method used be 
sound and equitable. 

Perhaps I had better read before that the few preceding sentences : 

In determining the method of separating the operating expenses to the 
passenger and freight traffic the suggestions and deductions of the railroad 
commission of Wisconsin set forth in its decision in the case of A. E. Buell v. 
The Chicago, Milwaukee & St. Paul Railway Co., decided February 16, 1907, 
have been made use of, and with the exceptions hereinafter noted the several 
items of operating expenditures have been divided in accordance with the con- 
clusions reached in that decision. The operating expenses were reported by 
the companies in accordance with the classification of operating expenses for 
steam roads issued by the Interstate Commerce Commission, effective July 1, 
1907, and amended July 1, 1908, comprising 116 accounts for the large roads 
and 44 accounts for the small roads arranged under the general headings of the 
classification, namely : " Maintenance of way and structures," " Maintenance of 
equipment," "Traffic expenses," " Transportation expenses and general ex- 
penses." Assignments and apportionments thereof were made according to the 
basis adopted. For this purpose Form 260S was utilized, a copy of which ac- 
companies this report. 

Assignments were made directly to passenger and freight traffic and in some 
instances to the mail and express services of such account totals and such parts 
of accounts as were reported by the companies as being actually expended in 
each class of service. Approximately 12 per cent of the total maintenance of 
equipment expenses and 25 per cent of the total transportation expenses were 
so assigned. 

In the determination of a basis for the apportionment of the remaining or 
nonassignable expenses of operation it was important that the method used 
be sound and equitable. The bases used by railroads for the distribution of 
nonassignable operating expenses are revenue train mileage, revenue car 
mileage, locomotive (including switching) mileage, the revenue, and the cost 
percentages of direct charge accounts. 

It would appear from the reading of the method so far that the 
Wisconsin basis was used for the division of the expenses b} r the 
Postmaster General in his report and he objects to the use of the 
revenue train mileage basis, and as a foundation for that objection- 
he quotes as follows from the decision of the Wisconsin commission : 

The revenue train-mile is the unit of work done in hauling trains between 
terminals, and it is the most direct unit of cost. That is, the passenger revenue 
train mileage is the most direct unit of those expenses which depend upon the 
same, and the freight revenue train mileage is the most direct unit of those 



RAILWAY MAIL PAY. 449 

expenses which depend upon this mileage. This is an important distinction, 
for the passenger train mileage differs materially in cost as well as in many 
other respects from the freight train mileage. * * * They evidently assume 
that passenger and freight train mileage stand for substantially the same thing, 
and that this is the proper unit of all expenses. Even a superficial analysis 
of the facts will show that this is not the case. 

The Chairman. That is the decision of the Wisconsin commission ? 

Mr. Peabody. The decision of the Wisconsin commission. 

The Chairman. Which the ex-Postmaster General presents and 
indorses in his presentation, I take it? 

Mr. Peabody. And which he quotes there to show that the revenue 
train mileage is not the proper basis of division between freight 
and passenger. 

The Chairman. What are your comments in reference to that? 

Mr. Peabody. The trouble with that quotation is he leaves out a 
very important part of that paragraph which does not refer to the 
division between freight and passenger at all ; it refers to the division 
of expenses — that is, it refers to the apportionment of expenses to 
the space as related to the entire line. They are condemning the use 
of revenue train mileage for the division of expenses of the entire 
line, or for the apportionment of the expenses of the entire line to 
that part of the line which is in Wisconsin. 

The Chairman. At this point of the proceedings, in accordance 
with the practice at the last hearing, I will swear the gentlemen who 
are present, in order that they may participate in a general discus- 
sion, which procedure will bring out any salient points which may 
occur to them. 

Thereupon the following gentlemen were sworn by the chairman : 

Archibald H. Rowan, assistant to vice president, traffic department, 
New York Central Lines. 

John Hurst, assistant comptroller, Pennsylvania Lines West of 
Pittsburgh. 

J. P. Lindsay, manager mail traffic, Atchison, Topeka & Santa Fe 
Railway system. 

W. C. Wishart, statistician of the New York Central Lines. 

V. J. Bradley, general supervisor of mail traffic of the Pennsylvania 
Railroad system. 

Albert Noble Prentiss, clerk, Post Office Department. 

C. H. McBride, Superintendent Division of Railway Adjustments, 
Post Office Department. 

Mr. Peabody. I was just beginning to say that he quotes from the 
decision of the Wisconsin commission in the Buell case and has omit- 
ted a very important sentence in the middle of the quotation, which 
sentence shows that the revenue train mileage, to which the quotation 
refers and which is condemned by the sentence, did not refer to the 
division of expenses between freight and passenger at all but to the 
division of expenses of the line as between Wisconsin and the balance 
of the line. I will read it with the omitted sentence : 

The revenue train mile is the unit of work done in hauling trains between ter- 
minals, and it is the most direct unit of cost. That is, the passenger revenue 
train mileage is the most direct unit of those expenses which depend upon the 
same, and the freight revenue train mileage is the most direct unit of those 
expenses which depend upon this mileage. This is an important distinction, 
for the passenger train mileage differs materially, in cost as well as in many- 
other respects, from the freight train mileage. 



450 RAILWAY MAIL PAY 

This is the part he has left out : 

Some roads apportion all of the operating expenses through the State in 
which they run in the proportion which the total passenger and freight train 
mileage in each State bears to the total passenger and freight train mileage for 
the whole line. They evidently assume that passenger and freight train 
mileage stand for substantially the same thing, and that this is the proper unit 
of all expenses. Even a superficial analysis of the facts will show that this is 
not the case. 

The Postmaster General has used that paragraph to condemn the 
train mileage feature for the division of freight and passenger, 
whereas the report shows, and as it specifically states, it is condemned 
for the use of the expenses as between Wisconsin and the balance of 
the line and has no relation whatever to the division of expenses be- 
tween freight and passenger. 

The Chairman. Do you agree, Mr. McBride, in reference to Mr. 
Peabody's comment just made? 

Mr. McBride. Senator, I hardly feel prepared to enter into a 
discussion of this matter on such short notice. I have no data with 
me or anything of any kind, and I fear I would be at a great disad- 
vantage in discussing the matter with Mr. Peabody, under the cir- 
cumstances. 

The Chairman. You have had two years' study of this, and you 
were one of the committee that were sponsors for what is known as 
Document 105 ? 

Mr. McBride. I worked on it, yes, sir ; as one of the members of 
the committee. 

The Chairman. There was an administrative committee formed, 
appointed by the Postmaster General, and, as I understand Docu- 
ment 105, representing the compilation and tabulation of information 
submitted by the railroads, was under that committee's direction. 

Mr. McBride. Yes. 

The Chairman. Then I fail to see why you are not prepared, Mr. 
McBride, to enter into a joint debate, if you please, in reference to 
the findings in that document. 

Mr. Peabody. To show that that reference is correct, the paragraph 
immediately preceding states : 

By some of the roads this distribution among the States is made in propor- 
tion to the revenue train mileage in each State. 

Then it discusses that and condemns it, as I have read, but, as I 
have stated, and it so states in the text itself, it relates to the division 
as between the State and the balance of the line. 

Mr. Lorenz. Would you say that the Buell decision approved the 
revenue train mileage basis for the division between freight and 
passenger ? 

Mr. Peabody. No; not altogether. 

Mr. Lorenz. It partly condemned it, did it not ? 

Mr. Peabody. I will come to that later. I am merely starting out 
to show that the apparent condemnation of the train mileage basis 
for the division between freight and passenger is not authorized by 
the decision, and it is misquoted and the quotation mutilated, I do 
not know for what purpose, but it has the effect of showing the oppo- 
site meaning from what it actually carries. 

The Chairman. Your comments in reference to the quotation in 
Document 105 and your elucidation of that quotation refer par- 



RAILWAY MAIL PAY. 451 

ticularly to the Wisconsin Railroad Commission Report, volume 1, 
July 20, 1905, and July 31, 1907, pages 388 and 389. 

Mr. Peabody. That is right. In response to the question of Mr. 
Lorenz I would say that the Wisconsin commission does not approve 
the use of the revenue train mileage on the division of the unassign- 
able expenses under all accounts. It does use that basis for some of 
the accounts and does not condemn it for that use in any place. 

The Chairman. Let me ask you if it is your opinion that the reve- 
nue train mileage is the correct yardstick, if you please, for the appor- 
tionment of accounts between freight and passenger ? 

Mr. Peabody. If you are compelled to use only one yardstick for 
all of the accounts and can not use a separate yardstick for the 
various accounts, then the revenue train mileage, in my opinion, is 
the best basis for what are known as the common or unassigned 
expenses incident to the operation of a railroad. 

The Chairman. What have you to say in reference to that, Mr. 
McBride? 

Mr. McBride. We were of the opinion that the direct-charge ac- 
counts provide a more competent basis for the distribution of the 
common expenses. 

Mr. Peabody. May I ask a question there? 

The Chairman. If you will, yes. 

Mr. Peabody. What do you mean by the" direct-charge accounts " — 
those that are absolutely assignable to the freight and passenger, 
without any division? 

Mr. Prentiss. The direct-charge accounts as used by the Post 
Office Department represent those accounts which are essential to the 
conduct of railroad transportation. They represent, in accordance 
with the Wisconsin commission's report, the accounts for equipment 
repairs and the transportation accounts absolutely essential for the 
operation of passenger trains. I will say that the principal ac- 
counts can be actually divided, so that besides representing the rail- 
road business they also represent the assignable expense to a great 
extent. 

Mr. Peabody. Which can be divided how — that is, naturally di- 
vided as between freight and passenger? 

Mr. Prentiss. Yes. It was also the intention of the department 
in handling the division of expenses never to divide on an arbitrary 
basis, but to get direct-charge percentage on which to divide the non- 
assignable accounts. 

Mr. Peabody. May I ask if you will name some of those accounts 
that can be thus divided without the use of an arbitrary ? 

Mr. Prentiss. With the exception of the Atchison, Topeka & Santa 
Fe Railroad, the accounts in transportation embracing road engine- 
men, road trainmen, and fuel for road locomotives, which comprise 
approximately 30 per cent of the transportation expenses, were 
assigned by the railroad companies, in every case. 

Mr. Peabody. Were assigned by the railroad companies ? 

Mr. Prentiss. On other reports. 

Mr. Peabody. I understand you to say that it was the assignment 
by the Post Office Department? 

Mr. Prentiss. The department assigned nothing. 

Mr. Peabody. The assignments by the railroad companies were on 
arbitraries, were they not? 



452 RAILWAY MAIL PAY. 

Mr. Prentiss. Not so far as the department was aware. 

Mr. Peabody. Will you tell me how you can divide fuel for loco- 
motives, except on an arbitrary basis, and water for locomotives? 

Mr. Prentiss. That, I believe, is a question for each railroad to 
determine. We were not in position to determine that. 

Mr. Peabody. The only reason I am asking this question is a large 
part of the accounts divided by the department are divided upon 
the direct-charge accounts. I am unable to find anything com- 
ing under your definition of direct-charge accounts except the repairs 
to passenger cars, repairs to freight cars, loss and damage to freight, 
loss and damage to baggage. I think those are all of the accounts 
that divide themselves. Others have to be divided on an arbitrary 
of some kind and consequently are not direct-charge accounts. 

Mr. Prentiss. I have one case in mind, that of the New York, 
New Haven & Hartford Railroad Co., where their fuel expenses are 
absolutely divided by means of fuel vouchers which they use, accord- 
ing to their own statement. 

Mr. Peabody. Do you know how they divide it on those vouchers? 
Our fuel is absolutely divided, but it is divided on an arbitrary basis 
just the same. What I want to bring out, is what you would have 
for direct-charge accounts on which you base most of your divisions ? 

Mr. Prentiss. What we intended to secure by the direct-charge 
percentage on which the division was made was a percentage which 
would represent the ratio of actual operations between passenger and 
freight, the cost of the operation. 

Mr. Peabody. And if there are no accounts or practically no 
accounts except those that are mentioned that divide themselves 
directly, then your basis is not competent, is it ? 

Mr. Prentiss. It is competent in this respect: That it represents 
an item for passenger and freight cost which is reported by the 
railroad companies to the department as actually expended for those 
two items. 

Mr. Peabody. And if those items, or those four accounts which 
are thus selected directly, comprise not more than about 15 per cent 
of the total expenses, would you consider that a proper basis for the 
division of the other expenses ? 

Mr. Prentiss. I think the equipment repair accounts and the three 
transportation accounts named represent in the minimum about 37 
per cent. 

Mr. Lorenz. Do you not think that we ought to recognize that 
there are perhaps three kinds of expenses rather than the two 
which I think you have in mind ? You have mentioned those which 
are naturally and directly assignable without question, but I think 
there is a second class that is apportionable with reasonable accuracy 
and not with so much uncertainty as maintenance-of-way expense. It 
is those two classes together that the Post Office Department used, 
I think. 

Mr. Peabody. You and I are in perfect harmony on that. There 
are a large number of accounts that can be accurately divided. 

Mr. Lorenz. So that I think the Post Office Department's direct- 
charge method is not open to the criticism you have just made — that 
it is misleading because there are only so few accounts that are 
direct!} 7 assignable. 



BAIL WAY MAIL PAY. 453 

The Chairman. Do you concur with Mr. Lorenz's suggestion there, 
that the criticism of the Post Office Department's assignabilities 
here are not exactly fair? 

Mr. Peabody. No. What I wanted to ascertain, and my questions 
were directed to ascertaining, was what items were called the direct- 
charge accounts in their assignments and the answer was that it was 
those accounts that divided themselves or could be directly allocated, 
and in such case I merely called attention to the fact that they were 
very few in number. If, in addition to that, the gentleman means to 
say that these accounts which could be allocated upon a fair and rea- 
sonable basis were also included as a direct-charge account, I am per- 
fectly willing to accept that, if that is the case, but, that was not his 
answer. 

The Chairman. These allocations would depend on the individual 
who makes them? 

Mr. Peabody. No. You can tell just what accounts can be directly 
allocated without any opinion at all. 

The Chairman. Is there a rule laid down, either by the Interstate 
Commerce Commission or by the railroads themselves, so that there 
is a general system as to the allocation of accounts, which is a uni- 
versal agreement? 

Mr. Peabody. There was a rule laid down by the Interstate Com- 
merce Commission, up until 1893 and it was then abandoned. Not 
being absolutely sure for -the reason for its abandonment I will 
not state anything about why it was abandoned. But that was the 
revenue train mileage which was abandoned in 1893 by the commis- 
sion and the railroads were no longer required, as they had been be- 
fore that, to make up their expenses on the basis of that division. 

The Chairman. That discontinuance would tend to prove, would 
it not, so far as the Interstate Commerce Commission is concerned, 
that their opinion in 1893 was against the revenue train mileage as a 
yardstick ? 

Mr. Peabody. I do not know whether that was their opinion or not. 
It was the opinion of the statistician of the Interstate Commerce 
Commission ; I will say that. Whether it was with the other gentle- 
men or not, I do not know. 

The Chairman. The discontinuance took place in 1893 ? 

Mr. Peabody. It was discontinued at the solicitation of the railroad 
officials and not at the instance of the Interstate Commerce Commis- 
sion. 

The Chairman. I understood you to say a little while ago that, in 
your opinion, if there was only one yardstick to be used that was the 
best yardstick that could be used. 

Mr. Peabody. I still maintain that position. 

Mr. Lorenz. I would like to ask whether you happen to know, ap- 
proximately, the relative weights of passenger locomotives and freight 
locomotives on your system? 

Mr. Peabody." I have in my office the weight of every separate loco- 
motive on the system. 

Mr. Lorenz. Would you say that the freight locomotive was con- 
siderably heavier than the average passenger locomotive ? 

Mr. Peabody. With the exception of one class of locomotives which 
we use on the mountain divisions. Mallet compounds, which we use 



454 RAILWAY MAIL PAY. 

almost exclusively for freight, all of our other engines we use inter- 
changeably. One is not heavier than the other. Our passenger trains 
are so large as to require the heaviest locomotives we can run. 

Mr. Lorenz. Would you say that was generally true of the rail- 
roads of the United States? 

The Chairman. What is generally true — difference in weight ? 

Mr. Lorenz. My impression is that the freight locomotives are 
about 50 per cent heavier than the passenger locomotives, on the 
average. That is at least indicated by the relative locomotive tractive 
power as reported by the Pennsylvania Railroad Co. 

Mr, Peabody. The locomotive tractive power does not indicate the 
weight of the locomotive with any degree of accuracy. 

Mr. Lorenz. But it would at least indicate that the average weight 
of a freight locomotive was much heavier than that of a passenger 
locomotive ? 

Mr. Peabody. I am not able to say as to the United States whether 
the average is larger. I should imagine, from my general knowl- 
edge of the subject, that the freight locomotives are heavier, on an 
average, but that is altogether supposition. 

Mr. Lorenz. And with respect to the weight behind the tender, is 
it not true that the freight train weighs a great deal more than a 
passenger train? 

Mr. Peabody. That is true. 

Mr. Lorenz. So that on the whole you have a freight train repre- 
senting something entirely different from a passenger train, and the 
question arises whether the difference in weight is offset by the dif- 
ference in speed. 

Mr. Peabody. I think if Dr. Lorenz will permit me to answer that 
question we will get into a discussion which is now going on between 
the Interstate Commerce Commission and a great many students of 
the whole subject, with the idea of formulating a proposition that 
will be more accurate than anything we have at present, revenue train 
mileage or anything else. I want to say that the revenue train mile- 
age is not an accurate basis for division. I am perfectly willing to 
state that at the outset, and we on the Santa Fe road use it only 
where it is absolutely necessary and where we can find no other basis 
that is better. We do not use revenue train mileage on all un- 
assignable accounts by a great deal, but it is used on a great many 
railroads, and, as I stated, where you can only use one yardstick, 
where that is the only yardstick possible to use, then I believe the 
revenue train mileage is the best yardstick; that is, it will produce 
the results that are nearest to being accurate than any other yard- 
stick that I know of at present or that has been suggested so far. 
Let me explain there what I mean. The Post Office Department 
labored under great difficulty, and I only wonder that they produced 
as good a result as they did. In the majority of their accounts they 
only had the sum total of the amount charged against any particular 
primary account. For instance, station agents. They knew that 
there were so many dollars charged for station service, and they had 
no way of dividing that except by applying their yardstick, whatever 
they used, to that total amount of station service. There is a great 
deal of that station service, when you come down to the units of the 
service, which naturally divide themselves as between freight and 
passenger. Some men at the station work entirely on freight, and 



RAILWAY MAIL PAT. 455 

some men at the station work entirely on passenger business, and 
baggagemen work in a great many stations on the passenger busi- 
ness, but all that is included in the one item of station service. 

Now, if you are going to apply a yardstick to that station service, 
I think the revenue train mileage is the best yardstick you can apply ; 
but the railroads, going back to the units present in that item under 
station service can apply a great deal better yardstick to that item. 
Our yardstick for that particular account is that we require our 
division superintendents to visit every station on the division and, 
in conjunction with the agent, determine how much time of each 
separate man at that station is devoted, respectively, to freight and 
passenger service, and that man's pay is divided on each individual 
voucher each month and charged against freight and passenger, 
respectively. 

The Chairman. You do not pay him two vouchers ? 

Mr. Peabody. No. He is given one voucher. The pay of each 
man is divided under that rule. 

The Chairman. But the voucher itself is for the month's pay, re- 
gardless of whether 50 per cent of his time, or 60, 70, or 80 per cent 
was for passenger and the remainder for freight? 

Mr. Peabody. That is true. The railroad says, " John Smith, 
$50," but that $50 is divided so much for freight and passenger. The 
next will be " Peter Jones, $70," and that is divided, and so on, 
throughout the entire road. 

The Chairman. Your idea being, as I take it, that you want the 
passenger service to be self-supporting and the freight service self- 
supporting ? 

Mr. Peabody. The idea being to ascertain just how much each cost, 
if we can, with the ultimate idea of finding out which service is 
profitable. That is why I said if we are going to apply only a single 
yardstick — if we are compelled to apply a single yardstick — which, in 
a large measure, the Post Office Department was compelled to do, 
then I believe the revenue train mileage to be the best yardstick for 
that part of the expense that is not assignable. 

The Chairman. Mr. Lorenz, conceding that your contention is cor- 
rect, that the freight engines and freight trains are heavier than the 
passenger engines and passenger trains, what would you expect to 
prove by it ? 

Mr. Lorenz. I would expect to prove that the freight department 
should bear a little more expense than is indicated by the freight- 
train mileage as compared with the passenger-train mileage. For 
example, I have in mind one road in which the relative freight and 
passenger train mileage would assign 44 per cent, or more, of the 
common expenses to the passenger service; but on that road nearly 
nine-tenths of the cars running over the tracks are freight cars, 
and it does not seem right under those circumstances to make the 
passenger department bear nearly half the common expenses when 
they run only one- tenth of the cars over the track. I am not inclined 
to say that you should therefore reject the revenue train-miles alto- 
gether. There are certain accounts in which it is the proper basis, 
but I do think that as a single measure for all maintenance-of-way 
accounts it is unfair to the passenger department. 

The Chairman. And your idea is that mail being part of the pas- 
senger service, a fair apportionment of expense should be arrived at 



456 RAILWAY MAIL PAY. 

between freight and passenger and then between general passenger 
service, specifically the mail service ? 

Mr. Lorenz. Yes, sir. 

Mr. Peabody. There is no doubt about that proposition, Senator. 
May I ask Dr. Lorenz this question : Have you taken into account in 
that estimate the extra expenses incident to the maintenance of the 
track suitable for passenger as compared with freight; that is, the 
refinements of the track which are necessary for the passenger busi- 
ness and which are very costly? Have you taken that into account 
when you say that because of the extra number of cars in the freight 
business it should be charged with other proportions? 

Mr. Lorenz. I think that that is a feature that must be considered, 
especially on some roads. I think that is something that would vary 
on different roads, probably. I have in mind a recent study of the 
Buffalo, Koch ester & Pittsburgh, where a division, according to the 
revenue train mileage, shows the passenger department to be un- 
profitable, but one of the editors of the Kailway Age, in making a 
special study of that system, thinks that, considering the nature of 
»,he passenger traffic and the nature of the freight traffic, the passen- 
ger traffic should not be charged with anything extra on account of 
the reasons which you state. 

Mr. Peabody. May I ask who that editor is ? Is it Mr. Dunn ? 

Mr. Lorenz. No, sir. 

Mr. Prentiss. Mr. William E. Hooper. 

Mr. Peabody. Did Mr. Hooper ever have a day's experience in 
railway service? 

Mr. Lorenz. I do not know. 

Mr. Peabody. I am afraid his opinion on that subject would not 
stand criticism. Now, we have some idea of what is meant by the ex- 
pression of the department with regard to direct expenses, and I want 
to refer to this quotation which is taken from the first Wisconsin re- 
port, on page 398. The reason for using this basis of separation is 
given in the decision of the railroad commission of Wisconsin: 

That all indirect costs and general expenses which are common to all depart- 
ments and contracts should be apportioned between them in proportion to the 
direct expenses or to some part of the direct expenses, such as the cost of either 
labor or material, or both. As to which one of these bases should be applied is 
a matter that depends on the conditions in each case. 

The only trouble with that quotation is that it does not refer to the 
railroad operation at all, but is a quotation from the discussion of 
manufacturing cost accounting referred to in the decision and has no 
possible relation to railroad accounting. The decision is discussing 
manufacturing costs. It speaks about the way in which that cost 
accounting in manufacturing is carried on. I will read the whole 
paragraph from which the quotation is taken : 

But this is not the only puzzling question. It is also necessary to ascertain 
the amount of the total operating expenses that can be fairly charged to the 
traffic in the State. Each railway system is operated as one unit and without 
any reference to State lines. Many of the current expenses can be, and often are, 
kept by operating divisions. When these divisions are located wholly within 
one State, a part of the expenses of the traffic of that State can, to that extent, 
actually be kept apart. But when the division crosses State lines, no direct 
separation is possible.. It appears from this that the greater proportion of the 
expenses must be distributed between the States in some arbitrary manner. 

Three or four pages before and after that are taken up with a dis- 
cussion of cost accounting as applied to manufacturing, and then the 



RAILWAY MAIL PAY. 457 

decision concludes that " if ccst accounting as thus applied to manu- 
facturing is feasible and been used by the manufacturers of the 
United States with profit and with good results the same thing cer- 
tainly should be applied to railroads," but that quotation has no ref- 
erence to any railroad account whatever, and is entirely referring to 
the matter of cost accounting in manufacturing. Besides, it is to be 
said that under the maintenance of way account 1, 2, 3, 7, and 90 per 
cent of 8 and various other accounts under the maintenance of way 
are alleged to be divided on the basis of the Wisconsin commission. 

The Chairman. Reading from page 9 of Document 105, this ref- 
erence that you have just made, I take it? 

, Mr. Peabody. Yes. The trouble with that statement on page 9 
is that the Wisconsin commission did not use that basis at all in their 
division of maintenance of way expenses, but they used 90 per cent 
on the percentage that the passenger and freight operating revenue 
bears to the total operating revenue and 10 per cent on the percentage 
that the passenger and freight train mileage, including switch train 
mileage, bears to the total train mileage. In other words, they divide 
all those accounts on a revenue basis and not on a direct charge 
account. 

The Chairman. That is, the Post Office Department did in their 
deductions, or the Wisconsin commission ? 

Mr. Peabody. No. They assumed to follow the Wisconsin method 
here. 

The Chairman. But they did not do it? 

Mr. Peabody. They did not do so. The Wisconsin commission 
did not use the direct charge accounts, but they used the revenue basis 
for a great portion of it — 90 per cent of superintendence, of ballast, 
66f of ties, which are the large items, were divided on the revenue 
basis and not on the direct-charge basis at all. 

The Chairman. What have you to say in reference to that, Mr. 
Prentiss ? 

Mr. Prentiss. The Wisconsin commission, on another page of their 
decision, make the specific division just as we have it here, and cite 
the statistician of the Pennsylvania Eailroad and some others as 
authorities for the use of those percentages. I will say relative to 
the Wisconsin commission and the way they handled the accounts, 
that they stated that in handling a specific account that this account 
should best be divided on the basis of the direct-charge accounts, but 
the railroad company has divided it on train mileage. The commis- 
sion ascertained the division by train mileage, by direct-charge ratio, 
and by revenue, and the difference between the results of dividing 
on the revenue basis and on the direct-charge basis is to small that 
they divided it on the revenue accounts. They handled it as a judge 
would handle a case, citing all the different opinions, and then they 
showed the division. 

The Chairman. That is, the Wisconsin commission did? 

Mr. Prentiss. Yes. But that did' not amount to much in dollars. 
They chose a division that would be acceptable to the railroad com- 
pany. The department handled it according to the proposition laid 
down by the Wisconsin commission in that case, that the direct- 
charge ratio was the proper percentage to use for the division of 
certain accounts and based on the percentages as shown there by the 
statisticians and authorities. 



458 EAILWAY MAIL PAY. 

Mr. Peabody. Let me read exactly what the commission says in 
their decision, referring to the final division under maintenance of 
way for Wisconsin : 

While the facts thus indicate that we would be justified in adopting the 
apportionment to the State which was made by this commission and in dis- 
tributing that part of the expenses between passenger and freight which de- 
pends on depreciation on the basis of the direct expenses, the situation, when 
considered as a whole, is such that it is undoubtedly fairest to all concerned 
to adopt the company's apportionment to the State and to apportion those costs 
which are due to depreciation on the basis of the gross earnings. 

That is what they say, and that is the way they did. 

Mr. Prentiss. That is their decision in regard to that case? 

Mr. Peabody. They say it is undoubtedly the fairest. This assumes 
that the commission used the other basis. That is what I am object- 
ing to. 

The Chairman. By " this " you mean the department's statement 
as represented on page 9 of Document 105 ? 

Mr. Peabody. Yes. Coming down to account No. 25, on page 9 of 
Document 105, which relates to steam locomotives and so on, repairs 
to locomotives under the general head of maintenance equipment, the 
Wisconsin commission used the locomotive mileage basis for the 
freight and passenger, respectively, of the locomotives engaged in that 
service. The department says : 

It was found that the locomotive mileage, although used by some companies 
as a basis for apportionment of these accounts, was too high for the passenger 
traffic and was in many cases unobtainable. The train mileage was higher for 
passenger service than the locomotive mileage, and the car mileage or cost of 
car repairs was too low a basis for division when the passenger traffic was 
considered. 

That would seem to indicate that if the result reached by the ap- 
plication of the most logical method, such as the mileage of the loco- 
motives which were undergoing repairs, produced what, in the opin- 
ion of the department, was too high and abandoned it they would take 
some other method. Certainly there is no better basis for apportion- 
ing repairs to locomotives than mileage made by the locomotive, and 
that is the universal basis established by all railroads. On the Santa 
Fe road we assign to those locomotives that are exclusively passenger 
their repairs to passenger accounts, and the repairs on freight engines 
are assigned to freight accounts, but a majority of our locomotives 
do both freight and passenger service, and when the repairs are made 
they have to be divided between passenger and freight on some basis 
and the respective mileage made in passenger and made in freight is 
certainly the proper divisor, but because that made too high a charge 
to the passenger department they abandoned that. 

Mr. Prentiss. It appears on the face of it as though the department 
used its own discretion, but the facts were that there was before the 
departmental committee a series of statistics of a great many roads 
which had actually divided locomotive repairs between passenger and 
freight. 

Mr. Peabody. On that same basis ? 

Mr. Prentiss. No. But had actually been able to divide the cost 
of repairs. Their repair shops were so separated that they were ac- 
tually able to assign to passenger and freight the locomotive repairs. 
By taking the amount and applying the percentage, which we could 
easily do for those roads — the locomotive mileage, train mileage 



RAILWAY MAIL PAY. 459 

and so on — we ascertained that they were not in accord with the 
actual facts as reported by the roads for actual expenses, but that the 
direct charge costs, as we showed here, were very close, within 1 or 2 
per cent of the actual facts, and consequently we used the percentage 
which would bring the proper result. 

Mr. Peabody. And because some roads made errors in that respect 
you applied that to all roads ? 

Mr. Prentiss. We had to have some general basis, of course. 

Mr. Peabody. I had to take the basis, as you stated it here, and I 
had no other means of knowing. As I have already stated, the 
department did a magnificent piece of work in doing this under the 
conditions under which they worked. They are entitled to a great 
deal of credit for the work' that they did in regard to this division 
between freight and passenger ; there is no question about that, but in 
the first place the men who were doing it, as I supposed, were not 
experienced railway men. I do not know that that is a fact, but I 
have understood that to be a fact. They also certainly did not have 
access to the unit charges which in most cases would determine what 
is the proper basis, and the result is that the conclusion they reached 
is wrong and we are asked to stand by that wrong result, and that is 
why I am questioning this report. I do not want to stand by that 
result. So far as the Santa Fe is concerned, we sent you our basis 
of division, showing how every account was divided, but you did 
not use it. 

Mr. Prentiss. As I remember it, the Santa Fe only assigned a very 
few expenses in their report to the department. I think it is only 
those expenses which you enumerated which you assigned. I think 
fuel, road enginemen, and road trainmen were not assigned. 

Mr. Peabody. In response to a request of the commission ? 

The Chairman. That is, the Post Office departmental commission? 

Mr. Peabody. In response to the request of the Post Office De- 
partment, accompanied by a blank which we had to fill out, certain 
information was requested. We filled that blank out strictly in ac- 
cordance with that request, and that did not permit of any division. 
We had to put it that way. We were not allowed under that to make 
any division, but accompanying that we sent you our formula, which 
was very elaborate and very complete, which takes up every account 
separately and first assigns every expense to the exact operation of 
the road on which that expense was incurred, dividing it between 
main and branch lines and between divisions. After using it in that 
way we apportion it between freight and passenger on the various 
bases which are outlined and set forth with great particularity in 
this statement, and this was sent you. 

Mr. Prentiss. I do not remember that we ever received it. We 
would have considered it if we had received it. 

Mr. Peabody. We have your acknowledgment of it. 

Mr. Prentiss. I do not recall any specific statement from the 
Atchison, Topeka & Santa Fe Railroad Co. giving a basis for each 
specific account. 

Mr. Peabody. Thinking perhaps the commission would like that 
apportionment I have drawn off our apportionment so far as it re- 
lates to the passenger and freight part of it. Dr. Lorenz has that 
full statement. 



460 EAILWAY MAIL PAY. 

The Chairman. Now, your idea for submitting this apportion- 
ment is that it will be illuminating in reference to the discussion now 
going on and should be inserted in the record at this place? 

Mr. Peabody. I think it should be inserted in the record at this 
place to show the basis used by us. That, of course, only relates to 
the division as between passenger and freight and does not relate to 
the division as betwen different operations of the road. 

Atchison, Topeka & Santa Fe Railway System. 

method of distributing operating expenses. 

All items of expenditure comprised in the 116 primary accounts, among which 
by direction of the Interstate Commerce Commission all railroad operating 
expenses are distributed, are allocated to the exact operating division (sub- 
divided as between main and branch line) upon which the expense was 
incurred, the common items, such as salaries of general officers and others 
having to do with more than one division, being prorated on mileage basis. 
Each of these items is also apportioned as between freight and passenger 
expenses upon the following formula, which is condensed from the " Working 
memorandum " covering this distribution. 

MAINTENANCE OF WAY AND STRUCTURES. 

Accounts 1 to 15, inclusive, are denominated common and apportioned on 
the basis of revenue train mileage. 

Accounts 16 and 17. Allocated as far as possible; unallocated items treated 
as common and apportioned on the basis of revenue train mileage. 

Accounts 18 to 21, inclusive, are treated as common and apportioned on the 
basis of revenue train mileage. 

Accounts 22 and 25. Allocated where possible ; unallocated treated as common 
and apportioned on revenue train mileage. 

MAINTENANCE OF EQUIPMENT. 

Account 24. Treated as common and apportioned on the final assignment of 
repairs as between freight and passenger. 

Account 25. (a) Road locomotives, allocated on the basis of assignment to 
service; (&) yard locomotives, allocated on the basis of cars handled; (c) non- 
revenue service locomotives, apportioned on the basis of revenue train mileage; 
(d) mixed service locomotives, allocated on the basis of respective car mileage 
of cars handled in mixed trains. 

Accounts 26 and 27. Treated as common and apportioned on the basis of 
miles run in respective services. 

Accounts 28 to 30, inclusive. No charges. 

Accounts 31 to 33, inclusive. All passenger. 

Accounts 34 to 36, inclusive. All freight. 

Accounts 37 to 39, inclusive. No charges. 

Accounts 40 to 42, inclusive. Allocated where possible; unallocated treated 
as common and apportioned on the basis of cars handled. 

Accounts 43 to 45, inclusive. Treated as common and apportioned on revenue 
train mileage. 

Accounts 46 to 50. inclusive. Treated as common and apportioned on the 
ascertained charges for repairs. 

Accounts 51 and 52. Allocated where possible; unallocated treated as com- 
mon and apportioned on the basis of cars handled. 

TRAFFIC EXPENSES. 

Accounts 53 to 60, inclusive. Allocated where possible; unallocated treated 
as common and apportioned on revenue train mileage. 



E AIL WAY MAIL PAY. 461 

TRANSPORTATION EXPENSES. 

Accounts 61 and 62. Allocated where possible ; unallocated treated as common 
and apportioned on revenue train mileage. 

Account 63. Allocated where possible; unallocated apportioned on the basis 
of estimated time devoted to respective services at large stations, and at small 
stations on the basis of allocated labor charges. 

Accounts 64 and 65. All freight. 

Account 66. Allocated where possible; unallocated treated as common and 
apportioned on basis of revenue train mileage. 

Accounts 67 to 78, inclusive. Treated as common; apportioned on the basis 
of cars handled by yard locomotives. 

Account 79. No charges. 

Account 80. Allocated on basis of miles run in respective services. 

Account 81. Allocated on the basis of assigned service. 

Account 82. Allocated according to service. 

Accounts 83 to 85, inclusive. Allocated on basis of assigned mileage. 

Accounts 86 and 87. No charges. 

Account 88. Allocated according to service. 

Account S9. Allocated where possible; unallocated treated as common and ap- 
portioned on the basis of revenue train mileage. 

Accounts 90 to 92, inclusive. Treated as common and apportioned on the 
basis of revenue train mileage. 

Account 93. Actual work of clearing wrecks allocated direct; common ex- 
penses are apportioned on the basis of revenue train mileage. 

Account 94. Allocated where possible; unallocated, apportioned on the basis 
of revenue train mileage. 

Account 95. Allocated where possible ; unallocated, treated as common and 
apportioned on the basis of cars handled. 

Account 96. No charges. 

Accounts 97 and 98. Allocated where possible ; unallocated, treated as common 
and apportioned on the basis of revenue train mileage. 

Account 99. All freight. 

Account 100. All passenger. 

Accounts 101 to 105, inclusive. Allocated where possible ; unallocated, treated 
as common and apportioned on the basis of revenue train mileage. 

GENERAL EXPENSES. 

Accounts 106 to 109, inclusive. Allocated where possible; unallocated, treated 
as common and apportioned on the basis of revenue train mileage. 

Account 110. Premium on merchandise in transit charged direct to freight. 
All other treated as common and apportioned on the basis of revenue train 
mileage. 

Accounts 111 to 114, inclusive. Treated as common and apportioned on the 
basis of revenue train mileage. 

Accounts 115 and 116. Allocated where possible; unallocated, treated as com- 
mon and apportioned on the basis of revenue train mileage. 

The Chairman. Do you approve the Wisconsin commission method 
of apportionment, and claim that it is the best developed method 
to-day ? 

Mr. Peabody. By no manner of means. 

The Chairman. Then why the criticism between the departmental 
and the Wisconsin commission methods ? 

Mr. Peabody. Simply to show that the department method does 
not follow any basis at all, or is even used by anybody. 

The Chairman. It is simply an arbitrary method of its own ? 

Mr. Peabody. That is all. That is the object of it. 

The Chairman. I would like to ask Mr. Prentiss, if in the depart- 
mental committee^ work, where they got in the twilight zone, if their 
deductions were made surely favorable to the Government? Is that 
true? 

Mr. Prentiss. Not always. 

The Chairman. Will you elucidate a little on that answer? 

49396—14 37 



462 KAIL WAY MAIL PAY. 

Mr. Prentiss. We followed the Wisconsin commission, using it as 
a theoretical basis, as it were. We first ascertained a basis of division 
for each separate primary account, and having ascertained a basis 
for each account, we then applied it to every railroad company alike, 
the idea being that we could not consider each railroad company 
separately so far as the method of division was concerned. It must 
be uniform in order to be just and equitable. 

The Chairman. In your study were there certain questions which 
presented themselves where you had no information, according to the 
recommendations of the Wisconsin commission's method, and you 
had to make arbitrary decisions yourself; and in your credits and 
debits as between the Government and the railroad companies did 
you equalize those credits and debits, or did you, in your deductions, 
apply the debits to the railroad companies and the credits generally 
to the Government? 

Mr. Prentiss. In regard to certain accounts which were not named 
by the Interstate Commerce Commission as primary at the time of 
the Wisconsin commission's decision in the Buell case, we divided 
those accounts in accordance with the best information at hand, fol- 
lowing the Wisconsin commission method for like accounts. 

The Chairman. That is not answering my question. 

Mr. Prentiss. But there were other accounts that it was impos- 
sible to divide on any known basis, and the commission had to use 
its best judgment in those specific accounts. 

The Chairman. In coming to your conclusion did you figure what 
the saving would be to the Government ? 

Mr. McBride. May I answer that ? " 

The Chairman. Yes. 

Mr. McBride. In our consideration of the entire question we 
endeavored to be entirely fair to both the railroads and the depart- 
ment. We considered it from all aspects. 

The Chairman. One aspect being as to how it would show in dol- 
lars — cost to the Government in the results? 

Mr. McBride. No, sir; I do not think that came into it at all. 

Mr. Peabody. May I ask Mr. McBride why, under that view, all 
the items under traffic expenses were thrown out? 

Mr. McBride. Thrown out? 

Mr. Peabody. Were they not? Were they not considered as not 
applicable to the mail service? 

Mr. McBride. The totals of traffic accounts 54, 55, 56, 57, and 58 
were divided between passenger and freight on the basis used by the 
company, if not already assigned. The amounts charged to passen- 
ger service were deducted, however, from the passenger operating 
expenses before we apportioned those expenses to the mail service, 
we deciding that they had no relation to the mail service. The mail 
service participated in the remainder of traffic expense accounts. 

The Chairman. Do you concur in that conclusion, that they had 
no relation whatever to the mail service? 

Mr. Peabody. Hardly. When you treat accounts of this kind as a 
whole, in arriving at an expense an average must be taken into account, 
and you can not by any possibility take out one particular account 
because it does not happen to apply to the mail service ; and they did 
not follow that rule all the way through by any manner of means. 






EAILWAY MAIL PAY. 463 

There are many things that do not apply to the mail service particu- 
larly, I presume — loss and damage to baggage. 

Mr. McBkide. We eliminated that account from consideration 
when apportioning operating expenses to mail service. 

Mr. Peabody. The porters on the trains do not apply to the mail 
service. 

The Chairman. Is it your contention that they should? 

Mr. Peabody. My contention is that you can not take out any one 
item that does not apply to the service and eliminate that without 
at the same time taking out other items that apply altogether to 
the mail service and putting the whole of that in — that is, it is not 
fair to put a small proportion, 2 per cent, if you please, of an item 
which goes altogether to the mail service in, because it applies to mail 
service, and then cut out 100 per cent of an item that does not apply 
to the mail service. In other words, when you are taking the accounts 
of a railroad and dividing them on any general basis, you are obliged 
to treat ever}^ account, because you have to take the accounts that do 
not apply to that particular service, which make up a very large 
majority of the expenses; consequently that very large majority of 
the expense which does not apply to the mail service is also taken 
out — if you take it out at all — of those items which do apply largely 
or wholly to the mail service, the result being that the item which 
applies wholly or largely to the mail service or what you charge 
against it, would be the 2 per cent instead of the 50, 75, or 100 per 
cent which would actually be the case. So you have to use it as an 
average, and it is not fair to take out an item which goes to make 
up a very large proportion that is not chargeable. 

Mr. Lorenz. Can many items be found which are only chargeable 
wholly to the mail ? 

Mr. Peabody. No. 

Mr. Lorenz. But many are assignable directly to freight or to 
passenger ? 

Mr. Peabody. Yes. 

Mr. Lorenz. Therefore your objection seems to me not valid, be- 
cause if you did separate, and properly, in the first place, all expenses 
directly assignable to passenger and to the mail, and then proceeded 
to divide the balance on some average basis, you would practically be 
proceeding as the department proceeded. 

Mr. Peabody. But, unfortunately, you can separate some of these 
items that do not apply at all to the mail, but you can not separate 
any items that apply exclusively to the mail, so the separation would 
not be fair. 

The Chairman. Is not this separation made solely for ascertain- 
ment as to what the percentage of mail charge shall be, as of the 
total passenger charge? Consequently, in determination of that 
percentage, why should you charge to the mail something that does 
not enter into mail transportation at all ? You give the 100 per cent, 
if it is all rental and chargeable to mail ; but if it is half-and-half you 
credit the fifty per cent, but where there is not a single per cent that 
enters into the mail transportation, why should it be charged to the 
mail? 

Mr. Peabody. Because we can not separate from the expenses an 
item chargeable to the mail. We do not know how much of any 
item is chargeable to the mail. That is impossible of ascertainment, 
so the arbitrary has to be used, and the arbitrary should apply to the 



464 BAIL WAY MAIL PAY. 

entire basis. The reason for that is that the passenger service finds 
its unit in the train. That is the unit of the passenger service. The 
maintenance and everything connected with the passenger service of 
the railroad finds its expression in that train as a unit. Now, of that 
train the mail service takes so much and is chargeable consequently 
with that proportion of every item that goes into that unit of the 
train. 

Mr. Lorenz. How are you going to tell how much of that the mail 
service takes? 

Mr. Peabody. That is what the department is trying to do now. 
whether it shall be weight or space. 

Mr. McBride. How about fast-freight lines? Does that refer to 
the cost of operating fast passenger trains? 

Mr. Peabody. No. I am referring now entirely to the passenger 
expenses, after the passenger expenses are determined. He is speak- 
ing now of the portion chargeable to the mail and passenger expenses. 

Mr. Prentiss. Would you consider advertising an account which 
should be apportioned between the classes of service — express, mail, 
and passenger? 

Mr. Peabody. Yes. 

Mr. Prentiss. Would the mail and express participate in pas- 
senger advertising? 

Mr. Peabody. That being a part of the expense attaching to the 
passenger service, I should say yes, and if I had time probably I 
could show by an argument that that would be perfectly proper, but 
it would take too long a time to enter into a discussion of that ques- 
tion for the purpose for which I am here. My general claim, how- 
ever, is that after you have ascertained the cost attaching to the 
passenger-train service then it is perfectly proper to divide the whole 
of that cost between the different services performed by that train. 
You must remember that in all of the accounting, everything that 
finds its unit right in the train — there is not an expense in a railroad 
that does not find its unit there ; consequently, the proportion of the 
different classes of service that a train performs should be made the 
basis of the cost attaching to that service. That is the general propo- 
sition. But my aim is not discuss that proposition, how you are to 
divide it afterwards, but the division between freight and passenger, 
which is the subject under discussion. 

The Chairman. In mail transportation, who puts the mail on the 
cars and takes it off, the railroad employees or the postal employees ? 

Mr. Peabody. As a rule, the railroad employees. 

The Chairman. The cost to the railroad would be the same, would 
it not, practically, if the pick-up and loading was made at Washing- 
ton and the delivery and unloading was made at San Francisco or 
made at New York, providing that the car was loaded at Washington 
went through to New York and another car loaded in Washington 
went through to San Francisco? Your cost to the railroad for 
pick-up and for loading and delivery and unloading would be the 
same to the railroad, would it not, assuming that wages were the 
same? 

Mr. Peabody. And that it was all on one railroad? 

The Chairman. Yes. 

Mr. Peabody. Yes ; I assume that is so. I presume it would not 
cost any more to pick it up in Washington and unload it in New 






KAIL WAY MAIL PAY. 465 

York than it would to pick it up at Washington and unload it at 
San Francisco, so far as that particular service is the same. The cost 
in rate would not be the same. 

The Chairman. The transportation cost would be in accordance 
with the mileage? 

Mr. Peabody. Certainly. 

The Chairman. In the construction of the parcel-post bill we made 
two separations, one that we termed an overhead charge which was 
pick-up and delivery, and which we assumed in constructing our 
rates would be the same materially as to where the activity took place 
and because it was done by governmental employees, and then took 
the transportation cost to the Government, which was easily ascer- 
tained, and added that in accordance with the distance embodied in 
the zones that were adopted. Could that same principle, in your 
opinion, be utilized at all in the solution of this problem of railway 
mail pay, namely, that the mail being practically one classification, 
one kind of freight or passenger — whichever you choose to term it — 
that there would be two factors to be ascertained, one an overhead 
charge, the cost of loading and unloading mail on the cars, performed 
by the railroads, and the other a transportation charge based on the 
ascertainment, as far as it is possible of ascertainment, based on the 
ascertained cost to the transportation company, with a determination 
on the part of Congress as to the compensation the transportation 
company should receive over and above that ascertained or arbitrarily 
adopted cost to the transportation company? 

Mr. Peabody. It seems to me that there are so many difficulties 
entering into the way of division of expense that I should not like to 
express an opinion offhand as to its correctness. Mr. Lane, of the 
Interstate Commerce Commission, in making his express rates, made 
them somewhat on that theory — that is, he first determined a trans- 
portation charge by his zones and he had a certain rate for each one 
of the zones, and after having ascertained what the rates would be 
under those rates through the different zones he then added the ter- 
minals at each end to the amount thus found, and pronounced that 
as the rate. That, I suppose, is somewhat in line with the theory 
that you have just stated, but in this country we have never made 
that dual rate on freight or anything else as they have in Eng- 
land. If I might be permitted to speak wholly as a layman in regard 
to the mail service without having given it any definite thought other 
than the ordinary citizen gives it and without giving it really any 
considerable thought at all, it has occurred to me that if the mail 
could be handled on the basis of weight, ascertained by an automatic 
recording device as put on and put off the trains, we would have the 
ideal way of transportation, and the Government would pay for what 
was carried and the railroad would get paid for what it did carry. 

The Chairman. What would you do with the R. P. O. and the 
apartment cars? 

Mr. Peabody. That is post-office space being transported over the 
lines. That would have to be paid for as now, in addition to the 
weight. 

The Chairman. As extra service? 

Mr. Peabody. But instead of having a lump weight, as determined 
now, which we have once every four years, if we could have a device 
for weighing on and off the trains which would keep a record and 



466 KAIL WAY MAIL PAY. 

which would be duplicated both to the railroad and to the depart- 
ment, there would be very little difficulty in ascertaining what the 
pay ought to be. 

The Chairman. Is there any such device that has been developed? 

Mr. Peabody. I do not know of anything of that sort, but I say, 
from my confidence in Yankee ingenuity, that I think, perhaps, one 
could be gotten up. I have not given it any serious thought. That 
may be a thought that could be worked out. I am going to make 
some investigation on that line simply for my own satisfaction. I 
have not anything to do with the mail service on our road. 

As to why the department used the Wisconsin method when there 
were others in use which had been decided by the courts to be supe- 
rior to the Wisconsin method I can not say. In the first place, they 
did not use it, but why they even selected that as their basis I would 
like to know. Was it not because it allowed the least to the pas- 
senger basis ? Was it not because the case in which it occurred was 
a passenger case, and it allowed the least possible expense to the 
passenger business of all methods? 

Mr. McBride. No, sir ; I do not think that entered into the mind 
of any member of the departmental committee. The method adopted 
by the department is not the Wisconsin method, but a modification 
of it, and was selected after a prolonged consideration of the ques- 
tion and after consultation with employees and officials of the Inter- 
state Commerce Commission and a discussion of different methods. 
It was determined on by the committee of the department as being, 
in their opinion, the most equitable method obtainable. 

The Chairman. I understand you to make the statement* that other 
methods have been decided by the courts to be superior to the Wis- 
consin method, which has been under discussion here. Will you please 
elucidate on that? 

Mr. Peabody. I will call your attention to several of those cases 
and the decisions. 

Mr. McBride. May I ask if the decisions were rendered before 
Document 105 was prepared. 

Mr. Peabody. Yes, sir. Nearly all of these cases antedate anything 
that was done by the department, I want to say, however, before 
going into that, that I have in my possession a letter from Commis- 
sioner Meyer, who is one of the commissioners subscribing to the 
Wisconsin decision. After an examination, at my request, of the 
Santa Fe method, he pronounced it to be almost ideal, and he would 
agree with it simply with one exception, that of switching mileage. 
We divide switching expense on the Santa Fe on the basis of the 
cars handled by the switch engines and yard expenses. Commis- 
sioner Meyer would assign all of the switching expenses to freight. 
On what theory he would do that I can not conceive, but that is a 
fact. However, with that, exception, he has indorsed our basis in toto. 

The Chairman. That is Commissioner Meyer, of the Interstate 
Commerce Commission? 

Mr. Peabody. Yes. Commissioner Meyer spent some time studying 
our method. I do not mean to say our method is by any means per- 
fect. It is not perfect and we are striving now to improve it. 

In a case in the court of common pleas, No. 4, for the county of 
Philadelphia, in equity, the 'Pennsylvania Eailroad Company, v. 






RAILWAY MAIL PAY. 467 

Philadelphia County, March term, 1907, it was stated and affirmed 
by the court : 

XIII. The complainant, at the request of the defendant, submitted its tables 
of figures showing its business, its estimated business, and the probable results 
of the reduced charge to the counsel for defendant, who in turn submitted the 
same to a competent accountant, Mr. Goldsmith, who spent several weeks in an 
examination of the books and papers of the complainant bearing upon the 
subject, to which he was given the fullest and most complete access. He sub- 
mitted a statement of the accounts which differed from those of the com- 
plainant by about $1,642,000. This difference came about as the result, first, 
of using another method of apportioning certain expenses as between the freight 
and passenger business than that used by the complainant, this method being 
the locomotive-mileage basis, while that adopted by complainant is known as 
the revenue train-mileage basis. 

Whilst the locomotive-mileage basis of apportionment had been used by 
complainant prior to the first day of January, 1907, it appeared, without con- 
tradiction, that during the period this method was used it affected no rights; 
that as early as the year 1892 the Interstate Commerce Commission recom- 
mended to the railroad companies of the country the use of the revenue train- 
mileage basis of apportionment; that antecedently to 1907 almost all railroad 
companies of the country, which made any apportionment, had adopted that 
basis; that in 1906 the then president of the complainant, Mr. Cassatt, had 
instructed the comptroller to investigate the subject of the proper apportion- 
ment, who did so investigate and who represented to Mr. Cassatt that the 
revenue train mileage was almost universally used, and was the proper one 
to adopt, and that the revenue train-mileage basis was thereupon adopted 
because of the conviction of those in charge of the operations of the railroad 
that it was the proper one. This method was proven by expert witnesses to 
be the proper method, and Mr. Goldsmith conceded that he had no such 
knowledge or experience as was essential to enable him to express any opinion 
as to which was the proper one. 

One of the findings of the court, on page 24 of the same opinion, is 
as follows: 

(c) As nearly as can be ascertained through a careful application of a rule 
of apportionment approved by railroad experts and in actual use by most of 
the large railroads of the country, the approximate cost to the plaintiff of 
handling its intrastate passenger business during the first three months of 
the present year was $2,921,607.91. 

Turning to page 26 of the same report, the decision says : 

Upon these facts we are asked by the plaintiff to declare that the regulation 
of passenger fares attempted by the act of April 5, 1907, is unreasonable. To 
this there is advanced on behalf of the defendant the particular objection that 
no evidence has been presented to show the results of the plaintiff's freight 
business; that its intrastate passenger business is so combined with its intra- 
state freight business as to be indistinguishable in their joint result; that 
greater profits on the one kind of traffic may make up for the lowering of 
profits on the other, and that, therefore, before it can be said that the act 
under consideration regulates the plaintiff's business unreasonably, the whole 
of that business must be considered, freight traffic with passenger traffic. This 
objection we think is overcome by the following considerations : 

First. Men whp understand the railroad business thoroughly and on whose 
opinion in relation to the subject we may with confidence rely, declare that 
intrastate passenger traffic may readily be distinguished from the rest of the 
plaintiff's business by the application of certain rules developed by experience 
and approved by general use. 

Second. The legislature itself, in the very act now under discussion has, for 
purposes of regulation, attempted to segregate the passenger traffic of the 
railways and to deal with it as if it existed as a thing apart from all else. 

Third. If pushed to its logical result the argument advanced would justify 
a law requiring that the railroad companies of the State should carry all intra- 
state passengers without charge and look to their freight business for reim- 
bursement; of expenses and for a return on their investment in the business, 
which, of course, is the reductio ad absurdum. 



468 RAILWAY MAIL PAY. 

It is further and more generally objected by the defendant that the plaintiff 
invites the court in this case to leave the domain of fact, where it has to guide 
it the testimony of witnesses who have seen the things that they describe, and 
to enter the realm of speculation, where all evidence is mere guesswork and 
where probability is the nearest approach to reality and truth that can be found. 
This objection seems at first sight more formidable than it really is. Antithesis 
always arrests attention. In an inquiry, however, as to conditions resulting 
from the operation of a regulation not yet in force, nothing but probabilities 
can be expected. Such a situation is not one with which the law is unfamiliar. 
It has never required mathematical proof of the facts with which it deals. 
Most verdicts rest on the likelihood (not the certainty, by any means) that 
witnesses will tell the truth under oath. Nevertheless, judgments are entered 
solemnly on such verdicts. And this is in accordance with the common practice 
of mankind in the affairs of daily life. No plan for future conduct was ever 
formed that was not based upon the probability as to what circumstances would 
develop at the time for its performance. There is nothing more uncertain than 
human life, but the study of the probabilities of its duration has made the insur- 
ance of lives a safe and profitable business. It may well be doubted that the 
business of life insurance has received more careful attention than has been 
applied by intelligent students to the traffic of the country's railways. To such 
experts what seems to others mere chance and guesswork becomes reliable fore- 
cast. In our opinion, the approximations and probabilities worked out upon a 
broad foundation of established facts by men of experience and sound judgment, 
testifying under oath, may properly be considered a safe ground on which to 
base judicial action. Having such testimony before us, we feel justified in 
accepting and acting upon the probabilities which it establishes. 

That is on the basis of the revenue train mileage. 

Mr. Hurst. There is a more recent reference than that. I would 
call your attention to the case of the Chicago, Peoria & St. Louis 
Railroad. 

Mr. Peabody. I think I have every case of the sort. I have all 
those cases, and will come to them later. 

The Chairman. Has that been sustained? 

Mr. Peabody. The Pennsylvania case was sustained. I am quite 
certain that it was. I know the rate which was approved by this 
court is the present rate in Pennsylvania. 

The Chairman. That was in 1907? 

Mr. Peabody. That was in 1907. The next case is the case of the 
Arkansas Rate case, in which Judge Van Devanter rendered his 
opinion on the temporary injunction, before he went to the Supreme 
Court, While he does not enter into any discussion, it is sufficient 
to say that the revenue train mile basis was the basis used in that 
case for the basis of dividing between freight and passenger. 

The Chairman. What is the status of that case? Was that 
affirmed ? 

Mr. Peabody. That is now before the Supreme Court of the United 
States, and we are waiting with some considerable degree of interest 
for the decision. It has been pending before the court now for over 
12 months. 

The Chairman. And the decision in that case was based on reve- 
nue train mileage? 

Mr. Peabody. Revenue train mileage. And Judge Van Devanter 
stated in his opinion granting the injunction that the actual cost of 
conducting the freight traffic and the actual cost of conducting the 
passenger traffic had been ascertained. That you will find In re 
Arkansas Rates, 163 Federal, 141. 

The Chairman. A short time ago, as I remember, you stated that 
you had received a letter from Mr. Commissioner Meyer, of the Inter- 



RAILWAY MAIL PAY. 469 

state Commerce Commission, approving, with one exception, the 
method of accounting of the Atchison, Topeka & Santa Fe Kailway 
Co. as to the division between passenger and freight expenses. 

Mr. Peabody. As to the division between freight and passenger 
and to the different operations of the road. 

The Chairman. I infer from that that, in his opinion, you have 
evolved the best method of accounting known to date, or, at least, 
known by him to date, in apportionment between freight and passen- 
ger; but have you made an apportionment between mail and pas- 
senger ? 

Mr. Peabody. I have ; yes ; and will come to that. 

The Chairman. Did you submit that apportionment to Mr. Meyer ? 

Mr. Peabody. Oh, no. That is only since this mail case came up. 

The Chairman. So that, as a matter of fact, according to your 
information, none of the railroads, and certainly not so far as your 
own road is concerned, had attempted to make an apportionment 
between mail and passenger until the department commenced its 
study of the question, the results of which are represented in docu- 
ment 105 ? 

Mr. Peabody. No, sir. The next case I want to refer to is the case 
of the St. Louis & San Francisco Railroad Co. v. Herbert S. Hadley 
(168 Fed., 317), the opinion of Judge McPherson in the Missouri 
case, which is also before the Supreme Court at the present time. 
In that case the revenue train-mile basis was submitted by all the 
roads and the State employed two very competent accountants, a Mr. 
Taliferro and a Mr. Hamilton — the latter now working for the St. 
Louis & San Francisco Railroad — to examine the accounts of the 
railroads to ascertain whether or not that division was correct, and 
they testified on the stand that they had no fault whatever to find 
in the division between freight and passenger as established by the 
roads, and that division for each of the roads is published in the 
opinion of Judge McPherson, showing the division between freight 
and passenger for each one of these roads in that case, and approved 
by the accountants. 

The Chairman. Is that on the revenue train-mile basis ? 

Mr. Peabody. That is on the revenue train-mile basis, with the 
exception of the Santa Fe, which is on the revenue train-mile basis 
where it is impossible to use anything else. For instance, the station 
service on the Missouri Pacific was divided on the train-mile basis 
and we divided it on the basis that I have explained. We divided 
the switching on the train-mile basis and we divided it on the basis 
of the cars handled, but, practically, the division was the same. But 
the basis was the revenue train mileage, and the court approved of 
that basis and rendered its decision under that basis. 

The Chairman. What was the date of that decision? 

Mr. Peabody. That is not dated, but it will be given in the refer- 
ence that I have stated. I should say that was about 1910. Judge 
McPherson, commenting on it, says : 

The earnings are known and fixed and in these findings stated to a certainty. 
But as to the expenses as between State and interstate business, there has been 
a controversy, and such is the principal controversy in the cases. There is no 
known fixed or certain rule for determining how this separation of expenses 
shall be made. The same can not be made with mathematical certainty. 



470 KAIL WAY MAIL PAY. 

That is, the separation as between interstate freight and intrastate 
freight and interstate passenger and intrastate passenger. 

The Chairman. Have you attempted that in the Atchison method? 

Mr. Peabody. We use the basis that has been adopted by all of the 
courts, which is the gross-revenue basis. 

The Chairman. Do you make an inter and intrastate distinction? 

Mr. Peabody. In all the State cases which we have had the courts 
have approved the Arkansas case, the Missouri case, the Minnesota 
case, the Chicago, Peoria & St. Louis case ; all of them have approved 
this basis for the division as between freight and passenger, ascer- 
tained by the revenue train-mile basis. Then the subdivision of pas- 
senger expenses as between interstate and intrastate is made upon the 
respective revenues of those two classes of business; the same way 
with the freight. That has been approved universally by every court 
before whom it has been submitted, except Judge Trebeir, who used 
a slightly modified basis in the Arkansas case. Judge McPherson 
also said in connection with this : 

With reasonable certainty the expenses for doing the freight and passenger, 
including miscellaneous of each, can be and have been separated. 

The next case is that of Judge Hook's, the case of Missouri, Kansas 
& Texas Eailway Co. v. Love (177 Fed., 493). While Judge Hook 
does not go into the discussion of it in that case, I will say the revenue 
train-mile basis was the basis used. I was the principal witness in 
that case on that point. Judge Hook says: 

As between freight and passenger traffic, a large part of the expenses may be 
directly located and distributed, and it is the custom to apportion the remainder 
by various rules not necessary to mention here. 

Those were the rules which we used in our method of division. 
That case is still under injunction. It has not gone to the Supreme 
Court. The Interstate Commerce Commission in the Advance Rate 
case, decided February 22, 1911, and in the decision of the Western 
case Commissioner Lane refers at some length to our basis of division. 

The Chairman. That is the Atchison basis? 

Mr. Peabody. That is the Atchison basis of division, and also the 
Burlington, which is practically the same. In the Advance Rate 
case we find at page 49 of the decision the following : 

While we find the carriers contending uniformly that in the making of a rea- 
sonable rate the cost of service is practically a negligible factor, yet the con- 
tention is herein made that the carriers should be allowed to increase their rates 
upon that ground. In short, that addition to cost of service justifies increased 
rates. It becomes of immediate importance, therefore, to learn what we may 
as to this factor in the problem. That the railroads are not indifferent to this 
element is shown by the fact that some of those of highest grade keep such 
figures. It would be remarkable indeed if, in this time when all great business 
enterprises make analyses of costs, our railroads should keep no such accounts. 

When we have sought to learn the cost of railroad service a twofold answer 
has been made: (1) That rates were not and could not be made with reference 
to cost because some traffic could and should bear a higher rate than other 
traffic, and (2) because it was impossible to allocate to the different services 
rendered their proper share of expenditures. The first of these answers we have 
considered above. As to the second, it has been testified by an official of an 
important carrier that it was entirely feasible to absolutely segregate about 51 
per cent of the cost of operation between passenger and freight traffic; that 
about 29 per cent was subject to some arbitrary division, but that for all prac- 
tical purposes it would be accurate ; and that only the remainder, or 20 per cent 
of the whole, had to be determined upon an arbitrary basis. 



KAIL WAY MAIL PAY. 471 

So that it was regarded as practicable by statisticians to leave but a very 
narrow " twilight zone " between the actual cost of moving a ton of freight and 
the statistician's estimate; and this estimate, it was thought, would not vary 
5 per cent from actual cost. This is readily apparent from the fact that of the 
total operating expense on most of the roads substantially 50 per cent is 
chargeable to "conducting transportation," 25 per cent to maintenance of way 
and structures, and 25 per cent to maintenance of equipment. There is no diffi- 
culty in segregating the cost of maintenance of equipment as between passen- 
gers and freight. Likewise, the 50 per cent under the head of " conducting 
transportation " is easily segregated, excepting as to some station, yard, and 
similar expenses, which constitute a small proportion of the total. 

Thus practically 75 per cent of the entire expense is taken care of. The ex- 
pense of maintenance of way and structures can not be allocated, and this has 
to be divided arbitrarily. Moreover, that it is not impracticable to estimate 
cost of railway service is evidenced by the fact that we have before us the cost 
figures of both the Santa Fe and the Burlington lines. The Santa Fe road has 
had in its employ for many years a man who has a national reputation as a 
statistician. It is a part of the genera] efficiency of the system of that great 
road to keep such accounts, so that the management may ascertain through 
varying periods of time how the income of the road is being expended. While 
the figures, as the carriers contend, may not be sufficiently definite as to be 
authoritative upon the cost of carrying traffic, they clearly and unquestionably 
show the relative cost from year to year, because the same system of bookkeep- 
ing and statistical accounting obtains throughout these periods of time. If we 
find that on a certain division of the Santa Fe road, for instance, the cost of 
moving a ton a mile is 3 mills in September, 1910, and Si mills in September, 
1909, we may not be justified in concluding that to the nicety of one-tenth of 
a mill this is the cost of moving that unit of traffic; but we are justified in say- 
ing that the cost over that particular portion of the road for that one month, 
including all operating expenses, has decreased in 1910. 

I will say, for the information of the commission, the Santa Fe 
road has followed this method for the last 12 years. We started it 
about 12 years ago, and I personally have been working with it for 
12 years, and we have been working at it all that time to complete, as 
nearly as we may, the expenses; so we feel somewhat competent to 
speak on the subject. 

The Chairman. You think you have perfected or evolved a very 
important plan in the segregation of expenses between freight and 
passenger. Do you think you could be equally successful in the seg- 
regation of expenses between mail and passenger? 

Mr. Peabody. We have not the data which will enable us to get 
that, Mr. Chairman. 

The Chairman. Is that data obtainable and would if be expensive 
to obtain ? 

Mr. Peabody. It would be expensive to obtain, and I know of no 
manner of obtaining it except by weighing the mail on and off the 
train. The next case I have is that of the famous Minnesota case, 
184 Federal, 765, and this particular reference is at page 812. This 
is quoted from the opinion of Judge Sanborn in the United States 
court : 

In the cases of the Northern Pacific Co. and the Great Northern Co. excep- 
tions are urged to the master's division of common cost between freight busi- 
ness and passenger business, to his finding that the cost of doing intrastate 
freight business was two and one-half times the cost of doing interstate freight 
business, and to his finding that the cost of doing intrastate passenger business 
was 15 per cent more than the cost of doing interstate passenger business. 
About 60 per cent of the cost of doing the passenger and freight business in 
Minnesota consisted of items which in themselves disclosed the fact that they 
were incurred either in doing the passenger or in doing the freight business. 

All parties conceded that these items were properly assigned to the freight 
business and the passenger business, respectively, by the railroad companies, 



472 KAIL WAY MAIL PAY. 

and these are termed " allocated items." The remaining 40 per cent of the cost 
consisted of items incurred for the common benefit of the passenger business 
and the freight business, and there was no method of assigning these items 
that was certain to be mathematically and absolutely correct. Two methods 
were advocated by the respective parties to this controversy. The defendants 
introduced in evidence an allocation of these items made by Mr. Conway W. 
Hillman, an expert railway accountant, without extended experience as a rail- 
road operator, whereby in the Northern Pacific case about $400,000 more 
common cost and in the Great Northern case about $900,000 more common 
cost was assigned to the passenger business, and a correspondingly less amount 
to the freight business, than was assigned by the companies and confirmed by the 
master. This division was supported by the testimony of Mr. Hillman that in 
his opinion it was right and reasonable and by his statement of his reasons 
for this belief. But no other witness came to support his view. On the other 
hand, a large number of witnesses, who had long been familiar with the details 
of the expense of operating railroads, who had enjoyed a long experience in 
their actual operation, and who had considered in the light of their knowledge 
and experience and formed opinions concerning a just division of this common 
cost, testified that the allocation made by the companies and finally adopted 
by the master was fair and just. 

This testimony was buttressed by evidence that this basis of division had 
been used by these and other railroad companies for their own information and 
convenience for some time before the questions here at issue had arisen, and 
that it had at one time received the approval of the Interstate Commerce Com- 
mission. So it is that whether the knowledge, experience, and opportunities of 
the witnesses to form correct judgments upon this issue of their numbers be 
considered, the great preponderance of the evidence sustains the division made 
by the master, and it must stand. 

That is on the revenue train mile basis. Eight here, without read- 
ing it, I want to introduce another item. Judge Sanborn, also in 
his opinion, stated the proper method for arriving at the value of the 
property was the gross earnings method — I mean the value of the 
property devoted to each class of business — and we used exactly that 
same method for arriving at the value of the property : 

The master divided the values of the Minnesota properties between freight 
business and passenger business and between interstate business and intrastate 
business on the basis of the respective gross earnings of these classes of busi- 
ness. Counsel for the defendants challenge this basis of division, and contend 
that the apportionment should have been made on the basis of the use made 
of the property by each of these classes of business, measured either (1) by 
the aggregate number of the ton miles of the respective classes, or (2) by the 
aggregate number of the car miles and engine miles of these classes. 

They say that if that proportion of the value of the property of a compauy 
which the number of ton-miles hauled by it in Minnesota bears to the aggre- 
gate of its ton-miles and passenger miles in Minnesota be assigned to its freight 
business, and that proportion which its number of passenger miles bears to the 
same aggregate be assigned to the passenger business, and if that proportion 
of the value thus assigned to the freight business which the aggregate of the 
car miles and engine miles appertaining to the intrastate freight business bears 
to the car miles and engine miles used in the freight business be assigned to 
the intrastate freight business, and the same method be pursued in apportioning 
value to the intrastate passenger business the apportionment will be more 
equitable and just. The issue is between apportionment by use without regard 
to the worth or value of the use, and apportionment according to the value of. 
the use. The latter basis seems to be more logical and rational. 

Capitalization is founded on the worth of use, not on mere use. The value 
of property and of investment in every form is measured by the value of its 
use, not by its use divorced from the value thereof. The Minnesota Railroad 
Commission, the railroad companies, all rate makers, base their rates primarily 
on the worth of the use of the railroad machines by the various classes of 
freight and by the passengers, and not on the amount of that use. The rate for 
hauling a ton of merchandise of the first class a mile is not five times the rate 
for hauling a ton of merchandise of Class E a mile, because the former ton- 
mile uses the railroad property five times as much as the latter, but because 
the use by the former is worth more than the use by the latter. 



RAILWAY MAIL PAY. 473 

Moreover, there is no unit of measurement of ton-miles and passenger 
miles, of freight-car miles and freight-engine miles, or of passenger car miles 
and passenger engine miles divorced from the values of the uses they make 
of the railroad property, from the classes of loads they carry, and the distances 
these loads are hauled. Indeed, there is no proportioning or measuring relation 
between such varying uses of property when no regard is given to the values 
of these uses. 

On the other hand, the values of the uses, the earnings of the property, 
unavoidable condition the value of the property used and present a natural 
and equitable basis of apportioning that value to these uses. Cases may indeed 
be imagined in which this basis does not produce persuasive results. One of 
them was suggested by Mr. Justice Brewer in Chicago. Milwaukee & St. Paul 
Ry. Co. v. Tompkins (176 TJ. S., 167, 176; 20 Sup. Ct, 336; 44 L. Ed.. 417), and 
others of like character have been presented in argument by counsel. Bat no 
basis has been suggested and none has been discovered which seems to be more 
equitable or more accurate. It may be that there is no basis or method that 
brings perfect or ideal results. But because the ton-mile and passenger-mile 
basis has no common unit of measurement, because that basis and the car-mile 
and engine-mile and the passenger car-mile and passenger engine-mile bases 
exclude the effect of the values of the uses made of the railroad property by 
the various classes of freight and by the passengers carried, because there is 
really no proportioning relation between uses divorced from their values and 
the value of the property used, because these bases ignore the differences in the 
classes of freight carried and in the distances they are handled, because the 
apportionment of the value of railroad property on the basis of the gross earn- 
ings of the classes of business, which disclose approximately the values of their 
uses of it, gives effect to these material differences, appeals more persuasively 
to the reason, and produces results more equitable than any other basis sug- 
gested, and because this basis has commended itself to the judgment of and 
has been adopted by the courts upon whom duties of apportionment of this 
nature have been imposed in like cases the master was justified in following 
their decisions, and his action and report in this regard is confirmed. (Ames v. 
Union Pacific R. R. Co. (C. C), 64 Fed., 165, 179; Chicago, Milwaukee & St. 
Paul Ry. Co. v. Tompkins (C. C), 90 Fed., 363, 370; St. Louis & S. F. Ry. Co. v. 
Hadley (C. C), 168, 317, 348-352; Northern Pacific Ry. Co. v. Keyes (C. C), 
91 Fed., 47, 26, 57; in re Arkansas Railroad rates (C. C), 163 Fed., 141, 142; 
Missouri, Kansas & Texas Ry. Co. v. Love (C. C), 177 Fed., 493, 497.) 

He also, in the same opinion, found that 7 per cent was a proper 
return upon the value of the property devoted to this use, and there 
is his argument in this respect : 

Complaint is made that the master finds that the companies are entitled to a 
net return of 7 per cent per annum upon the respective value of their properties 
devoted to this public use. The character of the business in which an invest- 
ment is made, the locality in which it is placed, the returns secured in that 
locality from other investments of a similar nature, the uniformity and cer- 
tainty of the return, and the risks to which the principal and the income from 
it are subjected, condition the measure of a fair return upon capital invested. 
An investment in a bank, in a factory, in a mercantile, manufacturing, or agri- 
cultural business is substantially free from regulation by the Government and 
exempt from any duty to the public, except that of paying taxes. If the busi- 
ness in which such an investment is made is unprofitable, its owners may 
piomptly discontinue its operation until more prosperous days come and then 
return to their undertaking. An investment in a railroad which operates in 
many States is subject to the regulation of its business by many Governments. 
Its owners owe the duty to the Governments and to the public to operate their 
railroad continually in days when its operation is unprofitable as well as when 
it is remunerative, a duty they must discharge under the penalty of the for- 
feiture of their property if they fail. In view of these facts they ought to be 
permitted a return large enough to enable them to accumulate in prosperous 
days a surplus sufficient to enable them to protect their property in days of 
disaster and to make their average return through dnys of prosperity and of 
adversity fair and just. The lands in Minnesota through which these railroads 
extend are fertile and productive. The cities, villages, and towns they reach 
are rapidly increasing in population and wealth, and the people they serve are 
thriving and successful. 



474 EAILWAY MAIL PAY. 

The evidence satisfies that the railroads are maintained in excellent condi- 
tion, that they are efficiently and, on the whole, economically managed and op- 
erted and are rendering commendable service. Justice to the thriving people 
they serve does not require that the owners of these railroad properties should 
be deprived of a fair return upon their values. To deprive them of such a re- 
turn would prevent advances and tend to compel reductions in the wages and 
salaries of their employees, would tend to preveut the extension of their lines 
into portions of the State where the development and accommodation that rail- 
road service assures would be welcome and may be needed, to deteriorate the 
character of the service they render, and to retard the general prosperity. 
The legal rate of interest on a debt in Minnesota in the absence of contract is 
6 per cent, and by contract it may be 10 per cent per annum. (Rev. Laws 
Minn.. 1905, par. 2733.) Rational investments in agricultural, manufacturing, 
mercantile, and other industrial pursuits, and even well-secured loans, yield 
returns in Minnesota corresponding with these lawful rates. Investments in 
railroads and the returns thereon are at the risk of failures and partial fail- 
ures of crops, of disasters, delays, and expenses of unusual storms, snow, and 
cold, of the great financial disasters which occasionally prevent or delay the 
movement of traffic, and of the burden of continuous operation, whether profit- 
able or unremunerative. It is an axiom in economics that the greater the risk 
the greater must the return be upon invested capital, and the conclusion is irre- 
sistible that a net return of 7 per cent per annum upon the respective values 
of the properties of these companies in Minnesota devoted to transportation is 
not more than the fair return to which they are entitled under the Constitution 
of the United States. 

The last case to which I will refer is the most recent case, found in 
the 199 Federal, 593. This is the most elaborate opinion in connec- 
tion with this division of freight and passenger expenses and the 
court goes into it very thoroughly. The master went into it very 
thoroughly and the court likewise. 

The Chairman. What court? 
. Mr. Peabody. This is the United States district court, Judge San- 
born, but not the Judge Sanborn of the circuit court. 

The Chairman. This was rendered when? 

Mr. Peabody. It is a very late decision, contained in the 199 
Federal. It is within the last year. 

The Chairman. It has not gone to the Supreme Court ? 

Mr. Peabody. No ; not to the Supreme Court. 

The Chairman. In your opinion, that is the most elaborate and 
sound decision relative to the adoption of the revenue-train mileage 
as the basis of segregation between freight and passenger? 

Mr. Peabody. It is the most elaborately argued and shows why, 
up to this time, this method has been adopted as the division between 
freight and passenger and why it is the most feasible method of 
dividing the expenses as between these two accounts. 

The Chairman. In support of your contention will you mark the 
salient features of that decision and leave it with the reporter, so that 
he may insert in the record those sections that you deem salient, or 
do you deem it important that the whole opinion should be embodied 
in the record? 

Mr. Peabody. It would be very helpful to the commission if they 
would read the whole decision. It is a very fair discussion of that 
subject and that is about all there is in it. First, the opinion of the 
master and then the opinion of the court, sustaining the opinion of 
the master. He indorses unqualifiedly the train-mile basis, and I 
want to say in this connection the only opponent in that case was Mr. 
C. W. Hillman, but he adopted a very different method of dividing 
between freight and passenger in this case than in the Minnesota 



EAILWAY MAIL PAY. 475 

case, because this was a passenger case, and he wanted the passenger 
expenses to be as small as possible. 

The Chairman . We will insert the whole of the opinion in the 
record at this point. 

In the District Court of the United States, Southern District of Illinois, 

Southern Division. 

Trust Co. of America, complainant ; Chicago, Peoria & St. Louis Railway Co. of 
Illinois, defendant. In chancery. 

John P. Ramsey and H. M. Merriam, receivers of the Chicago, Peoria & St. Louis 
Railway Co. of Illinois, petitions, v. W. H. Stead, attorney general et al., 
respondents. Intervening petition. 

Final hearing on exceptions to master's report. Exceptions overruled. 
Baker, circuit judge, and Humphrey and Sanborn, district judges. 

STATEMENT. 

Prior to the 1st of July, 1909, the Trust Co. of America filed a bill against 
the Chicago, Peoria & St. Louis Railway Co. of Illinois, to foreclose a mortgage 
upon a railroad. John P. Ramsey and H. M. Merriam were appointed receivers 
of the railway by order of July 1, 1909. They operated the road until October 
13, 1909, when they filed their intervening petition against W. H. Stead, attorney 
general of Illinois, and the various State's attorneys for the counties through 
which the road runs, for the purpose of testing the validity of the maximum 
railway-rate act, approved May 27, 1907, fixing the maximum passenger rate 
at 2 cents per mile. On January 3, 1910, the attorney general and the other 
respondents demurred to the intervening petition of the receivers upon several 
grounds, among others that it appeared by the petition and the bill that the 
subject matter of the petition was wholly unrelated to the bill, and that an 
answer to the intervening petition would raise a new and independent issue 
in the foreclosure suit wholly foreign to the purpose and subject matter of the 
bill and wholly unrelated to the issue raised by the bill and answer. The 
court overruled the demurrer. 

On October 13, 1909, the receivers moved for a preliminary injunction accord- 
ing to the prayer of the intervening petition, and on the same day the court 
issued a preliminary injunction restraining the respondents from enforcing or 
attempting to enforce the rates provided for in the Illinois maximum-rate act 
referred to, and from enforcing or attempting to enforce, through any agency 
provided in the statutes of Illinois or otherwise, any of the penalties prescribed 
by the statutes of the State for failure on the part of the petitioners to observe 
any of the provisions of the maximum-rate act, and from commencing or prose- 
cuting any suit or action for the failure of the petitioners to observe the rates 
provided for in said act. It was further provided in the order that the receivers 
at the time of the sale of each passenger ticket should deliver to each passenger 
a coupon, stating upon its face the amount of the fare received from the pas- 
senger in excess of 2 cents per mile, and that the holders of coupons have a 
first lien upon all the property of the railway company to secure the payment 
of all costs and damages sustained by them by reason of the issuing of the 
preliminary injunction if it should be finally adjudged that the injunction was 
wrongfully issued. 

On January 25, 1910, the Attorney General and his corespondents answered 
the intervening petition, again raising the question of jurisdiction and putting 
the merits of the petition in issue. Issue was joined March 9, 1910, by the filing 
of the general replication by the receivers. Thereupon the case was referred 
to Walter McClelland Allen, master in chancery, to hear the testimony produced 
by the parties and report his conclusions of. fact and law thereon. Tbe evidence 
was taken before the master, who filed his report July 19, 1911, as follows: 

To the Hon. J. Otis Humphrey, 

Presiding Judge of the Circuit Court of the United States 

for the Southern District of Illinois: 
Pursuant to an order of reference heretofore entered in the above-entitled 
cause whereby said intervening petition was referred to me as one of the mas- 



476 KAIL WAY MAIL PAY. 

ters in chancery of this court to hear the testimony produced by the parties 
thereto and report conclusions of fact and law thereon, I respectfully submit 
the following report, and herewith return a typewritten transcript of the testi- 
mony as a part thereof. 

THE ISSUES. 

The petitioners, who were appointed receivers on the 1st day of July, 1909, 
of the property of the Chicago, Peoria & St. Louis Railway Co., of Illinois, an 
Illinois corporation, in this cause on a bill to foreclose a mortgage upon the 
railway property, attack the validity of the "An act of the General Assembly 
of the State of Illinois," passed in the year 1907, commonly known as the 
4i Two-cent rate act," as a deprivation of due process of law contrary to the 
provisions of section 1 of the fourteenth amendment to the Constitution of the 
United States, as impairing the obligation of the contract implied in the charter 
of the company granted it by the State, in violation of section 10 of Article I 
of the Constitution of the United States, and aver that the rate of charges 
prescribed by said act is unreasonable, unjust, oppressive, discriminative, con- 
fiscatory, and void. 

Petitioners claim that from the 1st day of July, 1907, until the 1st day of 
July, 1909, the railway was operated in compliance with the provisions of said 
act, and with as great economy as was compatible with efficient service to the 
public and proper maintenance and preservation of its property, and that such 
operation resulted for the first year in an actual deficit of $8,032.41 in the 
earnings derived from the intrastate passenger business within the State of 
Illinois, and for the second year in a surplus of only $794.80, the total intra- 
state passenger earnings for said period amounting to $510,230.27, while the 
operating expenses solely incident to said business, including no fixed charges 
except taxes, amounted to $517,467.88. 

Upon the presentation of their petition an order for a preliminary injunction 
was granted restraining the respondents, the attorney general, and the State's 
attorneys of the various counties through which the railroad's right of way 
extends from enforcing the rates prescribed by said act and penalties provided 
for violation thereof, and directing the petitioners upon the sale of passenger 
tickets to issue to each purchaser a coupon secured by first lien upon the railway 
property for the amount paid in excess of 2 cents a mile, the coupons to be 
payable in the event that the injunction was wrongfully issued. 

Demurrer to the petition was overruled, and on March 9, 1910, answer was 
filed in substance denying the allegations of the bill and challenging the 
methods used in the division of common expenses between the freight and 
passenger business and of the earnings and expenses between interstate and 
intrastate passenger traffic. 

CONTROVERTED QUESTIONS OF FACT. 

The ultimate questions of fact in controversy upon which the right of peti- 
tioners to a permanent injunction depends are : 

(1) The proper and equitable division of expenses common to both freight 
and passenger traffic which can not be directly allocated to either so that each 
Dranch of the service shall bear its just share of the common expenses. 

(2) A proper and equitable division of earnings and expenses between intra- 
state and interstate passenger business necessary to the ascertaining of earn- 
ings and expenses of the intrastate business. 

(3) Proper apportionment of the value of the property as a whole to each 
branch of the service in order to ascertain the value of the investment in the 
intrastate passenger service upon which a fair return should be computed. 

(4) The value of the use to the public of the intrastate passenger service 
rendered by petitioners. 

DIVISION OF COMMON EXPENSES. 

The basis of division of most of the common operating expenses adopted by 
petitioners in order to arrive at a just apportionment between the freight and 
passenger service is that known as " revenue train mileage." It is not contended 
that this basis is mathematically accurate, but that it more nearly approximates 
.a division of expenses just to both branches of the service than any other 



E AIL WAY MAIL PAY. 477 

basis yet devised; that tlie existence of so many indeterminate factors renders 
such accuracy impossible; and that in the present state of the development of 
railroad accounting this basis represents the substantially unanimous judg- 
ment of the railroad world. It is a rule also which was prescribed by the 
Interstate Commerce Commission at a time when it required a division of these 
expenses, and as promulgated in its form of report for the year 1893 is thus 
stated: 

" Expenses which are not naturally chargeable to either traffic should be 
apportioned on a mileage basis, making the division between the passenger and 
freight traffic in the proportion which the passenger and freight train mileage 
bears to the total mileage of trains earning revenue." 

Mr. Robert I. Farrington, vice president of the Great Northern Railroad, 
who has spent 27 years in railroad service and was a member of the committee 
appointed by the Association of American Railway Accounting Officers to confer 
with the Interstate Commerce Commission with reference to a uniform system 
of railway accounting which the commission was authorized by the Hepburn 
bill, passed in 1906, to make, in explanation of the train-mileage basis, likens 
the railroad business to that of a manufacturing institution whose product 
is trains and train miles. Its entire business is devoted to running trains, 
getting the business to handle in trains, and taking care of it after it has been 
handled in trains. The train, he says, is the only unit that applies equally to 
the expense and the revenue. Other witnesses of large railroad experience who 
have given much thought to the question support this basis of division. These 
witnesses include W. D. Taylor, chief engineer of four railroads, who has also 
occupied the chair of civil engineering in the University of Louisiana for seven 
years, of railroad engineering in the University of Wisconsin for four years, 
and has devoted half of his life since maturity to practical work; Chester K. 
McPhersou, assistant to the general manager of the Missouri Pacific Railroad; 
W. B. Storey, vice president of the Sante Fe Railroad; W. B. Doddridge, who 
has been general superintendent of the Union Pacific Railroad ; John Hurst, 
general accountant of the Pennsylvania Line; F. P. Johnson, statistician of the 
Missouri Pacific; R. M. Huddleston, chief auditor of the New York Central; 
John P. Ramsey, one of the petitioners; H. W. Berger, auditor of the Chicago, 
Peoria & St. Louis Railway; M. P. Blauvelt, controller of the Illinois Central 
Railway. 

On behalf of the respondents Conway W. Hillman has testified against this 
basis of division of common expenses. Mr. Hillman entered railroad service in 
1876 as a telegraph operator for the Cumberland Valley Railroad, and served 
that road in the capacities of agent, operator, scales clerk, yard clerk, assistant 
dispatcher, and finally as dispatcher until 1881, when he took a position with 
the Northern Pacific Railroad in the treasurer's office and became assistant 
treasurer in the year 1888. In 1896 he organized the accounting department of 
the Metropolitan West Side Elevated Railway Co., of Chicago. In 1903 he left 
the service of the company and took employment with the Chicago, Rock Island 
& Pacific Railroad in the controller's office for a short time, and afterwards as 
chief clerk in its insurance department. This is the extent of his experience 
in practical railroad operation. He has since followed the business of a public 
accountant. For the past three years or more he has devoted almost his 
entire time to railroad rate bases, and has been employed as an expert on 
behalf of various States and their railroad commissions where such litigation 
has been pending. The division of common expenses did not become a practical 
question with him until after he was employed as an expert in rate litigation. 
In all he has been employed in 10 or 12 of such cases. In the present case 
he has had access to the railway company's books and records, and his 
assistants were engaged for three months or thereabouts in the work of com- 
piling from these records the data from which he testifies. While petitioners 
have presented the results of operations for two years, respondents have taken 
only the year ending June. 30, 1909. in which the earnings were considerably 
larger than in previous year. Mr. Hillnian regards revenue train mileage as only 
an indicative factor and presents his own formulas in respondents' Exhibit 7 
as a more accurate method of division. By the application of these formulae 
he arrives at the figures shown in respondents' corrected Exhibit 2, which shows 
a total of operating expenses incurred for the year ending June 30, 1909, of 
$205,476.29 in the intrastate passenger business, while the application of the 
formula? used by petitioners introduced in evidence as Exhibit 2 results in a 
total of operating expenses chargeable to intrastate passenger business amount- 

49396—14 38 



478 KAIL WAY MAIL PAY. 

ing to $233,943.65, exclusive of taxes, rental and hire of equipment, a difference 
in results of over $28,000 arising from the difference in method of apportioning 
common expenses. 

The Hillman method is set forth and explained in detail in his testimony, 
and lengthy cross-examination was had. The subject matter is one of expert 
railroad accounting, upon which the master must form his conclusions accord- 
ing to the weight of evidence drawn from expert sources. The petitioners have 
produced the testimony of men of high standing and large experience in railroad 
operation and accounting in support of their basis of division. Mr. Hillman 
stands alone in opposition to their views. The revenue train-mile basis was 
adopted and came into general use by railroads without reference to rate liti- 
gation, but for the purpose of determining the cost and profit of operation for 
the railroad's own corporate purposes, and the testimony of the witnesses for 
petitioners is free from the common criticism applied to expert testimony. Rail- 
roads have both the freight and passenger rate questions to meet. Unless, 
therefore, the Hillman method as explained by its author is of itself so per- 
suasive of its merits as to overcome this general judgment of men specially 
equipped in this particular field, there can be no doubt that the weight of the 
testimony is on the side of the petitioners. 

The interstate-commerce classification of accounts has been followed in this 
case and is set forth in the exhibits. There are in all five blocks in these 
accounts: (1) Maintenance of way and structures, (2) maintenance of equip- 
ment, (3) traffic expenses, (4) transportation expenses, (5) general expenses, 
and a total of 108 different accounts. 

The criticism made of the revenue train-mileage basis is thnt it is arbitrary, 
involves many assumptions, does not reflect the use of the facilities, the upkeep 
of which causes the expense, and is at best a rough approximation. This 
criticism involves the claim for the Hillman method of elimination of these 
objections, or at least of such a substantial reduction cf them as to entitle it to 
be substituted as producing a more reliable result. Mr. Hillman himself claims 
for his methods of division practical accuracy. 

Reference to some only of the items of common expense will be sufficient for 
the purposes of this report. 

Account No. 2 in the first block of accounts (maintenance of way and 
structure) — Ballast. — Petitioners for the year ending June 30, 1909 charge to 
passenger expense $852.09 (Exhibit 8) upon the revenue train-mile;! ge basis. 
Mr. Hillman charges only $424.68 out of a total freight and passenger expense 
of $1,860.76. He first divides the expense into two parts — that en used by wear, 
which he estimates at 10 per cent, following a holding of the Wisconsin Rnil- 
road Commission in Buell v. Chicago, Milwaukee & St. Paul Railway Co., 
and that caused by weather, which he estimates at 90 per cent. He then divides 
10 per cent, assumed to be due to wear between freight and passenger, upon the 
basis of train weights passing over the track, and the remaining 90 per cent 
upon the basis and in the proportions of earnings, freight and passenger. In 
arriving at this result he assumes : 

(1) That the percentage attributed to wear and weather are correct, or sub- 
stantially so, there being no available statistics upon the question. 

(2) That the extra speed of a passenger train equalizes the lower adjustment 
of the freight train in destructive effect upon the ballast. 

(3) That the kind of ballast used makes no difference in the percentages. 

(4) That the freight train weights upon the Chicago, Peoria & St. Louis Rail- 
road are obtained with substantial correctness by multiplying the number of 
freight-car miles by the average weight of a freight car in use generally on rail- 
roads ; to this adding the ton miles of the live freight and to this the weight of 
the engine and tender multiplied by the engine miles, the weight of the engine 
being figured upon a general average basis: That the passenger-train weights 
ar obtained with substantial accuracy in a similar manner, allowing 150 pounds 
per passenger and the same weight of express, mail, and baggage, making a 
total of 300 pounds as the weight of a passenger, express, mail, and baggage. 

All of these assumptions are controverted and, obviously, in the absence uf 
statistics upon the general questions and data relating to the particular railway, 
the conclusions drawn and computations made based upon them are unreliable 
and represent merely an individual opinion. 

The only reason assigned for dividing 90 per cent of this expense in proportion 
to freight and passenger earnings is that it is an expense the unit of which does 
not exist in the operation of the road and that the earnings are the source from 
which the expense must be paid. 



KAIL WAY MAIL PAY. 479 

There has been much discussion in the b/iefs of counsel as to the proper factor 
to be used in dividing the common expense due to wear of ballast, ties, rails, 
roadway, and tracks and some other accounts. It is conceded, as it obviously- 
must be, that the weight of trains has an effect and that this effect can not be 
ignored. Respondents say that the train-mileage basis ignores train weights 
entirely, while petitioners deny that this is so. The true situation is that while 
no particular percentage of the expense is assigned to weight nor is it used as a 
component factor of any formula, yet its consideration is involved as one of the 
elements entering into the train-mileage basis. Mr. Taylor's opinion is that 
weight alone is not a fair factor because a minor one. Mr. Blauvelt says, in 
testifying in support of the train-mile basis, that it takes into consideration 
all the factors. 

Mr. Storey did say that the train-mile basis, without an assumption that 
every train was of a certain weight would be " a poor measure of relative 
deterioration," but it is clear from his testimony, as a whole, that what he 
meant was that it was fair to assume that each train had the same destructive 
influence upon the track, weight, speed, and other elements considered. " You 
have got," he says. " to take all kinds of elements, and then in the end form a 
judgment alone. There is no absolute measure." 

The train- weight basis as applied by Hillman ignores some important factors. 
One of these is the number of points of contact where the weight rests ; another, 
the fact that the locomotive does as much or more damage to the track than the 
following train; and, that it is necessary to keep the track in much better con- 
dition, because of the higher speed of passenger trains than would be necessary 
if the track were used for freight trains only, a fact which is illustrated in 
actual operation where two tracks are maintained, one for passenger and the 
other for freight service. 

Account No. 6, roadway and track, for the year ending June 30, 1909, amounts, 
as computed on the train-mileage basis used by petitioners, to $30,363.86 (Ex- 
hibit 8), while the Hillman method produces only $15,494.75 (respondents 1 
corrected Exhibit 2). 

In the division of this account between wear and weather Hillman takes the 
various wear percentages he has already used for the prior accounts: Nos. (2), 
ballast, 10 per cent wear, 90 per cent weather; (3), ties, 17.5 per cent wear, 
82.5 jper cent weather; (4), rails, 90 per cent wear, 10 per cent weather; (5), 
other track material, 90 per cent wear, 10 per cent weather, together with those 
afterwards used for the following accounts: Nos. (8), bridges, trestles, and 
culverts, 15 per cent wear, 85 per cent weather; (10), grade crossings, fences, 
cattle guards, and signs, 25 per cent wear, 75 per cent weather,. and applies 
each of these percentages, respectively, to the amount in dollars and cents of 
the particular account, adds together into one total sum the various sums thus 
obtained representing wear, and then applies the percentage which the amount 
produced is of the total amount, representing both wear and weather, to the 
sum total of common expenses in this account. Having thus obtained his per- 
centages for division between wear and weather, he then divides the weather 
proportion on the basis of earnings and the wear proportion on the basis of 
train weights. 

All of the assumptions involved in the accounts 2, 3, 4, 5, 8, and 10 are neces- 
sarily involved in this division, and, in addition, the process is by the use of 
averages. This division further illustrates the constantly recurring effect of 
assumptions indulged with respect to one account entering into the other and 
the intermingling in the result produced of unrelated items of expense. 

Account No. 13, telegraph and telephone lines. — Hillman's division of this ac- 
count is one half on the revenue train-mile basis and the other half upon the 
car-mile basis. This division is admitted to be without data to support it and 
is purely arbitrary. 

Account No. 22 on petitioners' Exhibit No. 8, No. 18 on respondents' corrected 
Exhibit 2 — Maintaining joint track yards and other facilities. — Petitioners' 
computation for the year ending June 30,, 1909, shows total expense chargeable 
to passenger traffic $12,731.35, while Hillman shows only $8,335.17, which, ac- 
cording to the formulae shown in respondents' corrected Exhibit 7, he professes 
to have allocated. Of course it is manifest and agreed by the parties that allo- 
cation — meaning thereby the direct charging of an expense caused by one branch 
of the service to that branch — should always, where possible, be adopted, and 
if Mr. Hillman had done this there could be no question of the propriety of his 
treatment of this account. He says that he gave particular attention to this 
account; that his analysis is especially his own work, and that he personally 



480 KAIL WAY MAIL PAY. 

examined all the vouchers. The terminals are at six places: (1) Springfield; 
(2) between Peoria and Pekin, including the terminals at both cities; (3) St. 
Louis; (4) Ridgely and the tower at Alton; (5) Jacksonville; (6) Madison. 
Common expenses at Springfield he professes to divide partly upon the basis 
of train-miles, including switching. 

Peoria and Pekin common terminal expenses he professes to divide upon a 
wheel age basis. St. Louis and Madison expenses are allocated to each branch. 
Ridgely and Jacksonville common expenses he divides upon the revenue the 
basis of other maintenance accounts and partly upon the train-mile basis. 

Cross-examination developed many errors in the analysis of the various 
amounts used by Hillinan, and it is conceded by respondents' counsel that he 
was in error in basing his division of Peoria and Pekin union bills on the 
switching bills instead of the joint mileage statement of engines and cars of 
the Chicago, Peoria & St. Louis Railway passing over the P. P. U. tracks 
from Pekin to Peoria. It is said, however, that this error only makes a 
difference of $894.61. He divided $3,295.34. part of this account accruing 
at Springfield on the train-mile basis upon the assumption that the expense 
was mainly for the upkeep of crossings and crossing towers, when in fact it in- 
cluded $1,399.45 paid for the maintenance of the Madison Street track and 
$598.63 paid for the upkeep of the passenger station. It is clear that the results 
arrived at are unreliable and that neither in process nor results does the 
division made represent an " allocation " in the sense in which that term has 
been used in this proceeding. 

Passing for further illustration to the second block of accounts — maintenance 
of equipment. 

Account 24, superintendence, is divided by Hillman as is the same account 
under maintenance of way and structures No. 1 and under transportation ex- 
penses No. 61 upon the basis of all other accounts in the block, and therefore 
is affected by every valid criticism of these other accounts. This is true of a 
number of accounts and of the entire fifth block of accounts, general expenses, 
106 to 116, which are divided upon the basis of all the preceding divisions of 
accounts. The process of separate analysis of each item of common expense 
instead of using one basis for many appears upon the surface to have merit, 
but when the process is set forth in detail and applied to the various items the 
claim of superiority turns out to be more specious than real. Arbitraries*, pre- 
sumptions, opinions, averages, and approximations have not been eliminated 
and certainly substituted in their place, but instead of one yardstick admittedly 
inaccurate but in general use as practically satisfactory there are many yard- 
sticks also inaccurate and without other sanction than an individual opinion. 

Sufficient reference has been made to particular items for the purpose of 
showing the general effect of the application of the Hillman methods to the 
entire list of common expenses, and the final question is whether his unsup- 
ported individual opinion is to be accepted or the judgment of many men of 
larger experience. 

The same sort of testimony was given in the Minnesota case, Shepard v. 
Northern Pacific Railway (184 P. R., 765), where the master — and later, upon 
exceptions, the court — rejected the methods 1 advocated by Hillman and adopted 
the train-mileage basis, which was also the basis used in the Missouri and 
Oklahoma rate cases. The weight of the testimony upon this question I find to 
be with the petitioners. 

DIVISION OF COST BETWEEN STATE AND INTERSTATE PASSENGER TRAFFIC. 

Petitioners' division of cost between State and interstate passenger traffic is 
upon the revenue basis and is set forth for the year ending June 30, 1908, and 
June 30, 1909, in Exhibits 11 and 12. The computation includes also an extra 
cost of 15 per cent applied to operating expenses only of State traffic over inter- 
state. 

Respondents' method of division is set forth in Exhibit 7, and is not expressed 
in a single formula but proceeds according to Mr. Hillman's individual view 
throughout the list of accounts. 

As in the case of the division of common expenses between freight and 
passenger traffic many witnesses of experience have testified in support of the 
method applied by petitioners. That there is an excess cost of carrying State 
passengers over interstate is clear. The evidence would justify a larger per- 
centage than that used by petitioners to represent it. The cause of this excess 
cost arises from the shorter haul of State passengers, the more frequent start- 






EAILWAY MAIL PAY. 481 

ing and stopping of trains and consequent wear upon track, roadway, and equip- 
ment, greater consumption of fuel, greater use of terminal facilities, more 
frequent exposure of person and baggage to injury, the sale of more tickets, 
the checking of baggage, the printing of more tickets, greater accounting ex- 
pense. 

The Chicago, Peoria & St. Louis has 244 miles of track and the average length 
of haul of a State passenger for the year ending June 30, 1909, was 18.72 miles, 
of an interstate passenger 50.26 miles. 

Because the apportionment of expense contended for by respondents is sup- 
ported only by the individual judgment of Mr. Hillman while the apportion- 
ment made by petitioners is supported by the judgment of many witnesses who 
have had large experience in practical railroad operation; because further the 
Hillman method is not of itself to the mind of the master persuasive of its 
superiority and because cases thus far adjudicated have sanctioned the method 
used by petitioners, it is adopted for the purposes of this report as being 
supported by the weight of the evidence, not as being mathematically accurate, 
but as producing a more equitable result than the more detailed and com- 
plicated method employed by Hillman. 

DIVISION OF PROPERTY VALUATION BETWEEN FREIGHT AND PASSENGER BUSINESS. 

After considerable testimony had been taken on behalf of petitioners as to 
the value of the railway property it was stipulated that for the purposes of this 
case the value of the property used by it during the two years ending July 1, 
1909, and thereafter by the receivers for the conduct of its business as a common 
carrier of freight and passengers within the State of Illinois was and still is 
$5,500,000. Petitioners divide this valuation upon the basis of gross revenue 
using the operations for the two years ending June 30, 1909. This results in 
a valuation of $927,994.98 for the property used in State passenger business. 
For respondents, Mr. Hillman professes to divide the total property upon the ex- 
pense basis whereby he arrives at a valuation of $814,011.71 for the same prop- 
erty assigning as his reason for using this basis that in computing the ex- 
penses between freight and passenger he had employed the factors which show 
the use of the property. The evidence does not warrant the statement that 
the factor which expresses the use has been applied in all cases. None of the 
expenses caused by weather have been so computed. 

In the division of maintenance and way and structures accounts much more 
of the expense is assigned to weather than to wear, and such expense is extra- 
neous to use. Nor does the expense basis appear, even though based on use 
to be a more equitable one than the gross earnings basis. There is of course 
no accurate basis for making this division, and the earnings basis is open to 
objection. Nevertheless for the reasons given in the Minnesota case where the 
court says: "Because these bases (referring to the ton-mile, passenger-mile, 
car-mile, engine-mile, passenger car-mile, and passenger engine-mile) ignore the 
differences in the classes of freight carried and in the distances they are hauled, 
because the apportionment of the value of railroad property on the basis of the 
gross earnings of the classes of business which disclose approximately the 
values of their uses of it, gives effect to these material differences, appeals 
more persuasively to the reason and produces results more equitable than any 
other basis suggested, and because this basis has commended itself to the 
judgment of and has been adopted by the courts in like cases the master was 
justified in following their decisions," the earnings basis and valuation made 
thereon was adopted. 

VALUE OF USE TO THE PUBLIC. 

Counsel for respondents contend that there is no proof that a higher rate 
than 2 cents a mile will be fair to the public. The rule is as stated in Smyth v. 
Ames (169 U. S., 466) and quoted in the brief of counsel, "What the company 
is entitled to ask is a fair return upon the value of that which it employs for 
the public convenience. On the other hand, what the public is entitled to 
demand is that no more be exacted from it for the use of a public highway 
than the services rendered by it are reasonably worth." 

Ordinarily cost of production with a reasonable profit added determines the 
value of the product to the purchaser. This test of value assumes normal con- 
ditions attending the production. In the absence of proof of special circum- 
stances such as those suggested in Reagan v. Trust Co. (154 U. S., 412) waste 



482 KAILWAY MAIL PAY. 

in the management of the road, enormous salaries, unjust discrimination as 
between individual shippers, construction at a time when material and labor 
were at the highest price or in localities where there is not sufficient business to 
sustain a road, proof of the cost of production makes at least a prima facie 
ease. 

Counsel for respondents upon this branch of the case argue that the Chicago, 
Peoria & St. Louis Railway was unwisely built, and invoke further the doctrine 
laid down in Covington v. Sanford (164 U. S., 578), "If the establishment of 
new lines of transportation would cause a diminution of the number of those 
who need to use the road * * * that is not in itself a sufficient reason 
why the corporation operating the road should be allowed to maintain rates 
that would be unjust to those who must and do use the property." 

The argument of counsel is based upon the present existence of the competi- 
tive lines of the Chicago & Alton and Illinois Traction systems, the latter an 
electric interurban of recent construction. Counsel use five important terminal 
stations for comparison with the Chicago & Alton Railroad, showing a consid- 
erably shorter mileage than by the Chicago, Peoria & St. Louis Railway. On 
the other hand, counsel for petitioners point to other important stations where 
the comparison is inapplicable and where their road is the direct line, and, 
besides, counsel say that there is no evidence in this case that 2 cents a mile 
is compensatory to the Chicago & Alton Railroad. A finding upon evidence of 
this character that a rule in excess of 2 cents a mile is unjust to the public 
would lack substantial support and would be merely speculative. Density of 
population is one of the greatest factors in determining the reasonableness of a 
rate. Comparisons between rates are of little value unless all the elements that 
enter into the problem are presented. (Smythe v. Ames, supra.) For a like 
reason the comparative table presented in respondents' Exhibit 6 is not re- 
garded as of value. 

From the evidence in this case it appears that to be compensatory a maxi- 
mum rate of 3 cents a mile is necessary. It seems to the master that the rights 
of the public at noncompetitive points upon this railroad would be adequately 
protected by conditioning the grant of relief, so that a rate of 3 cents should 
be the maximum chargeable between any stations on its line within the State. 

REVENUES. 

The amount of intrastate passenger revenue as computed by the accountant 
for the petitioners for the year ending June 30, 1909, is $261,339.36, while the 
computation made by the accountant for respondents is $261,145.62. The dif- 
ference is trifling and does not affect the final result sufficiently to merit 
discussion. 

FINDINGS. 

From the evidence, therefore, and in accordance with the views herein ex- 
pressed, I find: 

I. That the total value of the Chicago, Peoria & St. Louis Railway property 
used during the two years ending July 1, 1909, and thereafter, by the receivers 
for the conduct of its business as a common carrier of freight and passengers 
within the State of Illinois is the sum of $5,500,000. 

II. That the most equitable basis of division of this total valuation between 
the freight and passenger traffic is that of gross earnings, and that upon this 
basis the value of said property used during the same period for the transpor- 
tation of passengers within the State of Illinois is the sum of $927,994.98. 

III. That the most equitable bases of division of expenses common to the 
freight and passenger traffic, which can not be allocated directly to either, are 
those set forth in Exhibit 2, whereby most of these expenses (reference being 
had to the exhibit) are divided upon the basis of revenue train mileage. 

IV. That 6 per cent per annum is a reasonable net return upon the value of 
the railway property used in the transportation of passengers within the State 
of Illinois. The net annual income upon this basis would be the sum of 
$55,679.69. 

V. That the expenses of the intrastate passenger business for the year ending 
June 30, 1908, amounted to $256,923.32, while revenue from the same source 
amounted to $248,890.91, leaving a deficit of $8,032.31 in the net earnings; that 
the expenses of the intrastate passenger business for the year ending June 30, 
1909, amounted to the sum of $260,544.56, while the revenue from the same 



KAIL WAY MAIL PAT. 483 

source amounted to $261,339.36, resulting in a surplus of net earnings amounting 
to $794.80. (Exhibits 3 and 4.) 

VI. That the effect of the operation of the maximum-rate law passed by the 
Legislature of the State of Illinois in the year 1907 is to deprive petitioners of 
a reasonable return upon the value of the Chicago, Peoria & St. Louis Railway 
property devoted to passenger traffic within the State of Illinois, and that a 
maximum rate of 3 cents a mile chargeable to passengers using its line within 
the State would not be unjust to the public. 

CONCLUSION. 

From the foregoing findings I conclude: 

That the act of the Legislature of the State of Illinois passed in the year 
1907 entitled "An act to establish and regulate the maximum rate of charges 
for the transportation of passengers by corporations of companies operating 
or controlling railroads in part or in whole in this State and to provide penalties 
for the violation of the provisions thereof and repealing all acts or parts of 
acts in conflict therewith," is confiscatory and operates to deprive petitioners 
of the power to earn reasonable compensation for the services rendered in the 
carriage of passengers without due process of law and to deny them the equal 
protection of the laws, in violation of the Constitution of the United States, 
and that said act, so far as petitioners are concerned, is void and of no effect, 
and petitioners are entitled to a decree as prayed in their intervening petition. 

It is recommended, however, that such decree be so conditioned that rate of 
3 cents a mile shall be the maximum chargeable to intrastate passengers on the 
line of said railway. 

Respectfully submitted. 



Master in Chancery. 

OPINION. 

Sanborn, District Judge: A technical question of jurisdiction was raised in 
the former circuit court by demurrer and later by answer to the effect that the 
receivers' injunction petition was not ancillary to the foreclosure suit, because 
the subject matter of the petition is wholly unrelated to the subject matter 
of the bill. The demurrer was overruled by the circuit court, upon the authoritv 
of Ex parte Young (209 U. S., 123, 144 ; 28 Sup. Ct, 441 ; 52 L. Ed., 714), holding 
that a Federal question is raised in suits like this, and Compton v. Jessup (68 
Fed., 264; 15 C. C. A., 397), Blake v. Pine Mountain Coal Co. (76 Fed., 624; 
22 C. C. A., 430), and like cases, holding that petitions similar to this are 
ancillary to the main suit and thence within the jurisdiction. We are entirely 
satisfied that the jurisdiction was properly sustained. 

The Chicago, Peoria & St. Louis Railroad was operated at a loss during the 
fiscal years of 1908 and 1909, and on June 30, 1909, the total deficit was 
$202,071.60. A foreclosure suit was at once begun, and this intervening petition 
was filed in that suit. Compliance with the 2-cent maximum passenger rate act 
of Illinois by the road was in part responsible for the deficit. Receivers were 
appointed, who operated the road under the same conditions up to October 13, 
1909, when they filed this petition, alleging that the maximum-passenger-rate 
act as applied to this railroad was confiscatory and constituted a taking of its 
property without due process of law. A temporary injunction was issued 
prohibiting the enforcement of the statute as to this road; the receivers there- 
upon put in force a 3-cent rate, with 1-cent coupons, as provided in the in junc- 
tional order. 

The question now before us is whether the evidence shows the Illinois rate 
to be confiscatory, as applied to this particular railroad, in respect to passenger 
returns. 

Earnings from the State passenger business, including mail, express, and simi- 
lar returns from the running of passenger- trains, are readily found. Expenses 
directly chargeable to such business may also be figured with reasonable cer- 
tainty. But the " common expenses," so called, like maintenance of the line, the 
equipment, traffic, and general expenses, and their proper distribution, between 
freigh^ and passenger business, present much difficulty. The master, follow- 
ing the great weight of the expert testimony, as well as the decisions of the 
courts, has adopted and applied what is known as the " revenue train-mile " 
basis in the distribution of these common expenses between the freight business, 



484 RAILWAY MAIL PAY. 

State and interstate, and the passenger. On such basis the road was not earn- 
ing a fair return from its State passenger business up to the time of the 
receivership, and the master concludes that the injunction should be made 
permanent, and the receivers allowed to charge 3 cents a mile for passenger 
service. 

The revenue train-mile basis of apportionment, as between freight business 
and passenger business, is applied to expenses not directly apportionable (called 
"common expenses") by the following method: The ninth annual report of 
the company shows the train mileage for 1909 of passenger trains, 446,540; 
freight trains, 532,962 ; mixed trains. 790 ; and special trains, 338. All but the 
last were revenue-producing trains. Excluding the special trains, whose char- 
acter is not shown, the total train mileage was 980.292. Of the mixed trains 
one-fourth of he mileage was allowed to passenger service, the balance to 
freight. The total passenger miles would therefore be 446,737.5 and the freight 
533,554.5; total, 980,292; and the passenger percentage 45.57. The year 1909 
is taken, instead of the year 1908 (June 30 to June 30), because showing a 
nearer recovery from the panic of 1907, and thus being closer to normal con- 
ditions. Thus, taking the common expense of superintendence for the year, 
which was $7,891.59, the passenger proportion would be $3,610.50, a difference 
of $4.31. This method of apportionment was applied to all the common ex- 
penses, in order to ascertain what pari: were passenger expenses, with the 
modifications referred to in Exhibit 2, shown on another page. 

Next it was necessary to find the proportion of State and passenger expense. 
This was done by finding the State and interstate revenues. It was found that 
the State passenger returns for 1909 were $261,339.26; interstate, $48,217.58; 
mail, express, and miscellaneous income earned by passenger trains, undivided 
as between State and interstate, $54,974.46; being a total of $364,531.40. By 
applying the revenue train-mile basis to all common expenses for 1909, and allo- 
cating all direct passenger expense, it was found that both these kinds of 
expense, including the proper share of taxes and hire of equipment, amounted 
to $350,914.45, whfch was the expense of producing the $364,531.40 ; also that the 
State passenger expense was $326,326.75. It was then found that the State 
passenger revenue represented 71.69 per cent of the total passenger revenue, 
the interstate 13 23 per cent, and express, mail, and miscellaneous 15.08 percent. 
It was also shown by testimony for the receivers that it costs about 15 per cent 
more to handle the State passenger business than it does the interstate, because 
of the shorter haul of State passengers and other reasons. By applying the ad- 
ditional 15 per cent to the operating expense it was found that 2.75 per cent of 
such expense, or $8,937.99, should be added to the State passenger expense, the 
final result being that the State passenger business for 1909 earned a net return 
of $794.80, or less than 1 per cent. This method is approved in Chicago, etc., 
Co. v. Tomkins (176 U. S., 179; 20 Sup. Ct., 336; 44 L. Ed., 417) ; Smyth v. 
Ames (169 U. S., 466; 18 Sup. Ct., 417; 42 L. Ed., 819) ; and Louisville & 
Nashville Railroad Co. v. Railroad Commission (196 Fed., 800, 824). 

In order to find what the road was fairly entitled to earn on its passenger 
business in 1909 the total value of the railroad in that year was found to be 
$5,500,000. These figures were agreed to by both sides, and are supported by 
the testimony. To obtain the proportion of the passenger value, State, inter- 
state, and mail, and express the total revenue of $1,554,600.37 was taken, and 
the total passenger revenue found to be 23.45 per cent of this, making the 
valuation of the passenger proportion $1,292,329.35; 71.69 per cent of this, 
or $926,464.46 represents the State passenger valuation. This should fairly 
earn 6 per cent, or $55,587.87. On this basis the earnings. for 1909 were about 
$55,000 too small. That this is the proper rule see Smyth v. Ames, supra, and 
Missouri, K. & F. Ry. Co. v. Love (177 Fed., 463) (the Oklahoma case). 

The plan for formula of division or allocation of expense for each fiscal 
year adopted by the master, and recommended by the testimony of substantially 
all the witnesses, except Mr. Hillman, is as follows: 

(A) To the revenue freight train mileage 75 per cent of the mixed train 
mileage is added, and to the revenue passenger train mileage 26 per cent of 
the mixed train mileage is added, and the common expenses are apportioned 
on the percentage thus obtained. The mixed train mileage is treated in this 
manner wherever revenue train mileage is used in apportioning common 
expenses. 

(B) Expenses incurred solely in the passenger business were charged to 
passenger and expenses which could not be separated between freight and 
passenger, but were common to both, were divided in the ratio which the 
passenger revenue train mileage bore to the total revenue train mileage. 



RAILWAY MAIL PAY. 



485 



(C) When the expense was upon a locomotive engaged in straight passenger 
service, the expense was charged to passenger. When the expense was upon 
a locomotive which had made both freight and passenger miles during the 
month, there was charged for each passenger mile made by that locomotive the 
average cost per mile of like expense on locomotives in straight pa?~eiiger 
service. 

(D) These are expenses which were incurred solely in the passenger service. 

(E) Expenses incurred solely in the passenger business were charged to 
passenger, and expenses which could not be separated between freight and 
passenger, but were common to both, were divided in the ratio which the total 
passenger revenues bore to the total freight and passenger revenues. 

(F) Expenses incurred for a particular yard were charged to passenger in 
the ratio which the number of passenger cars bore to the total freight and 
passenger cars there handled. Expenses of a general character incurred in all 
yards were charged to passenger in the ratio which the total number of 
passenger cars bore to the total number of freight and passenger cars handled 
in all yards. 

(G) Where the information obtainable showed wrecks to be passenger, 
the expense was charged to passenger; in months in which passenger wrecks 
occurred all expense which could not be allocated directly was charged to 
passenger in the ration which the passenger revenue train mileage bore to the 
total revenue train mileage. 

Applying this formula to the classification of expense accounts in use on most 
railroads, recommended by the Interstate Commerce Commission, we obtain 
the following for the fiscal year 1909 (wherever the passenger percentage is- 
45 and a fraction the figures in the passenger column represent the revenue 
train-mile basis) : When less than 45 a direct allocation to the freight business 
is indicated, and when greater than 45 a like allocation to the passenger. 

Direct and common expense table. 



I. MAINTENANCE OF WAY AND STRUCTURES. 



Superintendence (A) 

Ballast (A) 

Ties (A) 

Rails (A) 

Other track material (A) 

Roadway and track (A) 

Removal of snow, sand, and ice (A) 

Tunnels (none) 

Bridges, trestles, and culverts (A) 

Crossings (over and, under) (A) 

Grade crossings, cattle guards, and signs (A). . . 

Snow and sand fences and snowsheds (none) . . 

Signal and interlocking plants (A) 

. Telegraph and telephone lines (A) 

Electric power transmission (none) 

. Buildings, fixtures, and grounds (A) 

Docks and wharves (none) 

Roadway, tools, and supplies (A) : 

Injuries to persons (A) 

Stationery and printing (A) '. 

Other expenses (A) 

Maintaining joint tracks and other facilities — 
Dr.(B) 

Maintaining joint tracks and other facilities— 
Cr.(B) : 



Totals 



IT. MAINTENANCE OF EQUIPMENT. 



24. Superintendence (A.) 

25. Steam locomotives, repairs (C) 

26. 26. Steam locomotives, renewals (none). 

27. Steam locomotives, depreciation (C) 



Total 
expense. 



§11,592.09 

1,860.76 

37,242.08 

2,843.83 

11,702.55 

74,891.98 

1,191.26 



23, 714. 98 

24.97 

6,033.20 



586. 39 
5,106.25 



\ 465. 75 



2,521.26 

1,080.66 

100. 67 

1,011.90 

28,964.66 

9, 392. 17 



205,752.57 



15,990.90 
98, 164. 44 



13,207.44 



Freight. 



37,891.59 
1,008.67 

21,582.61 
1,952.03 
7,594.04 

44,528.12 
713. 10 



12,801.68 

11.88 

3,205.56 



320. 71 
2, 805. 76 



4,596.56 



1,394. 55 

575.23 

54.91 

541. 72 

16, 233. 31 

7, 553. 35 



116,558.12 



8,754.64 
79,961.26 



11,218.80 



Passenger. 



S3, 610. 50 
852. 09 

15, 659. 47 

891.80 

4,108.51 

30, 363. 86 
478. 16 



10,913.30 
13.09 

2, 827. 64 



265. 68 
2,300.49 



3,869.25 



1,120.71 

505. 43 

45.76 

470.18 

12, 731. 35 

1,838.82 



89, 194. 45 



7,236.26 
18,203.18 



1.9S8.64 



Per cent 
passen- 
ger. 



45.76 
45.79 
42.05 
31.36- 
35. 11 
40.54 
40.14 



46.02 
52.42 
46.87 



45.32 
45.85 



45.71 



44.69 
46.77 
45.76 
46.77 

43.95 

19.58 



43. 35 



45.26 

IS. 54 



15.06. 



This is a deduction and not an addition. 



486 



KAILWAY MAIL PAY. 
Direct and common expense table — Continued. 



Total 
expense. 



Freight. 



Per cent 
passen- 
ger. 



TI. MAINTENANCE OF EQUIPMENT— continued. 

Electric locomotives. 



28. Repairs (none) 

29 . R enewals (none) 

30. Depreciation (none) . 



Passenger train cars. 



31. Repairs (B) 

32. Renewals (none) 

33. Depreciation (B) 

34. Freight cars, repairs (B) 

35. Freight cars, renewals (B) 

36. Freight cars, depreciation (B). 



$18,771.81 



$100.00 



$18,671.81 



3,067.96 

179,254.68 

2,573.08 

31,081.03 



3,067.96 



179,254.68 

2, 573. 08 

31,081.03 



Electric equipment of cars. 



37. Repairs (none) 

38. Renewals (none) 

39. Depreciation (none). 



Floating equipment. 



40. Repairs (none) 

41. Renewals (none) 

42. Depreciation (none) . 



Work equipment. 

43. Repairs (A) 

44. Renewals (A) 

45. Depreciation (A) 

46. Shop, machinery, and tools (A) 

47. Power-plant equipment (none) 

48. Injuries to persons (A) 

49. Stationery and printing (A) 

50. Other expenses (A) 

51. Maintaining joint equipment at terminala- 

Dr. (D) 

52. Maintaining joint equipment at terminals- 

Cr.(D) 



2,473.99 

130.11 

1,602.42 

6,097.37 



1,343.41 

70.71 

870.91 

3,271.15 



1,130.58 

59.90 

731.51 

2,826.22 



941.76 

327.63 

1,016.04 

231.54 

17.91 



593.59 
183.00 
555.82 

210.54 



348.17 
144.63 
460.22 

21.00 



Total. 



374,914.28 



316,039.19 



548,751.09 



IH. TRAFFIC EXPENSES. 

53. 

54. Superintendence (D) 

55. Outside agencies (D) 

56. Advertising (D) 

57. Traffic associations (D) 

58. Fast freight lines 

59. Industrial and immigration bureaus (none) . 

60. Stationery and printing (B) 

Other expenses (none) 



27, 184. 78 

36,817.38 

1,587.88 

1, 228. 54 

1,087.72 



20,637.03 
33,437.79 



1, 179. 48 
1,087.72 



6,547.75 

3,379.59 

1, 587. 88 

49.06 



5,802.07 



5,078.14 



723. 93 



Totals. 



37 



61,411.16 



12,288.21 



IV. TRANSPORTATION OTHER THAN TRAIN EX- 
PENSES. 



Superintendence (A) 

Dispatching trains (A) 

Station employees (A) 

Weighing and car service association 
Coal and ore docks (none) 

Station supplies and expenses (A) . . . 
Yardmasters and clerks (F) . 



13, 851. 07 
15,438.54 
81, 444. 29 
3, 022. 22 



7, 573. 83 

8, 840. 81 

72,703.22 

3,022.22 



6, 277. 24 
6, 597. 73 
8,741.07 



Yard conductors and brakemen ( F) 

Yard switch and signal tenders ( F) 

Yard supplies and expenses ( F) 

•76. (See next head.) 

Operating joint yards and terminals— Dr. (B). 

Operating joint yards and terminals— Cr. (B). 
89. (See next head.) 

Interlockers, block, and other signals (B) 

Crossing flagmen and gatemen (B) 

Drawbridge operation (none) 

Clearing wrecks ( G) 

Telegraph and telephone operation 



6, 190. 25 

12, 149. 72 

27,036.86 

608.40 

560.22 

97, 996. 33 
1,786.82 

3,017.32 
3,980.62 



3,392.46 

11,992.28 

26,397.21 

597.07 

550.83 

84, 477. 42 
1, 735. 16 

1,804.87 
2,293.38 



2,797.79 

159. 41 

639. 65 

11.33 

9.39 

13,518.91 
51.66 

1,212.45 

1,687.24 



3,154.43 
1,784.13 



2,169.30 
1,470.90 



985. 13 
313.23 



RAILWAY MAIL PAY. 
Direct and common expense table — Continued. 



487 



IV. TRANSPORTATION OTHER THAN TRAIN EX- 
PENSES— Continued. 



95. Operating floating equipment (none) 

96. Express service (none) 

97. Stationery and printing (B) 

98. Other expense (B) 

99. Loss and damage, freight 

100. Loss and damage, baggage (D) 

101. Damage to property (B) 

102. Damage to stock on right of way (B) 

103. Injuries to persons (B) 

104. Operating joint tracks and other facilities- 

Dr.(B) 

105. Operating joint tracks and other facilities- 

Cr.(B) 



Total. 



V. TRAIN TRANSPORTATION. 



71. Yard enginemen (F) 

72. Engine-ho-jse expenses, yard engines (F) . 

73. Fuel, yard engines (F) 

74. Water, yard engines (F) 

75. Lubricants, yard engines (F) 

76. Other supplies, yard engines (F) 

79. Motormen (none) 

80. Road enginemen (D) 

81. Engine-house expense, road engines (B). 

82. Fuel, road engines (C) 

83. Water, road engines (B) 

84. Lubricants, road engines (C) 

85. Other supplies, road engines (C) 

86. Operating power plants (none) 

87. Purchased power (none) 

88. Road trainmen (D) 

89 . Train supplies and expenses (B ) 



Total. 



VI. GENERAL EXPENSES. 



Salaries and expenses of general office (A) 

Salaries, clerks and attendants (A) 

General office supplies and expenses (A) 

Law expense (A) 

Insurance (B) 

113. Stationery and printing (A) 

114. Other expense (A) 

General administration of joint tracks, yard, 

and other facilities— Dr. (D) 

General administration of joint tracks, yard 
and other facilities — Cr. (A) 



106. 
107. 
108. 
109. 
110. 



115. 
116. 



Total. 



Taxes 

Hire of equipment— Dr. 
Hire of equipment — Cr . 



Rentals, St. Louis Union Depot. 

Other rentals, St. Louis 

Rentals, Illinois 



Total rentals . 



Total expenses 

Total revenue 

Net revenue for 1909. 
Value of road 



Net revenue per cent. . 



Total 
expense. 



$7, 360. 76 
1,515.94 

16,789.59 

1.24 

5, 522. 39 

2, 159. 84 

32,541.63 

11,527.19 
3, 003. 92 



342, 862. 64 



15,836.12 

4, 652. 47 

12, 523. 97 

1,550.26 

850. 58 

495. 20 



77,972.24 
21, 144. 60 
113,804.15 
8,199.25 
4,506.75 
3,060.61 



71,322.92 
20,969.65 



346,889.47 



14, 178. 44 
21, 788. 98 
4, 150. 28 
8,075.22 
4, 703. 63 
2,073.74 
1,675.03 

477.88 

310.44 



56,812.76 



51,401.14 
9,762.11 



5,252.24 

9,097.20 

21,594.27 



35,943.71 



1,498,038.05 

1,564,833.10 

66,795.05 

5,500,000.00 



1.21 



Freight. 



$4,476.91 

1, 164. 42 

16, 789. 59 



2,400.31 

1,426.36 

26, 728. 94 

6,611.17 

1,997.43 



282,789.31 



15, 472. 65 

4, 564. 80 

12,230.21 

1,506.38 

831.55 

485. 10 



51,110.98 
11,661.81 
82,654.74 
4,765.63 
3,290.09 
2,653.84 



56,366.48 
13,614.41 



261,209.17 



7, 760. 28 
11,928.63 
2,337.27 
4,442.81 
4,035.76 
1, 154. 23 
944. 82 

303. 73 



32,597.09 



39,294.33 
9,762.11 



22,945.38 



1,147,123.30 

1,200,301.70 

53, 178. 40 

4,207,679.65 



1.26 



Passenger. 



$2,883.85 
351. 52 



1.24 

3, 122. 08 

733. 48 

5,812.69 

4,916.02 

1,006.49 



,073.33 



363. 47 
87.67 

293. 66 
43.88 
43.88 
10.10 



26,861.26 
9, 482. 79 

21,149.41 

3,433.62 

1, 216. 66 

406.77 



14,956.44 
7,355.24 



85,680.30 



6,418.16 

9, 860. 35 

1,813.01 

3,632.41 

667. 87 

919.51 

730. 21 

174. 15 



24, 215. 67 



12,106.81 
""'5i7.'44 



12,998.33 



350, 914. 75 

364,531.40 

13,616.65 

1,292,320.35 



Per cent 
passen- 
ger. 



39. 18 
23.19 



100. 00 
56.54 
33.96 
17.86 

42.65 

33.50 



17.52 



2.29 
1.88 
2.34 
2.83 
2.83 
2.24 



34.45 
44.86 
20.38 
41.88 
27.00 
13.29 



20.97 
35.08 



24.70 



45.27 
45.25 
43.68 
44.98 
14.20 
44.35 
43.60 

36.44 



42.62 



23.55 



36.16 



23.42 
23.23 
20.39 
23.45 



1.05 



It appears from the foregoing that the whole earnings of the road for 1909 
were only 1.21 per cent upon the fair and conceded valuation. This small 
return resulted in part from the fact that the road is a comparatively small 



488 KAILWAY MAIL PAY. 

one and partly because it meets with sharp competition by stronger lines and 
a well-developed trolley system. It appears inferentially from the testimony 
that its freight rates can not be increased. The only practicable escape open 
to the road, therefore, is to enlarge its passenger returns by obtaining authority 
to put in a 3-cent fare for State passengers. This i-s not to help out its loss on 
freight business, but to earn a fair return on the State passenger traffic. Hence 
the filing of this petition and the well-prepared case of the receivers, presenting 
a strong inference that the line was, in 1909, obtaining a very inadequate 
return upon its passenger business' Much expert testimony was taken to the 
effect that by applying common railroad bookkeeping the freight business in 
1809 paid li per cent and the passenger 1 per cent. 

The important question before the master, and now before us, is whether 
the best possible rules for dividing the expense between freight and passenger 
and between State and interstate passenger business have been applied. A 
more difficult question is rarely presented. For want of a better rule railway 
experts have adopted the revenue train mile as a fair (or as the least unfair) 
basis; that is, as the total passenger miles for a year are to the whole number 
of train miles (freight, passenger, and mixed, .excluding switching, repair, and 
special trains not bringing in revenue), so is the common passenger expense 
which can not be directly applied (unknown) to the whole common expense (a 
known quantity). 

Other bases for the division of common expenses, especially between intra- 
state and interstate freight and passenger business, are the straight revenue 
basis (or gross earnings' basis), train weights, ton miles, passenger miles, engine 
miles, etc. To apportion common expenses between intrastate freight and pas- 
senger business on the one hand and interstate business on the other, the 
straight revenue basis is sometimes used for certain expenses, as in the Arkan- 
sas Rate cases (187 Fed., 290. 355, 339, 341). To find the value assignable to 
the freight and passenger business, respectively, freight gross earnings (State 
and interstate) are taken to represent the freight value and passenger gross 
earnings the passenger value, as in Shepard v. Northern Pacific Railway Co. 
(184 Fed., 765, 811, 812). But for the apportionment of common expenses be- 
tween freight business, State and interstate, and passenger business, State and 
interstate, no rule so satisfactory as the revenue train-mile basis has been dis- 
covered. This method of division at one time received the approval of the 
Interstate Commerce Commission, has been used by many railway companies 
for their own information in advance of any controversy on the subject, was 
adopted by the Wisconsin Railroad Commission in the Buell case (1 Wis. R. R. 
Co. Rep., 324), and is approved in several decided cases, particularly the Min- 
nesota case (184 Fed., 765, supra). Judge Sanborn's discussion of this basis 
is on page 813, as the one used by the railway companies and adopted by the 
master. 

The revenue train mile basis was also used in the Missouri Rate cases, St. 
Louis, etc., Co. v. Hadley (168 Fed., 317, 348), as appears from the language 
of Judge McPherson, on page 348, and by the testimony of Mr. Johnson in this 
case. He says this basis was applied by the expert State accountants, and 
approved by the court, as, indeed, appears in the report. Care must be taken 
in reading these cited opinions, as well as others, to distinguish between the 
division of common expenses between freight business (State and interstate) 
and passenger business, on one hand, and the division of earnings for valuation 
purposes, or the separation of common expenses between intrastate freight and 
passenger business, and interstate, on the other. None of the opinions are as 
clearly or carefully stated as they might have been in these respects, but a 
careful reading leaves no doubt whatever. 

To illustrate the difficulty of treating accounts on bases other than the revenue 
train mile, take account No. 2, ballast, the total cost of which for 1909 was 
$1,860.76. Of this 90 per cent is supposed to be due to weather and 10 per 
cent to wear. The 10 per cent, or $186, may therefore be distributed between 
freight and passenger on the revenue train mile basis ; 45.79 per cent, or $85.16, 
for passenger and $100.84 freight. How shall the weather proportion be 
divided? Weather bears no closer relation to gross earnings, or train weights, 
than it does to revenue train miles. 

Any application of a weather expense between passenger and freight is 
unsatisfactory, and for want of a better plan it is divided on the revenue train 
mile basis. Ties, bridges, and culverts, grade crossings and fences, cattle guards 
and signs (all under the general head "Maintenance of way and structures") 
rest substantially on the same ground as ballast, while the others of the 19 



E AIL WAY MAIL PAY. 489 

primary accounts in this head are naturally divisible on the revenue train mile 
basis. 

Under the second general head, " Maintenance of equipment," many of the 
primary accounts are directly allocated. The rest are fairly divisible between 
freight and. passenger business upon the revenue train mile basis. 

The third general account " Traffic expenses," does not bear as close a rela- 
tion to the revenue train mile as the equipment group, but the amount of com- 
mon expense distributed to passenger is relatively small. Most of the items 
have been directly allocated between freight and passenger. 

The other two general accounts, 5 and 6, " Transportation expenses " and 
" General expenses," bear a closer relation to revenue train miles than to any 
other principle of division. Many of the items in these heads are divided by 
Mr. Hillman on the revenue basis. 

On the whole, therefore, we are satisfied that the master has adopted the 
best method obtainable, one less unsatisfactory than any other which can be 
fairly applied. Whether we follow the great weight of evidence or the 
decisions cited, we may feel that justice has been done, and the master's find- 
ings and conclusions should be sustained, except one provision. He recommends 
that the decree provide that a maximum rate of 3 cents per mile be made 
chargeable for State passengers. This would probably be the exercise of the 
legislative power of making rates, and not a judicial power. See cases cited 
in Peoria Water Works Co. v. Peoria Railway Co., 181 Fed., 990, 1004. In 
this respect the decree should provide that the district court may, in exercising 
its function of managing the road in its possession, institute any rate not 
exceeding 3 cents, as in its judgment may be fair and proper. 

A decree should be entered in accordance with this opinion. 



Judge. 

September 27, 1912. 

That is all I wish to say in regard to the division between freight 
and passenger. Now, understand that we think the revenue train 
mileage is the best method up to the present time of any one yard- 
stick that can be used, and also understanding that the Santa Fe 
method does not altogether follow the revenue train mileage ; that is, 
it follows revenue train mileage where an approximate basis of 
allocation can not be used. In explanation of that I will say, instead 
of dividing switching or train mileage Ave divide it on the basis of 
the cars handled, because we keep an account of cars handled by 
switch engines at each terminal. 

The Chairman. Do most of the railroads do that ? 

Mr. Peabody. No, sir. Very few railroad systems go into this 
thing with the completeness with which we do. 

The Chairman. Then how, in your study of railway-mail pay, are 
we to apply the Atchison system when other roads do not follow it ? 

Mr. Peabody. The revenue train mileage comes very very close to 
the result reached by ours. If we should apply the revenue train 
mileage to our figures we would not vary 2 per cent from our figures, 
but we wish to get actual figures so far as we can for our own pur- 
pose of operation. We do not make this division for the sake of 
going into court or anything of that sort. 

The Chairman. It is for your own information and knowledge of 
what you are doing? 

Mr. Peabody. For the analysis of our business and for the purposes 
of ascertaining expenses for each particular class of business. 

The Chairman. Granting that you have evolved a satisfactory 
method of ascertainment between freight and passenger, how are you 
going to work out an apportionment between mail and passenger? 

Mr. Peabody. That is what I am now going into. 



490 RAILWAY MAIL PAY. 

Mr. Hurst. Did I understand the members of the Post Office De- 
partment to say that they had come to this conclusion after a study 
of the subject that the Wisconsin method should be used as a basis? 
Have they taken into consideration, in arriving at this conclusion, all 
these cases Mr. Peabody has read from? 

The Chairman. Do you know, Mr. Prentiss? 

Mr. Prentiss. No; we could not. This letter was transmitted on 
the 24th of July, 1911. 

Mr. Peabody. All but one of them were before that ? 

Mr. Prentiss. The data was taken in November, 1909. 

Mr. Hurst. Most of these are prior to 1909 ? 

Mr. Prentiss. We considered the train mileage. That was consid- 
ered as a basis and was thrown aside as being inequitable. 

Mr. Hurst. In spite of the fact that eminent judges had decided 
they are? 

Mr. Prentiss. In the face of data which can be submitted, showing 
that in the proportion that expenses between passenger and freight 
are allocated, the expenses divided to passenger decrease; that is, if 
you divide on the basis of train mileage, and then begin to apply the 
allocated expenses to any road, the passenger expenses begin to 
decrease, showing that the train-mileage basis is not the proper ratio. 

Mr. Peabody. But no road applies revenue train mile basis to any- 
thing except those items you can not allocate. 

Mr. Prentiss. I am not referring to a particular road. In the case 
of the Atchison, Topeka & Santa Fe, if the train mileage is a proper 
basis, all the expenses of the road divided on a train-mile basis would 
result in a certain theoretical division. Then begin to allocate and 
you will find that in every case you will immediately reach a lower 
passenger cost. 

Mr. Peabody. No one claims anything of that sort. In one of the 
statements made to the Post Office Department- — one which I think 
was not used in Document 105 — the railroads were asked to give 
their allocation, the allocated items, and their division between pas- 
senger and freight. If you are going to use some arbitrary basis, 
why do you not first use the allocated items which they had set apart 
and then apply your arbitrary, instead of throwing all that mass of 
data that was actually furnished from the railways' standpoint, and 
then apply it to everything? 

Mr. Prentiss. We did not. What I am presenting is simply a 
theoretical statement of proof that the train-mile basis is an incorrect 
basis. In the actual division of the expenses we took all the allocated 
expenses as reported by the railroad company, and in the case of the 
large systems, such as the Pennsylvania Kailroad Co., we not only 
took the allocated expenses, but we took their own division of ex- 
penses for the direct charge accounts, because of the fact that we 
knew that the company was more capable than the department of 
dividing those expenses. If the railroad companies had submitted to 
the department allocations to the best of their knowledge and belief, 
the department would have had very little trouble in making the 
division of expenses. 

The Chairman. Mr. Prentiss, what is your official position in the 
Post Office Department? 



KAILWAY MAIL PAY. 491 

Mr. Prentiss. I am a clerk in the Railway Adjustment Division. 

The Chairman. How long have you been in the Post Office Depart- 
ment? 

Mr. Prentiss. I have been connected with the department for over 
20 years ? 

The Chairman. Have you had any experience or connection with 
any of the railroad companies of the country ? 

Mr. Prentiss. No. 

The Chairman. What experience have yoa had in railroad ac- 
counting and their methods ? 

Mr. Prentiss. I made a special study of railroad accounting when 
the question came up before the departmental committee for the 
division of these railroad expenses. I had previously had account- 
ing experience in the department. 

The Chairman. You commenced to make a special study of rail- 
road accounting in 1909 ? 

Mr. Prentiss. Yes ; and previous to that — in the spring of 1908. 

The Chairman. When this matter was initiated? 

Mr. Prentiss. Yes. 

The Chairman. Did you find in your special study of railroad 
accounting that there was any uniformity among the railroads in 
their systems? 

Mr. Prentiss. No. I believe there is no basis used by all the rail- 
roads. 

Mr. Peabody. I do not think you want that to go into the record. 
The accounts of every railroad are kept absolutely in accordance 
with the direction of the Interstate Commerce Commission, going 
down to every item of the account. 

The Chairman. To the extent of the direction of the Interstate 
Commerce Commission? 

Mr. Peabody. They say to what account every item of expense 
shall be charged. 

The Chairman. Then why is not the question solved absolutely 
under the direction of the Interstate Commerce Commission? 

Mr. Peabody. There is no division between freight and passenger; 
but his answer would relate to the railway accounting? 

Mr. Prentiss. My experience with reports from the railroad com- 
panies has shown that the accounting systems of the railroad com- 
panies vary with respect to the accounts. While their accounts may 
be all combined, as it were, into the Interstate Commerce Commission 
method, some roads go into greater minutiae than others. These 
roads subdivide the accounts of the Interstate Commerce Commission 
and obtain far more reliable data than other roads. 

The Chairman. Then, as I understand, there is no uniformity as 
between the railroads themselves as to their own particular method 
of getting information for their knowledge, but there is uniformity 
necessarily under the direction of the Interstate Commerce Commis- 
sion — in furnishing the Interstate' Commerce Commission with 
specific information based upon accounts outlined by the commission 
itself? 

Mr. Prentiss. Yes. 



492 RAILWAY MAIL PAY. 

Mr. Peabody. I would like to ask one more question, because I still 
think you have an erroneous impression. I think Dr. Lorenz will 
bear me out. Is there a single item of expenditure on account of rail- 
roading which is not directe'd by the Interstate Commerce Commis- 
sion as to the account to which it shall be applied ? 

Mr. Prentiss. No; I should not say there was any item of ex- 
penditure. 

Mr. Peabody. And is to be applied by all railroads to the same 
account. Then the Interstate Commerce Commission does permit the 
roads, if they care to, to make a separate division of any one or more 
of the 116 primary accounts, a subdivision of that; but that is also 
stated to the Interstate Commerce Commission, is it not ? 

Mr. Prentiss. The subdivision? 

Mr. Peabody. Yes. 

Mr. Prentiss. I think they mention certain subdivisions, but I do 
not think the roads necessarily follow those subdivisions. 

Mr. Peabody. All roads do not follow the subdivisions. Each road 
makes special subdivision of any one particular account it, pleases, 
but these are very few, as a matter of fact, and the roads that make 
that subdivision are also very few, in the main, and I will say as 
much as 99 per cent of the roads use only the Interstate Commerce 
Commission classification, do they not? 

Mr. Prentiss. A large percentage of them, I imagine, do. 

Mr. Peabody. So that there is absolute uniformity in the account- 
ing methods of all the railroads ? 

The Chairman. You were one of the departmental commission 
studying this question ? 

Mr. Prentiss. I was studying it with the commission, but I am 
not a member of the commission. 

The Chairman. But you were studying it in connection with the 
commission. Were any members of the commission gentlemen who 
had had practical experience in railroad accounting, who were in 
direct connection with any railroad company, according to your 
knowledge ? 

Mr. Prentiss. Not as far as I know. 

The Chairman. Mr. McBride, how about that ? 

Mr. McBride. Not that I know of. 

The Chairman. We will now take a recess for luncheon until 1.30 
o'clock. 

(Thereupon, at 12.40 o'clock p. m., the committee took a recess until 
1.30 o'clock p. m.) 

AFTER RECESS. 

The hearing was resumed at the expiration of the recess at 1.30 
o'clock p. m. 

The Chairman. I understand you completed your presentation of 
the views of the court bearing on this subject? 

Mr. Peabody. Yes, sir. In that connection I would ask that the 
commission read with care that last opinion of the Chicago, Peoria & 
St. Louis case. That is very completely and elaborately discussed 
by the master who made the report and by the judge who passed upon 
it, much more so than any other case that has ever been up. 



RAILWAY MAIL PAY. 493 

The Chairman. Granting all that, what benefit in the particular 
study that the committee have before it would they receive, provid- 
ing, in your opinion, it is absolutely impossible to apportion your 
mail costs out of your passenger costs, or to determine the compensa- 
tion to be given for the mail service rendered by the transportation 
companies under that method of ascertainment ? 

Mr. Peabody. Well, I do not think that that is impossible, Sen- 
ator. 

The Chairman. Then I misunderstood you. I got the impression 
this morning from your testimony that it was impossible unless all 
mail was weighed as it went on and off of a car. 

Mr. Peabody. So far as a division of expenses of each primary ac- 
count is concerned, it would be impossible; but there is a way of 
arriving at the proportion properly chargeable to the mail, I think — 
two ways of arriving at it, either of which would be measurably cor- 
rect, but that would be after we had completed the division between 
freight and passenger expenses. 

The Chairman. As I understand, you thought you had evolved a 
plan by which you had determined the method of correct division 
between freight and passenger service. 

Mr. Peabody. Yes; approximately. 

The Chairman. Now, you supplement that, adopting that plan 
there of two methods, by which you can go still further and deter- 
mine the division as between mail and passenger. What are those 
methods ? 

Mr. Peabody. I am going to show you one right here. Before ex- 
plaining this statement 1 which I will present I want to emphasize, 
for fear that I did not make it sufficiently emphatic this morning, that 
one reason why we place so much dependence on our division as be- 
tween freight and passenger expense is that every voucher that is 
made in payment of everything, no matter what it is, for the operat- 
ing expenses of the road is divided on that voucher as between freight 
and passenger in accordance with our formula. It is first divided 
as to the location on the road — whether it is on this division or that 
division or the other division, and whether it is on the main line or 
a branch line, and so designated in the voucher. Then the amounts 
are subdivided as between freight and passenger right on that 
voucher, and the sum total which we arrive at as the expense of the 
freight and passenger business are the addition of all the units and 
not the application of any rule to an aggregate sum. 

The Chairman. That is very interesting. Now, do you figure in 
the adoption of that plan of segregation in your vouchers that there 
is any additional expense to the railroads? 

Mr. Peabody. Not sufficient to condemn it. 

The Chairman. It is unappreciable? 

Mr. Peabody. We have done it for 12 years, and we would not do 
away with it. The expense is more than justified. It is not within 
my province to criticize accounting officers, but I do think they could 
extend their accounting methods with considerable advantage to the 
railroads. 

The Chairman. You mean the accounting officers generally in the 
transportation business? 

Mr. Peabody. That is what I mean. 

1 For statement referred to see conclusion of Mr. Peabody's testimony, pp. 526-527. 
49396—14 39 



494 RAILWAY MAIL PAY. 

The Chairman. Let me ask you this in that connection: Do you 
figure that it is an increased accounting cost, this minuteness of segre- 
gation on your vouchers, equivalent to 1, 2, 3, 4, 5, or any definite 
percentage because of that minuteness ? 

Mr. Peabody. I should say that it, perhaps, increased our account- 
ing expenses somewhere from 5 to 10 per cent. 

The Chairman. Over what it would be otherwise ? 

Mr. Peabody. Yes. 

The Chairman. And you think the benefits incident to the adop- 
tion of the method are infinitely greater than the additional cost? 

Mr. Peabody. It would be worth it if it increased the cost 50 per 
cent, because we find out what we are doing. We have been able to 
save money by knowing these costs. 

The Chairman. You know where to apply your ability and energy 
in the way of minimization of waste and improvement of methods by 
this method of minute ascertainment ? 

Mr. Peabody. That is right. 

The Post Office Department called on the Santa Fe Road, in com- 
mon with all the other roads of the country, to give them the mail- 
carrying data, space occupied, for the month of November, 1909. 
The request was made so near the month of November that I did not 
think we could get the machinery in shape to make a concrete test 
by the first of November, and not wishing to give any inaccurate 
figures I deferred the making of that test until the month of Janu- 
ary, 1910. I could have gotten ready for December, but I did not 
think the month of December would be fair on account of the Christ- 
mas season, when there would be a larger proportion of mail than 
ordinarily. 

The Chairman. Fair to which interest, the Government or the 
railroad ? 

Mr. Peabody. It would not be correct. 

The Chairman. You said " fair." Fair to whom? 

Mr. Peabody. Fair to either. 

The Chairman. On the theory that it would be incorrect informa- 
tion to both parties ? 

Mr. Peabody. Absolutely to both parties. We wanted to know the 
facts, so I took that test during the month of January. We found 
that it required a good deal of correspondence with the conductors 
and the others to whom was committed the work of doing it ; and, by 
the way, that test on our line consisted of the absolute measurement 
of the space in every car on every train during that entire month. I 
had a special report made by the conductor and baggageman of every 
train, which report came to my office. 

The Chairman. You made no test for November ? 

Mr. Peabody. No, sir. 

The Chairman. You did not furnish the Post Office Department 
with the information in reply to that request for information for 
that month? 

Mr. Peabody. For November ; no. But we gave them the informa- 
tion for January, and that is what they have used in their report, the 
January figures. 

The Chairman. You think that January and November are typical 
average months? 

Mr. Peabody. Well, hardly so; and for that reason, and also for 
the reason that a single month is hardly fair to either party, and also 






KAILWAY MAIL PAY. 495 

for the additional reason that our conductors, having had one month's 
experience in doing that work, could do it a second time more cor- 
rectly, I selected the months of September and October, 1911, for 
another test, and took a similar test for those months in which I 
had a special report made by every conductor on every train for those 
two months, figuring that this would be a fair average of the year. 

The Chairman. In what year was your January test made ? 

Mr. Peabody. 1910. 

The Chairman. So that you really have tests, then, for three 
months — Januar}^, 1910, and the months of September and October. 
1911? 

Mr. Peabody. Yes, sir. The space used by mail, as was demon- 
strated in those two months, was almost exactly double that used by 
mail in the month of January. The space used by the other portions 
of the passenger service, the passenger and express, were larger, so 
that the percentage of the mail space for those two months is less than 
the proportion of the mail space as shown in the January test. The 
express was larger and the passenger business was larger. We also 
had an increase in pay after the January test, so that our pay for the 
months of September and October was larger for the same amount 
of service than it was in January. 

The Chairman. An increase of pay in the handling of the mail ? 

Mr. Peabody. An increase in pay in the handling of the mail. 

The Chairman. How did you obtain that ? 

Mr. Lindsay. By the reweighing of 1911 east of the Missouri River 
or between Kansas City and Chicago, the mileage resulted in increases 
in our compensation. 

The Chairman. Due to the increased weight shown by the re- 
weighing ? 

Mr. Lindsay. Yes. 

Mr. Peabody. Although it did not occupy any more space, rela- 
tively, as shown by the test. 

The Chairman. How do you show that by the test? 

Mr. Peabody. We took the actual measurement of the car-foot miles 
in January, 1910, which was 55,480,640, whereas for September and 
October, 1911, it was 110,125,645, almost double. 

The Chairman. Almost double, but one for 30 days and the other 
for 60 days. 

Mr. Peabody. Yes. That is a check on the mail space showing it 
is correct as taken. The passenger space for those two months was 
1,209,901,808, or 80.37 of the total. The mail space was 110,125,645, 
or 7.32 of the whole. 

The Chairman. Is that 7.32 of the total? 

Mr. Peabody. Total space on the train — car-foot miles on the train. 

The Chairman. But on the passenger trains? 

Mr. Peabody. On the passenger trains; yes, sir. 

The Chairman. And your 100 per cent simply takes what we term 
the general passenger service, including mail and express, as well as 
passenger and milk? 

Mr. Peabody. Yes. 

The Chairman. So that you figure your mail on your apportion- 
ment of operating expense as 7.32 per cent of the total passenger 
revenue? 



496 RAILWAY MAIL PAY. 

Mr. Peabody. No ; not revenue. That is car- foot space, the express 
occupying 185,382,251, or 12.31 per cent. Our total car-foot space of 
the passenger trains for those two months was 1,505,409,704. That 
divided, as already stated, by passengers 80.37 per cent, mail 7.32 per 
cent, and express 12.31 per cent. 

The Chairman. Is it your opinion that the expense is equal or 
different in the handling of the segregations of your general passen- 
ger service, namely, mail, express, and passenger proper ? 

Mr. Peabody. In this statement I have charged the proportion of 
the total passenger expense to mail that the percentage of mail car- 
foot miles bears to the total car-foot miles. 

The Chairman. That is, you have taken the total passenger-train 
operating expense? 

Mr. Peabody. Which amounts to $4,394,347.26. 

The Chairman. And applying your 7.32 per cent, as arrived at in 
the upper column, you make that $321,666.22? 

Mr. Peabody. That is correct as the proper amount of expense at- 
taching to the mail for those two months, of course understanding 
that that $4,394,347.26 of the total passenger-train operating expense 
was arrived at on the basis already outlined this morning. 

The Chairman. On what we term the Atchison system ? 

Mr. Peabody. On the Atchison system. 

The Chairman. What was your total mail revenue from the Gov- 
ernment during the year ending June 30, 1912? 

Mr. Lindsay. In round figures, about two and one-quarter million 
dollars ; that is, for the fiscal year — for 12 months. 

The Chairman. The revenue of the Atchison system received from 
the Government was what for the fiscal year 1911 ? 

Mr. Lindsay. In round numbers, about $2,250,000. 

The Chairman. That includes the railway mail pay and E. P. O. 
pay? 

Mr. Lindsay. Yes, sir ; the whole of it. 

The Chairman. Now, Mr. Peabody, assuming that the months of 
September and October are typical months, or represent the two 
months collectively a fair average of the year's expenses, you would 
have $1,929,996 for the actual charge against the mail for passenger- 
train operating expenses which would leave an apparent profit of 
$220,000 that the Atchison Company made over and above the actual 
cost of hauling the mail on this compensation ? 

Mr. Peabody. I do not follow your figures, Senator. I have it all 
figured out here below. 

The Chairman. You say that for the months of September and 
October, 1911, that it cost the Atchison system, according to your 
method of computation, as herewith presented, $321,666.22. 

Mr. Peabody. That is right. 

The Chairman. Multiplying that by six it would give you the ap- 
parent cost of carrying the mail for that year, on the assumption that 
those two months were a fair average for the balance of the year? 

Mr. Peabody. Yes ; but that is hardly correct, because the mail ex- 
penses for those two months are less than the average, and that is one 
reason for selecting it. I wanted to make it just as conservative for 
the department as possible. Our expenses during the winter months 
are much larger than during the summer months, and that $321,666.22 
does not represent the operating expenses for the year. I can give 



RAILWAY MAIL PAY. 497 

you the operating expenses for the year. I have those here in the 
annual report. 

The Chairman. Let us carry this out a little further. If your 
figures for the months of September and October were typical bal- 
ances of the year and fairly representative of the average, your ex- 
penses for the year would then be $1,929,996, and your revenue would 
be $2,250,000. and your apparent earnings would be $220,000 plus. 

Mr. Peabody. On that assumption ; yes. 

The Chairman. Now, what criticism have you to make of that 
assumption? 

Mr. Peabody. The amount of the expenses are not typical of the 
entire year. The summer expenses are always less than the winter 
expenses, and we have used in all the summary of the expenses the 
actual expenses for those particular months and not the average ex- 
penses for the entire year for two months. 

The Chairman. September and October are not generally conceded 
to be summer months, are they ? 

Mr. Peabody. They are not expensive operating months, anywhere 
nearly as much so as the winter months. 

The Chairman. Have you with you your passenger operating ex- 
penses for the whole of the year ? 

Mr. Peabody. Xo; but I will send it to you if you would like to 
have it. 

The Chairman. Xo; but I would like your criticism or explana- 
tion or concurrence or comment on my statement that under the table 
presented this deduction is a fair one, that you had an apparent 
earning there of $220,000 for that year over and above the actual cost 
of hauling the mail. 

Mr. Peabody. On the figures presented that would be a fair as- 
sumption. 

The Chairman. "Why is it unfair to criticize the figures presented? 

Mr. Peabody. Simply because those expenses are not fair for the 
year. As I have stated, the expenses in September and October are 
below the average for the year, and that is not one-sixth of the total 
expenses attaching to the passenger business for the 3 r ear. 

The Chairman. The table presented by you here, in which you 
make your apportionment of the operating expenses in the passenger 
service and allow 7.32 per cent for mail, takes into consideration the 
R. P. O. as well as the weight, the railway mail pay. 

Mr. Peabody. It takes the total we received as earnings for those 
particular two months, which amounted to $377,864.26. 

The Chairman. The relative percentage of mail to the passenger 
service as a whole would not change according to the method. That 
is typical for the months of September and October. 

Mr. Peabody. The space would not change ; no. 

The Chairman. That percentage would remain fixed the year 
through. 7.32. 

Mr. Peabody. It could not be exactly, that per cent being varied by 
the addition or lessening of the express or mail. 

The Chairman. Do they not go hand in hand? 

Mr. Peabody. Pretty nearly. The percentage in the month of Janu- 
ary was 7.47. and in the months of September and October, 7.32, 
pretty nearly the same ; but there was a little variation, and because 
this was the smaller of the mail, and also the smaller expense. I made 



498 KAILWAY MAIL PAY. 

up my figures on that basis so as to make just as favorable a showing 
for the post office as was possible. 

The Chairman. In your ascertainment of operating expenses do 
you allow anything for interest on capital invested in any way? 

Mr. Peabody. Oh, no, sir. In these figures you have quoted there 
there is also nothing for taxes, rental, or hire of equipment. Those 
are not called operating expenses. 

The Chairman. Taxes are not included ? 

Mr. Peabody. No, sir ; nor hire of equipment, nor rental. 

The Chairman. If these two months of September and October 
are typical average months, you would have, under this statement pre- 
sented, $220,000 of revenue received from the Government over and 
above what you paid out in actual operation to earn that revenue, 
with no allowance whatever for taxes, no allowance for cost of ter- 
minals, and no allowance for equipment. Is that right. 

Mr. Peabody. That is right. 

The Chairman. Have you any idea, or could you work down now, 
under the figures given, what, in your opinion, a fair statement would 
be as to the amount you received over and above what you actually 
paid out under your apportionment here of operating expenses for 
passenger trains ? How much will you reduce that $220,000 ? Would 
it be entirely wiped out ? 

Mr. Peabody. There is a balance over operating expenses when we 
get through without taking any account of taxes, rentals, etc., of 
$56,000 ; but charging the proportion of taxes, rentals, hire of equip- 
ment, and also that proportion of the interest which we paid out on 
our bonds, not allowing any dividends or anything of that sort, it 
would show a deficit for those two months of $6,051.88. As I go 
through this statement I will explain the method by which this is 
all arrived at. The total passenger train operating expenses consti- 
tute 36 per cent of our total operating expenses — that is to say, the 
$4,000,000 which is charged here as the train operating expenses con- 
stitute 36 per cent of our total operating expenses. The apportion- 
ment of taxes, interest, and rentals, and the hire of equipment is 
made on the revenue basis, consequently it is necessary to know the 
revenue we received. Our freight revenue that year amounted to 
$13,191,317.90, or 69.80 per cent of the total revenue. 

The Chairman. That is, for the two months of September and 
October, 1911 ? 

Mr. Peabody. For those two months. The passenger revenue 
amounted to $4,722,656.95, or 24.99 per cent of the total revenue. 
The mail was $377,864.26, or 2 per cent of the total revenue. The 
express revenue was $608,263.98, or 3.21 per cent of the total revenue. 
Taxes, interest, rentals, and hire of equipment that we paid that year 
amounted to $3,112,495.90, and, divided on the proportions of rev- 
enue which I have just indicated, would charge to the mail service 
2 per cent, or $62,249.92. 

Kecapitulating all of these figures, we have for the operating rev- 
enue for freight $13,191,317.90, for passenger $4,722,656.95, for mail 
$377,864.26, for express $608,263.98, or a total of $18,900,103.09. The 
operating expenses chargeable to freight for those same two months, 
determined on our regular formula, amounted to $7,791,471.10, and 
to passenger, divided on the proportion of the car- foot miles, as shown 
at the head of the statement, amount to $3,531,736.89; to mail, on the 



E AIL WAY MAIL PAY. 499 

car- foot mile basis. $321,660.22; express, $540,944.15, making a total 
of the operating expenses of $12,185,818.36. It is interesting to note 
the ratio of the net operating expenses to the operating revenue. 
The ratio of the expenses on freight is 59.06 ; on passenger, 74.78 ; on 
mail, 85.13; and on express, 88.93, or a total ratio of 64.47 per cent. 

The Chairman. That ratio is determined on the actual revenues, 
based on your expenses as applied under the Atchison system? 

Mr. Peabody. As applied under the Atchison system; yes. The 
total ratio of the passenger operation, including passengers, mail, 
and express, is 77 per cent. The taxes for those two months were 
$751,957.91. The rentals were $18,215.93. The hire of equipment 
$101,135.91, or a total for those three accounts of $871,309.75. The 
interest for the two months which we paid on our bonds amounted 
to $2,241,186.15, making a total charge for taxes, rentals, hire of 
equipment, and interest of $3,112,495.90. 

The Chairman. That changes very materially the figures that you 
have in the statement which we have before us. 

Mr. Peabody. No : they are additional figures. I will now explain 
how the amount is the same. Apportioning the taxes, interest, etc., 
to freight, passenger, mail, and express, as shown in the statement, 
we have a net income on the freight of $3,227,324.66 ; a net income on 
the passenger of $413,107.34; a deficit on the mail of $6,051.88; and 
a deficit on the express for the two months of $32,591.29, or a total 
surplus, net income of $3,601,788.83. 

The Chairman. Under your recapitulation table, will you explain 
" Taxes, interest, etc." As I understand, your interest is simply the 
interest on your bonds. 

Mr. Peabody. That is right. 

The Chairman. And not dividends at all. 

Mr. Peabody. No dividends at all. 

The Chairman. What is the " and so forth " ? 

Mr. Peabody. Taxes represent 7.51 per cent. 

The Chairman. I mean, what does the " and so forth " mean? 

Mr. Peabody. Rental and hire of equipment are the other two. 
The Interstate Commerce Commission will not permit us to put this 
into operating expenses. They require us to keep a separate account 
of that and deduct it from the net operating revenue. They state 
what items shall constitute operating expenses. Those items are to 
be deducted from operating revenue and then these other items of 
taxes, rentals, and hire of equipment are put under another account 
and deducted from the net operating revenue and called net operating 
income. Therefore, we keep our accounts by their direction that 
way. The taxes, rentals, and hire of equipment are treated as sepa- 
rate items. Of that $3,112,495.90, which includes the interest paid 
on the bonds for those two months, $871,309.75 are taxes, rental, and 
hire of equipment, which is really an operating expense, and we are 
not allowed to state them separately.. 

The Chairman. Would you kindly explain the reason for the dif- 
ference in taking net apportionment of operating expenses on car 
foot-mile basis, that the mail is 7.32 per cent of the total operating 
expenses charged to the whole passenger service, and in your appor- 
tionment of taxes, interest, rentals, and hire of equipment on the 
revenue basis you only take a 2 per cent chareg as aganist the mail 
revenue ? 



500 RAILWAY MAIL PAY. 

Mr. Peabody. The item of operating expense as designated by 
the Interstate Commerce Commission are first divided between pas- 
senger and freight on the basis of our formula for division of ex- 
penses. Of the amount thus ascertained and chargeable to passenger 
we have charged against mail 7.32 per cent, that being the car-foot 
mile proportion of all of the expenses embraced in the passenger 
operating charges. Besides the operating charges or expenses there 
are other items of taxes, rentals, and hire of equipment, and also 
amounts paid out for interest on bonds. In all of the cases with 
which I am familiar the courts have uniformly held that payments 
of this character should be divided on the basis of the gross revenue 
instead of being apportioned on any formula to expenses, or other 
division, and in conformity with that rule I have divided those items 
on the proportion that the mail revenue bears to total revenue re- 
ceived in the operation of the road. 

The Chairman. Which in the Atchison case is 2 per cent. 

Mr. Peabody. In the Atchison is 2 per cent. 

Mr. Lorenz. I would like to ask whether the purpose of this ap- 
portionment is not to test the adequacy or inadequacy of existing 
revenues. 

Mr. Peabody. That, to my mind, is the absurdity of the proposi- 
tion ; but I do not like to take the attitude of calling anything a court 
daes absurd. 

Mr. Lorenz. I think the courts have sometimes taken bases because 
they simply did not know what else to do, because there was nothing 
else at hand. 

The Chairman. Do you think infallibility necessarily goes with 
the ermine? 

Mr. Peabody. No; not necessarily. But, as Dr. Lorenz says, there 
is self-contradiction in that application. Here a complaint is made 
that a rate is too low. We ascertain that the rate is too low, and one 
item to prove that it is too low we base upon the rate itself. 

Mr. Lorenz. As a matter of fact, the courts have not universally 
so held. There is a recent case in which this basis is condemned as 
illogical and absurd. It is a Federal case, but I can not recall the 
name of it at this time. 

The Chairman. Please look it up and give the information to us 
later, and I will have it put in the record. 1 What, according to your 
idea, would be the proper method of arriving at a percentage there, 
and what, in the adoption of such a method, would you have instead 
of the 2 per cent which is the debit under the dictum of the court? 

Mr. Peabody. I should charge the same basis that I charged in 
dividing the other expenses. 

1 The following statement was later furnished by Mr. Lorenz : 

" The case to which I referred in discussing with Mr. Peabody the gross-earnings basis 
for dividing expenses is Chicago & North Western Railway Co. v. Smith et al., before the 
United States Circuit Court, District of South Dakota, southern division. I had reference 
to the report of the special master appointed by the court. The opinion of the court 
itself has not as yet been rendered, I believe. The master says, on page 81 : 

" ' It seems to the master that these results conclusively prohibit the use of gross 
earnings as a factor in cases of this kind. The $10,000,000 example shown by Mr. 
Justice Brewer in the Tompkins case (176 U. S., 167) clearly indicated the same absurd 
results, and the master therefore feels justified in following Mr. Justice Brewer in the 
Tompkins case and in declining to follow the Love case and the Minnesota rate case and 
the other cases on this subject. 

" ' In regard to the remark of Judge Sanborn in the Minnesota rate case, heretofore 
quoted, " Cases may, indeed, be imagined in which this basis does not produce persuasive 
results," the master is of the opinion that no case can be imagined where such absurd 
results would not appear unless the freight earnings and passenger earnings were re- 
duced or raised in exactly the same proportion.' " 



RAILWAY MAIL PAY. 501 

The Chairman. In other words, instead of the 2 per cent which 
you take under the dictum of the court, you would take the 7.32 per 
cent ? 

Mr. Peabody. Let me correct that. I would first divide as between 
passenger and freight on the revenue basis, for I know of no other 
basis by which you could arrive at a fair division, but having arrived 
at a division of those expenses between passenger and freight on the 
revenue basis, I would then subdivide on the proportion of the service 
performed. 

Mr. Lorenz. Do you think that it is fair to divide the interest on 
the rails and ties, etc., in proportion to the revenue from the freight 
and passenger, as you have just said, when you do not divide the 
maintenance of those rails on the basis of the revenue ? 

Mr. Peabody. The reason for it is this: Taxes and hire of equip- 
ment and rentals are items that are paid out of general revenue. You 
put your hand in the treasury and pull out a certain amount of 
money, andl think that amount of money should be charged in the 
proportion that the two distinctive services contribute to that fund. 
That is my only reason. Whether that is the best one or not I do 
not know, but it is the only one that I can find that is at all satisfac- 
tory to my mind. 

Sir. Lorenz. It seems to me it is utterly contradictory to what you 
admitted a few moments ago regarding the absurdity of using exist- 
ing bases for dividing the properties on the total cost. 

Mr. Peabody. I would like to have some one suggest a better one. 

Mr. Lorenz. The only way in which it seems to me to proceed with 
the interest charges, if you are trying to find the total cost, is upon 
some ratio derived from consideration of cost. Now, then, the invest- 
ment of the rails and equipment and property is for the purpose of 
performing these various services. The interest on that investment 
ought to bear some relation to the use made of the common facilities, 
and it seems to me that the basis you use, whatever it may be, for 
dividing the maintenance of way and equipment between passenger 
and freight is also the proper basis for dividing the interest charges 
between freight and passenger. 

Mr. Peabody. Then you would determine the per cent that each 
item of the 116 accounts bore to the total charge, the interest pro- 
portionately to that account, and then subdivide that amount by the 
formula that you use for dividing between freight and passenger? 

Mr. Lorenz. No, sir. I would find the relation between the main- 
tenance of the freight cost to the maintenance of the passenger cost 
and use that ratio in dividing the interest between freight and 
passenger. That is merely a suggestion. 

Mr. Peabody. In other words, you put it on the expense basis 
instead of the earning basis. 

Mr. Lorenz. Exactly. 

Mr. Peabody. You base it on expenses instead of earnings. 

Mr. Lorenz. Yes. 

The Chairman. What do you think of that? 

Mr. Peabody. Well, I do not know but what it is just as good. 

Mr. Lorenz. As a matter of fact, it would subserve your purpose 
better, I think, because it would charge a larger proportion to pas- 
senger service. 



502 KAIL WAY MAIL PAY. 

Mr. Peabody. We have not any purpose in this. The Santa Fe 
road is trying to get at facts. I have not any preconceived opinion, 
but I am trying to bring out in all of our accounting the facts. We 
absolutely adhere to that. We do not care where it lands us, but we 
want the facts, and we use exactly the same basis, whether passenger 
or freight, regardless of whether it meets the case or not. I have 
gone into cases and shown where it was absolutely a sure loss to us 
to do it. 

Mr. Lorenz. I should have said " interest " rather than " purpose." 

Mr. Peabody. I do not take that offensively, of course, but I wanted 
to explain what we are after. If we can find out the facts in the case, 
and in carrying out that idea of Dr. Lorenz and in support of his 
statement that the suggested basis would be charged more to the pas- 
senger than the basis we have used, I would say that on the basis of 
the expenses as ascertained and suggested by him it would have 
charged to passenger $1,120,498.20. We actually did charge on the 
basis used here $939,973.76. We charged $180,524.84 less on the basis 
Ave used than we would have charged if we had used the basis sug- 
gested by Dr. Lorenz. 

Eight here I would like to say this in explanation of a remark I 
made in regard to what the Santa Fe is trying to do. When this 
matter first came up as to the using of the analyses of cost in connec- 
tion with our rate cases, which was, I think, in 1903, up to that time, 
perhaps, as you are aware, it had been the general impression, which 
had perhaps considerable for foundation, that railroads loathe to give 
information to the authorities as to what they were doing, particu- 
larly the regulating authorities, and in a case that we had I showed 
where it would be of advantage to use some figures that we had in 
our analyses. 

The Chairman. Of advantage to whom? 

Mr. Peabody. Advantage to us. It would help to win the case. I 
will say. I submitted the proposition to our president, in connection 
with our attorneys, and showed where that would be the result if we 
used those figures. At the same time I called their attention to the 
fact that if we used them in one case we would be obliged to use them 
in others, and there would be cases just the other way where it would 
be to our disadvantage, and I wanted to know what to do, being 
called as a witness in the case. Our president said : " The time has 
come when the regulating bodies are entitled to know what we are 
doing. We will play all of our cards on top of the table." Since 
then we have had all of our figures open to everybody. That is why 
I am bringing this here now. 

The Chairman. You show a greater loss in handling the express 
business here, under your statement presented for the two months 
indicated, than you do in handling the mail. 

Mr. Peabody. Yes, sir. 

The Chairman. How do you account for that, and what contract 
has the Atchison system with the express company ? 

Mr. Peabody. The Atchison system has a contract with the Wells. 
Fargo Express Co., by which it receives 55 per cent of the total 
receipts. 

The Chairman. That is, the Atchison receives 55 per cent of the 
total revenue of the Wells, Fargo business transacted over the Atchi- 
son system? 



RAILWAY MAIL PAY. 503 

Mr. Peabody. Yes, sir. 

The Chairman. And yet the loss, under this statement, is greater 
in the handling of the express than in the handling of the mail? 

Mr. Peabody. Yes, sir. 

The Chairman. Because the volume of business is greater for one 
factor, I assume? 

Mr. Peabody. Yes; or our operating revenue is not quite double, 
,000 for the two months as against $377,000 for the mail. And 
the expenses are charged on the same basis for car-foot miles. 

The Chairman. The earnings per car foot-mile under the passen- 
ger, mail, express, and total are percentages, are they, or are they 
mills per car foot-mile? 

Mr. Peabody. Those are mills, earning per car foot-mile in mills. 

The Chairman. Then, under your contract with the express com- 
pany, the more business you have the greater your loss ? 

Mr. Peabody. Oh, no. I do not mean that we are better off with- 
out the mail or better off without the express by a great deal. 

The Chairman. Without any elucidation of your statement that 
would be the natural inference. 

Mr. Peabody. That merely means that these services do not pay 
their proper proportion of the expenses by so much. 

The Chairman. When you take into consideration taxes, interest, 
and so forth, as explained heretofore in your testimony ? 

Mr. Peabody. Yes, sir. They do not pay their relative proportion, 
I want to say further in connection with this, leaving out that item 
of interest, the mail net operating revenue, amounts, as shown in the 
statement, to $56,198.04. The taxes, hire of equipment, and rental 
alone, not taking interest into account, is $17,422.20, leaving a net 
operating income of $38,771.84. We have to apportion that to the 
interest and the value of the property. The value of the property 
used for the year was $603,390,485. That is the total value of the 
Santa Fe property. 

The Chairman. The total value ; how ascertained ? 

Mr. Peabody. Our actual cost. The cost as shown in our accounts. 

The Chairman. Is it the sum of the bonds and stocks at par value? 

Mr. Peabody. No, sir. It is the cost of railroad franchises and 
other property, including stocks and bonds which we have bought 
of other properties to control. For instance, we own all of the stocks 
and bonds of the Gulf, Colorado & Santa Fe road. 

The Chairman. That is, including the stocks and bonds at their 
par value or the purchase price that you paid for them; which? 

Mr. Peabody. That includes the purchase price we paid for these 
stocks and bonds that were bought. That also includes the expendi- 
tures for additions, betterments, construction, and things of that 
sort. In other words, it is the cost of the road as it appears in our 
statement sent to the Interstate Commerce Commission, not the stocks 
and bonds as appear on the other side of the balance sheet. 

The Chairman. Your cost, taking the original purchase price and 
adding from the date of purchase down to date, interest at 6 per cent ? 

Mr. Peabody. No, sir. 

The Chairman. Just the original cost without interest? 

Mr. Peabody. The original cost without interest, including addi- 
tions or betterments since date of purchase. 



504 



RAILWAY MAIL PAY. 



Mr. Lorenz. How does that compare with the total stocks and 
bonds at par value? 

Mr. Peabody. Two million and one-half, in round numbers. 

The Chairman. That is very interesting; on over a $600,000,000 
computation ? 

Mr. Peabody. The proportion of that allotted to mail is $12,067,809. 

The Chairman. On the basis' of 2 per cent? 

Mr. Peabody. On the basis of 2 per cent. 

The Chairman. You take 2 per cent of the total cost and charge 
that to mail, and that amounts to $12,000,000 plus? 

Mr. Peabody. That is the basis used, I guess, uniformly in the 
courts' decisions. The return on that for 60 days at 6 per cent would 
be $120,678.09. At 7 per cent it would be $140,791.11, against which 
Ave have a margin of $38,771.84 to apply. 

Mr. Lorenz. This hire of equipment which you charge to the mail 
service, does that contain any mail cars ? 

Mr. Peabody. Any mail cars? Well, I can not answer that offhand 

DOW. 

Mr. Lorenz. Isn't that mostly freight cars interchanged? 

Mr. Peabody. There are no freight cars interchangeable in this hire 
of equipment. We would not use the freight-car hire as equipment 
here. We can determine that very easily. 

The Chairman. You say in your contract with the express com- 
pany you receive 55 per cent of the gross receipts of the express com- 
pany for all business handled over your line? 

Mr. Peabody. Yes, sir. 

The Chairman. Is there any railroad that receives a greater per- 
centage than that that you know of? 

Mr. Peabody. There is one that receives a greater percentage. I 
do not recall just now which one it is. As you may know, we have 
lately had an express case before the Interstate Commerce Commis- 
sion, and I was one of a committee to work up the data for sub- 
mission for all the express companies of the United States, and in 
doing that I remember that there was one road that had a larger per- 
centage than 55 ; but I can state right now, and I am perfectly willing 
to state, although it might not satisfy some of our express friends, 
that when our contract is renewed I believe we will get a good deal 
more than 55 per cent or it will not be renewed. 

The Chairman. That is the Atchison contract with the express 
company, the Wells, Fargo Co. ? 

Mr. Peabody. Yes, sir. 

The Chairman. In other words, you do not feel that 55 per cent 
of their revenue gross is a fair compensation to the Atchison for the 
service rendered ? 

Mr. Peabody. No, sir. When we made that contract we did not 
have the information that we are now possessed of. That is one of the 
advantages of this analysis we are talking of, but we got the contract 
under the best circumstances we could at the time. I think the Wells, 
Fargo Co. will admit they did not know any more about it that we 
did, and we traded and got the best contract we could ; but they are 
perfectly willing to admit now that a lump sum of 55 per cent on the 
business that embraces haul varying from 25 miles to 2.500 miles is 
not equitable. 



EAILWAY MAIL PAY. 505 

We get 55 per cent of the rate for 25 miles and we get 55 per cent 
of the rate for 2,500 miles. The service in both cases performed by 
the express companies is the same, the delivery service at each end, 
and we perform all the extra service and get no more money for it. 
That was a jumped-at average. 

The Chairman. Your statement shows you are receiving per car- 
foot mile fifteen one-hundredths of a mill more for mail than you 
are for express? 

Mr. Peabody. That is right. 

The Chairman. And yet the statement submitted by Mr. Peters, 
as chairman of the railway mail pay committee, which committee rep- 
resents 214,000 out of the 250,000 miles of railway in the United 
States, and in which calculation I presume the Atchison system is 
included, shows that the railroads on an average per car-foot mile 
receive from express 3.86 mills, while they only receive 3.23 mills 
from the mails. I know of no railroad that receives a higher per- 
centage of the gross receipts of the express company than 55 per 
cent — that is, I did not know of any until the statement you have 
just made, that in your opinion there was one road that received a 
higher percentage. I have understood that the percentage received 
from the railroads from the express companies varied from 40 to 
55 per cent? 

Mr. Peabody. That is right, although that road that receives 40 
is a mere question of bookkeeping. That is the Great Northern, and 
inasmuch as they own both the express company and the railroad 
company it does not make much difference what they credit to the 
express business. 

The Chairman. You say they own both the express company and 
the railroad? 

Mr. Peabody. And operate them. 

The Chairman. There are no stockholders in the Great Northern 
Express Co. other than the railroad itself? 

Mr. Peabody. I think not. The explanation of the account you 
just referred to is this : The railroads, as a whole, in the United States 
have a comparatively short express route. 

The Chairman. That is, the average haul on express — about 200 
miles ? 

Mr. Peabody. The average haul being about 200 miles, whereas 
our average is very much larger than that. We have a heavy Cali- 
fornia business and naturally it brings up the average, but I think 
somewhere over a thousand miles. Kansas City being a large point, 
with 488. 

The Chairman. And the express company probably gives low 
rates on fruit and things of that kind? 

Mr. Peabody. Yes. They give a comparatively low rate on fruit, 
because they compete against us on the fruit. We have a rate of $1 
per 100 pounds on the citrus fruit over the United States, and they 
can not charge but very little more. 

The Chairman. Do you deliver? 

Mr. Peabody. No. 

The Chairman. Do they? 

Mr. Peabody. They do. But they are obliged to charge at least 
one and one-half times as much as we do. But with the long haul as 
against the short haul it reduces the rate per car- foot mile very 



506 RAILWAY MAIL PAY. 

rapidly, and with us that is probably the reason why the rate per 
car- foot mile on express is more costly than the mail. 

The Chairman. It is often stated that the railroads give far more 
favorable terms to the express companies than they do to the Govern- 
ment in the transportation of the mails — or possibly I had better put 
the statement this way: That the Government pays more for mail 
transportation than the railroads receive, relatively, for express trans- 
portation. What would you say in reference to that? 

Mr. Peabody. I should say that as a general proposition that is so. 
It does not happen to be so with our line, but as a general proposi- 
tion I should say that that was so. I guess I misunderstood you. I 
think I have turned your question around. So, I think that the ex- 
press pays more, as a rule, to the railroads than the mail; that is, I 
think they get more out of the express business than they do out of 
the mail. That is what I meant to say. 

The Chairman. Is there any distinction in your mind as between 
the services rendered? In other words, should the railroads receive 
the same compensation for the handling of the mail that they do for 
the handling of express? 

Mr. Peabody. I have not given that subject much thought, and I 
should dislike to express an opinion. 

The Chairman. I would not ask you if you have given no thought 
to it. Have you any in reference to the distinction between passen- 
ger service generally and mail, as to whether the compensation should 
be the same or whether there should be a difference; and if so, which 
should receive the greater compensation, the passenger service or the 
mail ? 

Mr. Peabody. I do not see how you can compare those two, the 
services are so entirely different. The mail you have to handle, and 
the passengers handle themselves. Still you supply some things for 
passengers that you do not for the mail. 

The Chairman. Then, how are you going to arrive at any basis of 
fair computation to pay the transportation companies for the hand- 
ling of the mail ? 

Mr. Peabody. As I suggested this morning as a layman, without 
having studied the matter, it did occur to me only a day or two ago 
that if they would weigh on and off every bit of mail that goes on and 
off the train and charge accordingly and get so much per hundred 
pounds for handling it that would be a fair way. 

The Chairman. How are you going to determine what they are 
going to get per hundred pounds? 

Mr. Peabody. That is a matter of determination. A rate based on 
cost is an absurdity. 

The Chairman. Yet is not the trend of opinion rather toward the 
direction of scientific cost as nearly as possible? 

Mr. Peabody. To base rates on cost would stop the freight trans- 
portation throughout the country. You could carry high-class goods 
at an average cost, but you could not carry the low-cost goods at an 
average cost. 

The Chairman. You have but the one classification in mail trans- 
portation. 

Mr. Peabody. Possibly you could come nearer basing it on cost 
there than you could on quantities. Still, as I understand it, you 



RAILWAY MAIL PAY. 507 

have the classification in mail. You have the parcel post, which is a 
less rate than you have on letters. 

The Chairman. Not in the compensation that the railroads re- 
ceive, but in the compensation that the Government receives. We 
will have four classifications under the governmental charge to the 
public, but none under the governmental payment to the transporta- 
tion companies. 

Mr. Peabody. That may be so. 

Mr. Lorenz. If, as you say, you can not compare the mail and pas- 
senger service on the basis of the car-foot miles because they are so 
different, how do you justify your comparison? 

Mr. Peabody. I do not say you could not compare it on a basis of 
car- foot miles. We have compared it on the basis of car- foot miles. 

Mr. Lorenz. That was the purport of the Senator's question. He 
wanted to know whether the mail revenue ought to be based on that 
earned per car-foot mile in the passenger service. 

Mr. Peabody. If that is so, we have applied it on the basis of the 
car- foot mile. 

Mr. Lorenz. So } t ou could compare revenues as well as cost? 

Mr. Peabody. Yes. 

Mr. Lorenz. Following up that question, I think the Senator 
would have been interested to know whether, in your opinion, there 
is enough difference in the mail service compared to passenger service 
so that revenue ought to be different. 

Mr. Peabody. That is where I said they were so different I could 
not compare them. 

Mr. Lorenz. Is not the only difference with respect to the items of 
expense that attach to one as compared to the other? 

Mr. Peabody. Yes; but they are' so very different it would be 
pretty hard to make a comparison. 

Mr. Lorenz. Do you think your comparison of expense is accurate 
when the services are so different, and when you are simply dividing 
on the basis of car-foot miles? 

Mr. Peabody. Simply because the passenger train is the unit of 
the total expense, and that is a different proposition. When you at- 
tempt to make up those expenses by taking the expense attached to 
one and attaching to another, you would fall into difficulty. 

Mr. Lorenz. It seems to me you are inconsistent in making a cost 
and revenue comparison between mail and passenger services and 
then saying that a rate based on cost is an absurdity. 

Mr. Peabody. I am willing to compare the revenues on the car-foot 
mile basis. 

Mr. Lorenz. The impression given is that one service is profitable 
and the other is not. 

Mr. Peabody. We have shown the car-foot miles on the statements 
for the purpose of comparison, but we could not say whether that is 
too much or too little, in view of the expenses attached to each par- 
ticular one. 

Mr. Lorenz. If you can not say whether it is too high or too low, 
what is the purpose of this cost calculation ? 

Mr. Peabody. The purpose of the calculation is, first, to ascertain 
the expense chargeable to passenger; then, as a fair unit of division, 
between the service performed by the passenger train, which is the 



508 BAILWAY MAIL PAY. 

only complete unit in the passenger service, the car-foot mile is, to my 
mind, the correct basis, and applying that car-foot mile to the pas- 
senger expenses gives the proper proportion to be charged against 
each of the services. 

Mr. Lorenz. So we arrive at a cost per car-foot mile, as compared 
with revenue per car- foot mile, to see if the revenue is too high or too 
low or just right. Is that the proper procedure? 

Mr. Peabody. No; I do not know whether I could say whether 
it is too high or too low. 

Mr. Lorenz. If you can not say whether the mail compensation on 
the Atchison is right, then all these computations are really wasted? 

Mr. Peabody. The entire passenger service does not pay its proper 
proportion to the business. One may pay a little more, relatively, 
than the other, but the entire service does not pay its proper pro- 
portion of the expenses and charges. 

The Chairman. Why did you not charge more ? 

Mr. Peabody. We wish we could, but they will not allow us. 

The Chairman. Who will not allow you ? You mean the State com- 
missions ? 

Mr. Peabody. The State commissions. 

The Chairman. Have you ever taken the matter up with the Inter- 
state Commerce Commission? 

Mr. Peabody. It will not do any good. The State commissions? 
control that. 

The Chairman. Do they control the interstate passengers? 

Mr. Peabody. Absolutely. You can not charge more for interstate 
passengers than the sum of the two locals. A man can get off at the 
State line and buy a new ticket into the State. 

The Chairman. Have you ever taken the question up with the 
Interstate Commerce Commission? 

Mr. Peabody. I do not now recall a single passenger case. We have 
the question up before the Supreme Court, where we show that the 
State made passenger rates absolutely control the interstate rates; 
and that would be one of the points in the rate cases that will be de- 
cided in the decision we are waiting for, if they will decide it. 

Mr. Bradley. Mr. Peabody, the Post Office Department, in Table 7, 
Document 105, shows that the Atchison road has an earning of 4.40 
mills per car-foot mile, and your statement shows an earning of 3.43 
mills. I would like to inquire how that discrepancy is accounted for ? 

Mr. Peabody. This statement in Document 105 relates to the Janu- 
ary figures. My statement is for the months of September and Octo- 
ber, 1911. 

Mr. Bradley. It occurred to me that the disparity might be ac- 
counted for by your taking the car space actually employed in the 
mail service, and the department's finding was probably arrived at 
from a reduced mail space figure. Is that it ? 

Mr. Peabody. The department car-foot miles are 35,762,263.37. 
The Sante Fe actual car- foot mile for same period were 55,484,640, 
or about 20,000,000 less than the actual. That amount was taken out 
of the mail car-foot space and largely added to the passenger car- 
foot space, thus increasing the passenger percentage and reducing 
the mail percentage, which the department themselves admit to be 
wrong. 

T^he Chairman. Is that corrected in Document 105 ? 

Mr. Peabody- No, sir ; that is not corrected. 



RAILWAY MAIL PAY. 509 

The Chairman. That is a subsequent realization on the part of the 
department that they had made a mistake in making a double debit 
instead of a debit, if to be made at all, to apply to both services. 

Mr. Peabody. They did correct one route. One, the route from 
Chicago to Kansas City, they first published a total mail space of 
5,800,760; they corrected that to 6,309,509, but originally published as 
the passenger car-foot space 43,690.000, and in the corrected figures 
they raised that to 78,886,000. 

The Chairman. In that connection, Mr. McBride, in order to get 
it into the record, as I understand, the department realizes that that 
mistake was made if the debit was applied in the dead space and no 
allowance made in mail revenue in charging that to the other pas- 
senger service. In other words, that if disallowed in mail it should 
be rejected in the balance of the passenger service? 

Mr. McBride. I do not think the department has as yet granted 
that conclusion. It has been granted that some mistakes were made 
in the classification of car-foot-mile space, but I do not think it has 
as yet granted the conclusion mentioned. 

The Chairman. I would like to ask you personally your own point 
in reference to that. Is it not manifestly unfair to refuse to make an 
allowance in one case and then take and charge that in the other 
case? Shouldn't it, if eliminated in the calculations, be eliminated 
from both cases in order to secure a fair relativeness as between the 
two services? 

Mr. McBride. Well, I hardly know how to answer that, Senator. 
It is a question I have not fully settled in my own mind as yet. I 
have given it a great deal of thought. There is something to be said 
on both sides. 

The Chairman. What is there to be said on both sides? 

Mr. McBride. In the dead space in the closed-pouch service, that 
which was rejected. I think, should be charged to passenger service, 
because it is part of the passenger train space which we considered 
was not properly chargeable to the mail service, and if not chargeable 
there was part of the passenger train space. 

The Chairman. What is to be said on the other side? 

Mr. McBride. Possibly the dead space in apartment cars should 
not be charged to passenger space. 

Mr. Peabody. May I ask this question to still further elucidate 
that proposition? 

The Chairman. Yes. 

Mr. McBride. Remember, I am stating my personal view. 

Mr. Peabody. What would be your personal view in the closed- 
pouch car which went out loaded and came back empty? 

Mr. McBride. Do you mean a special car? 

Mr. Peabody. Xo. A regular baggage car went out full and came 
back empty. Where would that be charged, the space on the return 
trip? 

Mr. McBride. I do not think the -mail service should be charged 
with that space. 

Mr. Peabody. And that is one of the deductions that was made? 

Mr. McBride. Yes. 

Mr. Peabody. I traced every car that we carried out full of mail 
which came back empty and it was all deducted. In our computation 
it is included, and that is what makes the difference. 

49396—14 40 



510 BAIL WAY MAIL PAY. 

The Chairman. Why should not the Government be charged, if 
they call for and fill a baggage car, or any other car that is used in 
the transportation of the mail and the railroads under the govern- 
mental authorization or request, furnish the car and transport it to 
the point of destination and then the railroad is absolutely unable to 
use that car on the return ? Why should not the Government pay for 
that return in case the railroad is unable to utilize that car to haul it 
back? 

Mr. McBride. Well, I think that is all right as regards specially 
ntted-up cars, but I can not grant it in what is known as closed-pouch 
space. 

Mr. Bradley. Senator, might I ask a question along that line ? 

The Chairman. If you will. 

Mr. Bradley. Aside from the subdivision of space and leaving out 
of consideration closed-pouch space or mail apartment car space, or 
any special division of mail space, and considering the general prob- 
lem, suppose that this inquiry had been to ascertain the cost of pas- 
senger service and that the person making the comparison had elimi- 
nated the dead space in passenger service and had left the dead space 
in the mail and express business. Would he arrive at a fair result ? 

Mr. McBride. I hardly think so. 

Mr. Bradley. May I restate the question ? 

The Chairman. Yes. 

Mr. Bradley. Suppose that this inquiry was to ascertain the rela- 
tive revenue and the relative expense of the express service and the 
person making the investigation had carefully eliminated all of the 
dead space as he could recognize it in connection with the express 
service, but had left in ,all of the dead space in the mail service. 
Would that have been fair to the mail service as between the mail and 
express service? 

Mr. McBride. I do not think so. 

The Chairman. Then would not this be a fair statement, that in 
any calculation of this character that is made either the dead service 
ought to be accounted for in each of the services or else it should be 
eliminated in each of the services? 

Mr. McBride. That might be a fair way to handle it, although 
the fact should not be overlooked that the passenger train is oper- 
ated primarily for passenger service and the mail service is incidental 
only. The Government has no control over the amount of space 
run in a train beyond that authorized and needed for the mail service. 

The Chairman. What do you think about that, Mr. Prentiss? 

Mr. Prentiss. I think the three services are not comparable. 

The Chairman. How are you going to get a relativeness between 
the two, then? 

Mr. Prentiss. You are dividing the train according to car-foot 
miles, and in dividing that train you find a total of so many car-foot 
miles in the train, and then you make your division in certain pro- 
portions and say so much to mail, so much to express, and so much 
to passenger. The railroad company is obliged to furnish so much 
space for passenger service, whether they carry them or not, and they 
are obliged to furnish space for trunks, whether they carry them 
or not. 

The Chairman. They are also obliged to furnish space for the 
mail, whether they carry it or not? 






KAIL WAY MAIL PAY. 511 

Mr. Peabody. Surely we do. We have to furnish the space, and 
we do not know whether there will be 1,000 or 10,000 pounds. 

Mr. Prentiss. On a large bulk of the lines the mail service is con- 
stant, but it changes with different times, and there are certain days 
during the week when the mail is heavier than it is on certain other 
days. I recognize all of that. We know it to be so. 

The Chairman. And you make preparations for it and there is a 
steady increase in the mail business ? 

Mr. Prentiss. Yes. 

The Chairman. And you make preparations for that? 

Mr. Prentiss. We make preparations for it. 

The Chairman. But you are not infallible? 

Mr. Prentiss. No. 

The Chairman. And consequently you can not anticipate just what 
is going to be handled? 

Mr. Prentiss. No. 

The Chairman. And there are occasions where the railroads, ac- 
cording to 3'our directions and under the compelling influence of the 
law, have to furnish more space than you use. Now, what are you 
going to do with a case of that kind ? 

Mr. McBride. I think where the demand of the service requires 
them to run an additional car in addition to the regular baggage car 
they should be credited with the return space if they do not use it. 

The Chairman. If it is not used? 

Mr. McBride. Yes. 

Mr. Rowan. Did you carry that out in practice in the preparation 
of Document 105 ? 

Mr. McBride. No; we did not. But I think we have said since 
then that we should have done so. 

Mr. Peabody. Suppose that the amount of space which the mails 
occupied in a car, and for which you allowed space, was boarded up 
so that that was all the space devoted to the mail. How would it Be 
possible to handle it? Do you not require the dead space in order 
to handle the mail that you have in there that does not occupy all 
of that space? How can you handle mail just in the space that the 
mail itself occupies? As I understand, in a car you throw a lot of 
mail into the front end of a car and you are delivering it. There may 
be 3 feet of that car occupied by the mail. You allow 3 car-foot 
miles in the space, do you not ? 

Mr. McBride. Three feet on one side. 

Mr. Peabody. How are you going to get that to the door without 
occupying the other space? 

Mr. McBride. If there was 3 feet allowed across the width of the 
car, it would provide sufficient space for that purpose. 

Mr. Peabody. How are you going to get it back to the door. Are 
you not obliged to have that dead space in the car to handle that 
mail with? 

Mr. McBride. We allowed 3 feet all the wa} T across the car, the 
whole width of the car. The opposite side of the car, which is not 
occupied, and the aisle space, it seems to me, is a sufficient allowance 
for handling space. 

Mr. Peabody. You mean in the length of the car. not the full 
width ? 

Mr. McBride. Three feet in length of the full width. 



512 KAILWAY MAIL PAY. 

Mr. Rowan. In the case of a train that is running exclusively for 
mail, and no other traffic being handled on the train, the dead space 
in that case, as I understand it, was eliminated and put over on the 
passenger side. I do not see why that was done. 

The Chairman. Is that true, Mr. McBride? 

Mr. McBride. I do not think so. 

The Chairman. Could you tell. You have Document 105 there, 
Mr. Prentiss? 

Mr. Prentiss. An examination of the reports for the particular 
trains would be necessary. 

Mr. Bradley. If you rejected any dead space on an exclusive mail 
train, it would have been thrown to the passenger service, would 
it not? 

Mr. Prentiss. It would have been thrown to dead space. 

Mr. Bradley. And thence to the passenger. 

Mr. Prentiss. And thence to the passenger. 

Mr. Bradley. Before Mr. Peabody concludes I would like to ask a 
further question in regard to the Sante Fe. In that table 7 the Post 
Office Department shows that the expenses per car- foot mile, operat- 
ing expenses and taxes were 2.6 mills and that that figure, in com- 
parison with the earning of 4.46 mills that we have just referred to 
represented a profit in performing the service of 70 per cent. Was 
that entirely due to the different space basis used by the Post Office 
Department? 

Mr. Peabody. By no manner of means. They also reduced the 
amount of expenses between freight and passenger very materially. 

Mr. Bradley. Could you say how much ? 

Mr. Peabody. I do not think I have the figures here, but they made 
a very material reduction. You were here this morning when this 
difference was discussed. Their method of dividing between freight 
and passenger made a very material reduction. 

Mr. Prentiss. I have the figures here. The figures reported by the 
company for the total passenger operating expenses, including 
passenger, baggage, express, and mail, were $2,107,102, and the same 
figures by the department were $1,863,224. 

The Chairman. That difference, then, being due to what? 

Mr. Prentiss. To the department's method of apportionment as 
distinguished from the company's. I have found, Mr. Peabody, that 
we have never received from the company the statement of the com- 
pany's method of separating the expenses referred to this morning. 
I have found in the files a telegram from the company in reply to a 
letter requesting it. It is referred to at the bottom of Form 2603 : 

Your division of expenses as between passenger and freight is made in accord- 
ance with working memorandum for distribution of operating expenses between 
freight and passenger, copy of which is attached — 

And we wrote for the copy, which was not attached. The telegram 
in reply referred us to the Interstate Commerce Commission. 

Mr. Peabody. My clerk told me that he had furnished it. That 
is all I know about it. 

Mr. Rowan. There is one more question I would like to ask. I 
would like to know if the Post Office Department charged to the mail 
service the space occupied in passenger coaches by post-office in- 
spectors and postal clerks riding to and from their tour of duty. It 
is recognized we were forced to carry these people on postal commis- 



BAIL WAY MAIL PAY. 513 

sions, and I would like to know whether the space occupied by them 
was charged to the mail service or whether the space was charged to 
the passenger service? 

Mr. McBride. It was not. "We had no data as to the amount of 
space those men occupied. 

Mr. Rowan. Was it charged to the passenger service ? 

Mr. McBride. I presume it was. 

Mr. Hurst. On page 272 of this document, Mr. Peabody, the third 
from the last column, directly apportioned expenses chargeable to the 
mail services; Atchison, Topeka & Santa Fe shows nothing. Now, 
turn to page 29 in the same document of this Form 2602 ; column 31 
shows the cost of station service and facilities chargeable to the mail. 
Have you the figures that were shown in that statement? 

Mr. Peabody. Not here. We have the figures. 

Mr. Hurst. You filled out those forms, did you ? 

Mr. Peabody. Yes ; we filled every form that was asked for. 

Mr. Hurst. That would show certain items directly applicable for 
station facilities for mail service? 

Mr. Peabody. Yes. 

Mr. Hurst. Still this statement shows nothing directly chargeable. 
Can you account for that? 

Mr. Peabody. I can not. 1 will take a memorandum of that and 
advise the Senator of the result. 

Mr. Bradley. The department said that they concluded not to 
publish those figures. On page 6 they say the data reported by the 
companies on Form 2602 as to expenditures for station service and 
station and terminal facilities furnished were very carefully consid- 
ered ; and, in view of the fact that it was found impossible to ascertain 
the total of the accounts from which the amounts directly charged 
on this form should be deducted, and of the fact that such data were 
found to be unreliable in many instances, and of the further fact 
that it was determined that the mail service should participate in all 
of the station expenses upon a basis of car-foot miles, it was decided 
not to make use of such information in connection with the cost 
ascertainment. 

!$y. Peabody. That is the reason why I am insisting that the car- 
foot mile basis shall have regard to all of the operating expenses in 
this that are particularly applicable to the mail. They themselves 
say all the station expenses should be charged with it; all the other 
expense should be equally charged. 

The Chairman. Now, referring to what you have just read from 
page 6 of Document 105, I assume that you criticize that position of 
the department, do you ? 

Mr. Bradley. Yes. 

The Chairman. Give us your reasons. 

Mr. Bradley. The expenses were reported as definitely assignable 
to the mail service, and it would seem only fair that they should have 
been so published. 

Mr. Peabody. Whether they were used or not? 

Mr. McBride. Would it not be a fact that there would be a double 
charge — for instance, if the department charged itself with certain 
station expenses at certain stations and not being able to get the 
total station expenses at those stations, and then participated in all 



514 RAILWAY MAIL PAY. 

station expenses on the car-foot mile basis, would there not be a 
double charge? 

The Chairman. Your reason for nonpublication was due to the 
incompleteness of the information, as we take it? 

Mr. McBride. Yes, sir. 

Mr. Hurst. There is only one comment to make on that. In the 
first column of this particular table, 2602, that was not published, it 
calls for the wages paid porters and messengers employed exclusively 
in the handling of mails. If there were no figures shown in that for 
the Atchison, Topeka & Santa Fe they should have been in this 
account directly chargeable. The same condition will apply to all 
the railroads. 

Mr. McBride. That is true ; they were the wages of employees em- 
ployed exclusively on mail service. Supposing we did have the ex- 
pense for one particular employee, unless we had the wages of all 
the other employees at that station, in order to eliminate the amount 
thereof from consideration we would participate in all the expense at 
that station ? 

Mr. Hurst. Yet, on the other hand, you eliminate all the traffic 
expenses, or most of them, because they were not applicable to the 
mails. 

Mr. Bradley. Inasmuch as the inquiry extended over six years, 
would it not have been possible for the Post Office Department to 
have again called on the railroad companies for any additional infor- 
mation they thought they needed? So far as I know, there was no 
reluctance on the part of the railroads to furnish anything the 
department called for. 

The Chairman. I think that Gen. Stewart has already stated in 
the testimony heretofore and conceded that, so far as the department 
was concerned and his knowledge went in reference to this inquiry, 
there was no criticism whatever to be made on the part of the trans- 
portation companies as to their compliance with requests that were 
made. I am correct in that statement, am I not ? 

Mr. McBride, The railroads cooperated very nicely. 

Mr. Peabody. I have one or two other matters I would like to 
submit. 

The Chairman. I would like to ask Mr. Lorenz his view as to the 
fairness of elimination of credit for dead space and the application 
of that, as a debit, to the passenger service, given the desideratum — 
being ascertainment between the passenger service and the mail 
service or the relative compensation for both. 

Mr. Lorenz. I can not see how there can be two opinions. It 
seems to me just as you can not operate a freight service without 
hauling empty freight cars, and just as you can not operate pas- 
senger service without hauling empty space, you can not operate 
mail service without hauling empty space, and in comparing the 
various departments, either on cost of revenue basis, you should 
include all of the space used and unused which is hauled in connec- 
tion with that service, and I can not understand, therefore, why on 
this particular point the Post Office Department should have rejected 
the dead space from the mails and put it in the passenger service. 
It seems to me that there they made a clear error. 

The Chairman. Now, proceed, Mr. Peabody? 



RAILWAY MAIL PAY. 



515 



Mr. Peabody. I was interested in ascertaining the returns per unit 
of transportation on mail traffic as compared with less-than-carload 
freight. There is a sort of relation, if you please, between handling 
mail and handling less-than-carload freight. That is, it is in small 
packages and put on and put off, and so forth. We keep an analysis 
of our traffic so that we know just exactly what we handle of L. C. L. 
freight, and so forth. Our mail traffic for September and October, 
the revenue was $377,864, our L. C. L. traffic for the fiscal year was 
$14,268,583. We reduced the car-foot space to car- foot miles on the 
basis of the average length of the cars used. The car-miles were 
1.903,311 for the two months in question. For the year on the 
L. C. L. freight there were 93,175,853. The average dead weight per 
car for the mail in tons was 46.68. The average dead weight for the 
freight car in tons was 18.03. The ton-miles of car based on dead 
weight was 88,846,557. The ton-miles of car based on dead weight 
for the freight service was 1,679,960,630. The ton-miles of load for 
the mail was 3,790,104. The ton-miles of load for the L. C. L. 
freight was 513,966,726. The gross ton-miles of the mail was 92.- 
636,661 and for the less-than-carload freight 2,193,927,356. The rev- 
enue per gross ton-mile in mills on the mail traffic was 4.08. The 
revenue per gross ton-mile in mills on L. C. L. freight was 6.50. In 
other words, we get morfe on L. C. L. freight than we do on the mail, 
although we haul one in a freight train and the other in a passenger 
train. 



Atchison, Topeka <& Santa Fe Ry. system — Return per unit of transportation — • 
Mail traffic compared with less-than-carload freight. 

[Statistical department, Chicago, Feb. 20, 1913.] 





Mail traffic, 

September 

and October, 

1911. 


L. C. L. 

freight, fiscal 
year 1912. 


Revenue 


$377,864 

1,903,311 

46.68 

88, 846, 557 


$14, 268, 583 


Car-miles 


93,175,853 

18.03 

1 . 679. 9f,n. fan 


Average dead weight per car tons. . 


Ton-miles of load 


3,790,104 1 513,966,726 




92,636,661 2.193.927.356 


Revenue per gross ton-mile mills . . 


4.08 


6.50 



The Chairman. That is a most interesting statement you have pre- 
sented. This is applicable to the whole of the Atchison system, rep- 
resenting over 10,000 miles of railroad. What constitutes less than a 
carload lot — L. C. L. ? Suppose you had a car with a capacity of 
100,000 tons and you carried 80,000 pounds ; would that be less than 
a carload lot? 

Mr. Peabody. We have no box cars for use in merchandise of that 
capacity. Our largest box cars are 80,000 pounds capacity. 

The Chairman. What would bring it under L. C. L. class? 

Mr. Peabody. It would make no difference how much or how little 
was in that. If it only had 100 pounds in it, it would still be L. C L. 
freight, because it was all handled and loaded by the company in 
lots. Carload freight is freight loaded by the consignor and un- 
loaded by the consignee. All that the railroad company does is to 
switch and haul that freight. The L. C. L. freight is loaded through 
the freight house by the employees of the company. 



516 RAILWAY MAIL PAY. 

The Chairman. I would like a definition of what constitutes 
L. C. L. freight, and what proportion of your total freight handled do 
you figure is L. C. L. freight, as demonstrated in this statement? 

Mr. Peabody. L. C. L. freight is freight delivered to the freight 
house in small quantities, or in any quantity, if you please — although 
in every instance, almost, it is in small quantities — which takes what 
are called merchandise rates, or less-than-carload rates, consisting of 
first, second, third, and fourth class under the western classification, 
and I think under the eastern classification it includes some fifth- 
class freight. However, it is freight that takes merchandise rates, 
and takes the same rate whether it is 100 pounds, 1,000, or 1,500 
pounds, and is handled exclusively by the railroad employees — loaded 
into the cars and unloaded by the employees and delivered out of the 
freight house to the consignee. 

The Chairman. What percentage of the total freight business of 
the Atchison system would this L. C. L. freight for the fiscal year 
1912 represent? 

Mr. Peabody. There were 18,708,719 tons of carload freight ; there 
were 1,417,014 of less-than-carload freight, or merchandise. Ton- 
miles carload freight was 0,254,567,017, and the ton-miles of the less- 
than-carload freight was 513,966,726. 

The Chairman. So that your less-than-carload freight represents 
about 6 per cent of your total freight business ? 

Mr. Peabody. Of the tons handled it represents 6.7 per cent : of the 
ton-miles, 7.31 per cent. 

The Chairman. The statement shows that you received for that 
per cent of the freight business 2.42 mills more from that kind of 
freight than you received from the mail traffic? 

Mr. Peabody. Per gross ton-miles handled. 

Mr. McBride. May I ask how the ton-miles of mail were ascer- 
tained ? 

Mr. Peabody. We know how many tons we hauled. 

Mr. McBride. Was it based on the average daily weight? 

Mr. Peabody. Based on the weight. Those figures were obtained 
from Mr. Lindsay. 

Mr. Rowan. I want to ask Mr. Peabody if the definition of less 
than carload lot is not any amount of freight less than carload mini- 
mum. Has the loading through houses anything to do with it? For 
example, in New York City we handle most all of our freight through 
houses and through piers. 

Mr. Peabody. But you do not handle carload freight that takes 
the carload rate? 

Mr. Rowan. Yes, indeed. At all of our pier stations in New York 
City we have to handle it. The shipper can not, handle it. He would 
not be allowed to. 

Mr. Peabody. That is not the case with the Santa Fe road. A 
carload lot — that is, freight which takes the carload rate — is never 
handled by the company, but is always handled by the shipper. 

Mr. Rowan. In the East it is different. It seems to me, the defini- 
tion of less-than-carload freight is freight in quantities less than the 
minimum carload weight. 

Mr. Peabody. Oh, no. Any amount that takes a merchandise rate. 
You can have less carload rates or more than minimum carload. 



RAILWAY MAIL PAY. 517 

Mr. Bradley. Is not L. C. L. retail freight business and the car- 
load the wholesale freight? 

Mr. Peabody. Yes. 

Mr. Rowan. I wanted to correct his statement that any freight 
handled to the house as L. C. L. freight is not handled that way in 
Xew York City. 

The Chairman. Mr. Peabody *s statement is applicable to the 
Atchison system only. 

Mr. Peabody. That relates to all western freight. 

The Chairman. I would like to ask Mr. McBride what percentage 
of the total mail would correspond with less than carload lots? In 
other words, what percentage of the mail carried would be in full 
cars and what percentage would go in full cars and what percentage 
would go in less than full cars ? 

Mr. McBride. I have not the figures, Senator. I would say, in my 
opinion, that probably 10 per cent of the weight of the mail would 
be carried in full carload lots. 

The Chairman. Ninety per cent in less than full carload lots? 

Mr. McBride. Yes; that is an estimate. 

The Chairman. So that 90 per cent of the mail, for the purpose 
of comparison with the statement just submitted by Mr. Peabody, 
would compare with the less than carload column in that statement. 
It would then present itself in this way, to my mind, that so far 
as the Atchison system was concerned the Atchison received 2.42 
mills more for between 6 and 7 per cent of their total freight 
business than the}- received from 90 per cent of their mail business. 
Is that correct? 

Mr. Peabody. Oh. no. More per ton-mile. Not in amount. 

The Chairman. I say, per ton-mile? 

Mr. Peabody. Yes; more per gross ton-mile. 

Mr. McBride. May I ask how ton-miles of the L. C. L. ship- 
ments were obtained? 

Mr. Peabody. We keep in my own office absolute analyses of every- 
thing we carry — all commodities. 

Mr. McBride. Every shipment, or do you apply the average? 

Mr. Peabody. No. We take every actual shipment. I can tell you 
how far on our road every shipment travels and between what sta- 
tions. 

Mr. McBride. This data was obtained from those figures of actual 
shipments? 

Mr. Peabody. Yes. This is something we keep all the time. There 
is a statement made of all the commodities handled on our road. 

The Chairman. To my mind, that is one of the most interesting 
statements that has been presented at our hearing, as I have always 
assumed that the railroads received less per ton-mile for freight than 
for any other class of business performed by the railroads. 

Mr. Peabody. We do ; for all freight. 

The Chairman. I accept the correction and was going to state that 
this statement of a percentage, which in tons, as in value, is a very 
material percentage for the gross business of the railroad, shows that 
you receive more for freight than you do per ton-mile for 90 per cent 
of the mail. 

Mr. Peabody. Yes, sir. 



518 KAILWAY MAIL PAY. 

Mr. Lorenz. You distinctly recognize that this is not per ton-mile 
of mail and ton-mile of freight, but ton-mile of freight and car and 
mail and car. In other words, the dead weight of the car is figured 
in this, which makes the difference in the comparison. 

The Chairman. What difference would that make in the compari- 
son? 

Mr. Peabody. You will notice that the average dead weight of the 
car for mail is 46 tons and a fraction, whereas the average dead weight 
of the car for the freight is 18 tons and a fraction. 

The Chairman. Then this difference is due to the fact of the extra 
weight of the car for mail ? 

Mr. Peabody. Largely, and chiefly. 

Mr. McBride. How did you ascertain the car miles in the mail 
traffic for closed-pouch mail ? 

Mr. Peabody. I know just exactly. 

Mr. McBride. Prorate the car ? 

Mr. Peabody. Every car handled. 

Mr. McBride. For instance, in the baggage car you devote a cer- 
tain amount of space to mail ? 

Mr. Peabody. I do ; and had a report for these two months for the 
mail. I also had a report for those two months of every car handled 
on our line, and the figures were made from those actual statements, 
and I have in my office the dead weight of every car handled, so that 
there was no difficulty in obtaining the exact figures. 

Mr. Lorenz. The difference, then, is not simply due to the weight 
of the average car, but also due to the utilization in that car. 

The Chairman. That is the load placed in the car ? 

Mr. Peabody. Yes, sir. 

The Chairman. The fact that a relatively smaller percentage of 
weight of mail goes into the car than the weight of merchandise in 
the L. C. L. classification. 

Mr. Lorenz. In other words, a load of 6 tons would be high for an 
average of mail cars, whereas a load of something more than that 
would be larger for less-than-carload freight? 

Mr. Peabody. Oh, no. Our average L. C. L. freight will be less 
than 6 tons. 

Mr. Lorenz. Have you any figure as to the average load of the 
mail car? 

Mr. Peabody. No. 

Mr. Lorenz. Perhaps 2 or 3 tons? 

Mr. Peabody. I do not know what it is. 

Mr. Bradley. It would not exceed 3 tons for the whole country ? 

Mr. Peabody. But there is not very much difference between the 
average weight of the mail, I should judge, and the average weight 
of the L. C. L. freight. We handle many cars that only have 100 
pounds or 200 pounds. If they have 100 pounds it is a loaded car. 

Mr. Lorenz. These reasons for the difference, however, do not 
affect the value of the comparison, because the cost of hauling, of 
course, is better figured on the basis of the car and contents than on 
the contents alone. 

The Chairman. I would like for Mr. Lorenz to further develop 
the thought in his mind. You mean that the difference in tonnage 
handled bv the railroads in merchandise in less than carload lots or 






RAILWAY MAIL PAY. 519 

mail in less than carload lots, for the sake of comparison, is not as 
important as the difference in weight of the two cars ? 

Mr. Lokenz. I would not say that it was not as important. AYhat 
I meant was, for the purposes of the comparison of cost combined, 
weight of the contents and the car is a fair method of comparison — 
in fact, a fairer method of comparison — than if you take the cost per 
ton-mile of the load alone. 

Mr. Peabody. Because you have to haul both of them? 

The Chairman. Here you have taken the combined weight in this 
computation? 

Mr. Peabody. Yes. 

The Chairman. What do you think of that viewpoint, Mr. Mc- 
Bride, namely, is not the combined weight of cars and the loads 
fairer, for the sake of comparison, than the load alone ? 

Mr. McBride. I think for some parts of the expenditure it would 
be fairer. 

The Chairman. As an element of computation for determination 
as to compensation for the services to be rendered ? 

Mr. McBride. I think it is very valuable in that connection for 
comparison. 

The Chairman. If weight is a factor in determination of the com- 
jDensation should the two be considered together? 

Mr. McBride. I would not want to answer that question without 
further consideration. 

The Chairman. How does it appeal to you, then, on first im- 
pression ? 

Mr. McBride. There are so many things coming up here, one right 
after the other, that I hardly feel prepared to offer an opinion off- 
hand. 

The Chairman. In mail compensation, weight of cars has never 
been taken into calculation at all ? 

Mr. McBride. No, sir. 

The Chairman. The weight of mail itself has? 

Mr. McBride. Yes. 

The Chairman. In freight compensation is weight of cars taken 
into consideration ? 

Mr. Peabody. In making the rates? 

The Chairman. Yes. 

Mr. Peabody. No, sir. 

The Chairman. As a more scientific method is developed, do you 
think that the weight of the car should be a factor in rate making? 

Mr. Peabody. I will have to modify my answer that I just made. 
In a sense the weight of the car is taken into account in rate making. 
The rate on L. C. L. business is made higher for several reasons, one 
of which is the light load which we are unable to carry in the cars, 
as compared with the heavy car with carload freight. We make our 
rates on L. C. L. business, and we will take, for instance, soap, if you 
please. If we were offered a carload of soap our rate would be one 
thing. If we were offered a thousand pounds of soap our rate would 
be another thing. 

The Chairman. That is the wholesale and retail feature of rate 
making? 

Mr. Peabody. And the higher rate per thousand pounds is made 
partly because we would have to haul more dead weight with the 



520 RAILWAY MAIL PAY. 

thousand pounds. L. C. L. loads will be less than 6 tons and our 
average carload freight is 22.44 tons. That is the average carload 
on the entire line. 

The Chairman. What is your average carrying capacity of your 
car ? It varies, of course, with the classification ? 

Mr. Peabody. The carrying capacity does not mean what you have 
in mind. The carrying capacity means the supporting power of the 
axle. The carrying capacity of an 80,000-pounds car if 3^011 put 
buggies in it would not be over 4,000 pounds, because the space would 
determine that. 

The Chairman. But the charge you would make would be based 
upon the fact that it would carry 80,000 pounds of something else 
than buggies? 

Mr. Peabody. No. Our minimums are a great deal lower than that. 
We do charge more for a carload of buggies, proportionately, a higher 
rate per hundred pounds, than we would on a carload of brick, be- 
cause we could load very many more brick in a car than we could 
buggies. 

The Chairman. Then do you not take both space and weight into 
consideration in making those rates? 

Mr. Peabody. Oh, yes. 

The Chairman. Then what is the objection to the departmental 
recommendation of substitution of space for weight in 90 per cent of 
the mail business? 

Mr. Peabody. I am not familiar enough with the mail business to 
answer that question intelligently. That is somewhat outside of my 
line, and I have never investigated the carrying operation of the mail 
business. 

The Chairman. Very well. Now, you may proceed, Mr. Peabody. 

Mr. Peabody. Either yourself or Mr. Lloyd at the last hearing T 
attended asked for some specific gauges of mail handled at different 
points showing what the result was. I have prepared half a dozen 
cases of that kind. The first one here is Carrollton, Mo. That I 
selected because it was in Mr. Lloyd's district and quite a large town. 

Statistics of mail handling at Carrollton, Mo. 

Number of mail route on which located 135098 

Length of route miles__ 454 

Population of town 3.452 

Total pounds handled per year on route 51. 053. 050 

Total yearly compensation of route $374, 852. 53 

Pounds handled at Carrollton per year 369. 884 

Proportion of Carrollton weight to total per cent 0. 72451 

Amount of pay accruing to Carrollton $2,715.84 

Number of pounds handled at Carrollton per day 1.013 

Compensation for Carrollton per day $7. 41 

Number of mail trains serving Carrollton daily 6 

Average pounds handled per train 169 

Average compensation per train $1.23 

« 

The Chairman. You have several stations with the same compu- 
tation ? 

Mr. Peabody. Yes. Some of them are very startling. Here is one 
at La Plata, Mo., which is also in Mr. Lloyd's district. 

Statistics of mail handling at La Plata, Mo. 

Number of mail route on which located 135098 

Length of route miles__ 454 

Population of town 1, 605 



RAILWAY MAIL PAY. 521 

Total pounds handled per year on route 51, 053. 050 

Total yearly compensation of route $374, 852. 53 

Pounds handled at La Plata per year 528, 105 

Proportion of La Plata weight to total per cent__ 1.03445 

Amount of pay accruing to La Plata S3. 377. 47 

Number of pounds handled at La Plata per day 1,447 

Compensation for La Plata per day $10. 63 

Number of mail trains serving La Plata daily 6 

Average pounds handled per train 261 

Average compensation per train $1. 77 

The Chairman. While the Carrollton compensation shows $1.23. 
Mr. Peabody. Yes. The next statement is Window, Ariz., a divi- 
sion point out in the desert. 






Statistics of mail handling at Winslow, Ariz. 

Number of mail route on which located 167003 

Length of route miles__ 565. 17 

Population of town 2, 381 

Total pounds handled per year on route 27. 963, 162 

Total yearly compensation of route $211,735.65 

Pounds handled at Winslow per year 184, 363 

Proportion of Winslow weight to total per cent— 0. 665738 

Amount of pay accruing to Winslow SI. 409. 60 

Number of pounds handled at Winslow per day 505 

Compensation for Winslow per day $3. 86 

Number of mail trains serving Winslow daily 4 

Average pounds handled per train 101 

Average compensation per train $0. 96^ 

The Chairman. How do you account for the differences in com- 
pensation ? 

Mr. Peabody. The difference in the weight of mail. 

The Chairman. The volume of business? 

Mr. Peabody. Yes. The next statement is Saffordville, Kans. : 

Statistics of mail handling at Saffordville, Kans. 

Number of mail route on which located 155010 

Length of route miles__ 472.87 

Population of town 250 

Total pounds handled per year on route 115,941.527 

Total yearly compensation of route $425. 573. 41 

Pounds handled at Saffordville per year 44, 595 

Proportion of Saffordville weight to total per cent__ 0. 038463 

Amount of pay accruing to Saffordville ■ $163.69 

Number of pounds handled at Saffordville per day 122 

Compensation for Saffordville per day $0.45 

Number of mail trains serving Saffordville daily 4 

Average pounds handled per train . 31 

Average compensation per train $0. 11 

Statistics of mail handling at Holly, Colo. 

Number of mail route on which located 155010 

Length of route miles__ 472. 87 

Population of town 920 

Total pounds handled per year on route « 115, 941, 527 

Total yearly compensation of route $425, 573. 41 

Pounds handled at Holly per year 144,422 

Proportion of Holly weight to total per cent— 0. 124566 

Amount of pay accruing to Holly $530. 12 

Number of pounds handled at Holly per day 396 

Compensation for Holly per day $1.45 

Number of mail trains serving Holly daily 6 

Average pounds handled per train 66 

Average compensation per train $0.24 



522 RAILWAY MAIL PAY. 

Statistics of mail handling at Spearville, Kans. 

Number of mail route on which located 155010 

Length of route miles__ 472. 87 

Population of town , 576 

Total pounds handled per year on route 115, 941, 527 

Total yearly compensation of route $425, 573. 41 

Pounds handled at Spearville per year 98, 247 

Proportion of Spearville weight to total per cent__ 0. 084739 

Amount of pay accruing to Spearville $360. 63 

Number of pounds handled at Spearville per day 269 

Compensation for Spearville per day $0. 99 

Number of mail trains serving Spearville daily 8 

Average pounds handled per train 34 

Average compensation per train $0. 12 

Statistics of mail handling at Raton, N. Hex. 

Number of mail route on which located 165006 

Length of route miles__ 348.37 

Population of town 4,539 

Total pounds handled per year on route 31, 760,075 

Total yearly compensation of route $188,246.41 

Pounds handled at Raton per year 441.139 

Proportion of Raton weight to total 1 per cent__ 1.389000 

Amount of pay accruing to Raton ■ $2. 614. 74 

Number of pounds handled at Raton per day 1, 209 

Compensation for Raton per day $7. 16 

Number of mail trains serving Raton daily 5 

Average pounds handled per train 242 

Average compensation per train $1.43 

Actual expenditure for terminal service per year $300 

The Chairman. To make your comparison there, what have you? 
Mr. Peabody. The total amount of pay is $2,614.74, out of which 
we have to pay $300. 

Shoemaker, N. Mex., is the next statement: 

Statistics of mail handling at Shoemaker, N. Mex. 

Number of mail route on which located 165006 

Length of route miles__ 348. 37 

Population of town 27 

Total pounds handled per year on route 31, 760, 075 

Total yearly compensation of route $188, 246. 41 

Pounds handled at Shoemaker per year 17, 207 

Proportion of Shoemaker weight to total per cent— . 05417S 

Amount of pay accruing to Shoemaker $101.99 

Number of pounds handled at Shoemaker per day 47 

Compensation for Shoemaker per day $0.28 

Number of mail trains serving Shoemaker daily 3 

Average pounds handled per train 16 

Average compensation per train $0. 09 

Statistics of mail handling at Searchlight, Nev. 

Number of mail route on which located 176013 

Length of route miles__ 23. 57 

Population of town 387 

Total pounds handled per year on route 198, 025 

Total yearly compensation of route $1, 047. 92 

Pounds handled at Searchlight per year 78, 447 

Proportion of Searchlight weight to total per cent— 39.616 

Amount of pay accruing to Searchlight $415. 14 

Number of pounds handled at Searchlight per day 215 

Compensation for Searchlight per day $1. 14 

Number of mail trains serving Searchlight daily 2 

Average pounds handled per train 108 

Average compensation per train $2^5! 

Actual expenditure for terminal service per year 



RAILWAY MAIL PAY. 523 

We have to pay terminal service of $660 — $245 more than we get. 

The Chairman. You have to pay that because of handling the 
mail there? 

Mr. Peabody. Yes, sir. 

The Chairman. That is a side and terminal service? 

Mr. McBride. Have you included transportation pay for the 
terminal distance in there? 

Mr. Peabody. Yes, sir. I am right, am I not? The terminal 
service is in the Searchlight proposition? 

Mr. Lindsay. Yes. 

Mr. McBride. The transportation pay for the terminal distance 
is included in that ? 

Mr. Lindsay. Yes. 

The Chairman. Before we leave this Scearchlight proposition, this 
charge of $660 per year for terminal service, if you did not carry the 
mail, you would not have to make that charge at all ? 

Mr. Peabody. No, sir. That is a man we hire at $55 per month. 

The Chairman. And his time is solely and wholly occupied in that 
business ? 

Mr. Peabody. Pie is not a railroad employee at all in any other way. 

The Chairman. You pay $55 a month to an individual at Scearch- 
light who serves two trains a day at Scearchlight and handles per 
train 108 pounds. Presumably, unless the department is at a very 
much greater distance from the station than the population of the 
town, being stated at 387, not over an hour of his time should be 
occupied in handling that mail and getting it to the train from the 
post office and from the train to the post office. Is not that pretty 
high compensation for an individual for that limited consumption of 
time ? 

Mr. Peabody. I do not know the circumstances at all in connection 
with it. I assume, however, that inasmuch as that is a mining town 
and the demand for men is rather strong, I think it doubtful if you 
could get a man to do that without paying him full time, even if it 
did not occupy but an hour a day; but that is mere supposition. 

Mr. Lindsay. The condition there is it is let to a subcontractor, who 
operates a wagon line, a hack, and you can not secure an individual 
for that much money per month who wants to stay there and do that 
work. The station force there is such that it can not conveniently 
handle it, and they sublet to this outside man to do that service for 
$55 a month. 

The Chairman. Then, is it hardly fair to bring this out as an illus- 
tration of the burden of the side service without governmental con- 
sideration and compensation for that burden, in view of the fact that 
there are some 60,000, in round numbers, post offices in the United 
States? 

Mr. Lindsay'. It is stated merelv to illustrate what it costs us to 
do it. 

The Chairman. Have you got here 'some statements of some of the 
large cities where you serve ? 

Mr. Peabody. No ; I have not any large cities. I have quite a large 
town of 2,689 people at Pauls Valley, which is south of Purcelle, in 
the State of Oklahoma. 



524 RAILWAY MAIL PAY. 

Statistics of mail handling at Pauls Valley. Okla. 

Number of mail route on which located 153000 

Length of route l miles 1TL 78 

Population of town ^ 2,689 

Total pounds handled per year on route 5, S24, 621 

Total yearly compensation of route $30,814.98 

Pounds handled at Pauls Valley per year 463, 838 

Proportion of Pauls Valley weight to total per cent__ 7. 9936 

Amount of pay accruing to Pauls Valley $2,463.22 

Number of pounds handled at Pauls Valley per day 1, 271 

Compensation for Pauls Valley per day $6.75 

Number of mail trains serving Pauls Valley daily 6 

Average pounds handled per train 212 

Average compensation per train . $1. 13 

Actual expenditure for terminal service per year $360 

Statistics of mail handling at Chloride, Ariz. 

Number of mail route on which located 168009 

Length of route miles__ 22.62 

Population of town 470 

Total pounds handled per year on route 35,429 

Total yearly compensation of route $967.00 

Pounds handled at Chloride per year 17, 715 

Proportion of Chloride weight to total per cent- _ 50 

Amount of pay accruing to Chloride $483. 50 

Number of pounds handled at Chloride per day 49 

Compensation for Chloride per day $1. 33 

Number of mail trains serving Chloride daily 2 

Average pounds handled per train 25 

Average compensation per train $0. 67 

Actual expenditure for terminal service per year $469. 50 

The Chairman. Suppose you had a statement of San Francisco. 

Mr. Peabody. I can get that for you. I will be glad to get any 
point on our line. 

The Chairman. How long would it take to get that statement? 

Mr. Peabody. It would not take any time at all after I get home. 

The Chairman. I wish you would give a statement for the three 
largest cities the Atchison system serves. 

Mr. Peabody. Chicago, Kansas City, and San Francisco. I will 
be frank to say that I was asked for examples or illustrations. 

The Chairman. For which we are very grateful to you for fur- 
nishing the information to the committee, but in order to get the full 
weight it is desirable, to my mind at least, to have the scope as broad 
as possible. 

Mr. McBride. I would suggest that as all of these cities have 
Avagon service and at none of them do railroads perform any service 
except porterage service, if they would include one or two large cities 
where they do perform the service, it would be illuminating. 

The Chairman. I would be glad to elaborate my request, Could 
you mention such city? 

Mr. McBride. I could not offhand. 

Mr. Lindsay. San Diego is a terminal and they are asking for 
$900 more right now. 

Mr. McBride. I suggest San Diego, Cal., and Albuquerque, N. Mex. 

The Chairman. Now, Mr. Peabody, have you the information as 
to what the actual cost to the Atchison, Topeka & Santa Fe is for 
the side and terminal service required by the Government? 

Mr. Peabody. All of it ? 

The Chairman. Yes. 



RAILWAY MAIL PAY. 525 

Mr. Peabody. We have a statement of that sort at the office; yes. 
sir. 

The Chairman. Have you in mind the figures ? 

Mr. Peabody. No; I have not, I think probably Mr. Lindsay 
could give you better information. 

Mr. Lindsay. I have an inquiry out for that now, trying to get it 
in complete shape. We found a great many errors in it and they are 
going all over it so we will make a complete statement of the side 
and terminal service we are responsible for, the performance and 
cost, estimated or real. 

The Chairman. Mr. Peabody, would you state briefly what im- 
provements, if any, could be made in the present method of ascertain- 
ment and settlement by the Government with the transportation com- 
panies for the railway mail pay at the R. P. O. service ? 

Mr. Peabody. I do not know anything about the methods now. 
I understand that it is a space basis for the R. P. O service and the 
weight basis for the mail, with nothing for the apartment cars, and 
that is about all of my knowledge on the subject. I do not think my 
opinion would be worth anything, Senator. 

The Chairman. Then the demonstration and presentation that 
you have made before the committee is for the purpose of showing 
the Atchison system's method of accounting and apportionment of 
operating expenses between freight and passenger, and the sugges- 
tion as to the method you adopt in ascertainment of apportionment 
between mail and passenger profit ? 

Mr. Peabody. The object is to show that under what we believe 
to be a fair apportionment of expenses as between freight and pas- 
senger, that in proportion to space occupied by the mail on our 
passenger trains the service performed on account of the mail is un- 
derpaid in proportion to the cost of the service, that it does not, in 
other words, pay its fair share of the total expenses and outlays 
to which the railroad is subjected in the performance of the service. 
That is the object of the statement, and in that statement you will 
notice I have shown the cost, I have shown the return, and I have 
shown the value of the property and what the return should be on 
the basis of 6 or 7 per cent, which is the normal rate of return as 
found by the court. 

The Chairman. Have you any suggestion to make for the infor- 
mation of the committee by which the insufficiency of compensation, 
according to your viewpoint, could be rectified ? 

Mr. Peabody. Only by an increase in the compensation, but I have 
no suggestion formulated as to how that increase can be effected. I 
do not know enough about the business. I do not like to offer sug- 
gestions that are not feasible. 

The Chairman. You will prepare and mail to the committee 
specific comments in reference to the suggested plan of ex-Postmaster 
General Hitchcock as set forth on page 159 of this pamphlet? 

Mr. Peabody. Yes, sir; I will undertake to do that as far as I can. 

The Chairman. We are much obliged to you, Mr. Peabody, for 
your view. 

Thereupon, at 6 o'clock p. m., the hearing adjourned to meet at the 
call of the chairman. 

49396—14 41 



526 



RAILWAY MAIL PAY. 



Atchison, Topeka & Santa Fe Railway system — Net income, by classes, of traffic, 
September and October, 1911. 

[Statistical Department, Chicago, Mar. 6, 1912.] 



Amount. 



Per cent. 



Apportionment of operating expenses (on car-foot mile basis) 
Car-foot miles — 
Pass 
Mail 
Express 

Total 

Total passenger train operating expenses 

Proportion chargeable to— 

Passenger, 80.37 per cent 

Mail, 7.32 per cent 

Express, 12.31 per cent 

Apportionment of taxes, interest, rentals, hire of equipment (on revenue 
basis): 

Freight revenue (including freight, miscellaneous) 

Passenger revenue (including passenger, miscellaneous) 

Mail revenue 

Express revenue 

Total 

Taxes, interest, rentals, and hire of equipment 

Proportion chargeable to- 
Freight, 69.80 per cent . . . „ 

Passenger, 24.99 per cent. 

Mail, 2 per cent 

Express, 3.21 per cent 

1 Equals 82.72 per cent of passenger revenue. 

2 Equals 6.62 per cent of passenger revenue. 

3 Equals 10.66 per cent of passenger revenue. 

RECAPITULATION. 



1,209,901,808 
110,125,645 
185,382,251 


80.37 

7.32 

12.31 


1,505,409,704 


100. 00 


84,394,347.26 


=36 


3,531,736.89 
321,666.22 
540,944.15 










13,191,317.90 

4, 722, 656. 95 

377, 864. 26 

608,263.98 


69.80 
124.99 

2 2.00 

3 3.21 


18, 900, 103. 09 


100.00 


3,112,495.90 

2,172,522.14 
777,812.72 
62,249.92 
99,911.12 















Freight. 


Passenger. 


Mail. 


Express. 


Total. 


Operating revenue 

Operating expenses 


$13,191,317.90" 
7,791,471.10 


$4,722,656.95 
3,531,736.89 


$377,864.26 
321,666.22 


$608,263.98 
540,944.15 


$18,900,103.09 
12,185,818.36 


Net operating 
revenue 


5,399,846.80 


1,190,920.06 


56,198.04 


67,319.83 


6,714,284.73 








59.06 


174.78 


i 85. 13 


188.93 


64.47 






Taxes, interest, etc 


2,172,522.14 


777,812.72 


2 62,249.92 


99,911.12 


3,112,495.90 




3,227,324.66 


413,107.34 


3 6,051.88 


3 32,591.29 


3,601,788.83 




Earnings per car-foot mile 




3.89 


3.43 


3.28 


3.78 









1 Average ratio all passenger service, 77 per cent. 

2 Should be as adjusted at end of year, $64,629.60. 



» Deficit. 



Mail, net operating revenue $56,198.04 

Taxes, except equipment and rental 17,426.20 



(On the basis of January, 1910, revenue, the loss would have been $60,548.66.) 



38,771.84 



RAILWAY MAIL PAY. 



527 



Atchison, Topeka & Santa Fe Railway system net income, by classes, of traffic, 
September and October, 1911 — Continued. 





Amount. 


Equals at 2 
per cent — 


Taxes 


$751,957.91 

18, 215. 93 

101, 135. 91 


$15,039.16 


Rentals 


364. 32 


Hire of equipment 


2, 022. 72 






Total 


871,309.75 
2,241,186.15 


17,426.20 
44, 823. 72 


Interest 




Total 


3,112,495.90 


62, 249. 92 





Value of property used $603, 390, 485. 00 

Mail proportion 12, 067. 809. 00 

Return, 60 days at 6 per cent 120, 678. 09 

Return, 60 days at 7 per cent 140, 791. 11 

On basis of 7 per cent return the shortage would be $95,205 additional for mail, equal to 8607,541 per year. 
On basis of 6 per cent return the shortage would be $75,099 additional for mail, equal to $486,905 per year. 



RAILWAY MAIL PAY, 



TUESDAY, APRIL 22, 1913. 

Joint Committee on Postage on 
Second-Class Mail Matter, etc., 

Washington, D. 0. 
The hearing was resumed at the call of the chairman at 10.30 
o'clock a. m. 

Present: Hon. Jonathan Bourne, jr. (chairman), Hon. Harry A. 
Kichardson, Senator John W. Weeks, and Kepresentative James T. 
Lloyd. 

STATEMENT OF MR. ROBERT S. LOGAN. 

The Chairman. Mr. Logan, it will be necessary that you be sworn. 
Thereupon Mr. Logan was duly sworn by the chairman. 

The Chairman. Will you kindly state your full name, residence, 
occupation, and the official position that you occupy with any 
transportation lines ? 

Mr. Logan. Robert S. Logan; residence, Montreal, Canada; I am 
vice president of the Grand Trunk Railway system in charge of lands, 
taxes, claims, mail matter, etc. 

The Chairman. I will ask the gentlemen present to be sworn in 
order that they may take part in this debate, if they like. 

Thereupon the following-named gentlemen were sworn by the 
chairman : 

H. E. Mack, manager mail traffic, Missouri Pacific Railway. 

A. H. Rowan, assistant to vice president, New York Central Lines, 
Grand Central Terminal, New York. 

Joseph N. Crocker, special mail agent, New York Central Lines, 
Grand Central Terminal, New York. 

Herbert L. Fairfield, supervisor of mail traffic, Illinois Central 
Railroad Co., Chicago, 111. 

J. P. Lindsay, manager mail traffic, Atchison, Topeka & Santa Fe 
Railway system, Chicago, 111. 

John Hurst, assistant comptroller, Pennsylvania Lines West of 
Pittsburgh, Pittsburgh, Pa. 

W. W. Safford, general mail and express agent, Seaboard Air Line 
Railway, Norfolk, Va. 

Russell H. Snead, manager express traffic, Chesapeake & Ohio 
Railroad Co. 

V. J. Bradley, general supervisor of mail traffic, Pennsylvania 
Railroad, Philadelphis, Pa. 

Max Otto Lorenz, associate statistician, Interstate Commerce 
Commission. 

529 



530 KAIL WAY MAIL PAY. 

C. H. McBride, superintendent division of railway adjustments, 
Post Office Department. 

Albert Noble Prentiss, clerk, Post Office Department. 

The Chairman. Mr. Logan, what mileage and what capital does 
the Grand Trunk Railway system represent ? 

Mr. Logan. Between 1,000 and 1,100 miles in the United States. 

The Chairman. How much in Canada ? 

Mr. Logan. About 3,600 miles. I do not remember just what the 
capitalization is. We have several subsidiary railway companies 
and other organizations in Canada. 

The Chairman. The whole system is composed of this mileage 
you have stated ? 

Mr. Logan. In Canada and the United States? 

The Chairman. Yes. 

Mr. Logan. No. The capitalization is about half a billion dollars; 
to be more exact, about $420,000,000. That portion in the United 
States is about $59,000,000. 

The Chairman. Is that a subsidiary company, or is that a part of 
the parent company? 

Mr. Logan. In the United States the several companies are sub- 
sidiary, controlled by the parent company. 

The Chairman. }\ hat are the names of the roads that are operated 
in the United States ? 

Mr. Logan. The Grand Trunk Western is our principal mail-carry- 
ing line, the Detroit, Grand Haven & Milwaukee; Toledo, Saginaw 
and Muskegon; Cincinnati, Saginaw & Mackinaw; the Michigan Air 
Line Railway; the Chicago, Detroit & Canada Grand Trunk Junction, 
and the Pontiac, Oxford & Northern Railway. Those companies 
compose what we term our western lines, and we have a line of about 
160 miles in the New England States to Portland, Me. 

The Chairman. Your terminals in the United States are where ? 

Mr. Logan. Portland, Me., Chicago, Detroit, Milwaukee, Saginaw, 
and Bay City and Port Huron. 

The Chairman. You receive mail, do you, from other railroads 
at those points ? 

Mr. Logan. We receive mail at all of those points from other 
railroads. 

The Chairman. And also deliver mail ? 

Mr. Logan. And deliver mail. 

The Chairman. Have you read over Document 105, and especially 
that portion of it known as the suggested plan of the Post Office 
Department and the supplemental or amended suggested plan, as 
represented on page 109 of the preliminary report ? 

Mr. Logan. I have not read all of it, but I am familiar with the 
main facts. 

The Chairman. What comments would you have to make in refer- 
ence to that, from a transportation standpoint; that is, the compen- 
sation to be received from the Government by the transportation 
companies for the carriage of mail? 

Mr. Logan. That is, as I understand, the proposition of the Post 
Office Department, to pay on a space basis. 

The Chairman. Yes; the substitution of space for weight, in 
effect, and payment to be made upon a linear car-foot-mile basis ? 

Mr. Logan. We do not consider that a fair basis to all alike. 



BAIL WAY MAIL PAY. 531 

The Chairman. Your reasons being what ? 

Mr. Logan. I would concur in the views expressed in the written 
form that Chairman Peters prepared, with the concurrence of the 
committee on railway mail pay, especially the summary contained at 
the end of that pamphlet as to the nature of the payment to the rail- 
roads on the car-space basis now provided and the basis proposed. 
I think they are eminently fair, except I do nor think they go far 
enough, especially with the adoption and the inauguration of the 
parcel-post system. 

The Chairman. Taking your own system, for example, you feel 
that you are underpaid, overpaid, or equitably paid — which ? 

Mr. Logan. We are underpaid. 

The Chairman. What compensation do you receive annually 
from the Government ? 

Mr. Logan. About $225,000. 

The Chairman. Is that all railway mail pay or part R. P. 0. pay ? 

Mr. Logan. Part R. P. O. pav. 

The Chairman. The two amount to $225,000 1 

Mr. Logan. Yes. 

The Chairman. How much underpaid do you figure you are? 

Mr. Logan. We figure we now receive only about from 55 to 60 
per cent of what we should receive. 

The Chairman. On what basis ? 

Mr. Logan. On a basis of approximate expenditure and the approx- 
imate earning capacity of the space provided and used. 

The Chairman. Which, earning capacity or expenditure ? 

Mr. Logan. We are about even. We do not consider our passenger 
service much more than pays our expenses on our lines in the United 
States. 

The Chairman. Then you figure in the way of mail compensation 
from the United States that you are doing it at a loss of from 40 to 
45 per cent ? 

Mr. Logan. That is what we estimate. 

The Chairman. Can you demonstrate that ? 

Mr. Logan. Yes; I think I can give some facts and figures. 1 When 
the Post Office Department called for information in regard to the 
carriage of mails in 1909, on the basis of monthly experience, for the 
month of November, we had a statement prepared for our Grand 
Trunk Western Railway only based on the data that was obtained at 
that time for reporting to the Post Office Department, which I turned 
over to our audit department to prepare me a statement based on 
their estimates showing how this worked out. They took our total 
expense account, divided it between passenger and freight, on our 
train-mile basis, which I understand is what general auditors concur 
is as close an approximation as they can get, especially of the common 
or unassignable expenses. 

The Chairman. Is that plan that you adopt that of the auditors 
of the Grand Trunk? 

^ Mr. Logan. Yes; it is the plan approved by the Bureau of Statis- 
tics for the Government of Canada and adopted by them in their work 
in connection with their Government road. 

1 For statement showing net income by classes of traffic of Grand Trunk Western Railway Co. for year 
ending June 30, 1912, see conclusion of Mr. Logan's testimony, pp. 502. 



532 RAILWAY MAIL PAY. 

The Chairman. Are you aware as to how that compares with the 
plan of the Interstate Commerce Commission in this country ? 

Mr. Logan. I think it was formerly the plan adopted by the Inter- 
state Commerce Commission and so far as any definite basis has ever 
been adopted. Then, to the expenses, as found between passenger 
and freight, we added taxes, bond interest, hire of equipment, mis- 
cellaneous rents, etc., deducted our general interest, dividends on 
stock owned or controlled, miscellaneous rents, which we considered 
very conservative, arriving at the total net operating expenses, and 
then we divided these net operating expenses between the passenger 
and the freight, finding the proportion chargeable to the passenger 
service. Then we took our total baggage-car equipment and assigned 
an average of 1 linear foot of each baggage car to the mail service 
handled in baggage cars, and we consider that a very fair estimate; 
it does not materially affect the result, however. We add that to the 
space included in our mail cars. I might add, the mail proportion 
of the baggage cars was 1.84 per cent of the total space occupied or 
assigned for baggage and mail together. We added that proportion 
to the mail-car or R. P. O. car mileage, which total we found to be 
71,525 miles. The proportion that mileage bore to the total pas- 
senger train car mileage for the entire month of November was 8.95 
per cent, just a fraction less than 9 per cent. We then took our total 
operating expenses chargeable to the passenger service and found 
what 8.95 per cent of that amounted to, approximately $16,826 of 
the total passenger portion of the expenses, $188,000 for the month. 
Our mail revenue for the same month was $11,784; we had no diffi- 
culty in finding what that was. They calculated that we were 
operating them (year 1909) on G. T. Western at a loss of $5,000, or 
approximately 30 per cent. 

Mr. Lloyd. Are you through, at that point ? 

Mr. Logan. I was going to say that was for the year 1909, and our 
costs have increased considerably since 1909, owing to the increase 
in cost of material and wages. We found on this basis that our aver- 
age cost per mail-car mile was 23.52 cents, whereas our average 
revenue per mail-car mile was 16.47 cents, showing an actual loss of 
7.05 cents; while our cost per car mile for 1912 was 27 cents. I sub- 
mit a statement for 12 months ending June 30, 1912. 

Mr. Lloyd. Just at that point, I think that is a proper place to 
make an inquiry. You combined the space in the passenger car with 
the space in the baggage car in calculating baggage space. 

Mr. Logan. Yes; and express car; baggage, express, and passenger 
space is all calculated in this proportion of 91.5 per cent. 

The Chairman. Did you classify 'the baggage and the passenger 
together as a passenger coach. 

Mr. Logan. Yes. 

The Chairman. Just the same way. 

Mr. Logan. All included in passenger space. 

The Chairman. And took out of the baggage space 1.84 per cent of 
that space and gave that to mail ? 

Mr. Logan. Gave that to mail. 

The Chairman. How much did you lose on the passenger traffic ? 

Mr. Logan. During that month we got out about even. 

The Chairman. In counting the passenger space, do you count all 
the space in the passenger car ? 



KAIL WAY MAIL PAY. 533 

Mr. Logan. All the interior space. 

The Chairman. All the interior space in the passenger car ? 

Mr. Logan. Yes; and all the interior space in the baggage and the- 
mail car. 

The Chairman. Figured on a floor basis; that is, square feet on the 
floor, or cubic feet. 

Mr. Logan. We figured that on a basis of square feet of space. 

The Chairman. Floor space. 

Mr. Logan. Floor space. 

Mr. Lloyd. Do you figure out any dead space in either passenger, 
baggage, or mail car ? 

Mr. Logan. No; we took all the space that was occupied in each 
car. 

Mr. Lloyd. And charged to mail everything: in the mail car ? 

Mr. Logan. Everything in the mail car. They use it all whether 
they pay us or not, as a rule. 

The Chairman. What is your method of receiving compensation 
from the Canadian Government for mail in Canada ? 

Mr. Logan. That is on the basis of $160 per road mile for main 
lines, and $80 per road mile for branch lines. 

The Chairman. That is the universal method ? 

Mr. Logan. No; there is a difference in basis of compensation in 
Canada. Some roads are paid so much per train-mile, or so much per 
baggage-car mile. The Post Office Department is now conducting a 
study with a view to putting all on an equal basis, so as to pay the 
railroads on a uniform basis like they have here for a number of years 
past. 

Mr. Lloyd. Have you any data to show what percentage of the 
total postal expenditures in Canada the transportation companies, 
steam and electric, receive ? 

Mr. Logan. I have that data, but I did not bring it with me. 

Mr. Lloyd. Koughly, have you any idea ? 

Mr. Logan. Let me get that question clearly ; that is, the percentage 
of the total expense ? 

Mr. Lloyd. What percentage of the total expenditures of the 
Canadian postal department do the transportation companies 
receive ? 

Mr. Logan. I do not remember what that amounted to. I can 
get that and give it to you to-morrow. [Subsequently Mr. Logan 
stated that for the year ended March, 1912, the railway mail pay was 
15 per cent of Post Office Department receipts and 22 per cent of 
expenditures, and adding that Canada differed r from the United 
States in the fact that but comparatively little mail is carried by 
steamers or other water carriers — the Post Office Department being 
chiefly dependent upon the railways.] 

Mr. Lloyd. Under the Canadian system do the railroad com- 
panies receive comparatively more compensation than they do under 
the American system ? 

Mr. Logan. Very much less. We are very much underpaid there. 
We consider we are underpaid at least 60 to 70 per cent there. 

The Chairman. And 40 per cent in the United States, so far as- 
your lines are concerned ? 

Mr. Logan. So far as our lines are concerned, about 40 per cent. 



534 KAIL WAY MAIL PAY. 

Mr. Lloyd. In other words, we pay 30 per cent more than they 
pay in Canada for carrying the mails. 

Mr. Logan. I should judge you pay from 20 to 25 per cent more. 
I said it is hard to determine that definitely, because they have 
different bases of pay up there. 

Mr. Lloyd. There are a little over 200,000 miles of railroad in 
the United States, and if we paid $160 a mile, the same as you receive 
there, for the main lines, it would amount to $34,000,000. 

Mr. Logan. I beg your pardon. In the United States ? 

Mr. Lloyd. Yes. 

Mr. Logan. That we would receive that amount ? 

Mr. Lloyd. Yes. 

Mr. Logan. From 1,100 miles of line? 

Mr. Lloyd. No. I said the railroads of the United States had a 
mileage of a little over 200,000. 

Mr. Logan. I do not think that is a fair comparison, for the con- 
ditions are entirely different. 

Mr. Lloyd. I was not aiming to make a comparison, but I was 
trying to get in there the statement. Suppose we paid the same rate 
that was paid by the Canadian Government for carrying the mail, 
what would we pay in the United States, and, as I understand you, 
without making any comparison, the railroad companies in the 
United States would receive for carrying the mail something like 
$35,000,000. 

Mr. Logan. That is figuring on a basis of $160 a mile? 

Mr. Lloyd. Yes. 

Mr. Logan. You must take out of that $80 a mile for the branch 
lines. 

Mr. Lloyd. I am figuring it all on $160 a mile. 

Mr. Logan. That would not be fair. 

Mr. Lloyd. It would be fair to you if we figured all lines in the 
United States at $160, instead of figuring branch lines at $80 ? 

Mr. Logan. We do not consider it so. We consider we are not 
now paid the cost on our mail operation on a basis of $160 per mile. 

Mr. Lloyd. You do not understand my statement. You could not 
complain in making the comparison, if we figure all lines in the United 
States at $160 a mile instead of figuring the main lines at $160 and 
the branch lines at $80. In other words, the amount that you would 
receive would be more if we figured all lines at $160 than if we figured 
main lines at $160 and branch lines at $80. 

The Chairman. Y hat is the total mileage in the United States ? 

Mr. Lorenz. About 245,000 miles, I think, but they are not all 
mail roads. 

Mr. Lloyd. It is less than 220,000 miles. That is my recollection 
of it. 

Mr. Lorenz. I would like to ask, in connection with the statement 
that you divide the expense on a train-mile basis, whether you would 
divide all the operating expense on that basis or only the common 
expenses ? 

Mr. Logan. Only the common expenses. 

Mr. Lorenz. I would like to ask also whether that includes simple 
operating expenses or whether it includes taxes and interest charges ? 

Mr. Logan. Those are included in this statement of November, 
1909, in addition to the expenses. 



RAILWAY MAIL PAY. 535 

Mr. Lorenz. It includes the taxes and interest ? 

Mr. Logan. Yes. 

Mr. Lloyd. What are the uncommon charges, then ? 

Mr. Logan. Such as would be charged direct to passenger ex- 
penses — as expenditure for advertising; for instance, salaries and 
wages of passenger employees. 

Mr. Lloyd. Salaries of officers on passenger trains ? 

Mr. Logan. Yes; and in offices handling passenger business only. 

Mr. Lloyd. You pay a salary to officers on freight trains ? 

Mr. Logan. Yes; that is charged to freight. That is easily 
determined. It is the common expenses that are divided only on a 
basis of freight and passenger train mileage. 

Mr. Lorenz. Have you the figure by which you could compare the 
mail revenue which you receive with the operating expenses by itself; 
that is to say, does the mail revenue more than pay the operating 
expenses chargeable to the mail ? 

Mr. Logan. I think I have that here for year ending June 30, 1912; 
but the way this is divided, the operating expenses, taxes, etc., ex- 
ceed the mail revenue; that is, the operating expenses chargeable to 
mail exceed the mail revenue by over 40 per cent; in other words, we 
are underpaid to that extent. 

Mr. Lorenz. That is, operating expenses including taxes and fixed 
charges ? 

Mr. Logan. Yes. 

Mr. Lorenz. Without the taxes and fixed charges, have you a com- 
parison on that basis ? 

Mr. Logan. No; we included taxes and fixed charges and de- 
ducted miscellaneous rents received from outside companies that use 
our tracks, and so on, which I feel is very conservative, to offset other 
charges. 

Mr. Lorenz. Have you a comparison on any other than a train- 
mile basis ? 

Mr. Logan. Not for the Grand Trunk Western portion of the 
line: no. 

Mr. Lorenz. Would it be possible to use any basis which made the 
passenger expenses and allowances for mail expenses larger than does 
the train-mile basis ? 

Mr. Logan. I am not sufficiently familiar to give an opinion. 

Mr. Lorenz. My impression is that train-mile basis, whether it is 
fair or not, gives the maximum expense which you can reasonably 
charge to the passenger service. 

Mr. Logan. I think the passenger train-mile basis gets the benefit 
of a great deal of freight service that is not charged in on that basis ; 
for instance, for hauling the coal, which is all done by the freight 
department; that coal goes on the passenger engine and is simply 
charged on the basis of the passenger mileage. 

Mr. Lorenz. It is company freight. 

Mr. Logan. It is company freight. I think the passenger depart- 
ment really gets the best end of the proposition on that basis. There- 
fore, I think our figures are ultraconservative. 

The Chairman. In your computation presented to the committee, 
by which you endeavored to demonstrate you were underpaid by the 
United States Government for the transportation of mail 40 per cent, 
as I understand, you take the actual cost of operation and the per- 



536 RAILWAY MAIL PAY. 

centage basis of interest charges, of taxes, of capital charges, the cost 
of your equipment, and your road and your terminals, and they all 
enter into that computation? 

Mr. Logan. That all enters into the computation. 

The Chairman. Now, on the actual cost itself, eliminating your 
capital charges, such as a prorata charge on the cost of the road and 
of the terminals and of the equipment, what would you show ? 

Mr. Logan. I would have to figure that out. I believe I can do 
that probably from this statement. 

The Chairman. I wish you would, in order that we may have same 
to supplement other information that we have from other lines 
following the same method. 

Mr. Logan. Yes, sir. That is, including only the actual operating 
expense, maintenance of way, maintenance of equipment, traffic 
expenses, transportation and general expenses. 

The Chairman. Yes. 

Mr. Logan. Eliminate taxes, bond interest, and other interest, how 
about hire of equipment ? It seems to me that ought to go in, because 
we have to hire a great deal of passenger equipment. Then there are 
rents where we have to use property of other roads, both freight and 
passenger. 

Mr. Lloyd. Do you pay any more on account of the fact that you 
carry mail ? 

Mr. Logan. No; but it is all for the benefit of the whole. 

Mr. Lloyd. Do you build a railroad for the purpose of carrying 
mail or carrying passengers and freight ? 

Mr. Logan. For doing business of all kinds, as required by the law. 

Mr. Lloyd. Under your computation, you claim you lose 30 per 
cent on account of mail ? 

Mr. Logan. Yes. 

Mr. Lloyd. How much do you lose on account of express ? 

Mr. Logan. That I have not calculated; but I do not suppose we 
lose anything on account of express. 

Mr. Lloyd. The passenger traffic is about even ? 

Mr. Logan. The balance of the passenger-train expense is about 
even to the income. 

Mr. Lloyd. Then the money you make on your road is carrying 
freight? 

Mr. Logan. Carrying freight; practically entirely. 

The Chairman. What are your contracts for the carriage of express ? 

Mr. Logan. On a basis of 55 per cent of the revenue. 

The Chairman. That is, of the express company's revenue you 
receive 55 per cent. 

Mr. Logan. The gross revenue; yes. 

The Chairman. And your impression is that that is self-supporting 
and it shows a profit. 

Mr. Logan. It evidently shows a profit to help offset some of the 
other expenditures we do not show a profit on. 

The Chairman. What express company have you a contract with? 

Mr. Logan. The National Express, for part of the line and part of 
the line we operate with the Canadian Express Co. 

Mr. Lloyd. What do you say to the proposition of the Post Office 
Department of counting out dead space in connection with the 
carrying of the mail? 



RAILWAY MAIL PAY. 537 

Mr. Logan. I think that is all guesswork, very largely; it affords 
no basis. 

Mr. Lloyd. You counted out no dead space in your calculations ? 

Mr. Logan. No, sir; not in preparing this statement. We took 
passenger trains as they existed and I suppose assigned to each ■ 

Mr. Lloyd. You counted the space going and coming, incoming 
and outgoing ? 

Mr. Logan. Oh, yes. I beg your pardon. No. We took simply 
the total space for the equipment assigned to that portion of the line 
for the month of November, 1909, used on that line. 

Mr. Lloyd. Your other statement answers the question. 

Mr. Logan. We do not take it every trip. 

Mr. Lloyd. If a mail train goes out, it has to come back? 

Mr. Logan. Yes; it was the equipment assigned for the month of 
November and used on that portion of the line regardless of the 
mileage made. 

Mr. Lloyd. You assigned certain cars to a certain road, and 
whether those cars were used or not you counted the space as used 
all the time ? 

Mr. Logan. Exactly. In that connection I might say we had one 
mail car standing idle all the time; that was included in the mail 
space, but it was there ready for the mail service, because vv^e had to 
hold it to take care of the business in case of emergency. 

Mr. Lloyd. Do you know whether the Post Office Department in 
making its calculations, on which Document 105 is based, made 
similar calculations to that or not ? 

Mr. Logan. I do not know what they did. 

Mr. Lloyd. Then of course you do not know how much they 
counted out on account of unused cars. 

Mr. Logan. I have not kept track of that. 

Mr. Lloyd. Have you any idea how much of your equipment was 
not used from time to time, but was remaining ready for use? 

Mr. Logan. There was one spare mail car ready for use. 

Mr. Lloyd. That was not used. 

Mr. Logan. There are only five mail cars assigned to that line. 
We also held out, doubtless, some passenger equipment, but the 
passenger equipment was filling lines more frequently. Wlien there 
were delayed trains we filled in with the spare passenger equipment. 
This was the equipment in active service on that line and what was 
held in reserve for that month. 

Mr. Lloyd. You count that which was held in reserve as if it was 
in use. 

Mr. Logan. Yes; as if it was in use — all the passenger equipment. 

Mr. Lloyd. I am talking about the mail equipment, whether it 
is in use or not; if it is assigned for the purpose of use, you charge up 
the space in making the computations. 

Mr. Logan. We charge for the space in making the computation. 

Mr. Lloyd. In making your statement to the Post Office Depart- 
ment, on which Document 105 is based, did you make that kind of 
calculation of space? 

Mr. Logan. We simply reported what information they called for. 

Mr. Lloyd. They asked for the space used. Do you consider that 
space used where you have a car and do not use it ? 



538 RAILWAY MAIL PAY. 

Mr. Logan. I do not recall how that was; that has escaped my 
memory. You will remember that was four or Rye years ago. It is 
my recollection, however, that that was included as being used; it 
was there ready to be used and if the emergency had arisen it would 
have been used. 

Mr. Lloyd. Were those cars that were demanded for use by the 
Post Office Department counted, whether you used the space or not ? 

Mr. Logan. Yes. 

Mr. Bradley. May I ask a question along the same line 1 

The Chairman. Certainly. 

Mr. Bradley. Was the mail space that you reported all neces- 
sarily operated to furnish the Post Office Department what it needed ? 

Mr. Logan. It was. 

Mr. Bradley. It was necessarily operated ? 

Mr. Logan. It was necessarily operated. 

The Chairman. But, as I understand Mr. Logan, he said there was 
one car that was idle all of the time. 

Mr. Logan. It may have been used on one or two trips part of the 
time. 

The Chairman. Did the Post Office Department request you to 
have that car in readiness, or did you do it of your own volition in 
order to be prepared in case there should be an emergency ? 

Mr. Logan. It is generally under understandings with the Post 
Office Department that these arrangements are made. 

The Chairman. Were you paid anything for the use of that car ? 

Mr. Logan. No; just for the actual cars used. 

The Chairman. But this car was kept in readiness at the request 
of the Post Office Department ? 

Mr. Logan. Under an understanding with the Post Office Depart- 
ment. 

Mr. Lloyd. Under a space basis, what difference did it make, in 
compensation, if you counted for the space actually used and the 
space constructively used, practically the difference of one-fifth. 

Mr. Logan. Approximately 20 per cent, one-fifth. 

Mr. Mack. You reported the reserved cars in your space to the 
Post Office Department for the statistics of 1909 ? 

Mr. Logan. That is my recollection. 

Mr. Mack. I would like to say, Mr. Chairman, that that was not 
done by the railroads in the country as a whole, and that is, I think, 
entirely an exceptional case if it was done by the Grand Trunk. 

The Chairman. This is the only case that you know of in which 
this was done ? 

Mr. Mack. Yes, sir ; and I am inclined to think it may not have been 
done in this particular case for the statistics of 1909, although Mr. 
Logan may have used it in these special statistics. 

The Chairman. Mr. Logan, would you look into that particular 
point and let us know later, by letter, whether, in the information 
furnished the Post Office Department in answer to their questions, 
your computation included this item or not ? 

Mr. Logan. Yes, sir; I will. 

Mr. Lorenz. How is it possible to count car foot-miles when a car 
is standing still? 

Mr. Logan. This statement is not on the basis of car foot-miles. 



KAIL WAY MAIL PAY. 539 

Mr. Lorenz. Your basis is simply car feet in use ? 

Mr. Logan. Yes; cars assigned to that service. 

Mr. Lorenz. Irrespective of the number of miles made ? 

Mr. Logan. That is what I said, whether it was in use or not, if it 
was assigned for that purpose for that line for the month named. 

Mr. Bradley. Did you make the same deduction in regard to pas- 
senger cars held in reserve and express cars held in reserve ? 

Mr. Logan. Yes. 

Mr. Bradley. I think that is entirely exceptional to the practice 
that the railroads followed. 

Mr. Mack. What I wanted to get into the record was that the 
so-called dead space reported by the railroads, unless this is an excep- 
tional case, does not include any reserve space whatever; it is space 
actually hauled. 

Mr. Lloyd. That is my understanding about it and that is the 
reason I was pressing the inquiry. 

Mr. Logan. It may have been that the Post Office Department 
took that interpretation of our report when preparing their figures. 

Mr. Lloyd. I am inclined to think, like Mr. Mack, that you must 
be mistaken, and I think you should correct that in the record. 

The Chairman. Mr. McBride, will you give the committee the 
information relative to the method by which the Grand Trunk fur- 
nished you the information at the request of the Post Office Depart- 
ment ? 

Mr. McBride. I have not their particular report, Mr. Chairman. 

The Chairman. Your recollection ? 

Mr. McBride. My recollection is that they were furnished in the 
same way that the other railroads furnished them; that is, report of the 
actual movement of the trains with the equipment on those particular 
trains, and that there were no reserve cars reported in connection with 
the car space reported. 

Mr. Logan. That may be. I would not question that. 

The Chairman. That changes very materially your computation, 
if that is so. 

Mr. Rowan. If the Grand Trunk had reported this reserve car, 
would not the Post Office have thrown it out, if they could not have 
used it? 

Mr. McBrdde. That is correct; we would have thrown it out. 

Mr. Logan. Our computation is based on the basis of the equip- 
ment that is necessary to operate that service. 

Mr. Lloyd. Your computation now is an entirely different com- 
putation from the computation that was made on which Document 
105 is based. 

Mr. Logan. Oh, yes; entirely different. I tried to impress that 
in the first place, that this was a computation made by our audit 
department according to their own ideas. 

Mr. Lloyd. And would add about 20 per cent to the space used ? 

Mr. Mack. I think, Mr. Lloyd, if I may interrupt there, he fol- 
lowed the same rule with respect to passenger service, so that it 
would not be 20 per cent charged to the mau that was not propor- 
tionate also to other service. I am not saying anything about the 
merit of the plan. 



540 KAILWAY MAIL PAY. 

Mr. Lloyd. That would cut out the other question. If the 20 per 
cent is not used, so far as the mail is concerned, what per cent was 
not used so far as the express was concerned ? 

Mr. Logan. I do not know that. 

Mr. Lloyd. What per cent was not used so far as the passenger 
service was concerned ? 

Mr. Logan. I can not say that. 

Mr. Lloyd. If they all had the same 20 per cent, then it would 
have the same effect ? 

Mr. Mack. I should think it would run in the same proportion. 

The Chairman. I should think the percentage would be much 
less for express and much greater for passenger. In other words, 
they would have a far greater percentage of passenger cars ready 
to take care of overloads than express cars. 

Mr. Mack. I should think it is likely with regard to passenger. I 
do not know about the express. 

Mr. Logan. At that season of the year we would have probably 
considerable idle equipment lying around, some getting repaired and 
some held in reserve, but we have, judging from this statement, con- 
sidered that one would offset the other. 

Mr. Lloyd. What do you say as to space as a proper method of 
determining the pay that the railroad companies shall receive? 

Mr. Logan. I think it would be purely arbitrary in many cases. 

Mr. Lloyd. Leave out the feature that you call arbitrary. Sup- 
pose it is properly administered and there is nothing arbitrary in 
the administering of the law ? If space was taken as a basis, would 
it be more equitable to the railroad companies and the Government 
than the present system ? 

Mr. Logan. I do not think so. 

Mr. Lloyd. Why not ? 

Mr. Logan. Because it is so uncertain. You do not know what 
space is exactly; it is variable and more variable than the weight 
basis. 

Mr. Lloyd. What do you mean by being variable ? I do not know 
that I exactly understand you there. 

Mr. Logan. The department uses part space one day and uses a 
great deal more the next day. They run the mails uneven on different 
lines. 

Mr. Lloyd. If your theory of what is correct were adopted, that 
certain number of cars on certain lines were set apart for the use of 
the mails, then there would not be anything uncertain about it, 
would there ? 

Mr. Logan. It depends on the character of business. 

Mr. Lloyd. But you get pay whether you have the service or not? 

Mr. Logan. There is a good deal of space assigned that is not used 
at times, and again there is an overflow that is used in excess of the 
space assigned. 

Mr. Lloyd. You do not exactly answer my question. Suppose 
you set apart the necessary cars for the carrying of the mail on the 
main line of the Grand Trunk and those cars are to be at the service 
of the Government whether they carry mail or whether they do not. 
It is nothing to you whether they are full or whether they are empty ? 

The Chairman. Provided you get the compensation % 



KAIL WAY MAIL PAY. 541 

Mr. Lloyd. Providing you get full compensation for all cars. 
Would not that be a most satisfactory method of the determination 
of pay and would it not be more equitable and certain than any other 
system that you know of that could be adopted ? 

Mr. Logan. So far as the Grand Trunk is concerned it probably 
would be as just and fair as the weight basis, but our line is different 
from many other lines. In my opinion there are different classes of 
service, you might say quality of service, there are fast mail lines, 
heavy tonnage lines, and light tonnage lines. We happen to be a light 
tonnage line providing a large space. 

Mr. Lloyd. Light tonnage would take little space and heavy 
tonnage would take larger space ? 

Mr. Logan. No; I beg your pardon. Sometimes a light tonnage 
takes a great deal of space, as it does on our lines. 

Mr. Lloyd. That depends on whether it is first-class mail or fourth 
class. 

Mr. Logan. Whether it is mail cars, storage cars, cars especially as- 
signed to the mail service. 

Mr. Lloyd. Now, take the K. P. O service where you have full 
cars. In that branch of the service would not the space be the most 
equitable method of determination of pay ? 

Mr. Logan. It depends on the circumstances entirely. There are 
large cars and small cars and large weights and small weights. 

Mr. Lloyd. If you were paid according to space, you would get pay 
for the larger car if the large car was agreed upon and pay for the 
small car if it was agreed upon. You would get pay for whatever 
space was used. 

Mr. Logan. Yes; if it was sufficient. 

Mr. Lloyd. On the theory that it is sufficient we are trying to get 
at what is right between the railroad companies and the Government. 
Do you receive proper compensation for the space that is used in full 
R. P. O. cars, not with reference to the size of the car? I mean in 
this question with reference to the size of the car, it might be a 
30 foot, 40 foot, 50 foot, or a 60 foot car, but if you got pay for the 
full space and got pay all the time for the full space, whether used or 
not, would not that be the most satisfactory and reasonable method 
of determination of pay as a basis ? 

Mr. Logan. It might be in our individual case. I would not want 
to say that for the other lines. 

Mr. Lloyd. Do you think it would in your individual case? 

Mr. Logan. If we got paid what was proper. It simply comes 
down to a question of what is proper. 

Mr. Lloyd. It would on the weight basis, too ? 

Mr. Logan. If paid properly on a weight basis we w T ould have 
nothing to say. 

Mr. Lloyd. Are you satisfied with the present system ? 

Mr. Logan. Of weight basis ? 

Mr. Lloyd. Yes. 

Mr. Logan. So far as the mail proper is concerned we are perfectly 
willing to have that continued. We are perfectly satisfied with that. 

Mr. Lloyd. With the present rate ? 

Mr. Logan. With the present rate. 

Mr. Lloyd. Notwithstanding it is carried at a loss ? 

49396—14 42 



542 RAILWAY MAIL PAY. 

Mr. Logan. If we get proper compensation for car space and actual 
weight. 

Mr. Lloyd. I mean taking the present law and the present system. 

Mr. Logan. The present system is all right, but the present law is 
underpaying us. 

Mr. Lloyd. Then you want the law changed to increase the pay ? 

Mr. Logan. Along the outline or the summary of the railway mail 
pay committee ? 

Mr. Lloyd. How much increase do you think you ought to have ? 

Mr. Logan. I believe 40 per cent. 

Mr. Lloyd. You only speak for your own road ? 

Mr. Logan. That is all. Some of the other roads, I am satisfied, 
do not get 50 per cent of their expense. 

Mr. Lloyd. Do you think the carrying of mail ought to be placed 
on exactly the same basis as carrying express, passenger, or freight ? 

Mr. Logan. I do, certainly, for the reason that when you come to 
determine a freight-rate question the Interstate Commerce Commission 
takes nothing into consideration but freight-rate factors, the same way 
when a passenger rate is determined. Formerly the railroads were 
earning enough on their freight and passenger service to be indifferent 
to the question of mail pay; they could carry it for little or for much. 

Mr. Lloyd. And you do not think that the fact that you have a 
right to take a man's house or his ground or his property away from 
him, providing you pay him a compensation which is reasonable, is 
something that you ought to take into account at all in determining 
the pay that you receive for carrying the mails ? 

Mr. Logan. We usually have the experience of paying from 40 to 
50 per cent more than the property is worth. 

Mr. Lloyd. That is because of the fault of the law and not because 
of the law itself. 

Mr. Logan. That is a matter of administration. 

Mr. Lloyd. The fact is the same, that you can run right through 
a man's house, you can take his home from him, under the eminent 
domain proposition, and under the law all you have to do is to pay 
him that which is a reasonable compensation for the value of his 

Eroperty. Now, taking from the general public the right to a man's 
ome 

Mr. Logan. That is necessary and for the benefit of the public as 
well as the benefit of the railroad. 

Mr. Lloyd. I understand that; but you are receiving that benefit 
and it seems to me you ought to take into account something for 
having received that benefit. 

Mr. Logan. We do. 

Mr. Lloyd. But you are not disposed to pay any of it back ? 

Mr. Logan. We do. We take into account the service we render 
the people and the high rates of taxes we pay, etc. 

Mr. Lloyd. You do not take into consideration paying the people. 
You say it does not enter mto it and you ought not be required to do 
anything for the Government you would not do for me or for Senator 
Bourne. 

Mr. Logan. We get that right of eminent domain from the States. 
We are serving the Federal Government by carrying mail. 

Mr. Lloyd. You get your right of eminent domain from the State. 

Mr. Logan. Yes, sir. 



EAILWAY MAIL PAY. 543 

Mr. Lloyd. I appreciate that, but if you did not have the Federal 
Government you would not have any State government ? 

Mr. Logan. I do not know anything about that. That is another 
question. 

Mr. Llofd. Then, you think there is nothing in the proposition that 
you owe anything, as a public corporation, to the Government? 

Mr. Logan. We pay our taxes to the States who give the right of 
eminent domain, and we are entitled to the same protection and some 
return. 

Mr. Lloyd. But remember you get what you charge the people. 
I can not take your private property and you can not take mine, but 
as a railroad you can. Then you have rights as a railroad that the 
public does not have, and having received those rights 

Mr. Logan. That is the only way you can have railroads, that is to 
have that right of eminent domain. 

Mr. Lloyd. I am discussing the question of the railroad having 
received these extraordinary rights whether or not the roads do not 
owe something to the public for having received them. You make 
the private individual pay you; you make the man who carries 
freight pay you; the man who carries express pay you. Where does 
the general public get any benefit, or where do you show any apprecia- 
tion for that which you receive from the Government in this extraor- 
dinary power that comes to you, a right that comes to you under the 
eminent domain proposition that does not come to the private citizen ? 

Mr. Logan. I do not think that should enter into the question of 
whether the Post Office Department is paying the cost of the service 
or not. 

Mr. Lloyd. I just wanted your view about the situation. 

Mr. Logan. I think Uncle Sam is rich enough and big enough to 
pay his debts for services rendered. 

Mr. Lloyd. We think the railroads are rich enough and big enough 
to pay their debts, on the other hand. We think the corporations of 
the country ought to have enough of the milk of human kindness to 
appreciate that which they receive from the Government. 

Mr. Logan. I do not think there is any question about that. 

Mr. Lloyd. And there is nothing:, apparently, that tends more to 
prejudice the general public than the fact the corporations maintain 
a want of appreciation of that which they receive that the individual 
does not. 

Mr. Logan. In answer to that I can only say that the railroads are 
created by the Government for the service of the public. The rail- 
roads are the public's just as much as the Post Office Department is 
the public's. 

Mr. Lloyd. That is the misfortune in the United States to-day. 
The railroad companies have, to a certain extent, come to the conclu- 
sion that they are " the public " and that they have the right to control 
"the public," and the misfortune is they fail to catch the very thing I 
am trying to impress this moment,, and that is that they are creatures 
of the public and they ought to be subservient to it. 

Mr. Logan. The people who own the railroads are the public, and 
the railroads are created to serve the public. The stockholders are 
just as much entitled to consideration as the man who travels over 
the railroad — they are part of the same public. They are just as 



544 RAILWAY MAIL PAY. 

much interested in the railroad serving the public properly as the 
public are in having the railroad serve them. 

Mr. Lloyd. You do not understand what I am driving at — the 
fact that the railroad companies and the great corporations of the 
country do not show their appreciation to the public. 

Mr. Logan. In what way nave they not shown it? 

Mr. Lloyd. In many ways. Just like this: You say that the Gov- 
ernment in all its transportation business ought to pay you just the 
same as the individual; we owe no obligation to the Government 
that we do not owe to the individual. 

Mr. Logan. I think there is no question but that the railroads in a 
great many cases serve the public and the Government without com- 
pensation in times of calamity, just as they recently did for the storm 
and flood sufferers in the West, where the railroads have carried train- 
loads of supplies and material for nothing. 

Mr. Lloyd. They did that because they wanted to ? 

Mr. Logan. If that is your view, 'I can not question it. 

The Chairman. Is there any additional payment for R. P. O. cars 
in Canada ? 

Mr. Logan. We have a small payment that figures out about 
$5,000 per year per car for the service rendered. 

The Chairman. On what basis is that computation made ? 

Mr. Logan. An arbitrary basis. 

The Chairman. That is, arbitrary, but assented to between the 
Government and the transportation companies ? 

Mr. Logan. Yes; about 25 years ago. There has been no change 
since then. 

The Chairman. When was your basis of compensation of $160 a 
mile on main line and $80 a mile on branch lines put into operation ? 

Mr. Logan. In 1872. 

The Chairman. And it has been in operation ever since ? 

Mr. Logan. Without change on a good portion of the line and 
since 1893 on the other portion of the line approximately 30 per 
cent of the mileage. 

Mr. McBride. Is that rate the same on all railroads in Canada ? 

Mr. Logan. No; I was just speaking for the Grand Trunk. The 
rates are varying on the other roads. 

Mr. Bradley. Is Mr. Logan aware as to whether that rate of $160 
is based upon any commercial valuation? 

Mr. Logan. No; it is just arbitrary — a matter of negotiations. 

The Chairman. When that went into operation, was the law such 
that the post office department had the right to make contracts with 
each transportation company ? 

Mr. Logan. The post office department was authorized to make 
these contracts. 

The Chairman. And they are still authorized ? 

Mr. Logan. Yes. 

The Chairman. And no change has been made since 1873 in these 
contracts ? 

Mr. Logan. Not since 1873 and 1893. 

The Chairman. You say 1873 and 1893. What is the difference. 
As I understood, this method or basis of compensation went into 
operation in 1873 and is still in existence. Why is 1893 brought in? 



RAILWAY MAIL PAY. 545 

Mr. Logan. There were two lines in 1873 — one the Great Western 
and the other the Grand Trunk; they were consolidated in 1888, the 
Great Western was receiving lower compensation than the Grand 
Trunk ; and in 1893 that basis was equalized on the basis of $160 for 
the main lines and 180 for the branch lines. 

The Chairman. What is the compensation for the Canadian Pacific; 
do you know ? 

Mr. Logan. They have varying rates. 

The Chairman. There is a separate rate for each line ? 

Mr. Logan. Practically a separate rate for each line ? 

Mr. McBride. Is there a law in Canada requiring the railroads to 
carry the mail ? 

Mr. Logan. Yes. 

Mr. McBride. They have to carry the mail? 

Mr. Logan. They have to carry it. 

Mr. Lloyd. What exclusive or monopolistic features are there in 
your contract with the Canadian Government, or do you have any? 
You say you get $160 a mile for carrying the mail ? What kind of a 
contract have you ? 

Mr. Logan. We have no contract, practically. 

Mr. Lloyd. You just simply carry the mail 

Mr. Logan. It has been going on in a perfunctory manner for a 
number of years without anybody paying any special attention to it 
until I took the matter up some years ago. 

Mr. Lloyd. Do you have the same K. P. O. system as we have in 
the United States ? 

Mr. Logan. Yes. 

Mr. Lloyd. Is that paid for extra ? 

Mr. Logan. That is paid for extra on a portion of our lines only. 

Mr. Lloyd. How is that fixed ? 

Mr. Logan. We have five mail cars in special service, and we are 
paid $5,000 a car. 

The Chairman. A year ? 

Mr. Logan. A year. 

Mr. Lloyd. $5*000 a car ? 

Mr. Logan. Yes; for special mail cars running between Montreal 
and Toronto only. We have many others that we receive noth- 
ing for. 

Mr. Lloyd. Unless you have full R. P. O. cars you do not receive 
any compensation ? 

Mr. Logan. We have a good many R. P. O. cars we receive no 
compensation for. This special arrangement applies to those special 
mail cars. 

Mr. Lloyd. You say there is a law in Canada that requires you to 
carry the mail ? 

Mr. Logan. There is. 

Mr. Lloyd. That is the only reason you carry it ? 

Mr. Logan. I will not say that. , 

Mr. Lloyd. You would not carry the mail in Canada or any other 
place at a great loss like this if you could avoid it. The way to 
avoid it would be to refuse to carry it. 

Mr. Logan. That is true. 



546 KAIL WAY MAIL PAY. 

The Chairman. You could refuse to carry it in the United States 
over the 1,100 miles you operate in the United States, but still you 
carry it at this loss ? 

Mr. Logan. As a matter of policy we consider it best. 

The Chairman. How does the service rendered the Government 
in Canada compare with that in the United States ? 

Mr. Logan. Taking our lines between Toronto and Montreal it is 
very similar to the line between Port Huron and Chicago in mileage 
and character of service; we perform practically the same service, 
having five cars assigned to that line, the same as between Port 
Huron and Chicago, and we receive considerably less. 

The Chairman. In Canada ? 

Mr. Logan. In Canada. 

The Chairman. Do you get any allowance in Canada for side 
service ? 

Mr. Logan. No; we have been forced to perform certain side 
service heretofore. 

The Chairman. In Canada? 

Mr. Logan. In Canada. 

The Chairman. How does that correspond with your experience 
here in the United States? 

Mr. Logan. It has been more onerous. That is being readjusted 
from the first of next month, they are taking over the side service 
May 1. 

The Chairman. That is, the Canadian Government? 

Mr. Logan. Yes; the Post Office Department. 

The Chairman. They are on the first of next month. Do they 
expect to allow you compensation for side service performed in 
Canada, or will they relieve you entirely of the side service and the 
Government perform it? 

Mr. Logan. We are to be relieved of all side service. 

The Chairman. And the Government will perform that? 

Mr. Logan. Yes. 

The Chairman. What do you figure the cost to you in Canada for 
the performance of the side service for which you receive no compen- 
sation? 

Mr. Logan. It has been approximately $40,000 a year. 

The Chairman. What, in your judgment, will it cost the Govern- 
ment to perform that service itself ? 

Mr. Logan. I could not say. 

The Chairman. Do you think the Government could perform it as 
cheaply as you could? 

Mr. Logan. I think they should. 

The Chairman. How will they perform it? 

Mr. Logan. They will likely perform it through the same subcon- 
tractors that we have been performing it through. 

The Chairman. You have not done it directly, but by subcon- 
tracts ? 

Mr. Logan. Yes; and I might add at only a limited number of our 
stations; possibly a third of our stations. 

Mr. McBride. Has there been any distance limit at these different 
stations in Candaa ? 

Mr. Logan. No. 

Mr. McBride. Do you perform it at all stations? 



KAIL WAY MAIL PAY. 547 

Mr. Logan. No; about a third or less of the stations. 

Mr. McBride. What is the distance ? 

Mr. Logan. Some of those distances run from a few hundred feet 
up to 3 or 4 miles. 

Mr. McBride. When does the Government take it over under the 
present conditions ? 

Mr. Logan. The 1st of May. 

Mr. McBride. I mean, when did the Government take over the 
performance of the side service under the present conditions? You 
say it is only performed at one-third of the stations. At the other 
stations has the Government performed it ? 

Mr. Logan. They have always performed it. 

Mr. McBride. What decided who would perform it? 

Mr. Logan. It was under an old contract with the Grand Trunk, 
the old original main-line stations had this service included when 
the $160 rate was fixed. 

The Chairman. That covered the side service ? 

Mr. Logan. That covered the side service. 

Mr. Bradley. My impression is, Mr. Logan, that the Grand Trunk 
is the only railroad in Canada that performs side service for the 
Government. 

Mr. Logan. Yes; it was the only road at the time the contract 
was made. 

Mr. Bradley. And the Government performs side service on 
every other railroad in Canada except the Grand Trunk. 

Mr. Rowan. And that exists to-day, so far as you know % 

Mr. Logan. Yes. 

Mr. Lloyd. The computation that you made in this matter is all 
over your system, both in Canada and the United States. 

Mr. Logan. This statement for 1909? 

Mr. Lloyd. Yes. 

Mr. Logan. No; this statement is only between Port Huron and 
Chicago. Our Grand Trunk Western is 336 miles. 

Mr. McBride. That does not include your routes in New York 
State? Haven't you a few small routes in New York State that 
are not included? 

Mr. Logan. Those are not included; no. 

Mr. Bradley. My understanding was that Mr. Logan said his 
original presentation covered about 1,100 miles? 

Mr. Logan. No; I said our mileage in the United States was be- 
tween 1,000 and 1,100 miles. 

The Chairman. Does not the computation that you have pre- 
sented to the committee cover the whole of the 1,100 miles? 

Mr. Logan. No. Only between Port Huron and Chicago. That 
is, as I have said, our heaviest and most easily calculated mail-carry- 
ing line. 

The Chairman. And on that you estimate that you are receiving 
30 per cent less compensation than what you should receive ? 

Mr. Logan. Approximately; what our audit department figured out 
as the approximate cost in 1909. 

The Chairman. But the approximate cost takes in dividends, inter- 
est, and capital as well as operating expenses and all ? 

Mr. Logan. No dividends. It did not pay any dividends, but it 
includes bond interest and taxes. 



548 KAIL WAY MAIL PAY. 

The Chairman. And cost of terminals, cost of equipment, cost of 
road, and everything ? 

Mr. Logan. All costs. 

Mr. Lloyd. Can you answer the question as to whether you receive 
any bejtter compensation on the other lines than you do on the main 
lines? 

Mr. Logan. On the Grand Trunk Western ? 

Mr. Lloyd. Yes. 

Mr. Logan. It is approximately the same, based on the service 
performed. 

Mr. Lloyd. What do you say to this general proposition, from your 
experience, that the main trunk lines receive better compensation 
under the existing law than the branch lines and the short lines ? 

Mr. Logan. I do not know whether they do or not. I should think 
itwould be fairer to pay them on that basis — on the present weight 
basis for the mails proper. 

Mr. Lloyd. And you think that the present weight basis would be 
equitable as between the main trunk lines and the branch lines 
and the short lines ? 

Mr. Logan. As to the Grand Trunk lines I would say yes, so far 
as it applies to the mail, but there should be a readjustment on ac- 
count of the parcel-post business. 

Mr. Lloyd. I was only speaking of the mail. What kind of 
readjustment should we make on the parcel post? 

Mr. Logan. I feel that the parcel-post business is practically a new 
business ; it is handling merchandise at a higher maximum weight per 
pound than heretofore and that the determination of the payment for 
that service should be on the weight plus the space basis, neither the 
weight basis nor the space basis only being absolutely a fair meas- 
urement. 

Mr. Lloyd. You do not think you should receive as much per 
pound for carrying merchandise as you would for carrying letters ? 

Mr. Logan. No; I do not think that is fair, but the weight basis 
plus the space basis is the basis that has practically determined the 
rates made by the express companies and it is in effect with the 
steamship companies to-day and it is not therefore a new principle. 

Mr. Lloyd. It is getting to be a very important phase of it. There 
are two lines of thought with reference to the basis; one that it should 
be purely a weight basis and the other that it should be purely a 
space basis. The present law is about 90 per cent weight and 10 per 
cent space. Now, isn't it probable that a scheme could be worked 
out which would be more nearly equitable both to the Government 
and to the railroad companies that would more nearly equalize 
the two ? 

Mr. Logan. I feel, so far as the parcels-post business is concerned, 
that that is possible. 

Mr. Lloyd. Do you think it is practicable to separate the parcel- 
post business from the mail and make a different compensation for 
carrying merchandise than for what you do for carrying the mail ? 

Mr. Logan. I should think you could. You have your separation 
now and your accounting — the different stamps. The parcel-post 
matter is all carried under parcel-post stamps, as I understand. 

Mr. Lloyd. Yes. 



RAILWAY MAIL PAY. 549 

Mr. Logan. And the theory that we are negotiating with the Canadian 
Government on and the theory that has obtained and is in practice in 
England has been to divide that revenue, or practically a division of 
the rate. 

Mr. Lloyd. Do you think it would be fair to the railroad companies 
to divide the compensation that the Government receives by 2 — 50 
per cent to the railroad companies and 50 per cent to the Government ? 

Mr. Logan. That might be considered fair for a joint service. I 
will not say that for the Lmited States lines, but we would be willing 
to accept that division in Canada, although w T e will probably haul 
longer distances there than we do now. 

Mr. Lloyd. Would it not be equitable in the United States? 

Mr. Logan. I will let the United States lines speak for themselves 
in that respect. 

Mr. Lloyd. I am speaking of your line. Why would it not be all 
right with you ? 

Mr. Logan. Of course we prefer to have it on a basis of 60 per cent, 
if there is any possibility of getting it there. 

Mr. Lloyd. Seventy-five per cent would be better still. 

Mr. Logan. We feel we would be safer, but a fair division can be 
found. 

Mr. Lloyd. When you come down to the truth of it, we all want 
to get at the right thing. You want pay for carrying the mail, and 
so far as this commission is concerned we can speak for it; it wants 
you to have pay for carrying the mail. We want, if possible, to get 
an equitable basis that is fair to you and to the Government and try 
to get the thing into as simple a shape as we can, so that we can 
adjust the matter and have it permanently adjusted. 

Mr. Logan. I feel this way, if you will allow me to answer it in my 
own way: As I stated before, I think the railroads presented a fair 
basis for compensation for the mail service, but I do not think they 
have gone far enough; that with the introduction of the parcel-post 
business there is a new departure, and while you may continue the 
weight basis plus a space basis, as it is to day; the parcel post ought 
to be treated as a parcel post business, separate and distinct, and a 
basis of division of the rate used — a percentage basis — similar to that 
in England, a percentage to be determined by competent authorities. 

The Chairman. Let me ask you in that connection do you think 
the English method of compensation for carriage of the' mail, in- 
cluding the parcel post, is entirely satisfactory to the Government, 
and the transportation companies as well, in England? 

Mr. Logan. I believe that the Government has been complaining 
that the percentage is too high. 

The Chairman. That is on parcel post, but take the whole com- 
pensation and figuring the parcel post as mail, do you think the 
present method is satisfactory as it exists in England ? 

Mr. Logan. Conditions are entirely different there from what 
they are here. I do not know whether they are satisfactory to the 
English people or not. 

The Chairman. Are they satisfactory to the transportation com- 
panies in England ? 

Mr. Logan. I do not know. 

The Chairman. You say conditions are different. As a matter of 
fact, in England, according to Mr. Bradley's statement, the trans- 



550 RAILWAY MAIL PAY. 

portation companies receive 21 J per cent, including parcel post, of 
all the expenses of the postal department. 

Mr. Logan. Was that railroad transportation companies or railroad 
and steamship transportation companies also ? 

Mr. Bradley. Eailroad transportation. 

Mr. Logan. There is a great deal of mail carried in England by 
steamships around the coast — a great deal of it. 

The Chairman. Let us take the railway transportation and the 
R. P. O. service in the United States, and for the sake of comparison, 
to get the relativeness, give the two figures. In England it is 2l| 
per cent that the railroad transportation companies receive for the 
carriage of mail. In the United States, according to the Postmaster 
General's report for the fiscal year ending June 30, 1912, if you take 
the transportation of mails oh the railroads for that year and the 
railway post office car service for that year and add them together, 
and you take the expenditures on account of that year in the postal 
department, the transportation companies receive 19.475 per cent 
in the United States. If you take the figures of the Post Office 
Department and add the actual expenses for that year, including the 
amounts expended on account of the previous fiscal year, and add 
them together, then the transportation companies of this country, 
the railway, and the R. P. O. service receive 20.7 per cent of the total 
expenditures of the Post Office Department. Now, where is there a 
distinction in operation in the United States in railway transporta- 
tion of mails and in Great Britain ? 

Mr. Logan. I understand a big percentage of the postal service in 
Great Britain is handled by steamship transportation companies. 
That ought to be taken into that calculation. 

The Chairman. We are simply taking the two calculations of 
service in the two countries. 

Mr. Logan. The mileage is different. In the first place, the amount 
of service performed in the United States is far in excess, propor- 
tionately. 

The Chairman. Where is the difference ? 

Mr. Logan. That would have to be figured out by experts. 

The Chairman. I would like to ask Mr. Bradley in that connection 
a question. I was very much impressed with that portion of your 
statement in volume 2 of the hearings on page 440, in the paragraph 
reading as follows: 

In Great Britain it is observed that the Government pays the railroads for transport- 
ing the mails, including the parcel post, an amount equal to 21^ per cent of the total 
expenditures, although the service rendered in Great Britain by the railroads is obvi- 
ously much less extensive and not nearly so essential as the similar service is in the 
United States. 

Would you elucidate a little the difference in the two services and 
why the relativeness can not be taken in percentage of the compen- 
sation to the total cost of operation of the service in the two countries? 

Mr. Bradley. It is difficult to get data sufficiently trustworthy 
to make a serviceable comparison between the railway mail service 
performed in England and the railway mail service performed in the 
United States, but in this country the Post Office Department has 
stated the average haul of mail to be 620 miles. I do not think the 
figure as to the average haul in Great Britain is known, and we would 
have to guess at it — possibly 100 miles or less. I think it could also 



RAILWAY MAIL PAY. 551 

be said that the railroads are not so essential to the postal service in 
Great Britain, because they could perform much of their service by 
motor vans on account of the shorter distances and because of their 
better roads. 

Mr. Logan. And by steamship and coasting lines. 

Mr. Bradley. We have no trustworthy figures as to the compara- 
tive tonnage. 

The Chairman. Why would this make a difference ? I want to 
get it as a matter of information, and my questions are not based on 
criticisms of your statement. Your statement impressed me very 
strongly as something definite for a comparison and I wanted to get 
from you gentlemen who are experts and specialists on this particular 
subject the reason why these comparisons could not be used to advan- 
tage by the committee. 

Mr. Bradley. I think it would be a very good comparison if we 
could get the English data as to average haul and the progress that 
is being made in replacing the railroad mail service by motor van 
service. I do not know of any source from which that information 
could be obtained, but I think the general statement could be made 
and accepted that in the United States the. haul is several times as 
great as in Great Britain; the tonnage is greater, and the necessity of 
the railway service is greater to the Post Office Department. 

The Chairman 1 . What difference would it make whether your 
computations were based on 5,000,000,000 pieces of mail or on 
100,000 tons or 200,000 tons? Five billion pieces of mail or 
10,000,000,000 pieces of mail ? 

Mr. Bradley. Would not that measure the value of the service 
performed ? There ought to be a greater reward for moving 2 tons 
100 miles than 1 ton. 

The Chairman. You would get your greater reward and your per- 
centage of cost would be the same. The point that impressed my 
mind is, or the point on which I want to get more information, is 
why it is not safe to take 21^ per cent as the revenue to the railroads 
in England to the total expenses to the postal service and take 21 \ 
per cent as a figure, for instance, as to what the railroads should 
receive in this country of the total expense of operation of the postal 
service. The services are the same, they have to have clerks, they 
have to have mail carriers, they have to have different facilities, have 
mail transportation and mail service in both countries, only one is 
much larger territory than the other, and it means simply so many 
more units added to perform the activity and each unit gets a pro- 
portional cost. As I understand the compensation in England is 
less than the compensation to the postal employees in the United 
States, but I wanted to see from you gentlemen how far we could, 
to advantage, utilize this information which you submitted in your 
report from which I have just quoted. How does that impress you, 
Mr. Lorenz ? 

Mr. Lorenz. I think that some differences that have been men- 
tioned are very pertinent; for instance, the difference in the length 
of haul would be one factor to consider. 

The Chairman. Do you think that is vital ? 

Mr. Lorenz. That is vital. 



552 KAIL WAY MAIL PAY. 

The Chairman. So that the mere statement of percentages of 
receipts and cost of operation can not be used without further 
information ? 

Mr. Lorenz. Not conclusively. I have also been impressed by 
the statement that a large proportion of the mails are carried by 
steamship, so that your postal receipts would include that part of 
the mail carried on steamships, but the payment to the railroads 
would not. In other words, you have to include your payments to 
the steamships and railroads to make the comparison fair. 

Mr. Logan. Take all of the transportation companies in Great 
Britain and in the United States and then that would be fair ? 

The Chairman. Do you think that would be fair ? 

Mr. Logan. That would be fairer. 

The Chairman. How does that impress you, Mr. Lorenz ? 

Mr. Lorenz. That would eliminate that difficulty. 

The Chairman. Do you think that would be a fairer comparison? 

Mr. Lorenz. I should think the average length of haul should be 
considered also. 

Mr. Lloyd. What do you think of the theory of the New York, New 
Haven & Hartford road to the effect that the short distances which 
they haul their mail is accountable for the fact, in part, that they do 
not receive compensation they ought to receive compared to other 
roads ? 

Mr. Lorenz. I think it is an important factor and probably the 
comparison between England the United States should not be made 
as a whole, but of the New England group of roads that might be 
fair. 

Mr. Logan. Or with the eastern roads where you have a dense 
population ? 

Mr. Lloyd. The theory of the New York, New Haven & Hartford 
road was that because of their terminal facilities that must be pro- 
vided and terminal equipment, that the expenses of their road, com- 
paratively, were much greater than in a country that is less densely 
populated and where there is not so much required to be expended 
for terminal charges. In other words, the New York, New Haven & 
Hartford is a complex system of short roads and each short road has 
its costly terminals, which add very much to the charge per mile and 
the expense per mile for operating the road. 

Mr. Logan. It is fair to take that into consideration. In connec- 
tion with the English question, I might throw a little light on that by 
a memorandum I have prepared. This is on the result of an arbi- 
tration between the post office department and the Great Western 
of England, made about 1908, I think, which determined the present 
basis of pay to that road by the English post office department. 
Without taking into consideration their differences in pay (for 
instance, their enginemen will receive 60 per cent of what our engine- 
men will receive) , without taking those factors into consideration, but 
taking the factor that their mail car weighs about 20 tons, compared 
to over 40 tons for our average mail car, I figured out that the 
Grand Trunk should receive per mail car mile 27 cents, based on 
that decision. Their payment, in other words, approximated 
between 13 and 14 cents per mail car mile for the service rendered on 
a given district, which was stated in the decision. I multiplied that 
by two because of the double capacity of our mail car. That was 



RAILWAY MAIL PAY. 553 

based on the mail carried. To that should be added the revenue 
received from 55 per cent of the parcel-post revenues, whatever that 
was determined at. Some of that parcel post, as you may be aware, 
is practically handled on fast freight trains. 

The Chairman. In Great Britain ? 

Mr. Logan. In Great Britain. Here it is proposed to handle it 
all on fast passenger trains. 

Mr. Lloyd. Do you think it is practicable to provide for the car- 
riage of parcel post mail by fast freight instead of fast passenger, 
just like the English do ? 

Mr. Logan. With the prospective growth — — 

Mr. Lloyd. Where it may be carried in carload lots. Let me 
put it that way ? 

Mr. Logan. I would hardly like to venture an opinion on that. 

Mr. Lloyd. Could you carry it from New York to Chicago, or 
Indianapolis, Cincinnati, or St. Louis in carload lots by fast freight ? 

Mr. Logan. I doubt if it would compete with the express business. 

Mr. Lloyd. You think it would be a factor which would prevent 
its competition with the express business ? 

Mr. Logan. I do. 

Mr. Lloyd. How much difference would there be in time of deliv- 
ery, between sending by freight, for example, from New York to 
Chicago, than by sending by passenger trains ? 

Mr. Logan. I do not know; I could not say. In partial answer 
to your previous question relative to the handling by special freight 
trains you may say if the parcel-post business increased during the 
next five years as it has apparently increased during the past three 
months, from reports published, and which I roughly estimate at 
the rate of 10,000,000 parcels a month, at the end of this year the 
approximate amount of business handled will be close on to a billion 
parcels. 

The Chairman. Do you mean a billion parcels or a billion pieces 
of fourth-class mail matter ? 

Mr. Logan. Whatever you may term it, a billion pieces of mail 
matter handled under parcel-post stamps. 

The Chairman. It is fourth-class mail matter. We had 273,000,000 
pieces, as I remember, before we had what is known as the parcel- 
post law, so that it is simply the increase of that number that would 
be due to the increased provisions of the fourth-class mail matter? 

Mr. Logan. Whatever it is, it is an unknown quantity that we are 
all up against, and with the growth of that during the next five years 
at anything near the rate that the same business is growing in Canada 
on a 5-pound basis, which is at the rate of 30 per cent per annum, we 
would soon realize that it is a great big undertaking to handle all the 
business on the passenger or mail trains in the United States within 
the next four or five years, and it is bound to result in converting a 
good many of your present mail trains into mixed trains of passenger 
and parcels. In other words, there will be much delay at stations, 
and I believe that is the experience of some of the trains now. 

The Chairman. In Canada? 

Mr. Logan. No; in the United States. The result of delay to 
trains will result in delays to the mails proper. I understand 
from inquiries that the railways and express companies report ap- 
proximately increases and decreases respectively, from 25 to 30 per 



554 EAILWAY MAIL PAY. 

cent in the handling of parcel post — that is, the express companies 
report losses in 11-pound parcels and under of between 28 and 30 
per cent. 

The Chairman. Of their business? 

Mr. Lloyd. Of their business of 11 pounds and less. 

The Chairman. According to last year's statement, they had 
90,000,000 pieces of 11 pounds and less. How are you going to 
account for the increase of 750,000,000 pieces in fourth-class mail 
matter because of what is known as the parcel post ? 

Mr. Logan. Cut that estimate in two. 

The Chairman. What is the use of cutting it ? You can take any 
law of theoretical figures you want to to make figures on. 

Mr. Logan. Yes. 

Mr. Lloyd. Then you have four times as much as the whole 
express ? 

Mr. Logan. I am taking just what was published in the press as 
the increase during the last three months, the increase of 30,000,000 
pieces of parcel post. 

The Chairman. They are not parcel post. It is impossible to 
make a determination as to parcel post out of fourth-class mail 
matter. The only information that is obtained has been by actual 
count and weighing fourth-class mail matter, which prior to the 
operation of what is known as the parcel-post law in January there 
were 273,000,000 pieces, as I remember, of fourth-class mail matter 
handled. 

Mr. Logan. Whatever the figure is it is going to be a very large 
increase in the matter that is handled under parcel-post stamp. 
The railroads should be compensated for that additional service which 
they are called upon to perform and which we understand to be the most 
valuable portion of the service, as the railroads furnish the most 
valuable equipment, and perform a great portion of the service similar 
to the express service; and we feel we should be compensated for that 
on some different basis than either the weight basis or the space basis 
alone. 

Mr. Lloyd. If you were paid for the weight you could not com- 
plain, could you? 

Mr. Logan. Yes. 

Mr. Lloyd. Why? 

Mr. Logan. Because it is not fair to have a 5-pound piece of silver, 
a 5-pound package of soap, or a 5 pound package of feathers, or a 5- 
pound piece of millinery sent over your line at the same charge. They 
are all in different sizes. As an illustration, I have been referred to 
a case where one of the big 5- ton trucks carrying express matter was 
loaded up to the limit with millinery out of a millinery house; when 
it was put on the scale it weighed just 500 pounds. If they were 
required to carry that all on a weight basis it would be unreasonable. 
They carry such parcels up to a certain weight, and all in excess of 
that is on a space basis or the cubic contents. 

Mr. Lloyd. Is it true you think there has been a greater per cent 
increase in the carriage of goods by mail than any other class ? . 

Mr. Logan. I can not say that; I do not know. 

Mr. Lloyd. I heard that suggested. I do not know whether there 
is any foundation for it or not, that nearly all the women in the 
smaller towns now are getting their hats from the cities ? 



KAIL WAY MAIL PAY. 555 

Mr. Mack. I think the United Cigar Co. is supplying the West with 
hats, from the looks of the business passing through St. Louis. 

The Chairman. If you had compensation, Mr. Logan, for your 
R. P. O. and apartment cars and then compensation for the weight 
of your mail, your difficulty would be obviated, would it not ? You 
would get the weight compensation and would have additional space, 
abnormal amount of space paid for in extra compensation for the 
R. P. O., provided the same compensation applied to apartment cars, 
as it were ? 

Mr. Logan. Our experience is that we do not get paid for the space 
furnished. 

The Chairman. I understand that is the claim of all the railroads. 

Mr. Logan. That is an arbitrary rule ? 

The Chairman. That does not answer the question. If you did 
get paid for the space furnished in the apartment cars, as well as the 
R. P. O., you would get paid for the R. P. O. space, would you not? 

Mr. Logan. Some of it, but not all of it. 

The Chairman. Why not all of it ? 

Mr. Logan. For instance, on one line we furnish 55-foot cars and 
get a 40-foot allowance. 

The Chairman. Because you have not got a 40-foot car to meet 
the authorization of the department. Is that it ? 

Mr. Logan. Well, we have had some put in and some complaint 
about it, and we put back the 55-foot space. That is my understand- 
ing of it. The report came to me. 

The Chairman. If the assumption is that 10 feet of space is not 
to be used in a car — in other words, if there is a 40-foot requirement 
in a car and there should be 10 feet additional space — your compen- 
sation in effect covers th3 whole 50 feet, although it nominally covers 
only 40, there is no criticism on the part of the transportation com- 
pany, is there ? 

Mr. Logan. I would not like to answer that. 

The Chairman. There should not be? It would be simply a 
matter of application of figures. 

Mr. Logan. On some roads that would probably be fair, but on 
other roads where they are carrying heavy tonnage it should be 
taken into consideration as well. It is the service performed. 

Mr. Lloyd. Tonnage does not make any difference to the railroads, 
whether it is 1 ton in a mail car or 2 tons hi a mail car. 

Mr. Logan. It makes a difference if there are 2 tons or 20 tons? 

Mr. Lloyd. If there were 2 tons and 20 .tons there would be a 
difference, because if there were 20 tons you would have to have 
three or four cars; but it makes no difference to you, as a railway 
proposition, so far as the transportation of the train is concerned, 
whether there is 1 ton of mail or 2 tons of mail. The weight is in 
the car itself and not in the contents of the car. 

Mr. Logan. The value is in the service performed? 

Mr. Lloyd. Yes; and not in the weight. 

Mr. Logan. Weight is a factor the same as in freight, express, or 
anything else. 

Mr. Lloyd. It would cost you just as much — not actually, but the- 
oretically — to transfer an empty passenger as it does a passenger car 
reasonably well filled, does it not? 



556 KAIL WAY MAIL PAY. 

Mr. Logan. I would not say that ; no. It costs more in coal. The 
more weight you haul the more coal you burn and the more wear and 
tear. 

Mr. Lloyd. Slightly so. 

Mr. Logan. Taking it for the year around, it adds up. 

The Chairman. What percentage of the mail handled by the Grand 
Trunk in the United States goes in the R. P. O. cars ? 

Mr. Logan. I judge 90 per cent of it. 

The Chairman. Ninety per cent of it is in the R. P. O. ? 

Mr. Logan. That is, what I meant by that is full mail and apart- 
ment cars. 

The Chairman. What per cent goes in the full mail ? You say you 
receive no compensation extra for the apartment car ? 

Mr. Logan. No. 

The Chairman. What per cent goes in the R. P. O. car proper, for 
which you receive extra compensation ? 

Mr. Logan. I have not determined that. I could not say. I have 
not separated them. 

The Chairman. Do you think if you got compensation for the 
apartment-car service furnished that that would very materially 
decrease what you think is an apparent loss of $93,000 to your com- 
pany, according to your computation that you have presented % 

Mr. Logan. It would help to a certain extent. 

The Chairman. What amount ? 

Mr. Logan. I do not know. I would have to figure that out. 

The Chairman. Would the relief from the side service decrease your 
apparent loss of $93,000 « 

Mr. Logan. It would. 

The Chairman. To the extent of $40,000 a year? 

Mr. Logan. That is in Canada only. In the United States that 
does not amount to 10 per cent. 

The Chairman. Ten per cent in the United States ? 

Mr. Logan. I do not suppose it would amount to more than $3,000 
or $4,000 in the United States. 

The Chairman. Is it your opinion if you were relieved of the side 
service, received compensation for the apartment cars on the same 
basis that you get for the R. P. O. car, and had an annual weighing 
of the mail, under the present method, at least under the present law, 
by weight, that that would give you a fair return on the service 
rendered ? 

Mr. Logan. I think it would give us approximately a fair return 
of what we have heretofore expended for mail service, but I do not 
think it would compensate us for the increased load we are now 
carrying and which we are likely to carry in the future for the parcel 
post. 

The Chairman. Why does not the compensation for space in addi- 
tion to the compensation for weight cover that point ? 

Mr. Logan. Because a great deal of that will nave to be carried in 
baggage cars separate from your mail cars as it grows. 

The Chairman. Then that would be a separate car — extra compen- 
sation for use of storage car % 

Mr. Logan. That is right. That also would have to be taken care 
-of. 



RAILWAY MAIL PAY. 557 

The Chairman. Do you consider the Grand Trunk as typical of the 
railroads here in the United States ? In other words, the experience 
that you have on the Grand Trunk, would that be a good indication 
of the general lines of railroad in the United States ? 

Mr. Logan. No; I would not. I would consider it typical oi only 
a small portion of the lines ; not the short lines but the intermediate 
lines, because our lines in the United States are more or less short 
main lines and branches ; that is, lines running for three or four hun- 
dred miles. Our longest main line in the United States is 336 miles. 

The Chairman. Would you consider the Grand Trunk and the New 
Haven as analogous at all? 

Mr. Logan. No; I would not; they are not analogous, because 
the lines in Massachusetts and Connecticut are in densely settled 
country, and they have a great many expensive terminals, while 
we extend through a thinly settled country, comparatively, and 
with comparatively few expensive terminals. 

The Chairman. That is the Grand Trunk system in the United 
States ? 

Mr. Logan. Yes; that is as compared to the New Haven. 

Senator Weeks. How much difference do you think it would make 
to the corporation in the cost of the service under such conditions as 
obtain in the New Haven territory and those which obtain in the 
Grand Trunk territory of the United States ? 

Mr. Logan. I am not able to judge that. 

Senator Weeks. Have you any idea? 

Mr. Logan. I haven't any idea. 

Senator Weeks. You could not guess at it ? 

Mr. Logan. It would be purely a guess. 

Senator Weeks. What sort of a guess would you make ? 

Mr. Logan. I would not like to venture. 

Senator Weeks. Do you think anybody knows ? 

Mr. Logan. No; it is pretty hard to figure that out. The condi- 
tions are so different. The conditions vary with different years. 

Senator Weeks. Suppose somebody was trying to make a fair and 
just rate to everybody concerned, would you not have to arrive at 
some conclusion on that point ? 

Mr. Logan. They would have to find approximately what would 
be fair to both. 

Senator Weeks. But how would they go about it ? 

Mr. Logan. Like the Interstate Commerce Commission are going 
about the matter of finding the relative rates between passenger and 
freight service, by hearings, investigations, and adjustments that ex- 
tend over aperioa of years. 

Senator Weeks. Would you think the Interstate Commerce Com- 
mission the fittest organization for determining that; I mean that 
is in existence now ? 

Mr. Logan. They might have the most experience. I do not 
know whether they would be the most competent to judge or not. 

The Chairman. When do you think they would be able to get an 
ascertainment upon which they could make such a determination ? 

Mr. Logan. I have not the least idea. It depends on the staff 
they would have and what they would inquire into. 

49396—14 43 



558 KAIL WAY MAIL PAY. 

The Chairman. Then do you think the matter of adjustment of 
railway mail pay should be left in abeyance until the ascertainment 
is made ? 

Mr. Logan. No; I do not think so. I think I expressed an answer 
to that when I said we were receiving back about 60 per cent of our 
estimated cost in the United States. 

The Chairman. What subsidy do you receive in Canada ? 

Mr. Logan. None. 

The Chairman. None whatever ? 

Mr. Logan. At the present time ? 

The Chairman. Yes. 

Mr. Logan. For carrying the mail? 

The Chairman. Or for any purpose ? 

Mr. Logan. No; not that I know of. 

The Chairman. Did you have a land grant from Canada ? 

Mr. Logan. No. 

The Chairman. Have you ever received any assistance from the 
Canadian Government ? 

Mr. Logan. Received assistance in many cases to the extent, ac- 
cording to my recollection, of $3,200 a mile. 

The Chairman. What proportion of the cost was that ? 

Mr. Logan. That is hard for me to say. . 

The Chairman. Was that intended as a partial offset to the loss 
you are making in carrying the mail ? 

Mr. Logan. No; the mail did not enter into consideration at all; it 
was simply to get capital to build the lines. 

The Chairman. Is not the railroad receiving any benefit, anything 
for carrying the mail at one-third of the cost to the corporation ? 

Mr. Logan. None whatever. We figure that, roughly speaking, 
on the losses made for the carriage of the mail in the past they far 
more than offset any subsidy that we have received. One of these 
subsidies was in the nature of a loan of $15,000,000, which has never 
been repaid. 

The Chairman. How is the compensation which you shall receive 
for carrying the mail determined ? 

Mr. Logan. It is simply a matter of negotiation. 

The Chairman. Between whom ? 

Mr. Logan. The Post Office Department and the railroads indi- 
vidually. 

The Chairman. What you would receive has nothing to do with 
what the Canadian Pacific or some other railroad was receiving ? 

Mr. Logan. No. As I have stated before, the Post Office now is 
studying a scheme to put into effect that will put the railroads 
relatively on an equal basis. 

The Chairman. Can they be put on an equal basis ? 

Mr. Logan. That remains to be developed. 

The Chairman. Do you think they can be ? 

Mr. Logan. I think approximately; yes. 

The Chairman. You just testified conditions vary from year to 
year and in different territories ? 

Mr. Logan. We asked to have its inequalities adjusted between the 
territories and also to have them adjusted every five years, or for 
limited period. 



RAILWAY MAIL PAY. 559 

The Chairman. What reason is assigned for making an arrange- 
ment with the Government for carrying the mail for one-third of the 
cost of the service ? 

Mr. Logan. I do not know; it has been a matter of growth. 

The Chairman. Of course, you have to increase your other charges 
to make up that difference ? 

Mr. Logan. That is true. 

The Chairman. And you are furnishing a subsidy for the Govern- 
ment by so doing ? 

Mr. Logan. I think this is equally true here in the United States 
where, under this parcel-post system, a new method of discrimina- 
tion has been created, whereby the mail order houses and the de- 
partmental stores now can compete to their special advantage against 
the trader who ships his goods by freight and has his traveling men 
on the road, and the railway as the medium of service has to make 
up any difference on account of the less that may result because 
of cheap mail service. The railways are forced to assist in this 
discrimination. 

The Chairman. We are just going on to try to adjust it, but you 
have been going on year after year in Canada. 

Mr. Logan. But we hope to have a better adjustment in the future. 

The Chairman. Have the Canadian railroads so kept their accounts 
that they could demonstrate, to their own satisfaction at least, 
whether they were receiving fair compensation in Canada for the 
handling of the mail or not ? 

Mr. Logan. That is, the post office department ? 

The Chairman. I say, the railroads themselves; the transportation 
companies of Canada. 

Mr. Logan. We have made statements that I think have been 
accepted as reasonable and fair by the Post Office Department, to 
show that we are being underpaid. 

The Chairman. Submitted when ? 

Mr. Logan. At least three of four years ago. 

The Chairman. And since 1873 down to 1910, for a period of 37 
years, the railroads of Canada were not cognizant of whether they 
were underpaid or overpaid or equitably paid at all. In other words, 
their method of accounting made no segregation as to the mail com- 
pensation or cost, did they % 

Mr. Logan. INo, not until the new statistical reports were made. 
Then it developed that there were differences that should have been 
adjusted previously. There is one more point, if I might be per- 
mitted to bring it out, when making comparisons with the English 
pay, we do not want to forget the fact that the English Government 
also pays for the transportation of mail sorters, as they term them, 
in the mail cars, and we have the same question up with the Canadian 
Government, and we consider that when the Government of Canada, as 
well as the Government of the United States in many cases, pays for 
the transportation of their mail distributors in some sections and 
on certain classes of transportation, they ought to pay them on all 
classes of transportation and not discriminate in cases of the men 
traveling by steam railroad. As I understand, in a number of cities 
the mail carriers pay street car fare on electric lines — as an instance 
I am informed this is the rule here in Washington — and in Canada the 
Government makes a direct bonus payment to the electric railway of 



560 EAILWAY MAIL PAY. 

a city of the size of Montreal, Toronto, Hamilton, and so on, and 
paying them a certain amount per annum for the transportation of 
their mail carriers. There is no difference between an employee of 
the mail service riding upon a railroad train and riding upon an 
electric car, and as it appeals to our sense of justice it seems to me 
that we ought to be paid a fair compensation. In England it is the 
lowest commutation rate over the road over which the service is 
performed. 

The Chairman. Every individual postal employee who travels 
on the railroad pays, either himself or the government for him, for 
that transportation to the transportation company ? 

Mr. Logan. That is not my understanding. 

The Chairman. Does not the R. P. O. car cover the compensation 
for the passenger transportation of the employees in the car ? 

Mr. Logan. We have never so understood it. I do not think 
it is covered by the law, nor .are the men weighed when the mails are 
weighed. 

The Chairman. If you have not so understood it, why have you 
not made a claim for payment at the transportation rates ? 

Mr. Logan. It has simply gone by default. 

The Chairman. What difference would it make if you received 
compensation for R. P. O. cars, if there were 2 tons of mail in that 
car and six mail clerks or 4 tons of mail and two clerks ? 

Mr. Logan. The principal difference we find is that when that car 
gets into a collision we have to pay these men as much, and some- 
times more, than we do other people who are injured. We have to 
assume the risk of carrying the men. 

The Chairman. You assume no such risk in carrying the express- 
men? 

Mr. Logan. No; the companies assume that themselves, and in 
England that is taken care of by the post-office department assuming 
the risk against claims of that kind. 1 

The Chairman. Insuring the railroad companies ? 

Mr. Logan. Insuring the employees. They assume the risk. 

The Chairman. Then, if a postal employee in England is injured 
he looks to the Government or the insurance established by the 
Government and his own claim against the transportation company ? x 

Mr. Logan. That is my understanding, 1 and in addition they pay 
the fare on the lowest commutation rate. The mail clerks in the 
United States are treated under the law in every respect the same as 
a passenger, except they do not pay a fare. Yet we can not take 
them as trespassers because they are there by authority. 

The Chairman. Do you consider mail transportation as analogous 
to passenger and express transportation, or are there differences, to 
your mind, and is the railroad entitled to different compensation; if 
so, what are the differences between the three classes of transporta- 
tion? 

Mr. Logan. There are great differences between all three classes 
which make them hard to compare. 

1 With reference to Mr. Logan's statement that the British Post Office Department assumed all risks 
of accident to mail "sorters," he subsequently stated in a letter dated April 24 to the chairman that the risk 
was divided, the post-office department assuming one-half after their consent to settlement had been 
obtained. 



KAILWAY MAIL PAY. 561 

The Chairman. Suppose you had the right to determine the com- 
pensation received from the three classes of service generally — passen- 
ger service, express service, and mail service. What conditions would 
you make and which would you give the greater compensation to ? 

Mr. Logan. It seems to me they ought, as a matter of right, to 
practically earn an equal revenue per car. 

The Chairman. And in your mind they are equivalent ? 

Air. Logan. So far as their earning basis is concerned; yes. 

The Chairman. Is the express basis equivalent, relatively ? 

Air. Logan. There are differences there. But so far as mail carrying 
on the train is concerned the expense is practically equivalent, except 
in the case of emergencies arising. 

The Chairman. And the only difference between the mail and 
passenger is that you would expect to pay under existing conditions a 
greater reward to a mail employee for injury than to a passenger ? 

Mr. Logan. Well, only so far as the employee is concerned. Of 
course human life is human life and ought to be looked on as being 
more valuable and have far greater protection than mail matter in a 
mail car. 

The Chairman. I understand; but I understood you to say a 
moment ago, at least that is my impression, that you expected to have 
to pay more damages for injury to a mail employee than you would to 
the ordinary passenger ? 

Mr. Logan. That has been, on the average, our experience, yes; 
for injury to a mail employee. 

The Chairman. What has been the reason for that ? 

Mr. Logan. They have been better educated to the conditions, I 
presume, and know how to go about making their claims better, and 
probably use better class of lawyers, and so on. 

The Chairman. There is no recognized principle in law for a dis- 
tinction of that nature ? 

Mr. Logan. No, sir. 

The Chairman. Then from that viewpoint you would expect that 
the transportation companies should receive a higher compensation 
for handling the mail than they do for carrying passengers or carrying 
express ? 

Mr. Logan. No; although the mail always has the preference. 
With the payment for the carriage of the mail clerks included it 
would seem to me the amount earned per mail car ought to be approx- 
imately what can be earned per passenger car. 

Mr. Lorenz. Does not the passenger department have to carry 
free officials, employees, and perhaps others? 

Mr. Logan. Yes. 

Mr. Lorenz. So that there are certain persons necessarily carried 
without compensation by the passenger department ? 

Mr. Logan. Yes. 

Mr. Lorenz. Why could not that matter be eliminated in the com- 
parison if the employees in the mail service are carried free and those 
necessary in the passenger service are carried free ? 

Mr. Logan. It is necessary to carry men free account of, etc., the 
freight service. That is only incidental, and it might be an infini- 
tesimal amount as compared to the whole. I do not believe it could 
be easily calculated. 



562 



E AIL WAY MAIL PAY. 



The Chairman. Is there any further information you have to sub- 
mit, Mr. Logan ? 

Mr. Logan. No, sir. 

The Chairman. The committee are very much obliged to you for 
coming down and giving us your views on the matter. 

Net income by classes of traffic, Grand Trunk Western Ry. Co., year ending June 30, 1912. 





Amount. 


Percent. 


Car-miles: 


702,766 
24,350 
71,525 


87.99 


Express 


3.05 


Mail 


8.96 






Total 


798,641 


100. 00 








$2,638,889.92 
2,191,070.70 












Total operating expenses 


4,829,960.62 








Apportionment of passenger-train operating expenses on car-mile basis: 
Proportion chargeable to— 

Passenger 


1,927,923.11 
196,319.93 
66,827.66 


87.99 


Mail 


8.96 


Express 


3.05 






Apportionment of taxes, interest, rentals, hire of equipment (on revenue basis): 


4, 240, 782. 24 

2,198,874.61 

128,663.00 

98,485.14 


63.61 


Passenger revenue (including passenger miscellaneous) 


32.98 


Mail revenue 


1.93 


Express revenue 


1.48 






Total 


6,666,804.99 


100. 00 






Taxes $399, 422. 13 






Rentals 90, 404. 55 






Hire of equipment 424, 619. 01 












Total 914, 445. 69 




Interest 


847,855.32 








Proportion chargeable to: 

Freight $581, 678. 90 


539,320.77 

279,622.68 

16,363.61 

12.548.26 




Passenger 301, 584. 19 

Mail 17, 648. 80 




Express 13, 533. 80 









RECAPITULATION. 
[Italic figures indicate deficit.] 





Freight. 


Passenger. 


Mails. 


Express. 


Total. 


Operating revenue 


$4,240,782.24 
2,638,889.92 


$2,198,874.61 
1,927,923.11 


$128,663.00 
196,319.93 


$98, 485. 14 
66, 827. 66 


$6,666,804.99 
4, 829, 960. 62 


Operating expenses 






Net operating revenue 

Ratio 


1,601,892.32 
[62. 23] 

581,678.90 


270,951.50 
[87. 68] 

301,584.19 


67,656.93 
[152. 58] 

17, 648. 80 


31,657.48 
[67. 86] 

13,533.80 


1,836,844.37 
[72. 45] 

914,445.69 


Taxes, rentals, and hire of equip- 
ment 




Operating income 


1,020,213.42 
539,320.77 


30,632.69 
279,622.68 


85,305.73 
16,363.61 


18,123.68 
12,548.26 


922,398.68 
847,855.32 


interest 




Net income 


480, 892. 65 


310,255.37 


101,669.34 


5,575.42 


74,543.36 




Cost of property l 


17,792,124.77 
1,067,527.49 


9,224,717.41 
553,483.04 


539,833.37 
32,390.00 


413,965.49 
24,837.93 


27,970,641.04 
1,678,238.46 


8 per cent return on same 




Surplus per year 


47,314.07 


584,115.73 


117,695.73 


6,714-25 


755,839.78 





Prorated between classes of service in ratio of revenue. 



KAIL WAY MAIL PAY. 563 

STATEMENT OF ARCHIBALD H. ROWAN. 

The Chairman. Mr. Rowan, it will be necessary that you be sworn. 
Thereupon the witness was duly sworn by the chairman. 

The Chairman. Will you kindly give your full name, residence, 
and official occupation which you occupy with any transportation 
company ? 

Mr. Rowan. Archibald H. Rowan, assistant to the vice president 
of the New York Central, and manager of mail traffic of the Boston 
& Albany Railroad; residence, New York; age, 34. 

The Chairman. How long have you been connected with the New 
York Central and the Boston & Albany ? 

Mr. Rowan. Fourteen years. 

The Chairman. Your present official position is what ? 

Mr. Rowan. Assistant to the vice president of the New York 
Central, and I am manager of mail traffic for the Boston & Albany 
Railroad. 

The Chairman. And have been for 14 years ? 

Mr. Rowan. No ; 1 year in the direct employ of the Boston & Albany 
Railroad, but 14 years with the New York Central. 

The Chairman. But 14 years with the New York Central ? 

Mr. Rowan. I should correct that, because the Boston & Albany 
was part of the New York Central system until about a year ago, 
but when they were operated separately I handled their mail business 
independently. 

The Chairman. In conjunction with the New York Central? 

Mr. Rowan. Yes, sir. 

The Chairman. Are you familiar with what is known as Document 
No. 105 ? 

Mr. Rowan. Yes. 

The Chairman. And also familiar with the amended suggested plan 
of Mr. Hitchcock, the ex-Postmaster General, as represented on page 
109 of the preliminary report in the pamphlet entitled " Railway mail 
pay," are you not? 

Mr. Rowan. Yes. 

The Chairman. Would you favor the committee with your com- 
ments in reference to the suggested plan ? 

Mr. Rowan. Mr. Chairman, I have prepared a short statement, 
and if it is agreeable to you I will be glad to read it and answer any 
questions. 

I have prepared a short statement for the information of the joint 
commission of Congress investigating compensation for the trans- 
portation of the mails, showing the extent of the mail service per- 
formed by the New York Central lines for the Post Office Department. 
I will endeavor to show in detail the extent of our service, the advan- 
tages of same to the Post Office Department, and the pay which we 
receive from the Government for the services which we perform. 

Mr. W. C. Wishart, statistician of the New York Central lines, has 
prepared a criticism of House Document No. 105 as relates to the 
New York Central lines, which he will submit as a matter of record 
and for the information of the joint committee. 



564 EAILWAY MAIL PAY. 

I should be very glad to be interrupted at any time during my testi- 
mony to answer, to the best of my ability , any questions which may 
suggest themselves. 

The New York Central lines have a total mileage of 12,962.31 
miles, with total annual operating revenue for the year ending Decem- 
ber 31, 1912, amounting to $286,604,248, the mail revenue for the 
same period being approximately $5,864,000, representing about 2 
per cent of the total revenue, the mail service being performed on 
practically all of our mileage. 

The bulk of the mails are handled on mail route 107011, between 
New York and Buffalo, the pay being based on a daily average weight 
of 389,411 pounds of mail, and route 131095, Buffalo to Chicago, on 
which the daily average weight is 317,711 pounds. These two routes 
comprise what is known by the Post Office Department as the New 
York & Chicago R. P. O. There are other important R. P. O. lines 
on our system, as, for example, between Boston and Albany, Buffalo 
and Detroit, Detroit and Chicago, Cleveland and St. Louis, Cleveland 
and Cincinnati, and Chicago and Cincinnati, on all of which R. P. O. 
cars are operated. 

About 1875 the first "fast mail" train between New York and 
Chicago via the New York Central lines was inaugurated, on a 
schedule of 27 hours and 40 minutes. This "fast mail" was equipped 
with railway post-office cars and practically all of the through mail 
over our lines was handled on this train. To-day, in and out of 
Grand Central Terminal, New York, we operate daily 258 passenger 
trains (not including trains of the New Haven road), of which num- 
ber there are 20 trains a day from New York to Buffalo, 16 of which 
trains all operate through to Chicago and are all used by the Post 
Office Department in transporting the United States mail. 

I do not know of a single train that does not carry mail on the New 
York Central lines; that is, of the through passenger trains. 

Five of these through westbound trains to Chicago are what are 
known as mail trains and are operated primarily for the mail service, 
together with the complementary eastbound trains, the schedules of 
these trains being governed very largely by the needs of the depart- 
ment. 

The Chairman. Are there any passengers on those five trains ? 

Mr. Rowan. On some of them; yes, sir; but they are operated pri- 
marily for the mail service, and if the mail service was not there they 
would not be operated, but as long as they are operated they fill them 
out with anything that has to go. 

Mr. McBride. Of how many trains is that true, that they are 
operated primarily for the mail service, and if the mail service was 
not on they would not be operated ? 

Mr. Rowan. A good many, Mr. McBride. If the mail service did 
not exist on the New York Central lines, if we did not have any mail 
at all, we would run our trains on a different schedule from what we 
do to-day. 

The Chairman. How many of your trains would you discontinue 
altogether, in your opinion ? 

Mr. Rowan. I think that the passenger business could be handled 
on through trains that exist; there is such frequent train service on 
the New York Central lines between New York and Chicago that we 



RAILWAY MAIL PAY. 565 

could manage to get along without the mail trains; perhaps not all 
of them, but a majority of them. 

The Chairman. You say you have five trains which primarily 
operate for mail. Suppose you carried no mail. Would you discon- 
tinue those five trains entirely ? 

Mr. Kowan. I think three or four of them could be taken off. I 
refer to this in detail later. 

TVhile the advantages to the Post Office Department of these trains 
are many, I desire to call attention to several of the more important 
benefits : 

First. The mail cars for these trains are brought to a terminal like 
the Grand Central Terminal in New York many hours before the 
scheduled departure to permit the Post Office Department to per- 
form what they call " advance distribution," which saves the depart- 
ment the expense of maintaining terminals of their own for this work, 
resulting in considerable additional expense for lighting, heating, and 
valuable track space occupied in our terminals. 

Second. The schedules of these trains are governed by the needs 
of the Post Office Department, both as to the time of departure and 
arrival at destination. To illustrate: We have a mail train which 
leaves New York at 3 o'clock in the morning and reaches Chicago at 
1.20 a. m. This train takes the general clean up of mail out of New 
York and is an important train for the newspaper mail, making con- 
nections with the Rural Free-Delivery routes and permitting a first- 
carrier delivery of mail from New York a distance of 150 miles from 
New York. The arrival of this train in Chicago permits important 
connections to be made and advances the mail many hours over the 
regular passenger- train service. 

Train No. 3, leaving New York at 8.45 a. m., known as the "fast 
mail," is split at Buffalo and the mail cars are run as a first section 
to Chicago, reaching there at 6.30 a. m., against the 7.30 a. m. arrival 
of the passenger section. This operation of a train, a distance of 540 
miles, is done to give the Post Office Department more time for the 
important western connections out of Chicago and in order to permit 
of a first-carrier delivery for important Chicago mail on this train. 

The Chairman. Are your schedules designated at all by the Post 
Office Department ? 

Mr. Rowan. No. They do not order us to put on a train, but we 
have always cooperated with the department, and when they tell us 
a certain schedule is necessary we do everything in our power to give 
it to them. 

The Chairman. But the right of determining what the schedule 
will be rests entirely with your own management, does it not ? 

Mr. Rowan. Oh, yes. 

Train No. 9, which is also known as the "fast mail," is operated 
west of Buffalo ahead of the passenger section so as to permit an 
arrival in Chicago at 11.43 a. m. Out of New York we have train 
No. 9 which leaves at 12.50 p. m., the fast mail, and we have a passen- 
ger section which leaves 10 minutes ahead, at 12.40 p. m. Xow, if it 
was not for the mail we could put the passenger cars now operated on 
train No. 9 on No. 41, leaving at 12.40 p. m., and there would not be 
the necessity of running the two trains. 

Mr. McBride. Has not that been largely due to the growth of the 
service ? When the service was first put on there was but one train ? 



566 BAIL WAY MAIL PAY. 

Mr. Rowan. Yes; it was all one train; but there are too many cars 
now, and besides it is bad for the passenger business to hold trains 
at Albany and places like that a considerable time in order to transfer 
the mail, but if the mail did not exist we could take the passenger 
cars and put them on No. 41. 

Train 21, leaving New York at 6.30 p. m., overtakes the Lake 
Shore Limited, leaving New York an hour earlier, 5.30 p. m., and 
the mail cars are transferred to the Lake Shore Limited at Toledo, 
giving a 4 p. m. arrival in Chicago as against a 5 p. m. arrival for the 
passenger section of No. 21. This is done to expedite the mails. 
If for any reason train 21 is late and connection at Toledo is missed, 
the mail cars are run special into Chicago, a distance of 244 miles. 

Corresponding service is given eastbound where we run trains out 
of Chicago at 3 o'clock in the morning with a 4.01 arrival at New 
York and a mail train from Albany to Boston with a 5.15 a. m. 
arrival in Boston, permitting a first carrier delivery in all parts of 
New York City, Boston, and many New England cities. These two 
trains would never be operated on such schedules were it not for the 
mail and they are of great importance to the department and with- 
out them the postal service would be very much impaired. 

In New England, if we did not have train No. 34, the Boston mail 
would not reach Boston until 7.30 in the morning. As it is now it can 
get there at 5.15 and the business interests can get their mail on the 
first carrier delivery, and the same thing applies to points like Spring- 
field, Worcester, Providence, and the whole section of New England 
that is served by that train. It is a very important train for the 
mail service, and of absolutely no value from a passenger standpoint, 
for there is not a passenger car that I know of that is handled on it. 

The Chairman. That is on the Boston & Albany? 

Mr. Rowan. On the Boston & Albany; yes, sir. Passengers would 
not desire to arrive in Boston at 5.15 in the morning, or at any termi- 
nal at that hour in the morning. 

Third. In many instances these mail trains are held for important 
mail connections at starting points and junction points, in some 
cases more than an hour. 

To illustrate: We have trains starting from Chicago that are due 
to make an overland mail connection, and when the overland con- 
nection is late we frequently hold our trains for that connection. 

The Chairman. You hold them for passengers as well as for mail ? 

Mr. Rowan. No, sir; we do not hold them for passengers, because 
they are mail trains, and if the passengers miss a train they take the 
next one, but the mail train is frequently held for the mail. There 
was a case two years ago where a train due to leave Chicago at 8.15 in 
the morning was held until 2 o'clock in the afternoon because the 
Post Office Department advised us that they had some important 
mail that had come from Australia, or some place like that, and it had 
to make a steamer in New York the next morning, and it was neces- 
sary to run this train through to New York faster than the Twentieth 
Century Limited. 

The Chairman. You got no extra compensation for the com- 
pliance with the request of the Post Office Department ? 

Mr. Rowan. We did not ask for anything extra. We considered 
that it was good mail service, and we were glad to cooperate with 
them because they showed us the importance of complying with their 



RAILWAY MAIL PAY. 567 

request. It meant a number of days' delay if the steamer was missed 
at New York, and I think we have always tried to cooperate with the 
department. 

The Chairman. That loss of time means utilization of track for 
that extra period which might have been used for some other purpose, 
or what do you expect to demonstrate from the concrete instance 
that you have just mentioned? 

Mr. Rowan. To show the way we have cooperated with the de- 
partment; the service we give. And it certainly costs more to 
operate trains at high speed out of their schedule, sidetracking 
other passenger and freight trains, and it is a very undesirable thing 
to do from an operating standpoint 

Mr. McBride. I think the department thoroughly appreciates the 
cooperation it receives from the railroad companies, but nevertheless 
is it not a fact that during the weighing period you would hold your 
train at Chicago for 10 hours or so in order to get the overland mail, 
which would otherwise go to some other road ? 

Mr. Kowan. The time we held the train was not during the weighing 
period. 

Mr. McBride. You were not holding trains during the weighing 
period in order to get the mail ? 

Mr. Rowan. I do not think we make any distinction on our lines 
between a weighing period and any other time. We have held No. 34 
sometimes since the weighing. I do not think an average operating 
official on our road knows when they are weighing the mail. I found 
an official on our road the other day who did not know we were 
weighing on the New York Central, and he was an operating official. 
Does that answer your question ? You do not know of any instance 
where we have held them a longer time during the weighing period 
than any other time ? 

Mr. McBride. I do not recall any instance just now. I remember 
there have been instances where, during the weighing period, com- 
panies have held their trains in order to get the mail, and we argued 
that they should follow the same practice when they are not weighing. 

Mr. Rowan. I know it has not made any difference in the operation 
of our trains. 

The Chairman. Mr. McBride, in that connection, have you found 
any criticism of your contention that the operation should be the same, 
whether during the weighing period or outside of the weighing period, 
with any of the roads ? 

Mr. McBride. There has been some contention along that line; yes, 
sir. If a schedule changed the conditions would change, but so long 
as the schedule remained the same we have asked that the train be 
held, maintaining that if a train was held during the weighing period 
for the purpose of getting the mail it should be held during the interim 
when we were not weighing. 

The Chairman. How does that affect the question as to the 
increased cost to the railroads themselves, where delays result in 
interference with traffic, and an indirect loss to the company itself ? 

Mr. McBride. I do not think it would affect the cost in any way, 
but it has a bearing on the question, of course, as showing that the 
holding of the train is not wholly altruistic. 

Mr. Rowan. I want to show the mail facilities at some of our great 
terminals. 



568 KAILWAY MAIL PAY. 

MAIL FACILITIES AT THE GREAT TERMINALS. 

At the Grand Central Terminal, New York, a large amount of val- 
uable space is given over to the handling of the mails and certain tracks 
and platforms are used exclusively by the mail service. As fast as one 
mail train departs, the cars for the next mail train are placed at a mail 
platform, so that the Post Office Department at all times has a mail 
train available in which men can work the mails. We have plans 
which have been approved by the department for the installation 
of an electric mail conveyor, which will be installed at an expense of 
over $150,000, and operated by the railroad company. This conveyor 
will expedite the handling of the mail between the mailing platforms 
and the trains and will take mail from incoming trains on conveyors 
to the post office, pneumatic tubes or platforms where the mail 
wagons take it to connecting roads or sub post offices. To handle the 
mails at Grand Central Terminal about 100 men are employed and at 
the La Salle Street Station, Chicago, 41 men, an increase of 21.6 per 
cent since January 1, account parcels post at the latter point. 

At all junction points and terminals important space is reserved 
for the exclusive use of the Post Office Department. The railroad 
furnishes trucks and men to handle the mail, and with the rapid 
growth of the parcel post, which we are handling to-day without any 
compensation, we have had to employ additional men, purchase more 
trucks, and give up more space for the handling of the mails. At 
the present time there is already installed pneumatic-tube service at 
New York and Chicago, which permits the Post Office Department 
to exchange mail with important substations and which occupies 
valuable space for which no rental is paid. 

I want to bring out in connection with the pneumatic-tube service 
we have in the stations, that this valuable space is provided without 
any rental. 

The Chairman. How much space, in square feet, is occupied by the 
pneumatic terminal ? 

Mr. Kowan. I could not say. 

The Chairman. How many tubes do they operate ? 

Mr. Rowan. I do not know. They have a machine shop there, 
and they have a shop for the machinery for compressing the air, and 
at the La Salle Street Station they have what they call a pneumatic- 
chute room, where the mail is taken and dispatched to the various 
substations in Chicago. 

The Chairman. Did you, at the request of the Pest Office Depart- 
ment, give this space for the pneumatic tube ? 

Mr. Rowan. Yes. 

The Chairman. You have asked for no additional compensation 
for the utilization of that space, or absorption of it ? 

Mr. Rowan. I have never officially. I have talked it over with 
the Post Office Department officials many times, and thought we 
ought to get some compensation, but as I understand there has been 
no appropriation that could be used for that purpose. 

The Chairman. You say to-day you are handling that without 
compensation. You get compensation, do you not, for the ordinary 
amount of fourth-class mail matter that you handle under your 
railway mail pay basis, and also under your R. P. O. car basis? 



KAIL WAY MAIL PAY. 569 

What you mean is you get no compensation for the additional busi- 
ness incident to the enlargement of the fourth-class mail business ? 

Mr. Rowan. We get no compensation for the new business of the 
parcel post, and we are not getting to-day our full pay for R. P. O. 
space furnished and used by the department. The Post Office De- 
partment has that up now, and I suppose that will come along in 
time. 

The Chairman. But Congress at the last session made a provision 
for 5 per cent extra compensation. 

Mr. Rowan. Effective July 1, 1913, yes; but we are not getting 
any compensation for such matter as is strictly parcel post up to 
that time. 

The Chairman. This increase was made as compensation for the 
increase in the business incident to the enlargement of the scope of 
the fourth-class mail matter. 

Mr. Rowan. From July 1, 1913, but Congress, as I understand it, 
has made no provision to pay the railroads for such additional mat- 
ter as they have been handling and will handle from Januarv 1, 1913, 
to July 1,"1913. 

The Chairman. The railroads' position, as I understood it, was 
what they asked as a just demand from their viewpoint— and I 
think correctly so, as I will say personally — was a special weighing 
to be had in July or September or even October in order to determine 
the additional matter handled, and they were satisfied or even willing 
to waive any claim for compensation because of the increase in busi- 
ness incident to the period of six months from the 1st of January to 
the 1st of July, were they not? 

Mr. Rowan. If we had gotten the special weighing, yes, Senator. 
I am not making a claim for pay up to July 1, 1913, on parcel post. 

The Chairman. We do not want to get in the record a false impres- 
sion. Congress did take cognizance of the increased burden they 
put upon you by what is known as the parcel-post legislation and 
endeavored to give you compensation for the increased burden, and 
the best method of ascertainment, in the opinion of Congress, in 
accordance with its action, was an allowance of 5 per cent increase 
in railway mail pay. That is the fact, is it not? 

Mr. Rowan. Yes. 

Senator Weeks. How many tracks are there in the Grand Central 
Station? 

Mr. Rowan. We have two levels with 67 tracks, or 42 tracks on 
the upper level and 25 on the lower level. 

Senator Weeks. You give up one track to the mail trains ? 

Mr. Rowan. No. We have two tracks down on the lower level 
where they load the fast mail trains, but there is hardly a train that 
goes out that does not handle mail. 

Senator Weeks. Then you think about one-fiftieth of the tracks 
is given up to the mail service ? 

Mr. Rowan. But we bring the cars up from the lower level to the 
upper level about half an hour before the train departs, and use the 
upper-level tracks. 

Senator Weeks. Do you think you give up about one-fiftieth of 
the trackage to the mail service ? 

Mr. Rowan. I should think more than that. 

Senator Weeks. How much do you give up to the express service? 



570 EAILWAY MAIL PAY. 

Mr. Rowan. None at ail, sir; not directly, because the express is 
not handled in the Grand Central Terminal. The express companies 
have their own buildings on the west side of New York, and own their 
building for that purpose. They do handle some local business at 
the Grand Central Terminal, and they have space in the baggage 
room where they handle this express, which is taken down and put 
on the trains by the express messengers. Tney have their own men 
to do that. 

Senator Weeks. Do they pay for the space in the baggage room 'i 

Mr. Rowan. Yes, sir. 

The Chairman. You say the express cars are made up in their own 
terminal. Are they not put on the train in the Grand Central 
Station « 

Mr. Rowan. The bulk of our express business is handled in special 
express trains, and we operate from the west side of the city, and those 
trains run right through to the West, so that the only express that is 
handled out of the Grand Central Terminal is the small amount of 
express on the passenger trains that goes in baggage cars, and is local 
business. Of course there is not enough local business to warrant a 
through express train for that service. 

SIDE SERVICE. 

A service that we perform for the Post Office Department without 
any direct compensation, and which has become quite a burden, is 
the delivery of mail from railroad stations to post offices where the 
distance is less than 80 rods and where the Post Office Department 
does not maintain its own screen-wagon service. 

As of July 1, 1912, the New York Central Lines paid to outside 
contractors employed to handle the mails between railroad stations 
and post offices $18,938.40, and the Boston & Albany Railroad paid 
$1,841, or a total of $20,778.40 per annum. 

The Chairman. Then the New York Central and Boston & Albany 
for side service were required to expend $20,778.40 per annum. How 
much of the total mail of the United States does the New York Cen- 
tral and Boston & Albany handle? Have you any idea of the per- 
centage ? 

Mr. Rowan. I could not tell you. 

The Chairman. The compensation is $5,800,000 for railway mail 
pay and R. P. O. pay? 

Mr. Rowan. Yes, approximately. 

The Chairman. That is a little more than 10 per cent of the total 
compensation. 

Mr. Rowan. This does not include, of course, the expenses that we 
have in performing side and terminal service at stations where the 
work is done by our own men, where the time of our men is used in 
handling the mail. 

The Chairman. This is a direct additional cost to you represented 
by an increased number of employees that you have to pay because 
of the side service,, this $20,778.40 % 

Mr. Rowan. The men are not our employees, but they are subcon- 
tractors. 

The Chairman. That is an additional expense % 

Mr. Rowan. Yes, sir. 






RAILWAY MAIL PAY. 571 

The Chairman. Do you have to engage any additional employees 
because of the side service ? 

Mr. Rowan. I imagine there are a number of points on our railroad 
where the burden of the side and terminal service requires the em- 
ployment of additional men. 

The Chairman. You have not that computation? 

Mr. Rowan. I have not; no, sir. I have a record in my office of 
the amounts paid to outside contractors, and that is the amount which 
I am stating here. 

Since January 1, account of the parcel post, we have received 
numerous demands from contractors for increased compensation for 
the handling of the mails between post offices and railroad stations, 
and in a number of places additional money has had to be paid in 
order to keep the contractor from throwing up the work. 

The Chairman. Have you any information as to the additional 
amount you paid for that ? 

Mr. Rowan. It is so incomplete I did not think it was worth while 
submitting it. That is because we were still negotiating with a num- 
ber of contractors, and at a number of points where no contractor is 
emplo} T ed to-day the station agent is demanding more help or the 
employment of some outside men to handle the mail, and we have 
not decided in every case just what we would do. 

The Chairman. These side service contractors, do you make 
your contracts with them by the year ? 

Mr. Rowan. Yes, sir; generally. 

There are also a number of points where the service has been per- 
formed in the past by our station force, but as a result of the increase 
in the mails, it has been necessary to either employ additional help 
to take care of this work or give the contract to some outside party, 
and if the parcel post continues to increase, as I believe it will, it is 
going to result in a very large expense to the railroad to provide for 
side service. There are some places where we will have to maintain 
a regular express service. 

There are many places where we pay contractors more for the car- 
riage of the mails between the post office and the termini of a route 
than we receive in pay from the Government. To illustrate, the Little 
Falls & Doigeville road, part of the New York Central lines, known as 
route 107163, has a mileage of 11.87 miles and the annual pay for the 
transportation of the mail is $557.63. Of this amount we receive 
from the Post Office Department $40.01 per annum for the handling 
of the terminal mails at Doigeville, and employ a contractor at the 
rate of $200 a year to do it. In other words, it costs us $159.99 
more than we receive to perform the terminal service. 

The Chairman. For the total mail compensation at that point? 

Mr. Rowan. Yes, sir. 

On the New York Central & Hudson River Railroad we pay outside 
contractors $2,403 annually to perform terminal service, and we receive 
from the Post Office Department $643.84, or a direct loss of $1,759.16 
per annum. For all our lines, including the Boston & Albany Rail- 
road, the difference between what we receive from the Government 
for terminal service and what we pay to outside contractors amounts 
to a loss of $6,252.36 per annum, and, as I have already stated, this 
amount is going to be increased very largely as the parcel post grows. 



572 RAILWAY MAIL PAY. 

The above figures do not include expense to the railroad where our 
own employees handle the mail. 

Mr. Wisharfc will show in his testimony how the mail earnings of 
the system lines by years have decreased, although the weight of the 
mail handled has increased, and that the cost of labor, fuel, and all 
operating expenses have greatly increased. In the last 10 years the 
cost of coal alone, which is a very important commodity in the opera- 
tion of a railroad, has increased 76 per cent. In 1897 the daily aver- 
age weight on New York Central & Hudson River Railroad was 250,000 
pounds, in 1909, 452,333 with a basis of 6-day divisor, or 389,441 with 
7-day divisor, while the mail pay has not increased proportionately. 
In 1906 our mail earnings on the New York Central lines were 
$6,901,307.97 as compared with revenue for year ending December 
31, 1912, of $5,864,000. 

The Chairman. And the total railway mail pay or the pay that 
you receive, including R. P. O. 

Mr. Rowan. Including everything, R. P. O. and transportation 
pay. 

Senator Weeks. You do not mean to say the receipts from the 
mail service have decreased in that time to the New York Central Rail- 
road? 

Mr. Rowan. Yes, sir; and I want to show you how the weight has 
increased and the pay has not increased in the same proportion. In 
1897 the daily average weight of mail was 250,000 pounds. In 1909 
it was at the last weighing, if the divisor had not been changed — in 
order to make a comparison I have used the basis of the old divisor — 
it would have been 452,333 pounds daily average weight. 

The Chairman. That is because of the difference in divisor in 1907, 
is it not ? 

Mr. Rowan. No. I have raised the figures to what it would have 
been under the old divisor. 

The Chairman. Under the divisor of six instead of seven ? 

Mr. Rowan. Yes. Under the seven-day divisor the daily average 
is 389,441 pounds. The pay in 1907 to the New York Central main 
line was $1,137,517.31. In 1906 it was $1,985,910.27. 

The Chairman. For the same divisor in both computations ? 

Mr. Rowan. Yes, sir; in 1909, which is the basis under which we 
are being paid to-day, the mail compensation was $1,804,814.02. 
That does not include the R. P. O. pay, but it does include the trans- 
portation pay, so that we got a great deal more money in 1906 than 
we are getting to-day, and we are handling a great deal more mail 
to-day. 

The Chairman. You got more money in 1906 because you had a 
six-day divisor, and in 1909 you had the seven-day divisor ? 

Mr. Rowan. Yes, sir. That has largely affected it. 

This decrease in pay has been due to change in divisor, acts of 
Congress reducing mail pay, withdrawal of equipment from the mail, 
deductions in R. P. O. pay, and the withdrawal of magazines from 
the mails in the third contract section, so that while we are handling 
more mail tonnage now than we did in 1906 we are receiving approxi- 
mately $1,000,000 less revenue, yet the postal receipts of the depart- 
ment for the 10 years, 1901 to 1911, have more than doubled. 



RAILWAY MAIL PAY. 



573 



The Chairman. But for your tonnage of mail you computed both 
the blue-tag mail that goes in the fast freight and the regular mail 
that goes under the fast mail service ? 

Mr. Rowan. No, sir. On the New York Central there is no blue- 
tag mail, so there the blue tag could not be taken into consideration. 

Not only has the weight of mail increased very heavily, but the 
weight of equipment used in transporting the mail, as well as the 
cost of this equipment, has increased materially. For example, our 
wooden postal cars weighed approximately 91,000 pounds, while our 
latest steel postal cars weigh 122,000 pounds, an increase of 33 per 
cent, and it naturally follows that this materially increases our cost 
of operation. 

The Chairman. Have you got the relative figures as to the cost 
of the wooden and the steel cars ? 

Mr. Rowan. Yes; I have it here. The cost of the wooden posta 
car was approximately $6,000, while the cost of the steel postal car 
used to-day is practically double that amount. 

The Chairman. $12,000? 

Mr. Rowan. Yes, sir. 

Mr. Lorenz. For the same length of car ? 

Mr. Rowan. Sixty-foot cars; yes, sir. 

MAIL CARS AND APARTMENT CARS OPERATED ON NEW YORK CENTRAL 

LINES. 

Following is a statement showing number of full R. P. O. cars 
and apartment cars operated on the New York Central lines during 
month of November, 1909: 



R. 



New York Central & Hudson River R. 

Michigan Central R. R 

Lake Erie & Western R. R 

Lake Erie, Alliance & Wheeling R. R 

Big Four Route 

Pittsburgh & Lake Erie R. R 

Cincinnati Northern Ry 

Lake Shore & Michigan Southern Ry 

Dunkirk, Allegheny Valley & Pittsburgh R. R. 



Full. 



59 



Apart- 
ment. 



209 



For the operation of a full postal car, the R. P. O. nay ranges from 
3.4 cents per mile for a 40-foot car to 5.4 cents per mile for a 60-foot 
car, and in addition we receive the transportation charge for'the 
weight of the mail handled in the car, which I understand the depart- 
ment estimates to average 2 J to 3 tons, so that the average earnings 
on a railway post-office car would be about 20 cents per mile, as com- 
pared with the average number of passengers carried, which on the 
New York Central is 16 passengers, or 32 cents per car-mile, or with 
the maximum earnings of a passenger coach with a seating capacity 
of 84 persons at 2 cents per mile, or $1.68 per car-mile, or for a parlor 
car with a seating capacity of 25 passengers, 50 cents per car-mile. 
On some of the eastbound R. P. O. service we would not handle 1$ 



49396—14- 



44 



574 RAILWAY MAIL PAY. 

tons of mail in an R. P. 0. car, in which case our revenue would only 
be 13 cents per car-mile, as compared with a rate of 12 cents per car- 
mile for hauling an empty Pullman car or diner in a freight train. 

As the mail on our lines westbound is over four times heavier than 
the mail eastbound, and as we have to perform service in both direc- 
tions for the Post Office Department, it is only right to take the com- 
plimentary eastbound service into consideration in connection with 
the westbound service to arrive at the mail train earnings. Leaving 
out of consideration entirely the vast service performed in closed 
pouch trains and in apartment cars where we furnish considerable 
space, the earnings of the five mail trains westbound and the five mail 
trains eastbound would not average $1 a train mile, while our tariff 
rate for a special train is $2 per train mile, and our average revenue 
on all passenger trains operated is approximately $1.51 per train mile, 
and it should be noticed this average takes into account local trains 
and commutation trains which are admittedly operated at a loss. 

The Chairman. Have you the comparative figures as to your cost 
per train mile ? 

Mr. Rowan. We do not know what it costs. 

Comparing the earnings of an exclusive train which earns the maxi- 
mum mail pay on the Lake Shore road with a corresponding passenger 
train, we find train 35, which will average from seven to nine cars, 
earning $1.75 per train-mile on the Lake Shore, according to the train 
sheets made up by the Post Office Department, while a passenger train 
from Buffalo to Chicago, carrying about the same number of cars and 
operating about the same time of day (No. 23), earns, exclusive of 
express, $3.06 per train-mile. The $1.75 earned by the mail train is a 
westbound movement. The complimentary service eastbound of the 
mail cars earn about 70 cents, or, averaging eastbound and westbound 
movement, our mail earnings would average $1.20 per mile, against 
$1.51, the average earnings for all passenger trains. The through 
passenger trains pay about as well in one direction as in the other. 

The Chairman. In this $1.51 average earnings for all passenger 
trains you include in that the mail revenue ? 

Mr. Rowan. Yes, sir. The passenger trains pay about as well in 
one direction as in the other, whereas the mail does not. The mail 
pays better west than eastbound. 

Let us take another illustration: The mail section of train 3 on the 
Lake Shore road earns about 90 cents per train-mile, and the east- 
bound mail section of the complimentary train, No. 4, earns an aver- 
age of about 70 or 80 cents for the round trip. The passenger section 
of train 3 from Buffalo to Chicago earns $2.94 per train-mile, and the 
passenger section of train 4 earns $1.99 per train-mile, or $2.46 for the 
round-trip passenger train. 

The operation of the mail train is very expensive, as the mail 
takes precedence over every other class of traffic, and the mail 
trains, as I have stated before, are often held for a considerable 
time at stations beyond the schedule station stop, in connection 
with the loading of the mail. Especially is this true since the estab- 
lishment of parcel post. To illustrate: The exclusive mail train, 
No. 35, between Buffalo and Chicago, for the period March 10 to 
April 8, 1913, was held at various stations beyond the schedule 
stop 1,051 minutes as compared with a corresponding delay of 359 
minutes in the year of 1912. For the same period, train 43 was 



RAILWAY MAIL PAY. 575 

delayed between Buffalo and Chicago 1,547 minutes in 1913 as 
against corresponding delay of 913 minutes in 1912. The mail 
section of train 3 was delayed on account of mail 1,653 minutes in 
1913 as against 884 minutes in 1912. On eastbound trains we find 
train 34 delayed 779 minutes in 1913 as compared with 249 min- 
utes in 1912. Train 32 delayed 939 minutes in 1913 as compared 
with 312 minutes in 1912. Train 22 was delayed 404 minutes in 
1913 as against 85 minutes in 1912. This latter train is the Lake 
Shore Limited, one of our high-class trains, and you can readily 
appreciate the difficulties of making up this lost time. There is con- 
siderable additional expense attached to make up this lost time at 
important mail points like Albany, Buffalo, Cleveland, etc., it often- 
times being necessary to sidetrack less important trains and freight 
trains in order to get the mail train to the next stopping point on 
time, where it is perhaps further delayed in handling the mails. 

What I mean by these delays is the delay chargeable to the mails 
and does not include delays at Chicago waiting for connections. 
A train may be delayed at Cleveland 10 minutes for the mail, and 
it makes up that time and gets into Toledo on time, where it may 
lose 10 minutes more — that would be 20 minutes delay to the train. 

The Chairman. If you are delayed 10 minutes at Cleveland and 
you make up that time between there and your next stop, do you 
debit that to the mail ? 

Mr. Rowan. Yes. This computation is to show the length of time 
beyond the schedule of the special train that the train is held on 
account of the mail. If it is held for passengers or baggage it is not 
charged. 

The Chairman. If you had 40 trunks at a station and you had 
50,000 pounds of mail, you would not claim that the train was stopped 
or delayed to get those 40 trunks on, but you would charge it to the 
50,000 pounds of mail ? 

Mr. Rowan. The chances are it would go on different cars. 

The Chairman. It could not go on the cars as long as the train 
stopped ? 

Mr. Rowan. No, sir. The station stop is all right, but any delay 
beyond the station stop and if it is in order to handle the mail is 
charged to the mail in our train sheets. If it is on account of 
express, it is charged to that, or if it is passenger or baggage, it is 
charged to that. 

Mr. McBride. Suppose you did not have help enough to put mail 
and trunks on at the same time. How would you charge that ? 

Mr. Rowan. I do not know. I think that that ought to be 
divided in some way. I do not know just how it is done. This 
information is taken from the daily train operation sheet, showing 
the delays all along the line of road. 

In addition to the expense of side service and terminal service per- 
formed for the mail, we supply men on our fast mail trains, paid by the 
railroad company, to haul mail from the working car back into the 
storage car. This is done with the idea of relieving the great station 
delays account of transferring the mail from one car to the other; and 
even with these men on the train there is a considerable amount of 
mail which is put out of one car and trucked to another car in the same 
train during a station stop, for which labor must be furnished 



576 RAILWAY MAIL PAY. 

Another large expense that we have, which the Post Office Depart- 
ment has not taken into consideration in the preparation of Document 
105, is the value of the transportation furnished to post-office inspec- 
tors while on official duty and postal clerks riding to and from their 
points of duty in passenger coaches. We kept track of this for six 
months, and on several of our lines it resulted as follows : 

Value of transportation given by the New York Central lines to Post Office Department, 
account postal commissions honored in passenger coaches, June 1 to Dec. 31, 1910, 
inclusive. 

New York Central $31, 039. 48 

Boston & Albany 9, 514. 68 

Rutland R. R 1, 285. 08 

Lake Shore , 37, 837. 50 

Michigan Central 4, 740. 73 

Big Four 27,007.37 

Pittsburgh & Lake Erie 607. 25 

Chicago, Indiana & Southern R. R 190. 15 

Total 112, 222. 24 

The acceptance of these commissions as transportation has been the 
outgrowth of the liberality of the railroads, so that now it is regarded 
by the Post Office Department as one of our obligations in the hand- 
ling of the mails to transport these men. 

The Chairman. That does not cover the railway mail clerks at all ? 

Mr. Rowan. No, sir; except those in passenger coaches. 

The Chairman. Under a six months' actual computation ? 

Mr. Rowan. Actual computation; and I have the details showing 
the names, the commission number, and the points between which 
they rode. 

Senator Weeks. That was taken for what year? 

Mr. Rowan. 1910. 

Senator Weeks. Is not that riding on those commissions decreas- 
ing? 

Mr. Rowan. I do not think so. I think it has probably increased, 
as the mail and the number of clerks have increased. 

Senator Weeks. It was charged that about that time men were 
riding on their commission when they had no public business to 
perform. 

Mr. Rowan. My personal thought has been that there has been very 
little personal travel on the commissions. The man who travels as 
much as a postal clerk travels, when he gets a day off likes to stay at 
home. 

Senator Weeks. It was pretty clearly demonstrated at that time 
that many postal clerks went from the point where they happened 
to be to some other point which might be their home, or the place 
where some of their relatives lived, or something of that sort, on their 
own personal account. 

Mr. Rowan. If I am not mistaken, I think that the same rules 
applied to the Post Office Department in 1910 that apply now. 
Generally speaking, they are under oath, or at least had to make an 
affidavit at the end of the month that they had not misused their 
commissions. 

The Chairman. How is that, Mr. McBride 1 Can you give us some 
information relative to that ? 



RAILWAY MAIL PAY. 577 

Mr. McBride. I think there is less of that sort of travel that the 
Senator speaks of now than there was in former years. 

The Chairman. Do you think in 1910 commissions were being used 
for personal travel by post-office inspectors and clerks ? 

Mr. McBride. I know in the old days, when I was on the road, they 
were occasionally used for personal travel, but I do not think it is 
done now to any extent; the department has made every effort to 
stop the practice, it being absolutely forbidden by the Postmaster 
General's orders. That is the wish of the department. 

Thereupon, at 1.30 o'clock p. m., a recess was taken until 2.30 
o'clock p. m. 

AFTER RECESS. 

The hearing was resumed at the expiration of the recess at 2. '30 
o'clock p. m. 

Mr. Rowan. Mr. Chairman, before we took the recess, Senator 
Weeks asked a question when we were discussing the rules for the 
use of the commission as to whether the department was as strict 
in previous years as they are to-day. There are more postal clerks 
to-day and that might affect the question. I just wanted to bring 
that out. 

The Chairman. In other words, since your computation in 1910, 
you do not think there is any difference in the changes that may 
have been made in the rules concerning employees, you think you 
carry just as many in the passenger cars to-day as you did in 1910, 
when you made this computation? 

Mr. Rowan. Yes, sir; and if anything a slight increase, on ac- 
count of the increased number of postal clerks and post-office inspectors . 

In view of these facts, why did not the Post Office Department 
take into account in Document 105 the space occupied by these 
men and charge same to the mail service, where it must certainly 
apply, as we are required to transport them on account of the mail 
service ? 

The Chairman. Why should they take it into account when the 
Government paid no compensation for them on the passenger basis, 
but assumed that the R. P. O. pay and the Railway Mail pay was 
compensation for the postal employees ? 

Mr. Rowan. As long as they are figuring out the amount of space 
on passenger trains devoted to the mail service, it seems to me they 
should have taken into account the space occupied by their men on 
duty in passenger cars. 

The Chairman. Did the Post Office Department have that infor- 
mation so that they could take it into account ? 

Mr. Rowan. No; they could have asked us for it and we could 
have given it to them. 

The Chairman. You only had that for six months in 1910, and 
document 105 was based on an inquiry on November 1909, so you 
could not have furnished it to them. 

Mr. Rowan. If we had known in advance of the preparation of our 
statistics we could have ascertained it. 

The Chairman. But your question is inferentially a criticism on 
the part of the Post Office Department, which, if merited, should be 



578 EAILWAY MAIL PAY. 

all right, but I do not see that your inferential criticism here is war- 
ranted for the reason that they had not the information and they had 
not the knowledge. How could you expect them to take cognizance 
of a factor existing, of which they had no knowledge ? 

Mr. Rowan. The only reason I bring it in here is to show, in the 
preparation of document No. 105, the space occupied by the men in 
the postal service was not taken into consideration; that is simply 
a fact, and I am not offering a criticism one way or another, but it 
seems to me that it might properly be taken into consideration, for 
example, if they were doing it again. 

The Chairman. Had the postal department the information that 
you had for 1910 for the six months computation that so many 
employees occupied passenger cars, equivalent to a passenger com- 
pensation at regular rates of $110,000, as I understand 

Mr. Rowan. $112,000 for six months. 

The Chairman. Then, I think there would be some justice in your 
inquiry, but under the conditions I do not see that there is. 

Mr. Mack. Was not that information furnished the department in 
connection with these reports; that is, the relative value of trans- 
portation in passenger cars ? 

Mr. Rowan. I do not recall positively. I think it was. 

Mr. Mack. I think it was, and omitted by the department for 
some reason. 

Mr. Rowan. How about that, Mr. McBride ? 

Mr. McBride. We asked for no information regarding the amount 
of space occupied in passenger cars. We did ask for miles traveled 
by postal clerks on duty and those not on duty, for the mail service, 
as well as the express service, and that information was furnished. 

Mr. Mack. But was not used by the department ? 

Mr. McBride. No, sir. 

The Chairman. Why was it not used, Mr. McBride ? 

Mr. McBride. I think that is explained in Document No. 105 in 
the text there. I do not recall the wording of it, but for one reason 
there was no way to check it up and see if it was accurate. 

The Chairman. Was there any way of checking up the answers to 
the 160 questions submitted by the Post Office Department ? 

Mr. McBride. Yes; we could check up the amount of space used. 

The Chairman. You could check it up, but if you asked 160 ques- 
tions and you received 160 answers, is there any way of checking that 
up other than the computation that might be based on the information 
submitted in answer to your interrogatories ? 

Mr. McBride. Yes; we had information from our own people as to 
the various items. 

The Chairman. What was the purpose of getting the information 
from the railroads if you had it all from your own people ? 

Mr. McBride. Merely as a confirmation, and primarily because the 
law provided for getting the information from the railroad companies, 
and the other was secondary; we got the other information in connec- 
tion with the inquiry made by the railroads. 

The Chairman. I did not catch that. 

Mr. McBride. The inquiry was primarily conducted to secure from 
the railroads certain information, and in order to verify that as much 
as possible we obtained data from the officers of our service to check 
the information furnished by the railroads. 



KAIL WAY MAIL PAY. 579 

The Chairman. Then the data that you got from your field officers 
was particular information sought for the purpose of comparing it 
with the information that you received from the railroads for this spe- 
cial method ? 

Mr. McBride. That is entirely correct. 

The Chairman. And that information would not be available 
under the ordinary administration of the Post Office Department ? 

Mr. McBride. No, sir; not all of it. Some of it would be, but we 
had to make an inquiry in order to get it. 

Mr. Rowan. Did you check up all the space submitted by the rail- 
roads for the month of November, 1909 ? 

Mr. McBride. Yes; as far as we could. 

Mr. Rowan. In other words, you duplicated the work that we did 
on all of the railroads ? 

Mr. McBride. We asked for specific information with regard to the 
space used and needed on the trains for the Railway Mail Service. 
The particular data regarding closed-pouch service was not checked 
up, except that we applied our own basis to the data reported by the 
companies. 

Mr. Mack. The point of the matter here is that this was service 
rendered the Post Office Department in transportation of officers and 
employees of the service, and it was not taken into account in the 
deductions made in Document 105 for the reason that you had no 
means of checking the accuracy of the reports of the railroads as to 
the volume of that transportation. (Its value, based on November, 
1909, statistics, was $1,171,810.68 per annum for transportation ren- 
dered the Government as an incident of mail transportation.) 

Mr. McBrdde. Yes, sir. 

Mr. Mack. And, as I understand, Mr. Rowan submits subsequent 
information here to-day, indicating the value of that as a condition 
or an incident of mail transportation. 

The Chairman. The $112,000 loss to the railroad, according to 
your viewpoint, represents the actual computation made by the New 
York Central for the six months of the year 1910? 

Mr. Rowan. It does; yes, sir. 

SPACE BASIS VERSUS WEIGHT BASIS. 

There are serious objections, in my mind, to the substitution of 
space for weight as a basis of paying the railroads for the transporta- 
tion of the mails. First, the difficulty in arriving at any definite or 
accurate basis on which to compute cost; second, varying rates of 
pay on different railroads ; third, the fact that it places in the hands 
of one man, the Postmaster General, the power of adjusting pay for 
the railroads; fourth, the constant friction which would result be- 
tween the Post Office Department and the railroads as to the amount 
of space used. Nine- tenths of the difficulties with the Post Office 
Department to-day are over the question of car space, the depart- 
ment repeatedly using more space than is authorized. This is due, 
of course, largely to the fact that the department measures space not 
by the number of feet used, but by the number of separations made 
in the distribution of the mails, which, according to the yardstick 
now used by the department, prescribes a definite number of letter 
separations and paper separations as equivalent to 40, 50, or 60 feet 



580 EAILWAY MAIL PAY. 

of space. For example, we have operating on the Boston & Albany 
Railroad, between Boston and Albany, an exclusive car specially 
fitted up to meet the peculiar needs of this run. In this car the 
Post Office Department makes over 1,100 letter separations, and 
the cars are manned by eight postal clerks. The Post Office Depart- 
ment will not recognize this car as anything but a 30-foot apart- 
ment car, because there is no paper mail separated on this train, 
although the 1,100 letter separations exceed the requirements of a 60- 
foot car by 500 separations. 

I can see nothing but constant friction ahead if we have to argue 
out the mail space on every mail train. There have been other argu- 
ments presented by the railroads against the space basis, but weight 
is the factor used in charging for freight and express, and* why not 
for mail ? 

The Chairman. Mr. McBride, in that connection what have you 
to say to Mr. Eowan's statement that your method of ascertainment 
is based on the number of letter separations for the space used ? Is 
that correct, in the department ? 

Mr. McBride. Not entirely so. 

The Chairman. How far is it? Would you elucidate a little on 
that ? How do you use letter separations as a measure for the space 
used? 

Mr. McBride. We have heretofore had a standard number of 
separations in letters and papers 

The Chairman. Do you make any distinction between letters and 
papers ? 

Mr. McBride. Yes; letter separations are small pigeonhole boxes, 
while paper separations are provided by canvas sacks hung in a rack 
fastened to the side of the car and were, before the advent of the 
parcel post, hung with 9-inch openings. 

The Chairman. Then piece separations was misleading to my mind, 
the separations being the number of pigeonholes or divisions in 
a car? 

Mr. McBride. Divisions, pigeonholes, or number of sacks. 
• The Chairman. How many pigeonholes and how many sack spaces 
do you figure as the equivalent of 30 feet, how many the equivalent 
of 40 feet, and how many the equivalent of 50 feet? Have you an 
universal number of separations that apply ? 

Mr. McBride. We have a standard of separations for each size car, 
but that is not the sole basis for a determination of car space; other 
factors are the amount of space needed for the storage of the working 
mail and of the registered mail and mail for local delivery. The reg- 
ulation governing the determination of the amount of space upon 
which car space is authorized is contained in subparagraph a of 
paragraph 3 of section 1179 of the Postal Laws and Regulations, as 
follows : 

a. In determining the amount of space which shall be the basis for a recommendation 
and authorization of railway post-office cars and pay therefor the principal element 
shall be the amount of space necessary for railway post-office purposes; that is, for 
the handling and the distribution of the mails en route, the storage of the mails to be 
so distributed, and the storage and handling of registered matter and mails for local 
delivery. 



RAILWAY MAIL PAY. 581 

The Chairman. Have you an universal rule? 

Mr. McBride. No; no universal rule. 

The Chairman. Then they are arbitrary in each instance ? 

Mr. McBride. The determination of the amount of space needed 
for the storage of working mail and local delivery mail is left largely 
to the division superintendents as they state their needs. 

The Chairman. Is there any unanimity as between your superin- 
tendents as to the yardstick which you have for that determination 
of the separations for the space used, so many for so many feet ? 

Air. McBride. Entirely so, on the separations. 

The Chairman. How many separations are required for 10 linear 
feet? 

Mr. McBride. We do not put it that way. We have a standard 
for a 30-foot car, a 40-foot car, a 50-foot car, and a 60-foot car. In a 
30-foot car there are 300 letter separations, and I think 96 paper sepa- 
rations under the old rule, but since the advent of the parcel post we 
have had to change that on account of the necessity of hanging sacks 
with wider openings, and personally it is my opinion that we shall 
have to adopt a linear space unit instead of a separation unit. 

The Chairman. Then the development of what is known as the 
parcel post strengthens your contention as to the advisability of the 
substitution of space for weight as the determining factor or a measure 
of compensation for the service rendered ? 

Mr. McBride. Yes, sir; we have had a great many recommenda- 
tions recently for increase in car space due largely and principally to 
the advent of the parcel post, which does not increase the number of 
separations in the car, but which requires a greater number of linear 
feet for a given number of separations, because we find it necessary 
to hang them with 12 or 14 inch openings instead of 9 inches, on 
account of the larger articles. 

Mr. Rowan. To illustrate, I have a specific case here. We have 
two postal cars operating on our line recently built and built accord- 
ing to the plans prescribed by the Post Office Department. We are 
in receipt of a letter from a Post Office Department official, dated April 
12, 1913, in which he calls attention to the fact that the minimum 
number of separations in a 60-foot car is 600 letters and 200 papers, 
whereas in the two cars referred to the following openings are pro- 
vided in one car, 884 letter and 140 paper; in the other car 884 letter 
and 138 paper. We exceed the number of letter separations required 
for a 60-foot car, but we have not got the required number of paper 
separations. 

Mr. McBride. That is due, I assume, to the necessity for hanging 
sacks with the wider openings. 

Mr. Rowan. That I do not know. We are told if we can not 
change them they do not see how they can consider this car as any- 
thing else but a 40-foot car, although they are using 884 letter sepa- 
rations and 140 paper separations and the inside arrangement of 
the car was prescribed by the department. We will fix a car up in 
any way the department asks, and the car is 60 feet inside measure- 
ment, and now we have to go to work and change it. 

Mr. McBride. I do not think you want that to go into the record, 
that the department sent you a letter of that kind, do you — the 
Post Office Department in Washington ? 



582 RAILWAY MAIL PAY. 

Mr. Rowan. No; I will change that. That is a letter I got several 
days ago, and I brought that down to talk to you about it. But the 
department has, in the past, used a yard stick as to the number of 
separations made in a car. 

Mr. McBride. They were constant under the old order of things, 
but since the advent of parcel post we have had to abandon that, 
practically, in so far as paper separations are concerned. 

The Chairman. Let me ask you, in that connection, if heretofore 
you have used the number of separations as your unit upon which to 
determine the amount of space, why could not the number of sepa- 
rations be the factor as to the determination of the space, providing 
the separations are made always the same. 

Mr. McBride. They could, and that was the reason for adopting the 
standard under the old plan. But under the advent of the parcel 
post something new is injected. 

The Chairman. In 1909, under the old inquiry, there was no such 
thing as the parcel post. The difference of opinion between the de- 
partment and the transportation companies existed before the 1st 
of January, 1913. I would like to ask some of you railroad gentlemen 
in that connection what criticism you have as to the utilization of the 
number of separations — if you have a fixed measurement for the letter 
separations and a fixed measurement for the newspaper separations, 
and a fixed measurement, if you please, for parcel post? What is 
your criticism of that ? Mr. Mack, will you answer that ? 

Mr. Mack. As a basis for space pay, you mean ? 

The Chairman. Yes. 

Mr. Mack. The number of separations primarily would depend 
upon how much distribution the Post Office Department wants to 
make. It can make it more or less as it chooses. There is not any 
condition of service that requires a certain distribution of a certain 
number of separations. 

The Chairman. They would not change the number of pigeonholes 
for mail or the number of racks each trip ; they would be fixed in the 
car, and they would be the inches, if you please, of your yardstick. 

Mr. Mack. On each trip, yes; that could be determined. 

The Chairman. I mean, could a basis be worked out with the utili- 
zation of the number of separations as the basis ? Mr. McBride said 
because of the growth of what is known as the parcel-post business 
he is more than ever convinced as to the desirability, and in fact of 
the necessity, of the substitution of space for weight as the measure 
of the service rendered. I simply ask now what your criticisms are 
as to the utilization of a given number of pigeonholes for your letters 
and sacks for your newspapers in a car, as the basis for your yardstick, 
if you please, for the service rendered ? 

Mr. Mack. Well, I presume it could, but there would have to be 
an understanding as to what number of letter boxes was the proper 
basis for that space pay. For instance, the Post Office Department 
now, on a 60-foot car, would require 600 letter boxes. In 1876 the 
pay for a 60-foot car was provided for with 98 letter boxes. We 
think the post-office car has been very much overworked in its dis- 
tributing facilities. 

Mr. Safford. There is another important item in that connection, 
and that is that the number of separations do not necessarily repre- 
sent the volume of mail in this case. 



RAILWAY MAIL PAY. 583 

The Chairman. It represents the volume of facilities, does it not? 

Mr. Safford. So far as pigeonholes and rack space are concerned 
they do, but they do not necessarily represent the amount of floor 
space. 

Mr. Bradley. It would seem that the question of interior facilities 
should not affect the question of car space at all. If car space were 
the basis upon which the pay would be calculated, the interior facilities 
then would merely be important to the Post Office Department, and 
not important to the railroad company, unless the Post Office De- 
partment should undertake to make frequent changes in the make-up 
of those fixtures, thus obliging the railroad company to go to the 
expense of refitting the car, which is a more difficult matter at the 
present time with steel car equipment than it would be in the old 
times with wooden equipment; but if space were the basis of pay and 
there was a certain rate for a 60-foot car, it would seem to me that 
the utilization of the interior of the car by the Post Office Depart- 
ment in its own particular work would be a matter of indifference to 
the railroad company, except, as I said, as to the item of changes 
needed from time to time in the arrangement of these interior fittings. 

Mr. Kowan. They require a different number of separations 
between different points. There are often cases where they want a 
40-foot car, say, for instance, from New York to Syracuse, and a 60- 
foot car from Syracuse to Cleveland, and a 40-foot car from Cleve- 
land to Chicago. On a run like that you would have to provide the 
maximum number. 

The Chairman. Mr. McBride, in the suggested plan of the depart- 
ment, was it the idea of the committee that different rates of com- 
pensation per linear foot would be paid on a 60, 40, 30, 20, or 10 foot 
basis ? 

Mr. McBride. No, sir. 

The Chairman. That the same rate per linear feet would be paid? 

Mr. McBride. A car-foot-mile rate for a railroad system. 

The Chairman. If thev got a dollar for a linear foot, would they 
get $10 for 10 linear feet^ $20 if there were $20 linear feet, and $30 if 
there were 30 linear feet, $40 if there were 40, $50 if there were 50 
linear feet, and $60 if there were 60 linear feet? 

Mr. McBride. Yes, sir. 

The Chairman. So that you would have the same compensation 
whether 1 foot or 60 feet? 

Mr. McBrdoe. Yes, sir; the same rate of compensation per car- 
foot-mile. 

The Chairman. Per car-foot-mile ? 

Mr. McBride. Yes. 

Mr. Mack. That is for a single s\ r stem. 

Mr. McBride. It might vary with systems. 

Mr. Mack. Seven hundred and ninety-five car-foot-mile rates on 
that basis, the uniform rate applying simply to a particular company 
or corporation. 

The Chairman. And it is your contention that one of the weak- 
nesses of the system is the necessity of making rates for each one of 
the 795 roads with whom the Government has contracts to-day? 

Mr. Mack. We think there should be uniform rates. 



584 RAILWAY MAIL PAY. 

Mr. Rowan. Another objection to the present basis of mail pay is 
the fact that no pay is given for apartment cars. At the time the pres- 
ent basis of pay was established the apartment as it is to-day did not 
exist. It originated by the railroads permitting the route agents to 
have a few cubby-holes in the end of the baggage car or a few hooks, 
where he could hang up mail sacks, and the evolution has brought us 
down to the point where to-day a 30-foot apartment car is half of a car 
fitted up identically with a full mail car, with expensive fittings which 
must conform to the prescribed apartment-car standards, and be 
heated and lighted, and placed for advance distribution whenever 
the department desires, and in which numerous mail clerks are 
carried. It is impossible for the railroad to get sufficient tonnage in 
these working post offices to anywhere near compensate them for the 
operation of a car. The Post Office Department pays rent for its 
post offices — why" is it not fair to pay rental for a post office on 
wheels, and a sufficient rental to pay for the cost of hauling this post 
office over the road? 

The Chairman. It does in the R. P. O. car. 

Mr. Rowan. It does in the R. P. O. car pay. 

The Chairman. And your contention is that they should apply 
the same system to the apartment car. 

Mr. Rowan. Yes, sir. The side service is the outgrowth of the old 
stage coach which was required to go to the post office, where the dis- 
tance from the main road was less than 80 rods. At a great many 
points where the station is small and the train service not frequent, and 
the amount of mail to be handled small, the work can be performed 
without additional help and little or no expense, but as the mails have 
increased and with the parcel post, it becomes a real burden which 
was never intended by the originators of the law to be placed upon 
the railroad company. In many cases, in my opinion, arrangements 
could be made between the Post Office Department and the railroads 
so that the railroad could be reimbursed for the actual cost of the 
service performed. At places where the amount of mail to be handled 
requires the employment of additional help, or an outside contractor, 
the railroad should be relieved of the service altogether. There are 
numerous points on our system lines where the public is considerably in- 
convenienced by the one employee of the railroad being away from the 
station at different periods during the day carrying the mail between 
the station and the post office. There are also cases where we have 
to employ an additional man in order to exchange mails between the 
railway station and the post office at hours when an agent is not on 
duty. In my opinion, it is no more the duty of the railroad company 
to handle the mails beyond their station platform than it is for a rail- 
road to transport a man from the railroad station to his residence. 

Under the present system of weighing, once in four years, and with 
a normal increase in the mails ranging from 6 per cent up, the rail- 
roads are required to handle additional quantities of mail for which 
there is no compensation whatever. There is no justice to this, and 
four years is entirely too long a time between weighings, and there 
are cases where it works a tremendous injustice. For illustration, 
just after the quadrennial weighing of the mails in the State of Ohio, 
in 1907, the printing of stamped envelopes and newspaper wrappers 
was changed from points in New England to Dayton, Ohio, so that 
many roads have been required to handle this traffic for four years 



EAILWAY MAIL PAY. 585 

without any compensation, while other roads have been receiving 
for the same period compensation" for services not performed. There 
can not be any justice to this whatever. After handling this matter 
out of Dayton without compensation from three to four years the 
Post Office Department withdrew a large amount of same from the 
mails and shipped it by freight so that we will never receive a dollar 
compensation for all of this mail which has been handled. 

The Chairman. What do you estimate that would amount to in 
dollars under the present method? 

Mr. Rowan. I could not say, Senator. I have never figured it up, 
but I suppose the department knows how much they have shipped by 
freight. 

The Chairman. Of this particular matter, have you any idea, Mr. 
Prentiss, what that would amount to in weight ? 

Mr. Prentiss. No, sir. 

The Chairman. What would the volume of that business in 
stamped envelopes and newspaper wrappers that were made at Day- 
ton, Ohio, amount to? 

Mr. McBride. I can not state offhand, but can possibly get the 
data. The records show that during the fiscal year of 1912, 4,588,339 

Eounds of stamped envelopes and newspaper wrappers were shipped 
y freight from Dayton. 

Mr. Rowan. I just wanted to bring this out. The department is 
powerless to do anything. Annual weighings would make conditions 
more equitable. 

We are weighing the mails east of Buffalo to day and have been 
accustomed to receive several days a week large consignments of 
stamped envelopes and newspaper wrappers from Dayton to New 
England territory. Since the flood in Ohio the shipments of this 
matter from Dayton have practically ceased, so that on this particular 
traffic we have only received the benefit of the weight from February 
19 to March 25, and it is doubtful whether normal conditions will be 
resumed before the weighing is over. In other words, for hauling 
this traffic we are only going to receive one third the pay that we are 
entitled to, as only about one third the amount of this matter handled 
under normal conditions will be included in our weights. 

Further, in the fall of 1908 when the mails were weighed in New 
England the country was just recovering from the financial depression 
of 1907, and the weights of the mail on the Boston & Albany Railroad 
between Boston and Albany showed a loss in weight over the four 
years previous, a most unusual thing to have happen. The weighing 
of the mails on the Boston & Albany during the fall of 1912, which 
will govern the compensation for four years beginning July 1, 1913, 
shows an increase of 34 per cent over the 1908 weighing, from which 
you can readily see that we have been carrying for several years past 
a considerable volume of mail for which we have had absolutely no 
compensation, as the weighing was conducted at an abnormal time. 
Conditions became normal again in. the spring of 1909. The spring 
weights in New York State in 1909 showed the normal increase which 
was expected. 

Mr. McBride. Right there I might say that I am advised by the 
Division of Stamps that they have practically resumed the regular 
shipments out of Dayton. 



586 RAILWAY MAIL PAY. 

Mr. Rowan. I am glad to hear that. I asked our man in Dayton 
to advise me and he said it would tn some time before they were 
normal, but he is not able to get the information as accurately as 
you are. 

Mr. McBride. I was talking with the superintendent of the Division 
of Stamps yesterday, and he said they had resumed shipments. 

Mr. Mack. Have you any objection to the insertion in Mr. Rowan's 
testimony where the question of the value of the transportation of 
postal employees in coaches came in to show that in the testimony of 
Second Assistant Postmaster General Stewart he showed that infor- 
mation and showed that the statistics indicated $97,650.89 a month 
and the annual value of that service would be at the rate of $1,171,- 
810.68? 

The Chairman. For the whole allowance? 

Mr. Mack. For the whole allowance. That is not the postal clerks 
in the cars, but the officials and the clerks traveling in coaches and in 
Pullman cars. I thought it might be interesting to have it put in at 
that point in the testimony. It shows the annual value of it as re- 
ported by the railroad companies. 

Mr. Rowan. The main lines would be apt to get more of that than 
the side lines. We find it is mostly on the main line on our road. The 
side lines do not get much of it. 

The Chairman. Do you think transportation companies should 
receive relatively the same pay for mail service that they do for 
express and passenger, or what difference, if any, would you make 
between these three services in the way of compensation, and what do 
you figure the difference in the way of actual cost and operation? 

Mr. Rowan. We think that the mail service should pay its share of 
the expenses. 

The Chairman. You mean that the mail, passenger, and express 
should all be treated alike ? 

Mr. Rowan. Yes, sir. 

The Chairman. Are their operating expenses all alike ? 

Mr. Rowan. I should say so. The mail is given preferential treat- 
ment in every case and given precedence over the passenger service 
every time. 

The Chairman. Do you figure your operating cost the same in all 
three cases ? 

Mr. Rowan. We have not figured the cost of each service, Senator. 

The Chairman. That has never been done ? 

Mr. Rowan. No, sir. 

The Chairman. Then it is simply an impression on your part that 
they should receive equal compensation? 

Mr. Rowan. I think every class of service should pay its way; if 
we are paid any less we ought to be told that, so that we could go to 
the Interstate Commerce Commission and get them to permit us to 
charge more for some other class of traffic. 

Mr. Lloyd. Is it not true you receive better compensation for 
carrying freight than you do for carrying passengers ? 

Mr. Rowan. Yes, sir. 

Mr. Lloyd. Should not that be equalized? Why should a man 
pay more for carrying freight than for carrying passengers ? 

Mr. Rowan. Well, the freight service will stand it better. You 
can not raise the passenger rates; the commissions would not permit it. 



RAILWAY MAIL PAY. 587 

Mr. Lloyd. That is all right, then. 

Mr. Rowan. The railroads have to stay in business. They have 
to get revenue from some source or go bankrupt. 

Mr. Lloyd.. The Government might cut down the railroads' pay 
a little and say you must carry it, on the same principle. You said 
that the three ought to bear the same proportion of expense, and 
then you said they did not do it. Now, why ? I am talking about 
the passenger and freight ? 

Mr. Rowan. Oh, I do not know. 

Mr. Lloyd. Why don't they? 

Mr. Rowan. I do not know. 

Mr. Lloyd. Have the railroads ever tried to secure a rate which 
would be equally compensatory for both freight and passenger 
service ? 

Mr. Rowan. We tried to get more money out of our freight. I do 
not know how it is on the passenger service. 

Mr. Lloyd. The trouble about the passenger is that ordinarily 
it is governed by State legislation? 

Mr. Rowan. Yes. We tried to raise our passenger rate — our com- 
mutation rate — and failed. The public service commission ordered 
us to put back the rate we formerly charged, although we have the 
lowest commutation rates out of New York City. 

The Chairman. What is your rate per mile out of New York City — 
5 mills ? 

Mr. Rowan. I do not know. 

The Chairman. The New York, New Haven & Hartford has a 
5-mill rate, I think, and they endeavored to increase that rate but 
could not. 

Mr. Lloyd. Does it make any difference to the railroad from which 
service it gets its profits ? In other words, from the railroads' stand- 

Eoint and from an operating standpoint it is better that they should 
ave a profit on all three services; or, better if they had a greater 
profit On the freight service and a lesser profit on the passenger, 
express, and mail ? Does it make any difference from an operating 
standpoint or a financial standpoint to the roads as to how the 
dollars earned are apportioned ts between the services ? 

Mr. Rowan. I can only state my personal opinion. It seems to 
me that on the three classes of passenger service the roads should 
endeavor to have each branch of the service pay its way. Otherwise, 
you make the passenger service pay for mail, or the man who pays 
the express charges pay for passenger traffic. 

Mr. Lloyd. Then, assuming that your goal was to make a 6 per 
cent return or 7 per cent return on your investment, would it be 
material as to where you got your 7 per cent, whether you got it from 
passenger or freight, or in your apportionment for the passenger 
service whether you got it out of the mail, passenger, or express, or 
the passenger and milk service generally ? 

Mr. Rowan. I should think it would, because in the passenger rate 
cases that we have if we showed that we were earning more than a 
reasonable rate to offset a mail deficit, we might have to reduce our 
passenger rates. 

Mr. Lloyd. Does your system figure that you are making as much 
proportional profit per car mile on your passenger as you are on your 
freight ? 



588 RAILWAY MAIL PAY. 

Mr. Rowan. We make more money out of the freight. 

Mr. Lloyd. You make more money out of the freight? 

Mr. Rowan. Yes, sir; a couple of train-miles. 

Mr. Lloyd. What is the difference between car mile and train- 
mile ? 

Mr. Rowan. Train-mile is the operation of a train 1 mile. 

Mr. Lloyd. One mile ? 

Mr. Rowan. One mile; yes. 

Mr. Lloyd. Now, what is a car mile ? 

Mr. Rowan. For the individual car operated 1 mile. 

Mr. Lloyd. Running an individual car 1 mile ? 

Mr. Rowan. Yes. 

The Chairman. What is a common unit of computation as be- 
tween freight and passenger ? 

Mr. Rowan. The train-mile is the only basis, but it is common 
really only in name, because a train-mile in freight service is not the 
same thing as a train-mile in passenger service, while they each hava 
different locomotives and have a different number of cars and run at 
different speeds, and so on. 

. The Chairman. Mr. Peabody contended if there was to be but one 
yardstick it should be the train-mile ? 

Mr. Rowan. Yes; you could use a car mile as a common unit, but 
it would be a very different result from the train-mile. 

Mr. Lloyd. The pay there would depend on the number of cars ? 

Mr. Rowan. Yes, sir; and they are relatively much more numerous 
in the freight service. 

Mr. Logan. Would not that be the same, Mr. Lorenz — the train- 
mile and the car mile ? 

Mr. Lorenz. No, sir. Frequently on a railroad you will find half 
of the train-miles are passenger and half freight, whereas perhaps 
eight-tenths of the car miles are freight and one to two tenths pas- 
senger, so you would get a very different result if you took one or the 
other basis. 

The Chairman. I understand you received $5,800,000 last year 
from the Government in R. P. O. and railway mail pay. Do you 
figure that so far as the cost of that. service to your company is con- 
cerned, that you operate at a loss or at a profit ? 

Mr. Rowan. It did not pay as well as the other traffic. 

The Chairman. Relatively your compensation was not as great as 
that you received from the passenger service ? 

Mr. Rowan. Yes, sir. 

The Chairman. How about express ? 

Mr. Rowan. I think we earned more on the express. 

The Chairman. Have you made any computation to determine 
what actual profit you make in the handling of the mail ? 

Mr. Rowan. We never thought we did make much profit, if any, 
on the mail. 

The Chairman. You know what your profits are for your freight 
and you know what your profits are for passenger ? 

Mr. Rowan. I think that Mr. Wishart has prepared some figures 
on that, and I haven't those figures at my finger tips. Mr. Wishart 
will follow me and I think he is going to discuss that feature. 

Mr. Lloyd. Let me ask this question: Suppose you perform no 
mail service at all; do you think your surplus account would be 



RAILWAY MAIL PAY. 589 

decreased or increased ? Suppose you cut out the mail service; would 
your surplus account for the road be decreased or increased at the end 
of each year ? 

Mr. Rowan. I do not know. I never figured that out. 

The Chairman. Mr. Wishart has made a series of computations ? 

Mr. Rowan. Yes. 

Mr. Lloyd. I want to state right here that my candid judgment is 
that you can cut out the mail service and every important road in the 
United States would lose by reason of cutting it out at the present 
rate of pay. 

The Chairman. That is, there would be a reduction in the net 
earnings ? 

JVIr. Lloyd. Yes, sir; a reduction in the net earnings. 

The Chairman. What do you think of Mr. Lloyd's impression? 
How would you apply that to the New York Central ? 

Mr. Rowan. I do not know, Senator. I would want to give a good 
deal of thought to that. 

Mr. Lorenz. There is no question but what Mr. Lloyd is correct. 
That is to say, there is hardly any contention on the part of the 
railroads that the mail revenue is not as great as the additional 
expense caused by the mail service; they are running the passenger 
trains anyhow, and the extra cost of carrying the -mail cars is cer- 
tainly not as great as the mail revenue. The only contention the 
railroads can make is when you count in the common expenses and 
interest charges and taxes and apportion them on any basis you 
please, then the mail does not bear its full proportion, so that to cut 
out the mail service entirely would very clearly cut down the surplus to 
some extent. I do not think there is any railroad man here who would 
dispute that proposition. 

Mr. Bradley. That might be accentuated by the thought that the 
revenue for carrying the mail is less than 2 per cent of the total 
revenue. The difference would be difficult to perceive in the oper- 
ating result. 

Mr. Lloyd. Then there is something in that. 

The Chairman. That statement is not applicable to all the roads. 
The New York, New Haven & Hartford make a claim that for certain 
months of certain years their actual loss was so many thousands of 
dollars; if I remember, it was $93,000 for one year and $97,000 for 
another year. They would have been gainers to that extent if they 
had not carried any mail. 

Mr. Lloyd. I do not believe their computation is accurate. 

Mr. Lorenz. I think, Senator, that was on the basis of the total 
operating expenses; but if you consider that perhaps half of those 
operating expenses would have gone on just the same whether the 
mail was carried or not, then the actual expenses occasioned by the 
mail would certainly not be as great as then revenue from the mail. 

The Chairman. They figured a loss from the standpoint of allow- 
ance on capitalization of $500,000 or $600,000 a year. But they 
made an actual loss, as I understand from the statement; and I think 
Mr. Buckland stated specifically that the New York, New Haven & 
Hartford, under their system, would have been gainers by $93,000 
one year and $97,000 the other if they had not carried any mail at all. 

49396—14 45 



590 KAILWAY MAIL PAY. 

Mr. Lloyd. That is the way I understood it, and in that I think 
he was mistaken. 

Mr. Lorenz. Mr. Rowan described at some length the special 
service occasioned by the mail service — special facilities that had 
to be rendered, the interference with the train schedules, etc. I 
wondered whether an equally eloquent description could not be given 
of the special facilities occasioned by the passenger service proper; 
that is to say, compare for example the mere collection of the money 
in the case of the mail service, where you get in one or a few checks 
from the Government the entire amount of money you receive for 
the mail service. In the case of the passenger service you collect it in 
small sums of one and two dollars, which requires the maintenance 
of passenger ticket offices and ticket agents and ticket collectors, and 
so on. It seems to me perhaps if we set down all the special facilities 
occasioned by the passenger service that we would be even more im- 
pressed than by this discussion of the special facilities occasioned 
by the mail service, and the two things ought to be taken together. 

Mr. Rowan. I was simply endeavoring to bring out and show for 
the information of the commission what was done in connection with 
handling the mail on a line like the New York Central. 

Mr. Lloyd. Now, would you be kind enough to state what the 
special facilities are that are afforded the passenger service ? That is, 
answering the same question from the passenger standpoint. 

Mr. Rowan. I would have to go all over this paper again to point 
out the facilities. 

Mr. Lloyd. The truth about it is you have not prepared anything 
from that standpoint, have you ? 

Mr. Rowan. No, sir; I have not prepared any statement from a 
passenger standpoint. 

Mr. Lloyd. I wonder if anybody has that prepared for any road? 
I would like to have that done by two or three of the different roads, 
if they would, because that side of it has been repeatedly brought out 
in the hearings, but there has not been anything brought out that 
shows specifically just what extraordinary expense there is on account 
of passenger service, like those expenses to which Mr. Lorenz referred. 

The Chairman, i think Mr. Mack has a statement to make. 

Mr. Mack. Hardly in that particular way, but it seems to me that 
a railroad structure must first be there and the railroad passenger 
service in operation and the mail must stand its share of cost or 
should produce equal revenue with the other passenger service, 
because it participates in all the benefits that are derived from that 
great organization. 

Mr. Lloyd. How does it derive any benefit from that organization ? 
That organization was in existence before you undertook to carry any 
maiL You are prepared to carry passengers, you have to have your 
ticket agents and ticket officers and conductors, and all that kind of 
service whethsr you carry any mail or not, and because you have to 
li3,ve that whether you carry any mail or not, that expense ought to 
be charged to the passenger traffic and not to the mail. 

Mr. Mack. It seems to me that we have to support and provide 
that service, and that that forms the possibility of the use of that 
structure by and for the postal service. 

Mr. Lloyd. You do not use a ticket agent in handling mail. 
The mail has nothing to do with him. 



RAILWAY MAIL PAY. 591 

Mr. Mack. I know, but it is necessary to have a ticket agent in 
conjunction with the passenger service, and if we did not have the 
passenger service and ticket agent we would not have any mail 
service. 

Mr. Lloyd. You have to have a freight department. Do you 
think that ought to be charged up? You have to have a freight 
office and freight agent, and persons to handle the freight and all 
manner of equipment connected with freight service. No part of 
that could be charged to the mail, and yet it is that which you must 
have before the road is completed before you are expected to carry 
mail at all. It seems to me that the passenger and freight traffic in 
that particular stand exactly or\ the same basis, and that the mail 
should not be charged with any part of the expenses, either of the 
freight or the passenger. 

The Chairman. You look on mail as a by-product ? 

Mr. Lloyd. Certainly it is a by-product. 

The Chairman. And the express is a by-product ? 

Mr. Lloyd. Certainly. 

The Chairman. And the milk? 

Mr. Lloyd. Certainly; and they have always treated them that 
way. They speak of it as a combination service. The railroads of 
the United States to-day, I think I can safely say, regard the carrying 
of the mail as an accommodation to the Government, and while they 
are accommodating the Government they feel they ought to have 
reasonable compensation for carrying it just like they would for 
carrying any other by-product. But the serious question open right 
here is how much of the operating expense should be charged to the 
mail. 

Mr. Bradley. Would not this be a fair reflection? Why not, in 
connection with passenger service, regard this generation as a by- 
product, that the railroad was built for the last generation and that 
this generation is a by-product of the last and should not be charged 
any rate that would render a return to the railroad ? 

The Chairman. You are increasing your facilities all the time, 
your track and equipment, to take care of the increase in business. 

Mr. Lloyd. And you are making this generation pay the cost. You 
did not pay for it to start with. 

The Chairman. I would like to hear the comments of the railroad 
gentlemen on Mr. Lloyd's question. 

Mr. Bradley. It. would seem to me, Mr. Chairman, when we go 
into the realm of comparing the outgo and the income we have to 
part company with all ideas of noncontribution on the part of any 
particular factor. It is often said in the case of a passenger, "This 
train is going from New York to Chicago; why can't I be carried 
free? It will be no more expense to the company," which, no doubt, 
is true. It is an expense that could not be measured, but it seems 
to me just as soon as you enter the realm of comparing expenses 
with revenue, you have to charge each factor in the problem with its 
due proportion of one or the other. 

Mr. Lloyd. In that connection do you think it would be fair to 
charge to freight anything that you expend on account of the mail car 
and the equipment of the mail car ? 

Mr. Bradley. Of course in seeking to apportion your expenses 
you must first survey the entire structure and you will see that it is 



592 RAILWAY MAIL PAY. 

made up of two grand divisions, freight and passenger service; you 
next observe the mail service associates itself with passenger service. 

Mr. Lloyd. No; it does not until you have the railroad, the pas- 
senger service, and the freight service. After you have all that, then 
you undertake to carry the mail, and we want to get at the question 
what it costs you to carry the mail, and it seems to me it is no more 
right to charge freight expense to mail than it is niail expense to 
freight; it is no part of the expense of carrying the mail, what you 
pay on freight agents and the men who are handling and disposing of 
the freight. My own candid judgment is that you have no right to 
•charge up the ticket agent for any service that is rendered in connec- 
tion with the passenger service specifically to mail, and you do not 
^charge that any more to mail than you would charge the equipment 
of the car and the car itself to passenger or to freight. 

The Chairman. Would you extend that to overhead charges, to 
management, and things of that kind? They would be the same 
whether they carried the mail or not. 

Mr. Lloyd. Yes. They are the same whether they carry the mail 
or not. They have to have a general superintendent and all the 
officers of the company. They have to have the directorate, and all 
that has to be whether you carry a single pound of mail or not. 

Mr. Wishart. Does not that mean that you would have to go 
into a separate accounting for all expenses? It leaves out of the 
equation any refinement of that kind to say that a very small vol- 
ume of mail should bear its percentage of all the passenger business ? 
Mr. Rowan makes a case of special carriers around the station 
employed for the mail service. 

Mr. Lloyd. That is a side service which you claim the Government 
ought to pay for. 

Mr. Wishart. That is station service. 

Mr. Rowan. I mentioned a number of special facilities, where we 
had a number of men employed at Grand Central Terminal working 
exclusively on the mail. 

Mr. Lloyd. Every man employed by the railroads to render exclu- 
sive service to the mail ought to be charged to the mail. 

Mr. Snead. Why exclusively ? 

Mr. Lloyd. You are speaking of men performing exclusive service. 
Every man who performs exclusive service for the benefit of the 
mail ought to be charged to the mail. 

Mr. Wishart. That might be done, but there are so many cases 
where there are joint employees that it would be rather difficult to 
keep an accurate account. 

Mr. Lloyd. That would be an exception where you would have to 
work it out on an equitable basis, but where the person is employed 
specifically for handling the mail, or in connection with mail facilities, 
that service, whatever it is, ought to be charged to the mail. 

Mr. Bradley. Why should you not there say, in following out your 
own line of thought, that that joint employee would be there anyway 
for the general railroad business, and that no part of his time should 
be charged to the mail ? 

Mr. Lloyd. I am taking it for granted he is rendering additional 
service for which he should receive additional pay, and whatever 
additional pay he received on account of mail ought to be charged 
to the mail. If he does not receive any additional compensation at 



RAILWAY MAIL PAY. 593 

all because he has rendered service for the Government, and if it 
does not cost the railroad company any more, then the railroad com- 
pany ought not to receive the pay. If that man must necessarily 
be there, the railroad company is going to pay him the same amount 
whether the mail is carried and handled or whether it is not carried 
or handled ; then that individual ought not to be charged to the mail. 

The Chairman. Suppose in that connection 50 per cent of his 
time could be utilized to earn something that is now occupied in 
handling something for the railroad company ? 

Mr. Lloyd. That 50 per cent ought to be charged to the handling 
of the mail. 

Mr. Snead. Suppose a man in his day's work performs 100 pieces 
of work and one of the hundred is handling mail. Why should not 
that mail be charged with one-hundredth part of than man's salary % 

Mr. Lloyd. It ought to. 

Mr. Mack. Is not that an index of the whole proposition ? 

Mr. Snead. And why should not a mail car be charged with a cer- 
tain amount of wear and tear, and wear and tear on tracks, and main- 
tenance, of rent of rooms the mail service occupies in the passenger 
stations, and all those common expenses ? 

Mr. Lloyd. I should say that a mail car in a station, if it cost the 
railroad company anything to maintain the station, if it has to pay 
rent on its own property, a reasonable compensation might be 
charged to the mail. I am perfectly willing that everything should 
be charged to the mail that belongs to it; whatever is a mail charge 
ought to be charged to the mail, but my theory is this : You have your 
trains, your roadbed, and having the road and the road in operation, 
and you have your passenger traffic and your freight traffic, and your 
freight agents. Now, you carry the mail. Whatever additional 
expense comes to the railroad for carrying the mail, that expense ought 
to be charged to the mail account, aud every dollar of it should be 
compensated. 

Mr. Snead. You get off of the realm of facts into metaphysics,, 
where nobody would ever have a foot on the ground. 

Mr. Lloyd. The misfortune with this investigation is it is largely 
in metaphysics. 

Mr. bNEAD. That is the difficulty in trying to ascertain what it 
does cost to perform any transportation service. It is a plant just 
the same as a manufacturing plant is, but the manufacturing plant 
produces one, two, or three different kinds of goods, whereas the 
transportation plant manufactures 500,000 kinds of goods. 

Mr. Lloyd. You yourself make a distinction between freight and 
passenger. You charge to freight that which belongs to freight, and 
you charge to passenger what belongs to passenger. Now, what we 
would like to have done is for you to charge to what you call passenger 
service in its three divisions the individual cost of carrying the bag- 
gage, carrying the express, and carrying the mail, and assign to mail 
that which is its legitimate expense, and that to express which is its 
legitimate expense, and that to passenger winch is its legitimate 
expense. When we have worked that out completely we have the 
whole solution of the thing we are passing on now. 

Mr. Hurst. I take exception to one remark, and that is that the 
railroad separates its expenses to passenger and freight. It is not 
passenger and freight traffic, but it is the passenger and freight trains 



594 EAILWAY MAIL PAY. 

in which they divide their expenses. Not the traffic, but the trains. 
Now, we further segregate the train as between the cost of hauling 
these three commodities. 

Mr. Lloyd. Do you separate in your expense the freight agent from 
the passenger agent ? 

Mr. Hurst. Yes. 

Mr. Lloyd. Do you not take the freight agent and put that in the 
expenses of the freight train, if I may use your expression ? 

Mr. Hurst. Yes, sir. 

Mr. Lloyd. And you take the passenger agent and use him in 
connection with the passenger service ? 

Mr. Hurst. Yes, sir. 

Mr. Lloyd. Then there is no difference between us. That is what 
you ought to do. 

Mr. Hurst. That is an element in the running of that train. That 
is what he is hired for, for the purpose of preparing passengers to ride 
on that train, or the mail or the baggage or the express or anything 
that comes to his station. It may be his duty to put a sack of mail 
on or anything at all that refers to the passenger train. Therefore 
his pay is chargeable to that train, and the mail is an element in that 
service. 

Mr. Lloyd. We do not differ about that. 

Senator Weeks. What are you going to do with a train that 
carries both passenger and freight ? 

Mr. Hurst. There has been an arbitrary used. As it happens, the 
Pennsylvania does not have anything of that sort on its lines west 
of Pittsburgh, so I can not give any opinion on that. There has 
been a proposition by the Interstate Commerce Commission in cal- 
culating statistics that the element of miles of mixed trains used in 
both services should be considered both as freight and passenger 
traffic. 

Mr. McBride. How about a station where a station agent performs 
both freight and passenger service ? 

Mr. Hurst. We attempt to divide his pay on the basis of the time 
employed in the various services. 

The Chairman. That is necessarily an arbitrary. 

Mr. Hurst. An arbitrary based on the agent's report of the time 
occupied. 

The Chairman. And where you have a mixed train a division is 
made and a charge made both to freight and passenger. 

Mr. Hurst. We do not have mixed trains. I can not say what the 
rule is by roads that have mixed trains. 

The Chairman. Have you any mixed trains, Mr. Rowan? 

Mr. Rowan. On some of our branch lines we might have, but I do 
not recall any now. Some of our branch lines in Pennsylvania might 
have some mixed trains. 

Mr. Lorenz. Mr. Rowan enumerated certain objections to the 
space basis payment. I think he numbered them 1, 2, 3, and 4. I 
think, however, he did not elaborate them especially, and I am not 
sure that I understand exactly what the conditions were in each case. 
For example, Mr. Rowan, you said that the space basis was ob- 
jectionable because it was not definite. I do not quite understand 
why it is not possible to have a measurement for a certain number of 



RAILWAY MAIL PAY. 595 

days in the year, just as you have a weighing of the mail for a certain 
number of days now. 

Mr. Rowan. No. You misunderstood me. I said the difficulty 
in arriving at any definite or accurate basis on which to compute cost. 

Mr. Lorenz. I understand, then, your objections to the so-called 
space basis were really objections to a cost basis and not to the space 
basis ? 

Mr. Rowan. Arriving at the cost of paying for space. 

Mr. Lorenz. Is it proper in that way to mix space and cost ? You 
could have a space basis based on revenues instead of cost. 

Mr. Rowan. Then I tried to show the varying rates of pay and 
the fact that it would put in the hands of the Postmaster General the 
entire power to determine what the railroad should be paid. 

Mr. Lorenz. Vy hy does a space basis necessarily place in the hands 
of the Postmaster General any more power than any other basis, 
if you have it properly limited in the law ? 

Mr. Rowan. Because he determines the amount of space that shall 
be used, and if they should use the present yardstick of separations, 
and we have no access to the 

Mr. Lorenz. Your objection is to the measurement of space, rather 
than the space basis. Why would it not be possible to provide a 
method of determining space that would not be arbitrary, in the 
hands of one man? 

Mr. Rowan. I do not know. I have not heard of any such basis. 

Mr. Lorenz. I simply wished to bring out clearly that the objec- 
tions of Mr. Rowan to the space basis are really not objections to the 
space basis itself, but are objections to a proposed or possible method 
of applying that basis. 

Mr. Rowan. Yes; there are objections to the space basis. 

Mr. Lorenz. I do not now that you have mentioned any. Which 
one is an objection to the space basis ? 

Mr. Rowan ._ The difficulty in arriving at a definite or accurate 
basis of cost. 

Mr. Lorenz. What has cost to do with the space basis ? 

Mr. Rowan. How are you going to pay for the space ? 

Mr. Lorenz. You could pay for the space on the principle that it 
should earn the same revenue as your passenger service and have 
nothing to do with the cost. The two are independent things. 

Mr. Rowan. Then the fair rates of pay are based on the cost? 

Mr. Lorenz. That is again a cost objection and not a space 
objection. 

Mr. Rowan. Then, the friction that I feel there might be with 
the Post Office Department in arriving at the amount of space which 
they used ? 

Mr. Lorenz. That would depend, then, entirely on the way in 
which the law specified the determination of the amount of space. 
In other words, I think you have not touched the theoretical objec- 
tions to the space basis as much as the administrative questions 
which have been associated with it in the discussions ? 

Mr. Lloyd. Is not this true, after all, Mr. Rowan: Is it not true 
that your real objection to the space basis is that, first, you will not 
receive as much compensation under the space basis system as you 
do under the weight basis system, and, second, that you would have 



596 RAILWAY MAIL PAY. 

more trouble in the administration on the space basis system than 
you would under a weight basis system ? 

Mr. Rowan. The latter objection is my principal one. 

Mr. Lloyd. Is not the first one the real one ? 

Mr. Wishart. Not if we were paid on the passenger basis. We 
would get more. 

Mr. Lloyd. You people are objecting to the space basis, and there 
is not one of you who would object to it, I am sure, if you knew you 
were going to get more money by reason of having the space basis for 
the service you render, unless the administrative features, which 
would cause, you annoyance to such an extent that you would con- 
sider that an offset for that which you would receive additional pay 
on account of the space basis ? 

Mr. Rowan. I think that the administrative feature is a very serious 
one. Part of our pay now is on a space basis and, as I said in my 
testimony, most of my work with the Post Office Department is on 
the question of space, because they use one yardstick and I use 
another. They use the number of separations and I use the number 
of feet inside 01 the car and we never do agree. 

Mr. Lloyd. If that is the only thing in the way, we might make the 
law such that it could be easily demonstrated and avoid that trouble. 
The law might be changed so that the space basis, if that is to be 
adopted as the basis, could be adopted and the adjustment on account 
of space used could be gradually ascertained. Now, if you knew that 
was going to be, then your objection as to the administration would not 
exist ? 

The Chairman. That is, it could be specified in the law. 

Mr. Lloyd. Yes. I readily understand your objection, and I 
think it is a good one. I can see where you people have ground to 
complain already if we go into the space-basis theory with the present 
idea of how that space is to be determined and by the system of 
accounting that has already been made and by the system of manage- 
ment to-day with reference to the space basis, that you do not want 
to be annoyed by an administrative officer saying you are going to 
get pay for so many feet in this car and you are not going to get any 
more, but if the law specified just what you should receive and 
determined the space, then the administrative officer would have 
nothing to say about it, it would be fixed by law. For instance, if 
you use a 40-foot car and use at the instance of the department and 
receive pay for the 40-foot car, then there would be no further trouble, 
but now, in the administrative feature under the present arrange- 
ment you have trouble in determining the basis of pay that is deter- 
mined on the question of weight and space combined. It is the 
administrative feature now, in connection with weight and space, 
that you have trouble with. 

Mr. Rowan. As it is now they might say they wanted 40 feet, and 
we might furnish a 60-foot car because we have only 60-foot cars, 
and we would have no way of telling whether the department uses 
the 60 feet or the 40 feet. 

Mr. Lloyd. You do not care. 

Mr. Rowan. If we are paid on a space basis, we do care. 

Mr. Lloyd. If you furnish the space the Government could use it 
or not ? 



RAILWAY MAIL PAY. 597 

Mr. Rowan. If they asked for 60 feet 

Mr. Lloyd. If the space were determined by the law in some way 
so that there was no question about it, you would have no objec- 
tion to it? 

Mr. Rowan. I can not get my mind away from the present basis 
at all. 

Mr. Lloyd. Your trouble now is all about space. If the law 
fixed the space, then there would be no trouble about it. The Post 
Office Department contends, and it seems to me rightfully, that if 
they insist on a 40-foot car and you furnish a 60-foot car because 
you have not a 40-foot car, or because you do not want to use a 40- 
foot car, that you ought to have pay for a 40-foot car because that 
is what they demand. 

Mr. Rowan. A 60-foot car is a standard car, Mr. Lloyd, and we 
would not build anything but a 60-foot car. I do not know any 
railroad to-day that would build a car under 60 feet. 

Mr. Lloyd. If they demand, under existing regulations, a 40-foot 
car, you do not get paid for a 60-foot car? 

Mr. Rowan. No. 

Mr. Lloyd. What is the trouble between you and they ? They 
say they do not need a 60-foot car; we only need a 40-foot car, and 
under the law they have a right to fix the space, but if the law was 
such as to protect you and leave nothing to the administrative to 
determine except whether the car was to be used or not, then you 
would be relieved of your srouble. In other words, the trouble now 
is that you get paid for a 30-foot car, a 40-foot car, and a 60-foot car. 
The Government says we want a 40-foot car, you have not got it, and 
you use a 60-foot car. You do that on }~our own account, and you 
say you ought to have pay for a 60-foot car, because you have used it. 
The Government says no; we do not ask for a 60-foot car; We ask for 
a 40-foot car. That is the source of your trouble to-day. Now, if 
that law was changed so that there was a uniform car and tl ere were 
no cars except 60-foot cars, there were no 30-foot, 40-foot, or 50-foot, 
cars, but one class of cars, and that was a 60-foot car, and when you 
furnished a 60-foot car you got paid for a 60-foot car, the question, 
so far as the administration was concerned, would be overcome ? 

The Chairman. How about that case, if there was one standard 
car ? 

Mr. Rowan. That would relieve the situation a great deal, but in 
my contention with the department I recognized a 40-foot car a 50- 
foot car, and I never tried to get pay for a 60-foot car when they ask 
for 40 feet, because I know they can not give it. I 'would like to get 
it, and I can see a good many reasons why we should get it, but I have 
never asked them for it because, according to the present regulations, 
they only need 40 feet of space, and that is all they are going to pay for. 

Mr. Lloyd. What I was getting at is, if that was regulated by law, 
so that there was only one car, and that was tl e 60-foot car, then all 
the trouble you have now about a 40-foot car and 30-foot car would 
be eliminated ? 

Mr. Rowan. It would, if you pay for the space in the car instead 
of the number of separations made in the car as at present. 

Mr. Lloyd. That is an administrative question thus far, and that 
might be relieved by the law if the law was such, and I think it ought 
to be such, if you furnish a 40-foot car it does not make any difference 



598 EAILWAY MAIL PAY. 

to you how many separations there are, and the law ought to be such 
that the Government has nothing to do with that. If they demanded 
a 40-foot car and you furnished it, you ought to have pay for a 40-foot 
car, and if you furnish a 60-foot car instead of a 40-foot car, on your 
part you did that voluntarily and you would still get paid for a 40-foot 
car. I do not believe in governmental regulation with reference to 
the distribution basis, and while the Government is doing all right, I 
believe the law ought to be changed so that that administrative fea- 
ture would not be a bone of contention between the railroads and the 
Government. 

The Chairman. That is expressed in the law itself ? 

Mr. Lloyd. Yes. 

The Chairman. How would it be to have two standard cars, one 
30 feet and one 60 feet, and only have two kinds of cars — that is, 
apartment cars and a 30-foot standard and a 60-foot standard — and 
whether you used 1 foot or the whole 60 the Government has to pay 
for that ? Could not the postal department conform to that ? 

Mr. McBride. We could do it, but I think it would cost a great 
deal more money. 

The Chairman. Wherein ? 

Mr. McBride. Because we do not need 30 feet everywhere. 

Mr. Lloyd. Now we are talking about a space theory. Suppose 
you abandon the weight basis altogether and the railroads get paid 
according to the space used, if they furnish you a 30-foot car at your 
suggestion they ought to be paid for a 30-foot car, whether they 
used 1 foot or 30. If you demand a 60-foot car, if you use 1 foot, 
that is your business, and if you use 60 feet it is their business. 

Mr. McBride. There might be lines on which we would not need 
more than 15 feet for service. If we had nothing but 30-foot cars 
we would have to pay for 30 feet instead of 15 feet in such cases. 

Mr. Lloyd. It costs them just as much to furnish you a 30-foot 
car as it would a 15-foot space in that car, and if they furnish you 
a 30-foot car the Government ought to pay for it. 
• Mr. McBride. If it is a 30-foot car, but if only 15 feet are needed 
we should pay for only 15 feet. 

Mr. Lloyd. If you take a 30-foot car you ought to pay for it. 
Now, if you demand 15 feet of space, and only 15, and the law per- 
mits you to call for 15 feet of space, then you ought to pay for 15 
feet, but if there is no provision for this 1 5 feet and there is no pro- 
vision for the 30-foot space and you use a 30-foot car you ought to 
pay for the 30-foot car. 

Mr. McBride. We would have to, if the law read that way. 

Mr. Lloyd. If the law read that way it would avoid your admin- 
istrative trouble. 

Mr. McBride. I believe it would eliminate most of it. 

Mr. Lloyd. It would avoid their administrative trouble, and then 
the only question to be determined on the part of the Government 
would be, What is reasonable compensation for the space used? Does 
not that relieve the situation so far as the administrative features 
are concerned? 

Mr. McBride. It would probably relieve the administrative diffi- 
culties with the railroad companies. 



RAILWAY MAIL PAY. 599 

The Chairman. That would leave your pouch service as it is to-day, 
and you would have three units, a 30-foot car, a 60-foot car, and a 
pouch service, and you would have to pay for it. 

Mr. Lloyd. From a railroad standpoint, if they furnished a 30- 
foot car it costs them just as much full as empty. They do not 
know whether you have any mail in it or not; the expense to them is 
just the same. 

The Chairman. Would there be any question as between the 
departmental representatives and the railroads under any such 
system as that, if it was adopted ? 

Mr. Rowan. I think it would be largely eliminated, but I would 
like to know what the rate of pay would be for the car? 

Mr. Lloyd. That is not the question, because if we reach a space 
basis as the proper basis for the determination of pay, then the next 
question is, What should you receive for the space? 

The Chairman. Before we leave that space basis, Mr. McBride says 
it would cost the Government a great deal more under that plan. I 
would like for him to explain to me, if you have a 60-foot car, a 30-foot 
car, and a pouch service to limit yourself to — and those are all the units 
you have, and you have to adjust yourself to those three measures — 
where it is going to cost the Government so much more ? 

Mr. McBride. I had in mind the present rates of pay. Possibly, 
if the rates of pay under the proposed law were appropriate, it would 
not cost any more. 

The Chairman. Well, taking the present rate of pay, where is it 
going to cost the Government so much more ? 

Mr. McBride. Because we would pay for 60-foot cars in cases 
where we now pay for 40 or 50-foot cars. 

The Chairman. You would save $1,600,000 every four years for the 
cost of weighing. The Government would pay that. 

Mr. McBride. Yes, sir. 

The Chairman. And it would not require any weighing at all. 
You would take an arbitrary for the number of pouches, under the 
assumption that a pouch was equivalent to so much weight, and you 
would pay so much per pouch, and you have that information already 
under your present method of administration — the number of pouches. 

Mr. McBride. We could get it. I haven't that information 
tabulated. 

The Chairman. Is it available"? 

Mr. McBride. Yes. 

Mr. Lloyd. Mr. McBride, you see what I am driving at. It is not 
a question of what the nay should be, but the question of what basis 
should be used, should it be a weight or space basis. The railroads 
are insisting they did not want the space basis because of the adminis- 
trative features. Now, if we can remove the administrative features, 
so far as that is concerned, and there is nothing for you people to do 
and nothing for them to do in the way ol administration it simplifies 
the matter so that when the proper rate is fixed the whole matter is 
adjusted ? 

Mr. McBride. The only possible chance for disagreement would be 
as to whether a 60-foot car was needed or a 30-foot car. 

Mr. Lloyd. That the Government would have to determine for 
itself. 



600 RAILWAY MAIL PAY. 

The Chairman. I do not see where that disagreement would come 
in at all, you would ask for a 30-foot car and if they offered you a 
60-foot car they would know they would only get paid for 30. 

Mr. McBride. They might contend we needed 60. 

The Chairman. They are not running the department. 

Mr. McBride. They contend at present that the service on certain 
lines demands greater space than is being paid for. 

Mr. Lloyd. Is not this the real contention, that they are furnishing 
a space which you use and which is not paid for ? Is not that really 
the contention? 

Mr. Bradley. It might be put stronger than that, Mr. Lloyd, that 
the railroads are obliged to operate a certain amount of space beyond 
what the department calls for. 

The Chairman. We thank you very much, Mr. Rowan, for your 
views. 

STATEMENT OF WILLIAM C. WISHART. 

The Chairman. Mr. Wishart, it will be necessary for you to be 
sworn. 

Thereupon the witness was duly sworn by the chairman. 

The Chairman. Kindly state your full name, residence, and 
official capacity, if any, with any railroad company. 

Mr. Wishart. William C. Wishart, residence, Albany, N. Y.; 
I am statistician of the New York Central Lines. I would say, Mr. 
Chairman, I have only been with the New York Central Lines about 
a month, and was only brought into this case last week. Before that I 
was with the public service commission of New York for the second 
district as statistician for about three years. 

Mr. Lloyd. Before that where were you ? 

Mr. Wishart. With the Interstate Commerce Commission, as 
examiner, for about two years. 

Mr. Lloyd. Where were you before that ? 

Mr. Wishart. I was an assistant auditor for the Dupont Co. I 
was there for five or six years, and prior to that with different rail- 
roads. I will say I do not profess to know a great deal about this 
question. Mr. Rowan asked me to look into Document 105 and what 
I am going to say may be only an opinion of little value formed after 
a hurried inspection of the subject. 

MEMO RELATING TO MAIL REVENUE OF THE NEW YORK CENTRAL LINES. 

In document 105, prepared under the direction of the Post Office 
Department, it is made to appear that the railway mail pay is profit- 
able to the carriers, but the basic figures are incorrect, and therefore 
any conclusions as to the relative cost of the services must also be 
incorrect. 

In response to requests from the department the several roads 
comprising the New York Central lines prepared and submitted 
various statements in accordance with the forms furnished for that 
purpose, but these figures have been arbitrarily altered and rear- 
ranged. 



RAILWAY MAIL PAY. 



601 



The case of the New York Central & Hudson River Railroad is 
probably typical of all the roads in this system. The following state- 
ment for this company shows some of the figures submitted to the 
department, and those used by it in the preparation of document 105: 



Reported by 
the company. 



Used by Post 
Office Depart- 
ment. 



Total operating expenses 

Taxes 

Operating expenses and taxes assigned to passenger service . 

Car-foot mileage: 

Mad 

Mail deadhead 

Passenger 

Passenger deadhead 

Express 



Total car-foot mileage. 



$5,684,916.89 

436, 157. 20 

2,350,596.86 



54, 095, 823. 46 



623,536,321.67 
"83," 978," 738.' 64' 



761,611,883.77 



$5,670,975.41 

435,068.19 

2,096,398.21 




765,138,022.32 



The company is not advised as to the reason for making the 
changes indicated. A further reduction is effected in the amount 
that finally lodges in the so-called cost of mail service by the transfer 
of mail car space to the space assigned to other classes of service. 
These transfers and alterations result in changing the percentage 
relations of the space devoted to the three classes of service as follows: 

Percentage of train space occupied. 



Mail 

Express . . . 
Passengers 



Reported. 



Per cent. 

7.10 

11.03 

81.87 



Used by 
depart- 
ment. 



Per cent. 
6.41 
11.01 

82.58 



The basis of assignment of the expenses was also changed mate- 
rially, so that the company's statement giving $2,350,596.86 as 
expenses belonging properly to passenger service was reduced by the 
department to $2,096,328.91, or by 9.9 per cent of the amount 
reported. 

The proportion determined by the department as applicable to 
mail service on a car-foot-mile basis is 6.41 per cent of the total pas- 
senger-car space, but when this percentage is applied to the amount 
assigned as cost of the passenger-train service still another cut is 
found to have been made, and a test shows that the proportion of the 
whole actually allowed is not 6.41 per cent but 6.19 per cent. The 
amount assigned by the company to passenger service on account of 
traffic expense appears to have been eliminated before prorating the 
total to the classes of service. The 'traffic department is not one whose 
attention is given solely to solicitation, and such a department is 
necessary to the development of any road, and if the removal of such 
an item as traffic is warranted before dividing the common expenses 
the same line of reasoning might be extended to other items which 



602 RAILWAY MAIL PAY. 

are absolutely necessary to the conduct of a transportation company, 
but which might not be considered as essential to the mail service. 

In working out the statement shown in document 105 upon the 
basis of cost of service the department's auditors seem, in some 
instances, to have leaned very far toward regarding the mail service 
as merely a by-product of transportation and as not obliged to carry 
its share of overhead charges. 

On the basis of assignment made by the New York Central & 
Hudson Kiver Railroad Co. the passenger service — as distinguished 
from freight — is charged with only 38.4 per cent of the operating 
expanses and taxes— $2,350,596.86 out of $6,121,071.49— and in the 
department's computation this is further reduced to only 34.3 per 
cent of the amount assigned to operating expenses and taxes, but dur- 
ing the year 1909 the total number of revenue train miles in the two 
branches of service was divided in th.3 proportion of 54.3 per cent for 
passenger trains and 45.7 per cent for freight trains. Still this change, 
coupled with the lowered percentage of mail space, makes the differ- 
ence between a very profitable business and one that barely pays 
operating expenses and taxes and nothing for interest upon the neces- 
sary investment. 

The method of division adopted by the department has the effect 
of making the relatively small proportion of operating expenses, 
known as direct charges, govern the assignment of a very large part 
of the unassignable expenses. For example, the New York Central 
& Hudson River Railroad reported as expense for ties in the month 
of November, 1909, $152,238.87, of which $730.17 were assigned by 
the compan}^ to passenger business, presumably because during that 
month there happened to be applied to passenger tracks, ties of that 
cost. The balance was distributed by the company on the basis of 
the relative number of revenue train miles in the two branches of the 
service. Under the rule of the department, however, two-thirds of 
this unassigned expense follows what are called the direct charge 
accounts, and only one-third is divided on the basis of revenue train 
miles. It appears, therefore, that two-thirds of $151,508.70 was 
distributed to passenger and freight business on the basis of the ratio 
that the amounts charged to two groups of a very few freight only 
and passenger only accounts of small magnitude bear to each other. 

If the department's method is understood, the distribution made 
by it resulted in assigning to freight service $108,552.57 of the tie 
expense, and to passenger service $43,686.44. As another example, 
the expense of maintenance of bridges, trestles, and culverts, for 
which there was reported by the company an expenditure of 
$67,673.57, was divided under the department's plan, solely on the 
basis of the direct charges, or as it appears in the proportion of about 
20 per cent to passenger and 80 per cent to freight. 

To anyone at all familiar with the New York Central road, such 
treatment of its expenses is unjustified. It has not been possible to 
determine exactly what is meant by " direct charge accounts" as 
used in the department's compilations. Of the 116 operating 
accounts established by the Interstate Commerce Commission, there 
are only 14 or 15 which may be justly termed " direct charge 
accounts." These, with the amounts reported by the New York 
Central for November, 1909, are as follows: 



RAILWAY MAIL PAY. 



603 



Passenger. 



Freight. 



Passenger-train car: 

Repairs 

Renewals 

Depreciation 

Freight-train car: 

Repairs 

Renewals 

Depreciation 

Electric equipment of cars: 

Repairs 

Renewals 

Depreciation 

Weighing, car-service associations. 

Coal and ore clocks 

Loss and damage: 

Freight 

Baggage 



$140,?12.6S 
1,500.00 



1,120.47 



Total direct charge accounts . 
Percentage of total expense 



per cent. 



144, 129. < c 8 
2.5 



$4-6,752.25 
146,939.57 



1.235.57 
71.467.22 



706,394.61 
12.4 



One other account, fast freight lines, might be considered a 
direct-charge account, but it is found to be divided between pas- 
senger and freight in November, 1909. It does not seem fair to assume 
that unrelated expenses, such as for maintenance of tracks or bridges, 
should be affected by the distribution of these two accounts, but under 
the department method they are so affected and very seriously, as may 
easily be determined by referring to the foregoing statement. If in 
November, 1909, the company had not repaired any passenger cars 
or damaged any baggage, the direct-charge passenger accounts would 
have shown no charges, and the so-called assignment would have 
resulted in the free use of bridges, trestles, and culverts by the pas- 
senger trains. 

If we take the operating expense accounts of the New York Central 
& Hudson River Railroad for 1912 and divide all except the direct- 
charge accounts on a revenue train-mile basis, we shall have assigned 
to passenger, mail, and express business a cost of $40,041,608.97, and 
to freight, $41,269,544.33. The total revenues from all passenger 
business were only $41,959,327.87, wdiich would leave the freight 
business to carry the burden of all the interest and rents and nearly 
all of the taxes paid. It is not contended that this division is a correct 
one. It has been used in important cases, and it is believed to be more 
nearly in accord with the actual facts than the figures presented by 
the department. 

The management of the New York Central lines has reached no 
definite conclusions as to what may or may not be done in the way of 
cost accounting for transportation service. Many methods have 
been proposed, but it is doubtful if any rule can ever be devised which 
can be applied equitably to all roads alike for the division of their 
expenses. If such accounting is to be undertaken, it will be necessary 
first to change the methods now in use for the distribution of such 
costs. It does not appear that the department has available the 
data upon which to base the important deductions it sought to make. 

On the New York Central & Hudson River Railroad, with four 
tracks in its main line, two of which are devoted largely to passenger 
traffic and maintained at high efficiency for suoh traffic, conditions 
are wholly different from those obtaining on the Pittsburgh & Lake 
Erie. On the latter road the revenue passenger train-miles in 1912 



604 



KAILWAY MAIL PAY. 



constituted 43.1 per cent of the total revenue train-miles, but such 
trains produced only 9.4 per cent of the transportation revenues; 
while on the New York Central & Hudson River Railroad the revenue 
train-miles constituted 54 per cent of the revenue train-miles and 
produced 38.3 per cent of the transportation revenues. 

For the four larger roads of the system the following statement will 
show that in the face of greatly increased expenses and capital re- 
quirements the mail service has not borne its share of the increasing 
burden, and the same tendency is observable with the small com- 
panies. 

It is to be noted that in a 10-year period beginning with 1903 the 
revenue from mail service has actually decreased on the Lake Shore & 
Michigan Southern and Big Four roads, has increased only 5.7 per 
cent on the New York Central, and was on the Michigan Central the 
same in 1912 as in 1903, although on this road it had materially de- 
creased in 1907 and remained below the basis for five years. These 
tables show the percentage increase or decrease in each year as 
compared with 100 per cent for 1903. 

NEW YORK CENTRAL & HUDSON RIVER R. R. CO. 



Year. 



1903 
1904 
1905 
1906 
1907 
1908 
1909 
1910 
1911 
1912 



Total op- 
erating 


Passenger 
revenue. 


Express 
revenue. 


Mail 
revenue. 


Total op- 
erating 


revenue. 








expenses. 


Per cent. 


Per cent. 


Per cent. 


Per cent. 


Per cent. 


100 


100 


100 


100 


100 


101.3 


102.5 


114 


100.4 


102 


111.2 


109.2 


120.1 


113 


112.1 


119 


121.1 


130.7 


125.4 


121.5 


127.1 


126.5 


149.8 


115.7 


141.7 


111.2 


117.9 


150.1 


114.1 


114.6 


123.5 


126.5 


170.9 


109.8 


120.8 


132.4 


135.2 


172.6 


106.4 


138.5 


137.8 


139.4 


176 


106.5 


141.6 


145.6 


145.4 


198.3 


105.7 


152. 09 



Taxes. 



Per cent. 
100 

97.1 
110 
112.5 

97.2 
115.9 
121 
128.2 
148. 6 
161.1 



LAKE SHORE & MICHIGAN SOUTHERN RY. CO. 



1903 
1904 
1905 
1906 
1907 
1908 
1909 
1910 
1911 
1912 



100 


100 


100 


100 


100 


101.3 


98.6 


105.3 


112.9 


105. 7 


109.4 


106.7 


118.1 


113.4 


118.3 


120.6 


121.1 


126.2 


113.4 


133.3 


127.5 


135 


133.7 


110.3 


144.5 


112.4 


133 


167.1 


108.5 


123.3 


129.7 


150 


171.9 


105.4 


137.1 


142.1 


164.3 


188.8 


105.3 


170.4 


139.1 


168.4 


199.8 


108 


158.7 


156.1 


175.1 


227.3 


97.9 


173.8 



100 

109.3 

109.3 

149.8 

135.4 

148.3 

151.9 

179.1 

174.3 

184.4 



MICHIGAN CENTRAL R. R. 



1903 
1904 
1905 
1906 
1907 
1908 
1909 
1910 
1911 
1912 



100 


100 


100 


100 


100 


95.3 


94.5 


95.8 


104.3 


94.8 


102.9 


102.5 


131.1 


104.4 


104.9 


116.3 


116.3 


121.4 


104.6 


120.9 


126.4 


128.3 


167.3 


98.8 


128.7 


107.4 


121 


140.2 


95.2 


105.7 


121.5 


133.3 


167.7 


94.2 


102.9 


131.6 


147.9 


204.8 


99.3 


120.3 


133.7 


152.1 


199.2 


94.8 


118.7 


145.9 


164.5 


216.9 


100 


128 



100 

125 

108.2 

112.7 

113.4 

124.3 

126.1 

152.6 

148.8 

155 



RAILWAY MAIL PAY. 605 

CLEVELAND, CINCINNATI, CHICAGO & ST. LOUIS RY. CO. 



Year. 


Total op- 
erating 
revenue. 


Passenger 
revenue. 


Express 
revenue. 


Mail 

revenue. 


Total op- 
erating 
expenses. 


Taxes. 


1903 


Per cent. 
100 
108.3 
109. 8 
119.8 
129.1 
120.5 
137.4 
151.1 
151.2 
162.5 


Per cent. 
100 
128.9 
110.3 
120.5 
123.3 
118.2 
127.5 
138.2 
138.3 
137.8 


Per cent. 
100 
125 
135.9 
143.2 
188.2 
167.8 
173.7 
201.9 
197.8 
211.9 


Per cent. 
100 
117.5 
119.1 
119.1 
112.9 
108.9 
111 
109.8 
109 
98.8 


Per cent. 
100 
109.8 
116.6 
127.3 
139.1 
132.9 
136.2 
162.3 
156.7 
168.3 


Per cent. 
100 


1904 


96.4 


1905 


105.4 


19§6 


118.1 


1907 


119.9 


1908 


128. 2 


1909 


124.7 


1910 


134.9 


1911 


150.9 


1912 


169.5 







If there had been imposed upon the carriers the same proportionate 
reduction in freight, passenger, and express revenues as was brought 
about in the mail revenues during the years 1906-1909, three of the 

grincipal roads of this system would have been unable to meet their 
xed charges out of the year's earnings, to say nothing of dividends. 
This may be seen in the following statement, showing effect of the 
same rate of reduction upon all classes of revenue as was applied by 
the Government to the mail service during the years 1906-1909: 





New York 

Central & 

Hudson River. 


Lake Shore & 
Michigan 
Southern. 


Michigan 
Central. 


Cleveland, 
Cincinnati, 
Chicago & 
St. Louis. 




$3,007,462.96 

$2,633,969.85 

87.58 


$2,287,254.04 

$2, 124, 186. 70 

92.87 


$454, 594. 24 

$409,212.23 

90.02 


$782, 577. 02 




$729,272.38 
93.19 


Ratio 1909 to 1906 






Total operating revenue, 1906 


i $59,773,883.30 

78,623,966.99 
2 68,905,855.31 


i $41,949,754.39 

38,958,736.90 
2 28,524,967.77 


i $26,250,725.77 

23,630,903.34 
2 19,040,607.34 


i $24, 107, 189. 40 


Decreased for 1909 by same ratio as 

mail revenue 

Operating expenses. 1909 


22, 465, 489. 42 
2 20,073,357.94 








9,718,111.68 
4, 434, 504. 32 


10,433,769.13 
1,458,905.00 


4,598,398.00 
1,121,531.99 


2,392,131.48 




878,328.26 






Operating income 


5,283,607.36 
11,392,858.86 


8,974,864.13 
6,486,887.28 


3,121,531.99 
941,480.65 


1,513.803.22 


Other income, 1909.. 


623,232.87 






Gross corporate income 


16,676,466.22 
22,046,936.46 


15,461,751.41 
10,382,049.39 


4,418,346.66 
5,812,238.76 


2, 137, 036. 09 


Deductions from gross corporate income. 


4,858,240.77 




d 5,370,470.14 


3 5,079,702.02 


d 1,393,892.10 


d 2,721,204.68 





1 Excludes rentals. 

2 Sum of expenses for rail operations and expenses for outside operations. Both are taken because 1906 
operating revenue includes both kinds of operations. 

3 Net corporate income available for dividends. 

Note.— If during the 10-year period 1903-1912, other revenues had been held down to the basis estab- 
lished by the Post Office Department, and expenses had increased as they have, all these roads would now 
be hopelessly bankrupt and unable to pay their operating expenses alone, with nothing for taxes and other 
charges. 

Senator Weeks. That all goes back to the question of whether the 
compensation which the railroads received in 1903 was too high? 

Mr. Wishart. Yes. 

Senator Weeks. Have you anything to say about that? 

Mr. V\ t ishart. No; I have not. I am informed that the relative 
service was about the same in 1903 as in 1912: that is, the mail 
occupied the same proportion of the space in the trains and made about 

49396—14 10 



606 KAIL WAY MAIL PAY. 

the same ca,r-foot miles, but I am not sure about that. I can not 
testify to that. 

The Chairman. To your mind, is there any difference in compen- 
sation that should be received in passenger service, express service, 
and the mail service ? 

Mr. Wishart. Well, the tendency in all the accounting that I know 
of has been to segregate the two great classes of service, passenger 
and freight. I can not see any reason why the mail service should 
not pay its proportion of the cost of passenger business, because we 
must consider on any basis of division made so far that relatively the 
passenger business is the unprofitable end of the transportation busi- 
ness as a whole. 

The Chairman. What are the analogous requirements as between 
passenger and mail service ? 

Mr. Wishart. You mean in the way of service by the railroad 
companies ? 

The Chairman. Yes. 

Mr. Wishart. I do not know that there is any analogy, except in 
transportation and station service, possibly. 

The Chairman. Is it because of that definition, that mail is made 
part of the passenger, that they should receive the same relative 
compensation ? 

Mr. Wishart. It requires the same service at the hands of the 
railroad company; yes. 

The Chairman. To your mind there is no difference, then, in the 
requirements of the service ? 

Mr. Lloyd. The mail does not add any requirements ? 

Mr. Wishart. It does in some cases. I do not know that I am 
prepared to testify about that, but I understand it requires sides erv- 
lce and things of that kind. I do not care to go into that, because I 
am not familiar with the subject. 

Mr. Bradley. Could you say, if you have the information, how 
your computation for November, 1909, developed the case of the New 
York Central in comparison with the Post Office Department's pre- 
sentation as to the relative profit and loss ? Did your revenue from 
mail service cover your operating expenses and taxes chargeable to 
mail service ? 

Mr. Wishart. In November, 1909 ? 

Mr. Bradley. Yes. 

Mr. Wishart. If we use the basis for ascertaining the cost they did; 
it did. If we use the basis that has been recommended in other cases, 
the train-mile, for dividing expenses, it barely did. I figured it up, 
and I think it was something like 97 per cent of the revenues. 

Mr. Bradley. But made no contribution to capital at all ? 

Mr. Wishart. No. 

The Chairman. As to the express business of the New York Cen- 
tral, in your computation did you go into that ? 

Mr. Wishart. Yes. 

The Chairman. How does it show from an earning standpoint as 
compared to mail ? 

Mr. Wishart. On some lines it pays more than its percentage of 
expense as determined by the car space occupied. On some it pays 
less. 



RAILWAY MAIL PAY. 607 

The Chairman. Is there any basis of computation on the New 
York Central lines where it would be shown that company received a 
greater compensation from the express than it did from the mail ? 

Mr. Wishart. It does, in the aggregate; much more. 

The Chairman. That depends on the volume of business, but 
adopting any system of unit, in order to get the relativeness between 
the two services. 

Mr. Wishart. I think there are some things in there, Senator, you 
can not measure. The car-foot-mile basis is a basis of transportation, 
but there are other things in there you can not measure in money by 
any method that I know of; for instance, collateral service rendered 
by the express companies and other things that are generally brought 
out by witnesses in the case; for instance, the express companies trans- 
port the railroad companies' money to its treasury, and they take care 
of their own employees. 

The Chairman. And the Government does nothing at all except to 
handle the mail for the transportation companies ? 

Mr. Wishart. Yes. 

The Chairman. Your books show that you get a greater revenue 
from the express than from the mail on the system as a whole ? 

Mr. Wishart. Yes. 

Mr. Lorenz. Have you worked out the percentage of the common 
expenses which the Post Office Department assigned to passenger by 
their direct charge method, as compared to the train-mile percentage ? 
You gave the actual figures, but I do not know whether you put it 
on a basis of percentage. 

Mr. Wishart. No; I did not. I took the figures as I found them 
in Document 105, but I did not work out the percentage. I did not 
know what percentage of all expenses they were able to assign directly; 
in fact, I could not determine the method. 

Mr. Lorenz. I do not question your criticism that on a road 
like the New York Central, which does not have a system of appor- 
tioning all those expenses which can be apportioned to the passenger 
or to freight, the direct charge method is rather unfortunate. It 
certainly is absurd to assign maintenance of way expenses in the pro- 
portion in which the few tracks which you happen to have exclusively 
for passenger or exclusively for freight might be divided, but I 
thought possibly, by accident, it might have been worked out with 
reasonable satisfaction as between the two services. I think you 
showed that the train-mile method was about half and half ? 

Mr. Wishart. Yes. 

Mr. Lorenz. If they worked out about a third, it may be that their 
results are not so absurd, because my contention is that the train-mile 
method assigns the maximum proportion to passenger service, because 
the train mile is something different in the two services.* 

Mr. Wishart. Well, as I showed here in the case of the New York 
Central and the Lake Erie, I do not believe that any one method will 
ever be devised that will be applicable to all roads. The New York 
Central, as I said, is going to take up this question of cost accounting 
as soon as they can get to it. 

The Chairman. With your experience, and with what knowledge 
you have of the railway-mail question, do you believe it is possible to 
evolve a plan that will be universal in its application ? 

Mr. Wishart. No, sir; I do not. 



608 



KAILWAY MAIL PAY 



The Chairman. You think that is an absolute impossibility? 

Mr. Wishart. I do. 

The Chairman. Will it be necessary to make a separate contract 
with each one of the 795 railroads with which the Government has mail 
contracts ? 

Mr. Wishart. If you* are going to base it on cost of service, it will. 

The Chairman. Do you think the cost of service is a prerequisite 
for the solution of any problem ? 

Mr. Wishart. That does not seem to be a prerequisite in other rate 
making. I do not see how it could be used as a factor in the present 
state of the art of accounting. 

The Chairman. Then what is the use of endeavoring to use that as 
a factor if it is unascertainable ? 

Mr. Wishart. I do not believe it has been done as yet. 

The Chairman. Do you think it would be possible to group the 
railroads in the United States and make separate contracts with each 
one of the groups that would be equitable to each one in the groups ? 

Mr. Wishart. You mean territorial groups? 

The Chairman. Territorial groups, along the line the Interstate 
Commerce Commission has worked out. 

Mr. Wishart. No; I do not. I do not think the territory has so 
much to do with it as the service they are rendering. 

The Chairman. Does not the geographical grouping make the 
environment practically the same for the roads in the same group ? 

Mr. Wishart. No. The New York Central is much more a pas- 
senger road relatively than the Pennsylvania and practically in the 
same group. 

The Chairman. Then how would you suggest a grouping if not 
territorially ? 

Mr. Wishart. I have not studied the question long enough to be 
able to tell you that. 

Mr. Lloyd. He answered a moment ago he did not think they 
could be grouped. 

Mr. Wishart. If you could do it, it would be more nearly accord" 
ing to the nature of the physical characteristics of the road and the 
service they are rendering. 

The Chairman. That would necessarily be an arbitrary grouping ? 

Mr. Wishart. I think so. 

The Chairman. We are very much obliged to you for your views. 

STATEMENT OF MR. H. E. MACK. 



The Chairman. Mr. Mack, it will be necessary to be sworn. 

The witness was thereupon duly sworn by the chairman. 

The Chairman. Mr. Mack, we are anxious to hear from you why 
the Government should pay more for mail transportation than the 
public should pay for passenger service. 



KAILWAY MAIL PAY. 609 

RAILWAY MAIL PAY SHOULD MORE THAN EQUAL PASSENGER-TRAIN 

EARNINGS. 

Mr. Mack. While scarcely attaining the importance of an issue, 
the question has been raised, during the progress of the hearings by 
your honorable committee, whether the railroads should earn as 
much from transportation of the mail as they derive from other trans- 
portation service, and at your request I have made this memorandum, 
summarizing my views on that particular phase of the question before 
your commission. I would unhesitatingly say that it should, for the 
transportation service alone, and furthermore there should be addi- 
tional pay for extra requirements. 

According to my view, the transportation of the mail is a business 
matter, pure and simple (certainly it is such from a railroad stand- 
point), should be regarded and treated as such, and divested of 
sovereign power of the Government. It is not necessary to exert 
sovereign power to compel service from the railroads, for, while on 
the one hand the Government in administration of the postal service, 
which transportation business it has assumed, is compelled to avail 
of the railroad transportation in exercising this function — there being 
no other mode of general transportation — the railroads under stress 
of public necessity, must and do carry the mails and are necessarily 
dependent upon the fairness of Congress for adequate rates and 
reasonable conditions; to decline to carry the mail would be regarded 
by the public as a defiance of the Government. 

Under the circumstances, the railroads of necessity li accept and 
perform mail service under the conditions prescribed by law and the 
regulations of the department." 

Note Supreme Court decision of June 7, 1912, as follows: 

For public policy requires that the mail should be carried subject to postal regu- 
lations, and that the department and not the railroad should, in the absence of a 
contract, determine what service was needed and under what conditions it should 
be performed. The company in carrying the mails was not hauling freight, nor wss 
it acting as a common carrier, with corresponding rights and liabilities, but in this 
respect it was serving as an agency of Government, and as much subject to the laws 
and regulations as every other branch of the post office. 

It seems to me, therefore, that in view of these circumstances, Con- 
gress is under the highest obligation to pay the railroads adequately 
for the transportation of mail. 

It is to be borne in mind that the Government, hi the matter of 
mail service, is conducting a transportation business for the people, 
and collects postage from the people for such transportation and 
collection and delivery of service, and out of that postage it would 
seem there should be no hesitation in paying an adequate amount for 
the transportation service on practically every mile of railroad and 
practically every passenger train in the country, which form the very 
foundation of and which is vital to efficient postal service, such as 
the people expect, yet the railroads receive only about 21 cents out 
of the dollar of postage collected, the balance being employed in the 
collection, delivery, and administration service. It is remarkable 
that the Government has been enabled to expand and inaugurate a 
free-delivery service throughout the country on over 40,000 routes 
with an annual cost of $47,500,000 and to make large increases in 
salaries of working forces in recent years without any increase in 



610 KAILWAY MAIL PAY. 

postage rates. The railway mail pay has been cut, however, during 
this period approximately $8,000,000 per annum. 

During the same period, 1907 to 1912, increases have been as fol- 
lows in operating revenue on the railroads: 

Passenger $104,035,657.00 

Freight 157, 153, 002. 00 

Express 17,402, 069. 00 

Mail 1, 933, 230. 20 

While the increased pay to the railroads for mail has been only 
$1,933,230.20, the Government has collected increased postage 
.amounting to $63,159,010 during this five-year period. 

With these preliminary remarks of a general nature, I would say 
the railroads are entitled to earn as much or more from the mail 
service as from other passenger service. 

First. Because the railroads are enterprises operated upon private 
capital, and as the mail is a participant in the activities of trans- 
portation and use of the property and capital employed, the mail 
should be in the same relationship, and having the same rights as to 
privilege, should be on the same footing as to earnings as other 
transportation, such as freight and passenger service. To hold dif- 
ferently would approach a confiscatory process; otherwise, the law 
and the courts must permit any deficiency from inadequate mail pay 
to be recovered from the passenger or freight service, the effect of 
which policy would be to put the whole people of the country in the 
attitude of shifting upon the individual shippers of freight, or pas- 
sengers who traveled, such a deficiency, for railroad capital has its 
undoubted constitutional right to lawful earnings. 

Second. I think the railroads should earn as much from mail trans- 
portation as other passenger-train service, for the principal reason 
that the mail is primarily dependent upon the passenger service on 
the railroads, and participates to the very fullest extent in the passen- 
ger service itself, and is even a preferred service on passenger trains. 
Very often special mail trains throughout the country are superior 
to passenger service. 

Now we fall short of this, earning from the mail $3.37 per thousand 
car-foot miles and from other passenger service $4.34 per thousand 
car-foot miles, as shown in joint report of the departmental and 
railroad committees, dated March 15, 1913, mail earnings being 97 
cents less per thousand car-foot miles, and representing for the car- 
foot mileage involved upon 189,760 miles of service a deficiency in 
mail earnings of $13,190,724 per annum. This deficiency of course 
would be very largely increased if the figures were available for 
the entire service performed on 226,071 miles of railroad. 

The high efficiency demanded of the postal service by the peo- 
ple compels the use of the best train service, established primarily 
for passenger business, as well as the use of almost every train 
operated in the country. Congress itself requires the highest 
class passenger facilities, under severest penalty, as follows: 

Eevised Statute, 4000: 

Every railway company carrying the mail shall carry on any train which may run 
over its road, and without extra charge therefor, all mailable matter directed to be 
carried thereon, with the person in charge of the same. 



RAILWAY MAIL PAY. 611 

Act of March 3, 1897: 

The Postmaster General shall, in all cases, decide upon what trains and in what 
manner the mails shall be conveyed. 

Act of July 5, 1884: 

If any railroad company shall tail or refuse to transport the mails, when required 
by the Post Office Department, upon the fastest train or trains run upon said road, 
said company shall have its pay reduced fifty per centum of the amount provided by 
law. 

The act of August 24, 1912, requires a superior class of equip- 
ment in the construction of all steel full postal cars. 

A. The use of all trains prevents economies in handling or the ad- 
justment frequently to the other business on the trains. 

Not only are all passenger trains available, but special mail trains, 
in many cases with schedules to fit specially important connections, 
and adjusted to suitable hours of dispatch for the great city daily 
papers, are furnished, the speed in some cases being quicker than 
passenger service. For example: On our line, not only special 
schedules are provided, but faster time made from St. Louis to Kansas 
City, viz., 7 hours, whereas, the passenger schedule is 8 hours and 15 
minutes, and St. Louis to Texas, the fast-mail train is 6 hours quicker 
than the passenger service. 

An additional train, particularly if a fast train, is scarcely scheduled 
before there is a demand for mail service upon it. The better the 
passenger train, the more urgent the demand for its use for mail 
service, the department even having the right to and securing the 
service of special-fare trains, where operated. 

B. Under State laws, the railroads have the same full passenger 
liability for damages in the case of accident to railway postal clerks, 
as they have to passengers, and the United States Supreme Court, 
in a recent case, extended this liability, by a decision to apply where 
a postal employee was not even traveling upon official, but instead 
was traveling upon personal business. 

C. Mail apartment cars, if only 10 or 15 feet in length, with a 
single postal clerk, must have individual toilet facilities, wash water, 
ice water, and sanitary arrangements, as in private cars, yet in some 
instances, earn only as much as the fare of two passengers. 

D. The railroads are required to take on its scheduled train, 
designated by the department, all mail, even if necessary to exclude 
and hold back baggage (which should accompany passengers to avoid 
complaint and claims) and express. In fact, it is not an uncommon 
thing at St. Louis, to unload both baggage and express, after being 
placed in baggage cars, to make room for the mail. 

E. Mail trains must be held for loading mail from connections that 
have arrived before leaving time; this is not done for other passenger- 
train traffic, except in very rare instances. 

F. Where fast mail trains are operated, they have the right of way 
over all service, and freight trains, from one end of the line to the 
other, have to be sidetracked at meeting points for safe clearances. 

G. The mail service does not adjust itself as passenger and express 
business does to stops, but mail cranes and catcher service have to be 
provided, so that even the smallest local communities may exchange 
mails with the fastest trains, to secure high efficiency. 



612 



KAILWAY MAIL PAY. 



H. Mail cars must be set for advance work many hours before 
departures, requiring lighting, heating, extra switching, etc., whereas 
passenger trains need to be set only a few minutes before schedule 
departure, except in the case of some sleepers on late night trains, 
which may be set an hour or two before departure, to permit passen- 
gers to retire. 

I. The mail cars require more and better light than any passenger 
cars operated. 

J. The department requires preferred handling of the mail at 
stations over other work of station employees; that is, the mail must 
be exchanged before baggage and express are handled, so as to give 
the mail clerks an opportunity to open the mail bags quickly and 
assort the mail and have it ready for the next stations. 

The foregoing are practical reasons showing how completely the 
passenger service is utilized by the Government in mail transporta- 
tion, which seem conclusively to indicate to my mind that when the 
highest quality of service is demanded for the people the compensa- 
tion ought to be proportionate, as a business principle. 

It has been indicated that perhaps on account of property protec- 
tion, advertising, or the possible stimulating effect of mail upon 
freight and passenger business, there might be benefits to the rail- 
roads, incidental to mail transportation. If correct, the same prin- 
ciple would be involved as stated in the outset, that the people as a 
whole would thereby shift a burden to the shippers of freight, and 
to the passengers who travel, to make up for this so-called asset, 
which, I think, would be unsound in doctrine. 

Property protection: As to property protection, the railroads, it 
would seem, should have ample protection to property in considera- 
tion of taxation, the same as other property, the railroads paying 3J 
per cent of gross revenue in direct taxation. I might allude here to 
the rapid increase of taxes paid by the railroads, amounting in 1912 
to $120,873,472, an increase of 121.9 per cent in 10 years, while oper 
ating revenue has increased but 66.3 per cent in comparison. As to 
indirect taxation, upon materials, etc., they pay a full share, as all 
other business does. It is as much public necessity as protection to 
property for the United States Government, in extreme rare cases, 
to reenforce State powers and aid in the movement of the mails. 

Advertising: It is the consensus of opinion among railroad people 
that there is no advertising value whatever to the railroads, so far 
as being mail carriers is concerned. Practically all railroads carry 
the mail, and therefore are mail carriers. 

Stimulation of other traffic: There seems no reason why the mail 
should pay less than other passenger-train service, because it may 
have a stimulating effect upon freight and passenger business. The 
mail is essential to the conduct of business. It is so absolutely 
important that public opinion would rather tend to a policy of sub- 
sidizing railroads for service, and did so until a very few years ago, 
were it not for the fact that passenger-train service is so frequent 
and efficient as to meet the necessities of the people. 

The railroads have rendered a great service to the people in going 
into new territory and furnishing the means of transportation of 
products to and from markets, and thereby to some extent creating 
the very need for the mail facilities. The growth and development 



RAILWAY MAIL PAY. 613 

of communities which have followed railroad construction into new 
territory, private capital taking great hazards, is well known. 

In the Pacific group of States, viz, Washington, Oregon, California, 
Nevada, Idaho, Arizona, and Utah, the population in 1860 was 
491,183, with 23 miles of railroad; in 1910 the population was 
5,177,487, with 23,256 miles of railroad. 

In the southwestern group of States, viz, Missouri, Arkansas, 
Texas, Kansas, Colorado, New Mexico, and Oklahoma, the popula- 
tion in 1860 was 2,456,676, with 1,162 miles of railroad; in 1910, 
the population was 13,238,850, with 51,772 miles of railroad. 

In the intervening periods the rapid growth of railroad con- 
struction was followed by rapid increase in population. How much 
increase in the country's wealth is based upon railroad construction 
and operation I do not know, but they have been great creators 
of value and wealth to the people. How much " unearned incre- 
ment" may be traced primarily to the railroad construction will never 
be known. 

In the pacific group of States above mentioned, between even 1890 
and 1910, the increase in railroad mileage was 11,225 miles, and the 
increased value of farm property, buildings, implements, machinery, 
and live stock was $2,246,321,252, and in the southwestern group 
the increased railroad mileage during the same period was 18,884, 
with increased value of property as described above of $5,910,778,895, 
according to census figures. 

When railroad transportation has rendered such great aid in the 
settlement and development of the country, and in the production of 
values to the people, it would appear in the nature of a penalty if 
they should not now be permitted to earn as much from mail trans- 
portation as from other transportation service. 

I trust these views may at least be of some material service to 
your committee. 

The Chairman. What compensation per car mile does the Missouri 
Pacific receive from passenger service ? 

Mr. Mack. I have not those statistics. 

The Chairman. Do you know the difference — how much more you 
receive from passenger service than from mail service ? 

Mr. Mack. Per car-mile ? 

The Chairman. Yes. 

Mr. Mack. No; I do not. 

The Chairman. Per train mile ? 

Mr. Mack. I gave figures with respect to the special mail trains 
that we had at a previous hearing. If I recall, the mail train be- 
tween St. Louis and Kansas City early in the morning earned $1.30 
per tram mile and the earlier train in the evening earned $1.01, which 
is, I am very sure, much lower than the earnings from the passenger 
trains. 

The Chairman. That is, per train-mile ? 

Mr. Mack. Per train-mile; yes, sir. I would like to make this 
answer to Mr. Lloyd's point which came up this morning with Mr. 
Logan on the question of eminent domain. The right of condemna- 
tion of property for railroad construction is based upon the public need 
of transportation facilities and the construction of the railroad and 
its operation (good service and reasonable rates being secured) fulfills 
the obligation of the railroad companies. The law confers the right, 



614 RAILWAY MAIL PAY. 

but is based upon public necessity and is an inducement to capital to 
invest and supply such needs. 

Mr. Lloyd, but that which you receive is due to the law. If the 
law should provide that you should carry the mails free, you would 
be required to carry the mail, because it would be a part of the law. 

Mr. Mack. That would be very true if we were discussing original 
franchise conditions; but of course the postal service has proceeded 
along different lines, and up to this time the theory and practice has 
been, so far as I know, that the railroads should be compensated 
without any special privilege to the Government for mail service. 

Mr. Lloyd. Speaking for myself, and I am sure for the commis- 
sion, we have no antagonism toward the railroads and we are ready 
to admit all you say with reference to their being benefactors and 
paving the way for civilization and advancement of prosperity and 
development of the country, but I do not think that has very much 
to do with the question of how much pay we should give them, nor 
does that settle the question of space and weight. 

The Chairman. How does the viewpoint present itself to your 
mind, of mail transportation as a by-product of transportation itself ? 

Mr. Mack. I do not consider it a by-product. 

The Chairman. In any way ? 

Mr. Mack. No. 

The Chairman. Nor the express ? 

Mr. Mack. No. I think it is part and parcel of transportation, and 
that it should all be on the same basis. If the rates could be fixed 
and service conditions matched accurately, each class of service 
ought to support itself — the freight, the passenger, mail, and express. 
That exact condition, of course, can not be developed, but when we 
are dealing with a specific proposition like the mail, one proposition 
that apparently itself could be adjusted on the basis of other passen- 
ger service, I think we should have the same earnings. If the passen- 
ger service is profitable to a small degree, the mail should pay, in a 
small degree, and if the passenger service is unprofitable and it is 
generally believed it is, if the mail paid a proportionate rate to pas- 
senger trains, it would still fail to pay a profit to the railroad. That is 
taking the proposition as a whole. 

The Chairman. Is it generally believed, in the country as a whole, 
that the passenger service is unprofitable? 

Mr. Mack. It is so regarded, I think, by all the railroads of the 
country. 

Mr. Lloyd. What do you think would be the effect if your railroad 
company carried no mail? Would its surplus fund be as great at the 
end of the year or its earnings as great each year as it would without 
carrying the mail ? 

Mr. Mack. Why, no. We would save, of course, the cost of the 
special trains, and save the special terminal costs that are incident 
to the performance of the mail service, but, aside from that, probably 
the passenger service and other train service would be the same. 

Mr. Lloyd. Then the carrying of the mail is profitable to the rail- 
roads ? 

Mr. Mack. I would not say that it is profitable to the railroads, 
because on that basis you eliminate all proportional charges. 



BAIL WAY MAIL PAY. 615 

Mr. Lloyd. I am asking general questions, as you will observe. 
I think you must answer that that is the answer of every railroad — 
that it is beneficial to the railroads to carry the mail? 

Mr. Mack. There are special benefits, of course. It is beneficial 
to the railroad to carry the mail and beneficial to the Post Office 
Department. In fact, the Post Office Department is here acting 
as an agency of transportation and using our property. 

The Chairman. Do you think it is right to charge up as an expense 
of mail the charges for passenger agents and ticket agents ? 

Mr. Mack. My impression is that the question rests rather upon 
relative revenue rather than the relative cost, because costs are not 
definite and reliable. The costs are based upon an arbitrary divi- 
vision; but, answering your specific question, if you were to go to a 
specific basis of cost, and it could be ascertained, my judgment is 
the mail service participating so fully in the benefits and requiring 
the very highest class of passenger service there is should partici- 
pate fully in all costs that go to make up the passenger service. 

Mr. Lloyd. Do you not think that this is true, that where you 
run the mail train by itself without any passenger service that you 
ought to charge everything connected with that service to mail and 
no part of it to passenger? 

Mr. Mack. There would not be any charge to the passenger serv- 
ice for the operation of a special mail train; no. 

Mr. Lloyd. Everything connected with the special mail train, the 
conductor on that train, the brakemen on that train, the engineer, and 
everybody connected with that train, and everything that is in the 
way of expense for handling that special train ought to be charged 
to the mail. 

Mr. Mack. That is so; yes, sir. Likewise, if there was a passenger 
train operated without any mail on it the charge for that train would 
be for the passenger service on the same basis. 

Mr. Lloyd. Then there would be no difference between us on that 
proposition, except as to what you term common charges for passen- 
ger and mail facilities. It seems to me that there can be no question 
about this proposition, that anything that the railroad does in the 
transportation of mail ought to be charged to mail, just like the spe- 
cial trains; everything connected with them ought to go to the mail 
expense, if it is to be figured at all on the cost basis, and I take it 
that you people are figuring on a cost basis. Ali this hearing has been 
on the theory that it costs so much to carry the mail, and because of 
the cost you ought to have the cost back, and in addition to that, some 
compensation. Now, if you do away with the cost theory and take 
the revenue theory — what do you mean by that ? 

Mr. Mack. I mean that the car-foot-mile earnings on passenger 
trains for mail are below the earnings of the other space on these 
trains. 

Mr. Lloyd. Now, let us see if I understand you. You say a rev- 
enue basis. Take the amount you receive for mail and the amount 
you receive for express and the amount you receive for passengers; 
those are the three elements that make the revenue on a passenger 
train. Now, as I understand you, you think that the pay ought to 
be based according to the revenue received ? 



616 RAILWAY MAIL PAY. 

Mr. Mack. I think they ought to earn an equal amount. In 
other words, these figures demonstrate the question of under pay 
very definitely. 

Mr. Lloyd. Now, going back, here is what I want to reach. You 
say that they ought to pay relatively. Then we ought to pay for the 
space that is used on passenger trains, the space that is used for 
express, and the space that is used for mail, and that gets back to the 
space basis ? 

Mr. Mack. No; hardly. We arrive at the figures based upon the 
space that is actually used and operated as a common basis for com- 
parison, or test at a given time just as the service existed at that 
time. 

Mr. Lloyd. I am trying to get you, if I can, to get at some kind of 
synthetic statement that does not use car miles nor train miles, not 
any of these technical terms that the average individual does not 
understand, if there is any^ way to do that. One trouble about it is 
that in all of our conversations — I just as much so as the rest of you — 
we talk about car miles. What does the average individual in. the 
country know about car miles ? He does not know about it. If we 
can reach some kind of a system of pay by which John Jones working 
on the street, can understand what we pay the railroads and some 
kind of a system that I can explain to John Jones, who is one of my 
constituents, what we do pay the railroads, I think it means more than 
this question of how much we pay, because the whole thing to the 
average individual of the country is a complete mystery. I was just 
talking to the Senator here, and neither one of us, unless we gave 
some thought with reference to that thing, could go before a pro- 
miscuous audience and make a speech of 30 minutes and satisfy that 
audience to-day as to the present system of paying the railroads for 
carrying the mails. It is such a complex subject that it is almost 
impossible for anybody except an expert to explain it at all. 

The Chairman. I do not think he could. 

Mr. Lloyd. I am pretty nearly ready to say that. In my judgment 
you are one of the best we have along the line of investigation, and 1 
am anxious that some kind of a system should be worked out that 
anybody can understand. Everybody understands, when they go 
to buy a ticket for transportation, how much they are paying for that 
ticket from one town to another. If you take freight to the depot, 
you understand how much you are paying for that freight, and if you 
take an express package to the depot, you understand how much you 
are paying for express. That feature of it we will understand. Now, 
we want to get a system, if we can, so that everybody will understand 
what we pay for carrying the mail. 

Mr. Mack. Of course we would be the principal beneficiaries of 
any system that could be devised. 

Mr. Lloyd. I do not care anything about that, but I am anxious to 
get a system that everybody can understand. 

At this point of the proceedings, the committee went into an 
informal session, and at 5.40 o'clock, took a recess until 8 o'clock 
p. m. 



RAILWAY MAIL PAY. 



617 



EVENING SESSION. 

The hearing was resumed at 8 o'clock p. m. 

The Chairman. At this point I want to insert in the record a copy 
of my letter to Chairman Prouty of the Interstate Commerce Com- 
mission requesting a comparative statement showing the increase 
in the year 1911 over the year 1909 in the expenses or costs incurred 
by the railroads, and the reply of Chairman Clark, of the Interstate 
Commerce Commission, together with the statement transmitted 
by his letter. 

April 11, 1913. 
Hon. C. A. Prouty, 

Chairman Interstate Commerce Commission, Washington, D. C. 
My Dear Sir: I should like to have a comparative statement prepared for insertion 
in the hearings now being conducted on the subject of railway mail pay, showing 
what, if any, increase there has been in the year 1911, or preferably 1912, if obtain- 
able, in the expenses or cost incurred by the railroads over 1909, same to include 
taxes. In order that the actual increase over 1909 may be shown, allowance should 
be made for the increased traffic and additional mileage of the railroads of the country. 
As prompt a response as the nature of this request will permit will be greatly appre- 
ciated. 

Yours, very truly, 

Jonathan Bourne, Jr., 

Chairman. 



Interstate Commerce Commission, 

Washington, April 19, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Compensation for Transportation of Mail, 

Washington, D. C. 
Dear Sir: In compliance with your request of the 11th to the former chairman of 
this commission, I take pleasure in submitting to you the desired statement, which 
I trust may be of service in your work. If there is anything further which we can 
do for you, kindly write again. 

Very respectfully, yours, E. E. Clark, Chairman. 



Statement compiled from annual reports of operating steam railway companies to the 
Interstate Commerce Commission for the years named, ended June 30. 

[Does not include switching and terminal companies.] 



Item. 



Year. 



1909 



1911 



Miles of roads for which operations were reported 

Operating revenues— Rail operations 3 

Operating expenses— Rail operations 3 

Taxes accrued 3 

Operating income 3 

Number of revenue passengers carried 

Number of revenue passengers carried 1 mile 

Number of revenue passengers carried 1 mile per mile of road 

Average receipts per passenger per mile (cents) 

Number of tons of revenue freight carried 

Number of tons of revenue freight carried 1 mile 

Number of tons of revenue freight carried 1 mile per mile of road 

Average receipts per ton per mile (cents) 

Passenger service train revenue per mile of road , 

Freight revenue per mile of road 

Operating revenues per mile of road 

Operating expenses per mile of road 

Net operating revenue per mile of road 

Ratio of operating expenses to operating revenues (per cent) 

Ratio of operating expenses and taxes to operating revenues (per cent) 



1235,402.09 

$2, 418, 677, 538 

$1,599,443,410 

$85, 139, 554 

$738,031,543 

891,472,425 

29, 109, 322, 589 

127,299 

1.928 

1,556,559,741 

218,802,986,929 

953,986 

.763 

$2,979 

$7, 184 

$10, 356 

$6,851 

$3,505 

66.16 

69.65 



2 246,238.02 

$2, 789, 761, 669 

$1,915,054,005 

$102,657,157 

$773,865,700 

997,409,882 

33,201,694,699 

139,191 

1.974 

1,781,638,043 

253,783,701,839 

1,053,566 

.757 

$3,312 

$7,895 

$11,433 

$7,850 

$3,583 

68.66 

72.32 



1 Includes 9,396.35 miles operated under trackage rights, and 1,343.45 miles not in United States. 
* Includes 11,008.85 miles operated under trackage rights, and 1,761.58 miles not in United States. 
8 Excludes returns for a few small roads because of deficiencies in their reports. 



618 



EAILWAY MAIL PAY. 



I also wish to put into the record a memorandum of* railway mail 
pay submitted by Mr. M. O. Lorenz under date of April 19, 1913: , 

Memorandum Regarding Railway Mail Pay. 

The services performed by railroad companies for the Post Office Department may 
be divided into the following three classes: 

1. Carrying mails in apartment, R. P. O., and storage cars. 

2. Carrying mail in closed pouches, these being handled along with baggage or 
other traffic. 

3. Side services — that is, carrying mail between station and post office. 

These three classes of service need not all be paid for on the same basis. The 
basis used should be suited to each class. Taking up the last class first, we must 
admit that this is not really a steam railroad transportation service, and the pre- 
sumption is that the Post Office Department would take this out of the hands of the 
railroads altogether. It is urged that the railroad company has men employed any- 
how who will carry the mail in many cases without extra pay; but does this not 
work both ways? Wherever there is a post office, there must be some one employed 
anyhow by the post office. It has been suggested that the matter might be adjusted 
in this way: In cases where it would clearly not cost them anything the railroads 
might continue to perform this service without pay; but whenever they demanded 
pay for the service, the Post Office Department should take over the work. 

Turning to the closed-pouch service. We have here a service analogous to the 
express service. Is not the natural method of payment on the basis of actual weight 
or number of pouches? As to the rate, how would it do for the Government to pay 
one-half the rates fixed by the Interstate Commerce Commission as fair rates for the 
public to pay to the express companies? If the department wished to send a carload 
of closed pouches by freight, the payment could bear some relation to the first-class 
freight rate. 

This leaves us simply the first class mentioned above to consider. The proposition 
is here advanced that the proper solution for this class of service is the payment of a 
specific rate per car-foot mile in both directions for the maximum space used or neces- 
sary in either direction, unless by mutual agreement the empty space can be utilized 
in other services, the payment per car-foot mile to be the same to each and every 
railroad, except that possibly a minimum payment might be prescribed if it is found 
that very small roads are not taken care of by the payment for closed pouches sepa- 
rately. The argument in favor of this proposal will first be indicated, before taking 
up the question of what that payment should be. 

It is commonly thought, and rightly, that as a general proposition increasing density 
of traffic means a lower cost per unit of traffic. (By density of traffic is meant the 
amount of traffic per mile of road operated.) We get this general impression doubtless 
chiefly from the fact that in the freight service increasing density means larger train- 
loads and larger carloads, and this decreases the cost per ton. Furthermore, in any 
traffic, the more cars are hauled, the less is the share for each car of those common 
expenses that are independent of wear and tear. But it would be a mistake to con- 
clude from these well-known facts that the train mile expense is less in regions of 
dense traffic. A train mile does not always mean the same thing. Freight trains 
vary tremendously in weight and passenger trains very in speed, number of cars, and 
nature of service. Compare for example the Lake Shore with the Santa Fe: 



1911 



Santa 
Fe. 



Lake 
Shore. 



Operating revenues per mile of road 

Operating expense per train mile 

Per cent passenger-train miles are of total train miles (revenue service) 

Passenger cars per train 

Loaded freight cars per train 



$11,817 
1.64 

Per cent. 

48.57 

6.05 

21.90 



$29,138 
1.76 

Per cent. 
49.86 

6.88 
28.61 



RAILWAY MAIL PAY. 



619 



The additional expenses of the heavier traffic per mile of line more than counter- 
balance the economies per train that come from a better utilization of track. We can 
not, of course, use directly the average train-mile expense, both freight and passenger, 
in a study involving the passenger service alone. Such an average is much affected 
by the relative number of heavy freight trains. Thus on the Pittsburgh and Lake 
Erie the average train-mile expense is $2.82 as against |1.74 on the New Haven. To 
test the relative expense of hauling a passenger-train car a mile satisfactorily would 
require a separation of the passenger from the freight expenses. We do not have 
reliable figures of this kind for all roads. But just at present we are arguing concern- 
ing the question whether one payment per car-foot mile would be reasonable for roads 
in different sections of the country. As bearing on this particular point, the following 
table may be of interest: 

Year ending June 30, 1911. 





Revenue 

per passen- 
ger-train 
car-mile 

(cents). 

A. 


Per cent 
operating 

expenses 
are of rev- 
enues (all 
business). 

B. 


Column B 

applied to 

column A 

(cents). 

C. 


I. Large roads: 


25.5 
24.3 
25.5 


Per cent. 
70.35 
68.40 
66.56 


17.90 


Southern 


16. 60 


Western 


16.97 







II-III. The smaller roads — that is, those having revenues of less than a million dol- 
lars a year — show a higher car-mile revenue and a higher operating ratio, but they may 
be ignored in this discussion because (1) they would be affected more by the closed- 
pouch method of payment than by the car-space payment; (2) a minimum payment 
per mile of line might be provided for; (3) the large roads mentioned above do over 
96 per cent of the business. 

From the above table it does not seem that a different payment is required for 
roads in different regions. For individual roads there is more variation, but the gen- 
eral impression produced is the same. Notice the exceptional cases of the New 
Haven and Boston & Maine resulting from the small trains and well-filled cars. 



Road. 



Revenue 
per passen- 
ger-train 
car-mile 
(cents). 



Ratio of 
expenses to 
revenues- 
all opera- 
tions. 



AX B 

(cents). 



Pennsylvania R. R 

Pennsylvania Co 

New York Central 

Lake Shore ".... 

Baltimore & Ohio 

Erie 

New Haven 

Boston & Maine 

Southern 

Chesapeake & Ohio 

Seaboard Air Line 

Southern Pacific 

Chicago, Burlington & Quincy 

Santa Fe 

Northern Pacific 

Union Pacific 

Denver & Rio Grande 



27.16 
21.13 
24.57 
23.36 
22.22 
21.98 
39.51 
29.78 
24.57 
27.92 
21.69 
29.39 
25. 10 
25.48 
27.60 
21.70 
22.75 



72.15 
68.28 
73.98 
71.66 
71.21 
64.94 
65.80 
78.43 
67. 82 
64.79 
66.48 
57.33 
67.45 
63.52 
61.20 
53.19 
68.22 



19.6& 
14.42 
18.17 
16.74 
15.81 
14.27 
25.99 
23.35 
16.66 
18.09 
14.42 
16.85 
16.93 
16.18 
16.89 
11.54 
15.52 



620 RAILWAY MAIL PAY. 

Aside from the statistics, does it not appear reasonable to pay the same per car-foot 
mile, when you consider that the roads which have a dense traffic and which thus have 
certain expenses less per car, nevertheless haul more weight per car foot and give 
better service; that is, faster and more frequent? The pounds per car-foot mile can 
not be given by roads, but may be estimated by routes. Thus: 

Pounds per 
car-foot mile. 

Route No. 109004. New York to Philadelphia, Pennsylvania R. R 105 

Route No. 11001. Philadelphia to Pittsburgh, Pennsylvania R. R 119 

Route No. 110123. Pittsburgh to Youngstown, Pittsburgh & Lake Erie 82 

Route No. 167009. El Paso to Bisbee, Santa Fe 52 

Route No. 159001. Sioux City to Edgley, Chicago, Milwaukee & St. Paul 19 

The impression gained from the preceding considerations is that no grouping of the 
roads is necessary. This simplifies tremendously the problem of railway mail pay if 
the car-foot-mile basis is adopted for the railway post office, apartment, and storage 
car service. 

The question now is, what shall be the revenue per car-foot-mile? 

Such information as we have at this time enables us to make the following statement 
as demonstrable : The existing mail revenue for the roads as a whole is, on the one hand, 
profitable traffic for the railroads in the sense that it more than pays the actual out-of- 
pocket expenses occasioned by the mail service directly or indirectly, but on the other 
hand the mail service does not pay its full proportionate share of taxes and interest 
charges. In other words, no crying injustice would be done to the railroads or to the 
Post Office Department if no radical change is made in the existing level of pay for the 
next three or four years, by which time it is to be hoped that the accounting practices 
of the railroads generally will be sufficiently developed to permit of a reasonably 
definite determination of the relative cost of various branches of the railroad service. 
The existing revenue per car-mile for all passenger- train traffic is about 25.5 cents as 
against a mail revenue of about 20 cents (using the 3.37 mills per car-foot mile given on 
page 324 of the Hearings No. 2). Doubtless the mail revenue ought not to be as large 
as the other passenger- train revenue per car-foot mile, because certain expenses are 
incurred for the passenger traffic that are peculiar to it to a larger extent than is true of 
the mail traffic. This consideration would probably not warrant a reduction of more 
than 10 per cent from the passenger earnings, although no definite conclusion is pre- 
sented on this point. In other words, it is possible that the committee might find that 
a car-foot mile in the mail service should earn 3.37 or 3.50 or 3.75 mills (as further 
consideration may determine), subject to a proportionate reduction if the closed-pouch 
service is paid for separately. 

Before reaching a definite conclusion on this point, all parties interested will doubt- 
less wish to see how it would work out in individual cases. Practically the only 
statistics of car-foot miles we have at the present time are for the single month, as com- 
piled by the Post Office Department. Perhaps, before weighty conclusions are 
reached, additional data should be collected regarding the actual car-foot miles de- 
voted to the mail service on various roads. 

The Chairman. I want to ask Mr. Lorenz to elucidate a little on 
this portion of his statement reading as follows : 

Doubtless the mail revenue ought not to be as large as the other passenger train rev- 
enue per car-foot mile, because certain expenses are incurred for the passenger service 
that are peculiar to it to a larger extent than is true of the mail traffic. 

What? 

Mr. Lorenz. I had in mind in writing that, for example, the 
expenses which the railroad officials reported as traffic expenses. 
They, presumably, do not maintain relatively as many officials or 
agents to get the mail traffic from the Government as they do main- 
tain to get their passenger traffic for the railway. That is one illus- 
tration of the expense that is peculiar to the passenger traffic and not 
the mail traffic. 

The Chairman. I would like to get a little discussion between you, 
Mr. Bradley, Mr. Mack, and the other gentlemen here in reference to 
that; as to the dLierence between passenger and mail. 

Mr. Lorenz. I think the question can only be satisfactorily deter- 
mined by a complete system of cost accounting, where every item 



RAILWAY MAIL PAY. 621 

would be set down that is exclusively chargeable to freight, exclusively 
passenger, or exclusively chargeable to the mail or to express, and 
then the balance of the expenses and divided among these depart- 
ments on some basis that is proper for each account. That would 
automatically determine this question, but not having that we 
can only take into account these features which are obvious. It seems 
to me the one I have mentioned, traffic expense, and again, the ticket 
agents, and probably also the expenses for passenger stations, are 
relatively greater. Some illustration has been given of the terminal 
service performed for the mail, and of the fact that cars must be 
placed upon side tracks, and that some room must be furnished, 
perhaps in the station, and the mail handled, and so forth. I do not 
know just where the line would be drawn, but on the whole it seems 
to me a little more was done for the passenger service along these 
lines than for the mail service, and that therefore the revenue per car- 
mile should be somewhat greater to cover that extra expense in the 
passenger service. 

The Chairman. That is, revenue per car-mile should be greater in 
the passenger than in the mail service ? 

Mr. Lorenz. Yes, sir. 

The Chairman. Mr. Bradley presented a statement, as is shown on 
page 438 of the second volume of the railway-mail pay hearing, which 
made a strong impression on my mind, giving the relativeness between 
the Post Office Department and the express companies. Why could 
not that same thing be done with the passenger service ? You have 
read that statement, have you ? 

Mr. Lorenz. Yes, sir. I think such a statement would be very 
useful. 

The Chairman. Is there any criticism that you would make in ref- 
erence to Mr. Bradley's presentation under that comparison between 
express and mail ? 

Mr. Lorenz. No, sir; I have no particular criticism on this. It 
may be, in the comparison between mail and express, that there might 
be relatively more done for the post office than for the express. 

The Chairman. In other words, under that comparison, I take it 
Mr. Bradley thinks that the transportation companies should receive 
more compensation in the handling of the mail than they do for 
express, because more is required. Is that correct, Mr. Bradley V 

Mr. Bradley. Yes, sir. 

The Chairman. Are there any criticisms whatever to make as to 
his deductions based on those premises? Do you think they are a 
fair presentation of the relativeness between the two ? 

Mr. Lorenz. I have not studied them closely enough to answer 
that. 

The Chairman. Have you, Mr. McBride? 

Mr. McBride. I have not had an opportunity to study them very 
closely. I do not want to go on record at this time. 

The Chairman. I wish you gentlemen would both kindly look into 
that question between the express and mail. That presentation ha* 
made a very strong impression on my mind. 

Mr. McBride. I think from a casual reading that the differences 
are presented correctly, although I do not agree with the language 

49396—14 47 



622 EAILWAY MAIL PAY. 

of that part presenting the Post Office Department's side of the case. 
I think it is probably correct as to the facts. 

Mr. Bradley. Would you instance a case ? 

Mr. McBride. I am not prepared to instance a case at this time. 
I want to give the subject more study. 

Mr. Rowan. I want to ask Mr. Lorenz if some consideration ought 
not be given to the fact that mail is given precedence over every other 
class of traffic ? 

Mr. Lorenz. Yes ; I think it should be. 

Mr. Rowan. And it is admittedly given preference over every other 
class of traffic that is handled ? 

Mr. Bradley. I was going to ask that in a general way — whether 
Mr. Lorenz, in considering this subject, had turned his attention as 
much to the extra advantages that the mail service enjoys, or the 
extra expense attendant upon the performance of the mail service, 
as he did to the extra expense which appertained to the passenger 
service ? 

Mr. Lorenz. Perhaps they were not fully considered. Of course 
I had them in mind, but I reached no final conclusion. 

Mr. Rowan. Do you not think that the activity of all traffic officers 
results in advantage to the department ? 

Mr. Lorenz. I do not see how. 

Mr. Rowan. Because the traffic official solicits passengers for the 
trains and enables the road to run a train like the Century. With- 
out the traffic department booming a train like that, there would not 
be such a train for the Post Office Department to use. 

Mr. Lorenz. On the other hand, if it was not for the Post Office 
Department, those trains would not pay so well. Perhaps in help- 
ing out the mails enable you to establish a train like the Century. 

Mr. Rowan. Our earnings for mail on the Twentieth Century 
Limited are less than 4 cents a mile, and we give them 9 feet of space. 
I do not think there is anything in that. 

Mr. Snead. There is one part of the traffic activities that does it 
which seems to me helps the Post Office Department, and that is 
soliciting settlers to move into a country — immigration. They settle 
in a country, build it up into farms and towns and create mail along 
with other business, but the mail does benefit and profit by that the 
same as your freight and passenger business does. 

Mr. Lorenz. I think that is too intangible to be measured directly. 

Mr. Snead. I think that is true of a great many others, but that is 
a direct benefit. 

Mr. Rowan. If it were not for the traffic department the Post Office 
Department would not have the good trains they have to-day. 
The traffic department creates the necessity for additional trains. 

Mr. Bradley. I prepared some time ago a tentative statement 
about weight or space which I have not presented, but in that I point 
out that we can readily distinguish the 15 separate services rendered 
by the railroad company in connection with the Railway Mail Service, 
of which only two were specifically paid for, namely, the transporta- 
tion of the mails and the R. P. O. cars. 

The Chairman. What are the other thirteen ? 

Mr. Bradley. Mail apartments in combination cars, side messenger 
service within 80 rods, terminal messenger service, transfers if depots 
are 80 rods or less apart, station rooms for transfer clerks, station 



RAILWAY MAIL PAY. 623 

rooms for sorting mail, R. P. 0. cars and apartments placed in rail- 
road terminals hours before train's departure or held after train's 
arrival, mail cranes, mail receivers, and mail catchers. Right there, 
the British Government pays for their own mail cranes and catchers, 
but in this country the railroads are obliged to pay the expense. The 
next item is transportation of railway postal clerks on duty and to and 
from duty, transportation of postal officers connected with Railway 
Mail Service, transportation of postal officers connected with the other 
branches of the postal service, fines and deductions (including dis- 
ciplinary action), speed and frequency. 

As Mr. Mack pointed out to day, the holding of postal cars in 
railway terminals for several hours before departure, and in some 
instances providing for the distribution of mail in terminals for more 
hours than the postal car travels on its journey is one distinction be- 
tween the mail and passenger service, and it leads to the impression 
that if all these credits were given on both sides of the account, 
it might be concluded to be entirely fair to make no discrimination 
against an equal rate for postal cars on account of such few items in the 
passenger account as can not be identified as being directly applicable 
to the mail service. 

Mr. Mack. The postal service certainly gets the very best there is 
in our passenger service, and in addition to that, special mail train 
service. Do you not think, for instance, when we are required to give 
that preferred service — for instance, we have to put our baggage and 
express off of our trains to accommodate mail that comes in on a late 
connection, when we can not get another car — do you not think 
those are factors clearly in the case of preferred service that ought to be 
on the highest passenger basis possible? 

Mr. Lorenz. That should be considered; yes. But how would you 
reduce that to dollars and cents, as to whether it should be 5 per cent 
more or 10 per cent less than passenger earnings ? 

Mr. Mack. We have not attempted to do that. The position I 
have taken personally is that the passenger service is organized, 
including its whole outfit, of which the traffic expense is a part, and 
the Government comes along representing the people in the conduct 
of the postal service, and finds to hand this passenger service and gets 
the use of it. Now, why should it not bear a proportion of all the 
expense necessary to maintain that service without cutting out a little 
here or there. As I also showed this afternoon, the Government has 
been willing to pay for 30 years a subsidy in order to get the postal 
facilities that it desired, that were not secured through the regular 

Eassenger service. The Post Office Department and Congress have 
een willing to pay a higher rate in order to get a service that was 
needed, but that higher rate and that subsidy has been eliminated 
by a great improvement and an increase in our passenger service 
which now meets practically all the necessities of the postal service 
which should pay us as much at least, as the other passenger service. 

The Chairman. What subsidy 'do you refer to specifically? 

Mr. Mack. From 1876 until 1907 there were subsidies for the fast 
mail service from Washington to New Orleans, from Kansas City to 
Newton, and some other cases that I have forgotten now, but they 
have gradually disappeared, based primarily upon the fact of the 
improved passenger service. 

The Chairman. The general improvement of passenger service ? 



624 RAILWAY MAIL PAY. 

Mr. Mack. Yes. 

Mr. Bradley. It represented an expenditure, as I recall it, of about 
$250,000 a year by the Government. 

Mr. Mack. Now we give them not only passenger service, but special 
mail train service at regular rates. We feel when we do that we are 
giving the Government a great deal for its money, and to cut out 
traffic expense because you have your service built up, based upon 
passenger business, it is hardly just to put it on any other basis than 
even terms with the passenger revenue. It seems to me that that 
is clearly sound. 

Mr. Bradley. Then referring to the idea that the mail service is 
a by-product, it occurred to me to-day that the mail service was in 
existence before the railroads were built, and they commenced using 
the railroads as soon as they were built. 

The Chairman. So you take it that the passenger service is a 
by-product of the mail ? 

Mr. Bradley. I would not go that far, but at least I would place 
them on even terms. 

Mr. McBride. Do you not think you are slightly incorrect in saying 
that speed and frequency are not considered in compensation? 

Mr. Bradley. What I say about that is this: There is no greater 
pay for a speed of 60 miles per hour than for 15 miles per hour. 
There is no greater pay for 100 trips a day than for one trip, if the 
aggregate weight of the mail is the same in both instances, yet if a 
single train fails to make its usual time, a deduction is made from the 
pay of the company. It should be admitted, however, that speed and 
frequency are thus rewarded indirectly. 

Mr. McBride. I think your statement should be modified by saying, 
that if the failure is unavoidable, the deduction made is only 50 per 
cent of the value of the trip. 

Mr. Bradley. How would it be in the recent floods in Ohio and 
Indiana. What allowance would be made for an act of Providence ? 

The Chairman. I would like to get that statement of yours into 
the record, Mr. Bradley. 

Mr. Bradley. This was made in February, and I do not know 
whether it is up to date. We have had very many informal con- 
ferences since this was written. 

The Chairman. We will insert it in the record here. 

WEIGHT OR SPACE. 

In studying the subject of railway-mail pay in order to distinguish and select those 
elements of service upon which the rate of pay should be based it is first important to 
survey all the services performed by the railroads for the Post Office Department and 
estimate their relative importance. We can readily distinguish 15 separate services 
of which only 2 are specifically paid for, the other 13 being not paid for specifically. 

First. Transportation of the mails. — This service is paid for and is the carriage of 
the weight of mails from every place of origin on a railway to every place of destination 
on a railway. It is an indispensable service for the Post Office Department; without 
it we could not have an efficient postal system. Car space is only necessary according 
to the amount and character of the load and is not an unduly prominent factor as 
compared with the weight. This service could be performed by the railroads if all 
R. P. O. cars and mail apartments for sorting the mails en route were abolished. The 
space statistics in Document No. 105, accepted by the Post Office Department as 
necessary both for the transportation and the sorting of the mails en route, allows 
87 per cent for sorting space and 13 per cent for storage space. This implies that the 
excess space (almost six times beyond what the load requires) is primarily a necessity 



RAILWAY MAIL PAY. 625 

of the Post Office Department to secure a high quality of postal service and not, bo 
far as the railroad is concerned, an essential concomitant of the weight of mail 
transported. 

Second. R. P. 0. cars. — These cars are built and provided and hauled by the rail- 
roads, and are paid for specifically in addition to the pay for the weight of mail carried . 
In theory this additional pay is intended to cover the additional space in R. P. O. 
cars beyond the space in which the load is carried, but it is inadequate for the purpose. 
In Document No. 105 the R. P. O. car distribution space is stated by the Post Office 
Department as being 45 per cent of the total of all mail space accepted by the depart- 
ment. The pay to the railroad companies for furnishing this class of service — that is, 
full R. P. O. cars — is equivalent to about 10 per cent of the transportation pay. The 
13 services not specifically paid for are: 

Third. Mail apartments in combination cars. — These are from 10 feet to 30 feet in 
length, furnished with complete sorting facilities, and serve as traveling post offices 
for over 7,000 railway postal clerks, similar to the full R. P. O. cars. In Document 
No. 105 the Post Office Department attributes to these mail apartments 39 per cent 
of all car space used for mails. The lack of additional pay for these apartments 
widens the inadequacy of the pay for the weight carried, especially as there is no 
effective check upon the Post Office Department to restrain its demands for apartment 
car space. 

While this statement applies to the railroads generally it can be given especial 
emphasis in relation to the short-line railroads that are required to supply mail apart- 
ment cars. 

Fourth. Side messenger service within 80 rods. — Fifth. Terminal messenger service. — 
Sixth. Transfers if depots are 80 rods or less apart. — None of these services are specifically 
paid for. In the case of the short-line railroads the requirement is very often a great 
hardship, and sometimes means that the railroad company pays out more than it 
receives for its entire mail service. In the case of the larger railroad systems it is not 
so serious a hardship, but is thought that it should not be a requirement without 
special accounting. 

Seventh. Station rooms for transfer clerks. — Eighth. Station rooms for sorting mails. — 
The station rooms for transfer clerks are not specifically paid for, but to a reasonable 
extent might be regarded as a proper auxiliary of the transportation service, especially 
if the Post Office Department would not assert the power to determine the size and 
location of them in the stations or terminals. In the case of station rooms for sorting 
mails, as in a post office or railway post office; a fair rental should always be paid, as 
is now done in some instances. 

Ninth. R. P. 0. cars and apartments placed in railroad terminals hours before train's 
departure or held after train's arrival. — This requirement is not specifically paid for; is 
very burdensome, and is a very valuable service in expensive terminals. The effect 
is to relieve the Post Office Department from paying rental elsewhere or from paying 
for the maximum requirements en route. It is not considered to be a reasonable 
auxiliary of the transportation service beyond the time needed for loading or unloading 
the mails. 

Tenth. Mail cranes, mail receivers, and mail catchers. — These are demanded at the 
expense of the companies, although purely postal necessities. They sometimes entail 
enlarged secondary responsibilities, both burdensome and expensive, while relieving 
the Post Office Department of expenses justly their own. These requirements are 
likely to bear heavily on the short line roads. 

Eleventh. Transportation of railway postal clerks on duty and to and from duty. — 
Twelfth (a) Transportation of postal officers connected zvith Railway Mail Service. — (6) 
Transportation of postal officers connected with other branches of the postal service. — 
Thirteenth . Fines and deductions (including disciplinary action) . — Fourteenth . — Speed. — 
Fifteenth. Frequency. — There is no greater pay for a speed of 60 miles per hour than 
for 15 miles per hour. There is no greater pay for 100 trips a day than for one trip if 
the aggregate weight of mail carried is the same in both cases. Yet, if a single train 
fails to make its usual trip a deduction is made from the pay of the company. It 
should be admitted, however, that speed and frequency influence the allotment of 
mail tonnage to the roads giving the best quality of service and are thus rewarded 
indirectly. 

Of the 15 items, car space is obviously the proper measure for items 2 and 3 (R. P. O. 
cars and apartment cars), but it is not a good measure for the other items, such as mes- 
senger service, or mail cranes, or station facilities. Neither is the weight of mail 
transported a good measure for these services because their extent and cost do not 
advance or recede in close accordance with the tonnage. 

These auxiliary services deserve recognition and suitable remuneration, and a very 
good beginning would be to allow pay for mail apartments and relieve the companies 



626 RAILWAY MAIL PAY. 

from the compulsory performance of messenger and terminal service without pay. 
It would also seem desirable to relieve the Post Office Department from the necessity 
for pursuing the precedent of compelling railroads to perform the other services and 
give them the freedom of mutual arrangement and agreement as in usual contracts 
in the commercial world. 

Reverting to the main service performed by the railroads for the Post Office Depart- 
ment, the transportation of the mails, I have already intimated that the weight carried 
represents the essence of the service rendered. The delivery of the weight, the thing 
itself, at destination is a guarantee that the service was performed. The weight is 
easily ascertained by both of the contracting parties and joint verification is possible. 
If, instead of taking the weight of mail as the measure of the transportation service 
to the Post Office Department, we were to take the car space operated, we would be at 
least one remove from the thing itself — the mail transported. Instead of considering 
the traffic we would consider the container of the traffic, i. e., the car space either in 
full cars or in part of cars. 

It is known that there is no invariable relation between mail-car space and the mail 
tonnage transported. The car space accepted by the Post Office Department in 
Document No. 105 showed for the whole country about 23 linear feet of car space per 
ton of mail. Yet, one route showed as low as 8 linear feet per ton, and one small rail- 
road system showed 66 linear feet to the ton. These diverse results were partly the 
result of transportation conditions and partly caused by the Post Office Department's 
method of performing the service. We are enabled to see this disparity because we 
have the weights as well as the space, but if car space were the only measure there 
would be no gauge for determining the value to the Post Office Department of the 
car space used. Therefore, the amount of car space accepted by the Post Office Depart- 
ment for the mails would be determined by the varying opinions of subordinate 
officers with frequent fluctuations and consequent instability. 

If it were possible to make a four-year agreement on mutually satisfactory terms, the 
railroad company to fix the rate, as the owner of a building would fix the rate, one 
might say that it would be immaterial which basis was selected because the company 
would be able to satisfy itself as to the adequacy of the pay and protect itself against 
excessive exactions. But when the rate of pay is not fixed by the railroad company 
and when experience has shown that the officials of the Post Office Department do not 
see the same space for payment that the railroad officials find necessary for operation, 
and when experience has shown that the Post Office Department even now alters its 
allowances of R. P. 0. car space at frequent intervals, reducing authorizations on 
30 days' notice, or even less, it is natural that a strong preference should be expressed 
for the more stable factor — weight of mail transported, which is less subject to mere 
opinion. 

Another very strong reason should appeal to the Post Office Department. While 
it is true that there is no constant or exact proportion between bulk weight of mail 
carried and its attendant car space for distribution and storage, yet there is an approxi- 
mate relation, especially if the "working mail" is differentiated from the "through 
mail." If an officer of the Post Office Department were attacked for overliberality 
in allowing car snace to a particular railroad system, it would be difficult for him to 
defend himself without having the statistics of weight to quote. 

For similar reasons the statistics of weight carried would be important to Congress 
or to the Interstate Commerce Commission when either is dealing with the question, 
because the value of the total car space paid for would be expected to rest in some 
measure upon the amount of the traffic, and this could only be learned by a periodical 
weighing, as at present. 

In 1899, when the last joint congressional commission was studying this question, 
I held the opinion, which I surmise is still held by some officials of the Post Office 
Department, that if the department paid for car space instead of for weight they 
could load the space to the maximum, and so effect great economies. I am satisfied 
that this is a delusion. The low average load carried per car is really the result of 
the variable character of the traffic and not of the present basis of pay. The fact 
that the yolume of mail in one direction is heavier than in the reverse direction lowers 
the average load, but the department can not control or change this condition. The 
further fact that the load from the heavy initial terminal varies from day to day can 
not be controlled by the department unless it takes all expedition and high quality 
out of the service by holding the mail back until it accumulates a full load, as in the 
freight service. Congress and the American people would not consent to this. 

Superficially it appears quite clear that the average load per car is too low, and 
therefore extravagant, but close examination discloses the fact that this is an insepa- 
rable characteristic of the mail traffic and partly the price paid for expedition (includ- 
ing distribution e,n route). 



RAILWAY MAIL PAY. 627 

It would therefore seem that there is nothing to be gained and much to be lost 
by both the Post Office Department and the railroad companies in substituting space 
as the sole measure for the transportation service and for the pay in comparison with 
the present basis by which about 90 per cent is apportioned to weight and about 10 
per cent to space. The correct view seems to be that in the passage of time since 
the law of 1873 was passed the service has so developed, especially the distribution 
of mails en route, that the measure of weight is at present overemphasized in the 
law and the additional measure of space is underemphasized. If Congress would 
now allow pay for mail apartment cars, and if 3t would also revoke the law of March 2, 
1907, so as to restore the former rates of pay for full postal cars, such action would 
give recognition to the changes that have occurred in the character of the service 
and tend toward a fairer adjustment. 

Mr. Bradley. Unless Mr. Lorenz is about to make some remark, 
I would like to ask this question: Is it generally conceded outside of 
railroad circles that the passenger service on the railroads of the 
country as a whole is an unremunerative service ? 

Mr. Lorenz. It is frequently so stated. I can not state that it is 
generally conceded. 

Mr. Bradley. What would you say, in your opinion, whether the 
statement is true that the passenger-train service is unremunerative 
to the railroads as a whole ? 

Mr. Lorenz. I do not think I could express an opinion, so much 
depends on the particular method of figuring the expense; but I 
am rather inclined to think it is not likely to be found as profitable 
as the freight. 

Mr. Mack. That is pretty well demonstrated in the rate cases, is 
it not? 

Mr. Lorenz. I think so. But testimony before this committee 
shows that on the New Haven the passenger service is the more 
profitable. 

Mr. Mack. So, if the question of overpay or underpay were deter- 
mined on relative revenues it would be founded on passenger service 
that at least is not excessively profitable ? 

Mr. Lorenz. That would be my impression; yes. 

Mr. Bradley. If the rate per car-mile in the passenger- train serv- 
ice could be regarded as not distinctly profitable to the railroads as 
a whole it would hardly be necessary to make any deduction from 
that rate in the case of the mail service. 

Mr. Lorenz. You mean, even conceding that the mail should earn 
a little less than the passenger service under ideal rate adjustments, 
it ought to earn as much as the passenger does now ? 

Mr. Bradley. Yes, at least that that would not be an unreasonable 
position to t#ke. 

The Chairman. All of you gentlemen are unanimous, are you not, 
in your opinion that the mail service should be self-supporting to the 
Government ? In other words, that the charges asked by the Gov- 
ernment of the citizens should cover the cost to the Government of 
the service ? 

Mr. Bradley. "That is my opinion, absolutely. 

The Chairman. There is no difference among any of you railroad 
gentlemen as to that ? 

Mr. Mack. I think not. 

Mr. Snead. I do not think it would be good business to do anything 
else. 

Mr. Mack. Of course there might be a little over or a little under 
which would not adjust itself with exactness; but the principle, I 



628 RAILWAY MAIL PAY. 

think, we all agree on, that it ought to pay its way and the postage 
rate ought to be adjusted accordingly. 

The Chairman. I desire at this point to put into the record the 
statement of Mr. A. H. Plant, comptroller 01 the Southern Railway, 
which he has submitted to the commission. | 

Assignment of Railway Operating Expenses to the Various Classes op Service 
for which such expenses are incurred. 

The proposed law for the regulation of railway mail pay has as a foundation the 
allocation of railway operating expenses to freight service and to passenger service, 
separately, and a further subdivision of those expenses assigned to passenger service, 
between costs incident to the transportation of mails as distinguished from other 
passenger- train costs. 

It is assumed from the proposed regulation that, if enacted into law, fixed and uni- 
form rules or methods must be prescribed: 

(1) By the Interstate Commerce Commission for the purpose of determining: (a) 
those costs incident to freight service; (&) those costs incident to passenger service. 

(2) By the Postmaster General for determining that part of the passenger costs 
assignable to the transportation of mails. 

The purpose of this paper is to point out the impossibility of fixing a general rule or 
method for allocating railway operating costs, separately, to the several classes of 
service for which they are incurred, which will be equitable alike to all carriers con- 
cerned and to the Post Office Department. 

This segregation or allocation of railway operating expenses to the several classes 
of service is by no means a new or an experimental question. For years past it has 
had the serious and thoughtful consideration of railway managers, and especially of 
railway accounting officers, and their conclusions have invariably been that, while 
in some cases a part of such costs can be accurately assigned and that other costs are 
assignable with a fair degree of accuracy upon arbitrary bases applicable only to 
the individual line making this assignment, no trustworthy rule or method could be 
adopted which could with equity or with a fair degree of accuracy be applied to 
all railways alike. 

. As far back as 1885, in conjunction with several of my colleagues, careful consid- 
eration was given to the matter, and at that time, with far less complications and 
difficulties than now confront us, our conclusions were that there were too many 
elements of averages and approximations to be dealt with and too many varying 
conditions existing on different railways and on individual operating divisions of a 
single railway to warrant the establishment of a uniform basis for such an allotment. 
Since that time, by reason of the changed conditions incident to railway operations, 
such as heavier and faster trains of both classes, new and complicated appliances, the 
greater use of joint facilities for both classes of service, the complications and diffi- 
culties in the way of such a determination have materially increased, making the 
problem far more difficult of solution than it was at that time. 

Prior to 1894 the scheme of accounting and statistics required of carriers by the 
Interstate Commerce Commission called for an assignment of operating costs to the 
two classes of traffic; i. e., freight and passenger. 

Effective July 1, 1894, the Interstate Commerce Commission promulgated a revised 
classification of operating expenses, and from it I quote the following: 

"The classification of operating expenses herewith presented has been nearly four 
years in process of revision. Every accounting officer of an opey^inja^jroad, as also 
all State railroad commissioners, have been asked for criticisms and suggestions, 
and there is hardly an important railway line in the country which has not been 
represented, eithar directly or indirectly, on some one of the various committees having 
this matter in charge. It is needless to say that some of the changes finally agreed 
upon do not meet the approval of all the members of all the committees, but the state- 
ment may be made without fear of contradiction, that this revised classification rep- 
resents the best thought of the railway commissioners and the railway accounting 
officers of the United States." 

Again, in that same document, is found the following: 

"The most important change in this revised classification consists in the abandon- 
ment of the assignment of expenses between passenger traffic and freight traffic, a 
change which for a long time had been urged by accountants and which secured the 
approval of the State railroad commissioners at their fifth annual convention, held 
in Washington, April, 1893." 



BAIL WAY MAIL PAY. 629 

Going a little further back, we find, in the Fifth Annual Report of Statistics of 
Railways, issued by the Interstate Commerce Commission, being the report for the 
year ended June 30, 1892, pages 86 and 87, the following: 

"The second change was the abandonment of the attempt to assign operating 
expenses to passenger and to freight traffic, respectively. This assignment was 
introduced by the railways many years ago, when the difference in the character 
of the two services was so marked as to permit it to be made with a fair degree of 
accuracy. With the development of railway economy, however, which has resulted 
in increasing the rapidity of freight trains and the weight of passenger trains, it has 
been found that not more than half of the items of operating expenses can by any 
means be assigned to passenger and to freight service." 

Again, in the Sixth Annual Report of the Interstate Commerce Commission, pages 
61 and 62, the following appears: 

"This summary also contains a statement of the proportion of operating expenses 
assignable to the passenger service and to the freight service, but, as stated in the 
report of the previous year, this assignment appears for the last time in the present 
report, it having become evident that no trustworthy rule exists for making the 
assignment in question." 

Thus we have, after nearly four years of consideration, an acknowledgment by the 
Interstate Commerce Commission that at that time and under more favorable condi- 
tions than exist at the present time no equitable allocation of the two classes of 
expenses could be made. 

In 1906 the Interstate Commerce Commission, under authority vested in it by Con- 
gress, began its work of promulgating a uniform system of accounts to be kept by car- 
riers subject to the act to regulate commerce. One of the first acts of the commission's 
accredited representative in respect to that work was the issuance of a circular letter 
to carriers, in which their views were asked upon certain pertinent questions of account- 
ing, among which was question 5, reading as follows: 

"While refraining at the present time from expressing any opinion on the proposal 
that an authoritative rule should be formulated for the separation of operating ex- 
penses incident to the passenger service and the freight service, it is recognized that 
certain expenses can be accurately divided between the two services named. Your 
attention is called to this matter with the request that you state in detail the extent 
to which and the manner in which such separation may be made." 

The replies to that question summarized were, as shown on page 10 of Bulletin No. 
13, issued by the Association of American Railway Accounting Officers under date of 
December 10, 1906. which is as follows: 

"It is considered that the larger proportion of operating expenses can not be ac- 
curately separated as between freight and passenger service. There are a few accounts 
which can be separated by all lines, and several which can be separated by some lines, 
but not by all. Any arbitrary basis applied for this purpose to all roads would there- 
fore produce results which would be absolutely incorrect and misleading. 

"No division can be made of the accounts under 'Maintenance of roadway and 
structures' except perhaps as relates to a few individual buildings. 

"The same condition exists as to the accounts under 'General administration 
expenses.' 

"The maintenance of passenger and freight cars may be readily shown, but loco- 
motives are for the most part used in both freight and passenger service, and the 
repairs can only be divided as between freight and passenger on an arbitrary basis. 
The remaining accounts under 'Maintenance of equipment' are subject to the same 
arbitrary conditions. Traffic solicitation and administration expenses may be sepa- 
rated as between freight and passenger on those roads which have through their 
organization provision for a separate staff of freight and passenger work, but it 
would be impracticable to divide on such roads as have one staff for the entire traffic 
department. 

"The expense of handling traffic at stations and in yards is for the most part per- 
formed by a common staff, and the requirement is used for both purposes. In the 
train service the wages of train crews and the supplies for trains can not be separated 
when there is mixed train service. Dispatchers and protecting by telegraph are 
indivisible. 

"Loss and damage, injuries, clearing wrecks, mileage and per diem of equipment, 
and insurance may be separated, with some minor exceptions, but the operation of 
joint tracks and terminals, floating equipment, and the remaining accounts under 
'Handling traffic' can only be separated when under a particular organization they 
provide exclusively for one branch of the service. 

"An examination of the replies submitted on this subject by the chief accounting 
officers of the railways of the United States shows a practical unanimity in support of 



630 RAILWAY MAIL PAY. 

the conclusions reached by the committee, and such replies as propose a division give 
only such bases as are entirely arbitrary, and the accounting officers for the most part 
positively assert that the information is only approximately correct and would be value- 
less if used for any_ other purpose than as a comparison with the same property during a 
Corresponding period. 

"The only basis which receives any considerable support as applied to the separation 
of those expenses which can not be accurately divided, is that of train mileage, but it is 
a well-known fact that passenger trains vary widely in weight, speed, and number of 
stops; that the same conditions exist as regards freight trains, and that the disparity be- 
tween the two services is even more strongly marked. The cost of maintaining tracks, 
apart from natural depreciation which is uninfluenced by the amount of traffic, is 
affected principally by speed, weight of load, and number of stops, but no known formula 
exists for determining the influence of each, nor can any basis be reached for averaging 
these elements as between the two classes of service. There are many other conditions 
which would influence the question, such as climatic conditions, the varying classes 
of traffic handled, both passenger and freight, differences of grade and alignment, etc., 
and it is therefore evident that no uniform basis can be provided for the purpose of 
making this separation throughout the country. 

"If it is desirable to show expenses for passenger and freight service separately, it 
should be confined to only such items as can be charged direct to either service. 
Whenever it is necessary to prorate expenses to obtain such division the information 
furnished is without value and should not be required." 

Again, in the latter part of the calendar year 1912 the question of cost statistics was 
taken up with carriers by the Interstate Commerce Commission, and the matter of 
allocating expenses to each of the two classes of business was carefully studied with 
the results outlined on pages 2 and 3 of Extract from Minutes of a Meeting of the Stand- 
ing Committee on Corporate, Fiscal and General Accounts of the Association of 
American Railway Accounting Officers, held at French Lick, Ind., November 13 
and 14, 1912, copy of which, marked "Exhibit A," is herewith submitted. 

Thus it is shown that for approximately 20 years the matter of allocating operating 
expenses to freight service and to passenger service, separately, has been diligently 
and intelligently considered by both the officials of railroads and by the Interstate 
Commerce Commission with the conclusion always that no fixed or definite equitable 
rule could be found under which the allocation could be made. 

It is true that, for comparative operating purposes, some railway companies allot 
their operating cost to the two classes of service, separately, and it is also true that, 
for special studies by individual lines, such allocations have been made. This, I 
frankly admit, can be accomplished with a fair degree of accuracy by and for an indi- 
vidual line, but a rule or formula which would make such an allocation possible on one 
railroad would be inappropriate to the affairs and conditions of another railroad. The 
individuality of and the particular conditions existing on each line must be taken into 
consideration and reckoned with; otherwise the results obtained would be incorrect 
and misleading. As a practical illustration of this fact, I submit the following: The 
gross cost of an individual operating expense for the year ended June 30, 1912, on the 
linelrepresentamountedto$3,100,259.95. Of this amount 98 per cent, or $3,038,936.69, 
could, under Southern Railway methods, be assigned to the two classes of service with 
a fair degree of accuracy. The proportion assignable to passenger service, under 
such methods, would amount to approximately 39 per cent, or $1,189,395.39. Apply- 
ing the rule suggested by the Post Office Department the proportion of this expense 
applicable to passenger service would be 50 per cent or $1,534,359.14, an excess over 
Southern Railway Co.'s method of 29 per cent, or $344,963.75. 

Another individual expense account of the same line and for the same period 
amounted to $3,327,144.82, of which, under Southern Railway methods, $3,258,073.34 
could be assigned separately to the two classes of service. Of this latter amount the 
assignments to passenger service would be: Under Southern Railway method, 39 
per cent, or $1,290,814.15; under method suggested by the Post Office Department, 
51 per cent, or $1,678,233.58; post-office method in excess of Southern Railway method 
30 per cent, or $387, 419.43. 

Furthermore, notwithstanding the careful thought and consideration which haa 
been given the matter by accounting officers, I find that there is a wide difference of 
opinion among them as to an equitable and proper basis or formula to be used for arriv- 
ing at passenger train costs on an individual railroad. This fact was emphasized in 
a, recent study of operating expenses made for a specific purpose. In that study it 
was necessary to approximate passenger costs. Four different plans, the result of 
much thought ajid consideration on the part of accounting officers, as well as the 
Post Office Department officials, were produced. Applying the four different plana 
to the Southern Railway Co.'s gross operating costs for the year ended June 30, 1912, 



RAILWAY MAIL PAY. 631 

we find, under one plan, the costs assignable to passenger business were 32.24 per 
cent of the total operating costs; under another, the costs were 35.81 per cent; under 
the third, the costs were 35.83 per cent; and under the fourth, the costs were found 
to be 39.73 per cent. Thus under the four bases averages ranging from 32.24 to 39.73 
per cent were found, representing a variation in costs assignable to passenger service 
of something over $3,200,000. In the second and third bases the per cents were fairly 
well together, varying only from 35.81 to 35.83 per cent, representing a difference of, 
in the aggregate, only $8,000. However, in one particular group of expenses the differ- 
ence under the two plans aggregated over $1,000,000, such difference being made up 
and equalized in other expense accounts. 

These results demonstrate most emphatically that, first, there is a wide variation 
in the opinion of railway officers as to what method should be used in assigning oper- 
ating expenses to the two classes of sendee on an individual line; and, second, that no 
general rule can be produced which can be applied with any degree of equity to all 
railroads under all conditions. 

REPORT OF THE SUBCOMMITTEE ON STATISTICS. 

Division of operating expenses between passenger service and freight service. — The sub- 
committee on statistics, consisting of Messrs. A. H. Plant (chairman), C. I. Sturgis, 
L. A. Robinson, M. P. Blauvelt, Frank Nay, C. M. Bunting, C. B. Seger, and R. A. 
White, presented the following report on the allocation of operating expenses to pas- 
senger service and freight service, which was accepted and approved: 
Whereas Commissioner B. H. Meyer, in his letters to the presidents of sundry railroads, 
in referring to division of operating expenses between passenger and freight, used 
the following language : 

"I am advised that the question of separating expenses among the different 
branches of the business has been raised. This idea is as old as the railways. I 
believe such a separation should be undertaken as far as it can be correctly done 
without unnecessarily suggesting misleading conclusions. I have long felt that 
every useful scheme of operating statistics rests upon such a separation. I regard 
this separation as fundamental, and unless hitherto unthought of objections can 
be raised, I assume that all the carriers will cooperate in doing it in the future, as 
some of them have done it for many years past. A beginning could be made by 
reporting all expenses which are assignable to passenger, freight, and other branches 
of the business under existing classifications. All those expenses which can not be 
directly assigned should be reported unassigned, unless the carriers voluntarily 
desire to submit a complete apportionment. Such apportionments have been 
made very elaborately for important systems and the commission would certainly 
wish to get the benefit of this work; but I should be opposed, for the 
present at least, to any plan looking toward the assignment or apportionment 
of all expenses of every class to the respective branches of the business in reports 
to be made to this commission. If the commission is in possession of the figures 
representing expenses which are actually assignable, it can, if necessary, go beyond 
this, stating for the information of all concerned the bases more or less arbitrarily 
adopted for common items and the reason for their adoption in every individual 
case. I should be inclined to recommend the adoption of a report form which will 
leave it optional with the different carriers to report separately only the assignable 
expenses, leaving common expenses unapportioneel, or to report a complete appor- 
tionment. In case the latter alternative is elected, however, each carrier should 
be required to state the basis upon which it made its apportionments and the reason 
for adopting that particular basis." 
And whereas, in his remarks before this subcommittee in Washington, D. C, February 
8, 1912, he reiterated that opinion using the following language: 

"One of my suggestions was that, putting aside all controversy with respect to the 
separation of expenses between the different branches of the business, carriers 
might report all expenses assignable to passenger, freight, and other branches of 
service under existing classifications. As I see it from the point of view of the 
commission, I feel that this is fundamental. * * * It is axiomatic with you 
that before we can have anything in the wa'y of cost, we must have a separation of 
expenses. Then, of course, you come in to the complicated question of mixed ex- 
penses, and expenses that can not be allocated. What would help the commission 
is the expenses that can be allocated and then enter those that can not be allocated. 
It would help if some companies would report all expenses which are actually 
assignable, designating other expenses as unassignable, unless they desire to submit 
a complete apportionment, stating the basis used. If 20 roads make such returns, 
it is quite possible $iat in those 20 roads there will be suggestions enough to lead to 
uniformity for 50 next year. So in working along these matters will develop. If 



632 KAILWAY MAIL PAY. 

we would put ourselves to the problem like the people in the manufacturing business 
have put themselves to the problem, I am inclined to believe that we could make 
headway. I realize those differences that exist, and yet the fact remains that they, 
too, have these arbitrary apportionments to deal with. * * * I did not mean 
to convey the impression that I had in mind to apportion 100 per cent of the expenses 
between different classes. 

" In my written communication I intimated that I would oppose it. * * * As 
for the apportionment of expenses between freight and passenger; they might be 
divided as far as possible and then the common expenses put in a pot, so to speak. 
* * * I should hope that the matter of division between passenger and freight 
should not cause you to pause too long in the elaboration of our operating statistics. 
In the separation, between passenger and freight, here are certain things that have 
been definitely apportioned to passenger, say 40 per cent, and that leaves 60 per 
cent unapportioned. No one can use that. The present proposition is to separate 
the 40 per cent and then leave the 60 per cent to any one interested in making the 
additional separation . ' ' 
And whereas the question of formulating rules for the division of operating expenses 
between freight and passenger was discussed by the special committee on corporate, 
fiscal, and general accounts prior to the promulgation of the present classification 
of operating expenses, at which time, after full consideration, it was decided that 
no fixed rules could be made which would apply alike to all railroads under the 
varying conditions. 
And whereas this subcommittee has formulated a text indicating the items of oper- 
ating expenses, under the existing classifications, which are directly assignable to 
freight or to passenger, and the question of apportioning expenses common to both 
classes of service has not been brought before this subcommittee; 
And whereas while in practical experience some carriers have made division of ex- 
penses between freight and passenger, this has been true only in specific cases and 
subject to the individual judgment of the party making the division: Therefore 
be it 

Resolved, That this subcommittee concurs in the view expressed by the special com- 
mittee on corporate, fiscal, and general accounts in the year 1906, and that this sub- 
committee, after due and deliberate consideration, reiterates that no fixed rule for 
the division of common expenses between freight and passenger can be devised which 
will be equitable to all carriers, to the same carrier under all conditions, or to all divis- 
ions of the same carrier; and be it further 

Resolved, That the attention of the commission be called to the fact that even the 
partial separation suggested by the commission of stating the amount of expense 
directly assignable to freight or passenger will involve some additional expenses to 
the carriers, with no appreciable benefit to the commission. 

Thereupon, at 11 o'clock p. m., the hearing was adjourned. 

By direction of the chairnlan the following letter, with accompany- 
ing memorandum, from Mr. M. O. Lorenz, associate statistician, 
Interstate Commerce Commission, is inserted: 

Interstate Commerce Commission, 

Division of Statistics, 
Washington, May 13, 1913. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Senator Bourne: The inclosed is a memorandum of such thoughts as have 
occurred to me in reading the paper submitted to the committee on railway mail pay 
by Mr. A. H. Plant. I thought they might possibly be of interest to you. 
Kespectfully, yours, 

M. O. Lorenz, Associate Statistician, 

[Remarks concerning a paper entitled "Assignment of railway operating expenses, etc.," submitted 
to the committee on railway mail pay by Mr. A. H. Plant, comptroller of the Southern Railway.] 

The purpose of Mr. Plant's paper is "to point out the impossibility of fixing a gen- 
eral rule or method for allocating railway operating costs, separately, to the several 
classes of service for which they are incurred, which will be equitable alike to all 
carriers concerned and to the Post Office Department." 

He says that the problem is far more difficult of solution now than it was in 1885. 
This is surely not correct. To-day we have a uniformity in railway accounting 
which did not exist then. Furthermore, it is probable that with the improved ac- 
counting and with the development of traffic a larger proportion of the total oper- 






RAILWAY MAIL PAY. 633 

ating expenses can be definitely assigned to one service or to another. On a road 
with a well-developed traffic there is probably less interchange of locomotives, for 
example, between freight and passenger service. 

After giving certain historical facts, Mr. Plant says: 

"Thus it is shown that for approximately 20 years the matter of allocating oper- 
ating expenses to freight service and to passenger service separately has been dili- 
gently and intelligently considered by both the officials of railroads and by the 
Interstate Commerce Commission with the conclusion always that no fixed or definite 
equitable rule could be found uuder which the allocation could be made." 

The reader would doubtless be misinformed if he came to the conclusion from this 
statement that cost accounting is a closed book so far as the Interstate Commerce Com- 
mission is concerned. Numerous recent decisions of the commission indicate that 
they are paying attention to estimates of the cost of carrying specific commodities. 
The commission has recently issued a formal order requiring railroad companies to 
state the extent to which and the manner in which they are separating their operating 
expenses between freight and passenger services, and while this order does not commit 
the commission to any policy regarding the matter, it indicates at least that they are 
still open to conviction. Furthermore, Mr. Plant near the close of his paper himself 
quotes certain expressions of Commissioner Meyer which indicate that at least one 
member of the commission hopes that a system of cost accounting for railways will be 
worked out, even though the time may not be ripe for a uniform rule for apportionments 
of expenses to be prescribed for all roads. He says, " I have long felt that every useful 
scheme of operating statistics rests upon such a separation. " It is true that the former 
statistician of the Interstate Commerce Commission, Mr. Henry C. Adams, was opposed 
to cost estimates of this kind, but his successor, Mr. William J. Meyers, is of the opinion 
that a separation of expenses among the various branches of the services would serve 
a useful purpose. 

So far as the resolutions of accounting officers are concerned, it may be observed that 
they as accountants do not have need for estimates of this kind, but we do find that 
other railway men resort to cost estimates to the extent that they have need for them. 
Operating officials, for example, have need for only a partial system of cost accounting. 
The expenses which they can cut down by economical methods are the ones which 
they watch. Traffic men have generally felt no need for cost estimates because it is 
their business to make rates as high as possible without curtailing the volume of traffic. 
Railroad lawyers, on the other hand, have made frequent use of complete cost estimates 
because they have found them to be the basis of the only effective argument which 
could be made in many cases to prove the reasonableness of an advance in rates or the 
unjustness of a reduction in rates. In attacking a 2-cent-fare law, they could proceed 
in no other way than to make a complete cost estimate. Mr. Plant himself mentions 
a recent study of operating expenses "in which it was necessary to approximate 
passenger costs. " The following quotations are from a recent book by Mr. Samuel 0. 
Dunn, entitled "The American Transportation Problem, " Mr. Dunn being one of the 
editors of the Railway Age Gazette. He says: "Many railway men in their public 
utterances say that rates can not and should not be based to any considerable degree 
on cost of service. Their practice refutes their theory" (p. 13). Again: "If railways 
can work out cost figures to defend or to attack rates, they can work them out as more 
or less useful guides for making rates" (p. 18). Again: "One of the main obstacles 
to the better apportionment of rates according to costs has been the failure of the 
railways to develop as good methods of cost accounting as are in use in many manufac- 
turing concerns" (p. 17). 

It should be stated that much of the opposition to cost estimates probably would 
disappear if it were thoroughly understood that the term "cost estimate" should be 
understood as meaning "cost and use" estimate. Common expenses can not be 
assigned in a convincing way to branches of traffic on the ground that each branch 
causes so much expense. What can be measured is the use which each branch of 
the traffic makes of the common facilities, and whatever may be determined as a 
fair measure of the use will also be a fair measure for the distribution of the expense. 

Mr. Plant's paper is purely destructive. In place of the post-office method, which 
he attacks, he gives us absolutely nothing to put in place of it as a means of ascer- 
taining what is a fair payment to the railroads for the service of carrying the mails. 
The statement may be ventured without fear of contradiction that neither he nor 
any other railroad representative can suggest a method of telling whether the rail- 
roads are overpaid or underpaid for this service and demonstrate its correctness wi ih- 
out directly or indirectly making a "cost and use" estimate. 



WEDNESDAY, MAY 14, 1913. 

Committee on Second-Class Mail Matter, 

Washington, D. G. 
The hearing was resumed, at the call of the chairman, at 10.30 
o'clock a. m. 

Present: Hon. Jonathan Bourne, jr. (chairman), Hon. Harry A. 
Richardson, Senator John H. Bankhead, Senator John W. Weeks, 
Representative James T. Lloyd, and Representative William E. 
Tuttle, jr. 

The Chairman. I will swear the gentlemen who are present, in 
order that they may participate in the discussion, which procedure 
will bring out any salient points which may occur to them. 

Thereupon the following gentlemen were sworn by the chairman : 

Ralph Peters, chairman of the Railway Mail Pay Committee ; Her- 
bert L. Fairchild, supervisor of mail traffic, Illinois Central Railroad 
Co., Chicago, 111. ; J. E. Mallette, representing the Union Pacific Rail- 
road Co. ; P. S. Eustis, traffic manager, Chicago, Burlington & Quincy 
Railroad Co., Chicago, 111. ; C. A. Searle, mail traffic manager, Rock 
Island Lines, Chicago, 111.; Russell H. Snead, manager of express 
traffic of the Chesapeake & Ohio Railway Co.; Bird M. Robinson, 
president Tennessee Railway Co. ; John N. Drake, secretary and 
treasurer Short Line Railway Association; F. A. Campbell, agent 
transportation department, Norfolk & Western ; S. C. Scott, assistant 
to first vice president, Pennsylvania Lines west of Pittsburgh ; W. W. 
Safford, general mail and express agent, Seaboard Air Line Rail- 
way; James Peabody, statistician of the Atchison, Topeka & Santa 
Fe Railroad ; Ivy L. Lee, executive assistant, Pennsylvania Railroad 
Co.; V. J. Bradley, general supervisor of mail traffic of the Penn- 
sylvania Railroad System ; J. P. Lindsay, manager mail traffic, Atchi- 
son, Topeka & Santa Fe Railway System, Chicago, 111. ; E. T. Postle- 
thwaite, assistant to president, Pennsylvania Railroad ; W. C. Wishart, 
statistician of the New York Central Lines ; P. R. Albright, assistant 
to general manager, Atlantic Coast Line ; W. W. Baldwin, vice presi- 
dent Chicago, Burlington & Quincy Railroad Co.; Joseph Stewart^ 
Second Assistant Postmaster General ; C. H. McBride, superintendent 
Division of Railway Adjustments Post Office Department; Albert 
Noble Prentiss, clerk, Post Office Department; Max Otto Lorenz, as- 
sociate statistician, Interstate Commerce Commission; H. E. Mack, 
manager mail traffic, Missouri Pacific Railway Co.; Archibald H. 
Rowan, assistant to vice president, traffic department, New York Cen- 
tral Lines; Walter S. Baskerville, general agent mail traffic, Great 
Northern Railway. 

635 



636 RAILWAY MAIL PAY. 

STATEMENT OF MR. RALPH PETERS. 

The Chairman. Mr. Peters, what information, additional to what 
has already been submitted, have you to give to the committee? 

Mr. Peters. Mr. Chairman, we have carefully studied over and 
discussed the memorandum that you sent us through Mr. Bradley, 
which had been prepared by Dr. Lorenz, and we have studied over 
the suggestions of Mr. Lloyd. 

The Chairman. That is, the establishment of four units ? 

Mr. Peters. The establishment of four units as the basis of com- 
pensation for railway mail pay. 

The Chairman. That is, the 60-foot car, the 30-foot car, 15-foot 
car, and the closed-pouch service ? 

Mr. Peters. Yes. As I told you two weeks ago, we thought we 
were seeing daylight, but you told me you had not seen any. After 
studying the matter more and more, and after a long meeting last 
night in discussing the matter from various viewpoints, we could 
only see daylight in continuing to use the weight basis and distance 
as a basis for pay. 

The Chairman. Your main objections to the adoption of Mr. 
Lloyd's suggestion of the 60-foot, 30-foot, and 15-foot car and the 
mail-pouch unit, being what? 

Mr. Peters. That you can not fix a rate that will be compensatory 
and continue giving fair compensation to the railroads, at the same 
time permitting your department to exercise all the economy it can 
to concentrate its load and keep down space; that you are going to 
make it impossible for the railroads to get increased compensation 
for the work they are going to perform. Furthermore, you are going 
to make it impossible for the administration to justify its payments to 
certain roads and its payments to other roads, without having weight 
to show that the payments were based on the service performed. 

The Chairman. The difficulty being what? The difficulty of de- 
termination as to what the cost of the service is ? 

Mr. Peters. No. I do not think that cost should enter into it. 
You can not take the cost as a factor. 

The Chairman. That is not a factor? 

Mr. Peters. Merely for comparison to know that you are going too 
high or that your rate is more than compensatory or less than com- 
pensatory. Cost is an element to consider in getting at what is a fair 
basis. 

The Chairman. What specific difficulties are in the way of taking 
the four units, the three different sizes of cars and the pouch service, 
and taking weight and getting a fair compensation for the service 
rendered ? Where is the distinction between the two ? 

Mr. Peters. You can throw a large amount of car space on one 
railroad and largely increase its compensation, if it is the desire to 
put that on the part of anyone in the department, and it can be kept 
down on another railroad so that there can be favoritism; and you 
have not the records to show, by your weights, that you are justified 
in doing it. 

The Chairman. Why does not the same possibility of favoritism 
exist in the present method? They can send their mail just before 
the weighing on different routes and take it away from other routes, 
provided your objection is a pertinent one? 



RAILWAY MAIL PAY. 637 

Mr. Peters. They have the record of weights to show the service 
is performed, no matter what railroad it goes over. 

The Chairman. But the weights would not be there unless the 
amounts had gone over the road. The opportunity for determina- 
tion under the weight system, it seems to me, is equal with the op- 
portunity for determination under the car-unit system. 

Mr. Peters. That is true, but the service has to be performed and 
you have the record of the weight to show that the service is per- 
formed. In the case of the cars you may not have that ; you may be 
liberal with one road and require a liberal furnishing of car space 
without the heavy weights of mail and on another road concentrate 
your mail into a limited number of cars. 

The Chairman. Let me ask you this : You have two forces operat- 
ing, and would they not neutralize each other, the department to 
make an economical record and the transportation company to get all 
the business possible? Are not those two forces going to equalize 
each other under any system, providing the law specifies as to what 
the units are ? 

Mr. Peters. They ought to. 

The Chairman. Then, where does your objection come in? 

Mr. Peters. From our experience in the past they have not always 
done so. As I started to say in the first place, you are going to con- 
tinue to increase the weights of mail. 

The Chairman. As the service will develop. 

Mr. Peters. It is founded on facts. We understand that there is 
a requisition in for a new lot of scales for the Post Office Department 
for the parcel post and instead of those scales providing for a weight 
of 12 pounds they are providing for a weight of 21 pounds, with the 
idea that the weight limit of the parcel post is going to be 20 pounds. 

The Chairman. That has nothing to do with the question we now 
have before us. 

Mr. Peters. I say it is going to be weight, and weight is going to 
increase all the time. 

Mr. Lloyd. That is not done by any conference with the officials 
of the House or Senate and is not based on the idea that there is to be 
any change in the law. 

Mr. Peters. I do not believe you will hold your limit of parcel 
post to 11 pounds very long. 

Mr. Lloyd. You are trying to create the impression before this 
commission that there is an agreement that the parcel post is to be 
raised to 21 pounds. 

Mr. Peters. I started out by saying there is gossip in the air. 

Mr. Lloyd. 'What we want is facts and not gossip. 

Mr. Peters. Well, is it a fact that there are new scales being or- 
dered for parcel post? 

Mr. Lloyd. Yes, sir. 

Mr. Peters. To provide for a weight of 21 pounds? 

Mr. Lloyd. I do not know anything about that. It certainly would 
be a proper thing to have a scale weigh more than 12 pounds. 

Mr. Peters. Your limit is now 11 pounds and the first scales ob- 
tained were for 12 pounds in order to cover just above your limit. 
The new scale would indicate that there is a possibility and a proba- 
bility of an increase in the weight. 

49396—14 48 



638 EAILWAY MAIL PAY. 

Mr. Lloyd. You know very well that the parcel-post rate is now 
fixed at 11 pounds and it is not going to be changed except by law. 

Mr. Peters. Has not the Postmaster General the authority, with 
the approval of the Interstate Commerce Commission, to change the 
conditions ? 

Mr. Lloyd. Not to change the weight. 

The Chairman. After the Interstate Commerce Commission has 
made an investigation of the subject themselves, an ascertainment, 
and concur. First, you have to have the experience of the operation 
of the law, and then you have to have the determination of the Post- 
master General, then the additional check of the requirement that 
the Interstate Commerce Commission shall make their investigation 
and that the two shall concur in relation to their findings. 

Mr. Peters. There is no more legislation needed. They have the 
authority after investigation. 

The Chairman. They have the authority under some limitations, 
namely, ascertainment and determination as to the advisability. 

Senator Weeks. You do not mean to say they have the authority 
to change the weight? 

The Chairman. Yes ; to increase the weight or decrease the rate. 

Mr. Lloyd. I think you are mistaken about that. 

Senator Weeks. I think so, too. 

The Chairman. I am not mistaken, as perusal of the law will 
demonstrate : 

The classification of articles mailable as well as the WEIGHT LIMIT, the 
rates of postage, zone or zones, and other conditions of mailability under this 
act, if the Postmaster General shall find on experience that they or any of them 
are such as to prevent the shipment of articles desirable, or to permanently 
render the cost of the service greater than the receipts of the revenue there- 
from, he is hereby authorized, subject to the consent of the Interstate Commerce 
Commission after investigation, to reform from time to time such classification, 
WEIGHT LIMIT, rates, zone or zones, or conditions, or either, in order to 
promote the service to the public or to insure the receipt of revenue from such 
service adequate to pay the cost thereof. 

Mr. Peters, would you criticize the department, or draw any infer- 
ence as to what the intention or purpose was if in the purchase of 
instrumentalities to be used in the service they got the most efficient 
possible, providing the opportunity was the same? Would you not 
do that in the management of your own railroad? 

Mr. Peters. Every time. I would not criticize them at all. 

The Chairman. Would you not take a scale with a capacity of 21 
pounds in preference to one with a capacity of 12 pounds, if you 
could get it for practically the same price? 

Mr. Peters. I do not understand that you can get them for the 
same price. 

Mr. Lloyd. Is not this true, that in all of these suggestions with 
reference to the change of parcel weight no suggestion has been made 
of 21 pounds? 

Mr. Peters. No ; it was not 21, but it was 20 pounds. 

Mr. Lloyd. There was no suggestion of 20 pounds. The next sug- 
gestion of increase of weight was 25. 

Mr. Peters. If you increase the weight, the bulk is not going to 
increase. You have got into the parcel post now about all of the 
bulky articles you can take, and you will not go up much on that. 
The weight tendency will be to concentrate, so that you can concen- 



RAILWAY MAIL PAY. 639 

trate the greater load in your cars as the result of increasing the 
weight, like in parcels, and you have to stand by your weight, and 
the Post Office Department will have to keep a record of the weight 
for its own satisfaction, for the satisfaction of the Government, and 
for analyzing the business it does, the expense, and everything else, 
and they must have the weight. I made an extract from a book I 
was reading a few days ago by Prof. Abbott, of Princeton, called 
" The common people of ancient Rome." In one chapter he treats 
on Diocletian's edict and the cost of living. From that edict I find 
one section in which he fixes the price of transportation of one person 
1 mile at nine-tenths of 1 cent. Rent for a wagon 1 mile, 5 cents. 
Freight charges for a wagon containing up to 1,200 pounds, per mile, 
8.7 cents. Freight charges for camel load of 600 pounds, per mile, 
3.5 cents. Rent for laden ass, per mile, 1.8 cents. This edict was 
issued in 301 A. D. There was the basis of your mail pay — the weight 
and the distance — and it was established by an edict of the Emperor 
Diocletian in the year 301 A. D. 

The Chairman. Then, as I understand you, you claim that the cost 
has no particular bearing at all upon the question as to the com- 
pensation that is to be paid for the service rendered ? 

Mr. Peters. I do not think it has any at all, except as a matter of 
information and comparison. If a body, like the Interstate Com- 
merce Commission, is investigating the reasonableness of a charge, 
they will try to get at the cost, but you do not make the basis of pay 
on the basis of cost, and in a universal service of this kind with so 
many varying elements and varying conditions everywhere, I do not 
see how you can possibly reach any reasonable or fair basis of pay 
fixed on cost. 

The Chairman. Then, to whatever extent cost might be or is a 
factor, the same difficulty would apply in the ascertainment of the 
cost whether weight or space were the measure adopted, would it 
not? 

Mr. Peters. No. Do you think so? 

The Chairman. Why not? Where would be the distinction? 

Mr. Peters. The tonnage you haul affects your coal pile, and 
affects your wear and tear. Your space does not always do so, but 
you must know your weight. 

The Chairman. The primary weight in the Postal Service is the 
weight of the car and not in the mail itself. 

Mr. Peters. It is in some cars, distributing space. 

The Chairman. What is your average — that a 60-foot R. P. O. 
car will carry? 

Mr. Peters. I think now the general practice of the department 
requires something near 3 tons or a little below that. 

The Chairman. From 2-J to 3 tons. What is the weight of the 
car itself ; that is, of the new steel 60-foot R. P. O. car ? 

Mr. Peters. I think about 120,000 pounds. I am not sure of that. 
Is that correct, Mr. Bradley? 

Mr. Bradley. About 120,000 pounds. 

The Chairman. So that the weight is really in the car, and not in 
the mail carried. That is, the greater proportion. 

Senator Weeks. How much more is that weight than the weight 
of a car constructed of wood? 



640 RAILWAY MAIL PAY. 

Mr. Peters. Our wooden postal cars usually weigh about 80,000 
pounds, I think. 

Mr. Bradley. About 50 per cent increase. 

Senator Weeks. How about the combination cars? How much 
do they weigh? 

Mr. Peters. Wooden combination cars run from seventy to eighty 
thousand pounds. The steel cars will run up to about the same as 
the others, though not quite as heavy as the 60-foot postal cars. 

Senator Weeks. How much more does it cost to haul a car weigh- 
ing 100,000 pounds than one weighing 80,000 pounds ? 

Mr. Peters. That varies in all directions, on different roads, but 
the consumption of fuel depends on the power or the pull on the 
draft of the locomotive. You will naturally consume more fuel and 
use more steam in drawing the 120,000-pound car than in drawing the 
80,000-pound car. but I am not enough of a mechanical engineer to 
tell you the difference or the increase in cost, but it is perceptible. 

Senator Weeks. It seems to me, Mr. Peters, that that is rather an 
important element. Suppose you were carrying 5,000 pounds of 
mail in a car, you could not tell how much it would cost to haul it. 
In other words, if you were hauling it in a car constructed of wood, 
you would be hauling less weight than you would to haul an empty 
steel car. 

Mr. Peters. Yes; and we all know that the expenses of the rail- 
road have already increased with the introduction of the heavy car. 
The costs have been running up for the last 10 or 15 years. The 
first economies the railroads made were in the introduction of large 
freight trains, which were made possible by the large locomotives. 
The large locomotives pull a big train, but it had a train of circum- 
stances following it which meant the reconstruction of every bridge 
and relaying of the rails on the railroad, the reconstruction of all 
the cars, getting steel cars to resist the strain from the big locomo- 
tives and a big train, and the same way with the passenger trains. 
We used to haul 10 or 12 cars in a train, certain trains, with the 
largest passenger locomotives. Then they got all-steel passenger 
cars, and they can only haul 8 or 9, and we know that that has 
increased expenses all around, but it is due to getting safety and 
avoiding accidents. 

Senator Weeks. Five years ago the Pennsylvania Railroad was 
running trains between here and New York the cars of which were 
constructed of wood. Now it is running exactly the same kind of 
a train except the cars are constructed of steel, and the load carried 
is the same. How much more is it costing to furnish the motive 
power for the steel trains than for the former wooden trains? 

Mr. Peters. I have not seen any figures on that, but when they 
ran the 8 and 10 wooden cars they had what was known as the 
Atlantic type of locomotive, which would pull that train without 
any difficulty; the engine had certain tractive power. When they 
introduced the steel cars, they found they had to run two of this 
Atlantic type of locomotives to haul the same train and make the 
time, so they constructed a larger locomotive, large 10-wheeled 
prairie type or mountain type of engine, and they have gotten up 
with the all-steel cars now, and I have frequently seen two of those 
largest locomotives pulling the train where originally one locomotive 



RAILWAY MAIL PAY. 641 

pulled the train when it was of wooden cars, and it was rare they 
had to double-head the engines. 

Senator Weeks. Is there not some one connected with the Penn- 
sylvania Eailroad who knows how much more it costs? 

Mr. Peters. Yes; I think we have officers who have made a study 
of that. 

Senator Weeks. I should think this was an important point, be- 
cause if all the railroads Avere going to furnish steel cars, and it 
costs more to haul those cars, then the service the road is furnishing 
the Government is better and more expensive. 

Mr. Peters. It is better and much more expensive. 

Senator Weeks. We all admit it is much better, but how much 
more expensive is it? 

Mr. Peters. I will ask Mr. Scott or Mr. Bradley if they have had 
any records bearing on that point in our analysis of expenses. 

Mr. Scott. I do not know of anything that I could give offhand. 
We have the figures in our annual report that show an increased cost. 
I think it demonstrates the increased cost on account of steel equip- 
ment to a certain extent. 

Senator Weeks. I suppose that that would be a question that would 
be figured out to a nicety, because your road and many other roads 
are going in on a large scale in the construction of steel equipment, 
and I should think you would know how much more motive power 
you would have to furnish to haul a train of the same length. 

Mr. Peters. I have all the figures, but I haven't them in mind at 
all. For instance, a train of 10 steel cars, each one weighing 60 tons, 
would amount to 600 tons ; that is not a load for an engine to haul at 
a low rate of speed, but when you put that load back of an engine that 
has to make 60 or 70 miles an hour, it makes quite a difference, and the 
coal consumption is much higher than it was when we had 10 cars 
that weighed 40 tons each, or 400 tons to the train. It very nearly 
doubles the train. 

Mr. Mack. Is it not true that since the Pennsylvania has had all 
steel equipment, the double-heading of trains is much more common ? 
That has been apparent to me as I have traveled over the road, and I 
think perhaps it is quite a general condition. 

Mr. Scott. I think there is no doubt about that, although I do not 
want to state it positively on the record. 

Senator Weeks. I think, Mr. Chairman, that it is so important 
that some one ought to furnish those figures. Here is a service which 
we admit is safer and better than the service which was rendered 5 
W 10 years ago, necessarily the cars cost more, necessarily it costs 
more to haul the cars, and we would like to have those figures in 
the record. 

Mr. Peters. We will have those figures prepared and sent to you. 
In the award under the Erdman Act, recently made under the de- 
mands of the locomotive firemen, there was an increase made in the 
pay dependent upon the size of the-locomotive, so that there has been 
an increased weight due to the larger locomotives that have to be fur- 
nished to haul the heavy steel cars, and the expenses in all directions 
have increased as a result of that. I stated in the earlier hear- 
ings that the conditions of operation were entirely different to-day 
from what they were in 1907, when your last reduction of pay was 



642 RAILWAY MAIL PAY. 

made. Our expenses have been increasing in all directions for labor 
of all classes, but we could not get away from the matter of weight. 
In our letter to you under date of October 3, 1912, the reply of our 
committee to an inquiry from Chairman Bourne, we gave very clearly 
our reasons for saying that we should stand by the weight system, 
and in that letter made recommendations as to changes so as to give 
annual weighing and to give pay for compartment cars. The more 
we study this question, the longer we dwell on it and think over it, 
the more firmly convinced are we that our position at that time was 
the correct one and the safest one for the Government, the safest 
one for the railroads, and that you ought not to depart from it ; that 
it would be unsafe to depart from it, at the present time, until we 
ultimately know the development of the parcel-post business. 

(Under date of June 18, 1913, Mr. Peters addressed a letter to 
the chairman of the joint committee transmitting the sworn answer 
of Mr. A. W. Gibbs, chief mechanical engineer Pennsylvania Kail- 
road Co., to Senator Weeks's interrogatory next above, which answer 
and exhibit attached read as follows:) 

compaeative statement of cost of handling steel and wooden postal cars. 

The Pennsylvania Railroad Co., 

Philadelphia, June 14, 1913. 
Mr. V. J. Bradley, 

Chief Supervisor of Mail Traffic. 

Dear Sir: Referring to your request for data concerning the extra cost of 
handling steel trains, as compared with wooden trains: 

We find it difficult to give a categorical answer. The best data which we 
have been able to get from the test department is shown by the inclosed table 
and blue print, which would indicate that with the present 62 -ton steel postal 
car, as compared with the previous 40-ton wooden car, the increased hauling 
resistance is about 20 per cent at speeds of 30 to 60 miles an hour, reaching 22 
per cent at 70 miles. 

In considering the increased hauling resistance it must not be forgotten that 
as an incident of the introduction of the steel postal car it has been necessary 
to add electric lighting appliances, in which the power for generating the cur- 
rent is taken from the car axle. Of course this means just that much more 
drain on the capacity of the locomotive. 

It strikes me, however, that the answer to the question is not quite so simple 
as would appear from the table. As an incident of the introduction of the steel 
car, we have been obliged to discard from the service in which these cars have 
replaced wooden cars practically an entire set of engines and substitute larger 
ones, and our annual statement of the coal consumed per car-mile seems to 
indicate an increase varying on different divisions from 9 per cent to as much 
as 19 per cent, and what is rather striking is an apparent diminution in the 
number of cars per train. I would explain that this figure of cars per train 
is obtained by dividing the total number of miles run by passenger locomotives 
into the total number of miles run by passenger-equipment cars of all kinds, 
and the real meaning is that the locomotive mileage has increased decidedly 
more than the passenger-car mileage, partly explained by the fact that on an 
increasing number of trains two locomotives are employed. I do not wish to 
be understood as saying that the postal cars alone are to be charged with all 
this expense of replacing locomotive equipment, for the substitution of steel 
for wood includes all classes of equipment. 

It may be asked why we have not detailed figures as to the increase in cost. 
The reason is that the burden of the clerical expense which we are obliged to 
continue is such that figures which are not absolutely necessary are dispensed 
with. Among other accounts which are no longer kept is that of the operating 
cost of locomotives by classes. In other words, the detailed costs chargeable to 
locomotive repairs are pooled, and it is impossible from the available data to 
separate the increased cost in the case of passenger locomotives from that of 



RAILWAY MAIL PAY. 



643 



other classes. We do know, as a matter of fact, that we have substituted large 
locomotives for small locomotives and that our cost of maintenance has 
increased. 

In attempting to measure the increased cost in the operation of steel postal 
cars we must take note of a number of factors : 

1. The cost of construction of steel postal cars we estimate at $12,000. To 
get a comparative figure for wooden postal cars, I have taken the cost of the 
last fifty-five 60-foot wooden postal cars and obtained an average of $5,849.35 
per car. 

2. The weight of the 70-foot postal car averages about 125,500 pounds, as 
compared with an average weight of 88,888 pounds for the wooden postal car. 

3. The cost of maintenance of steel postal cars was recently carefully esti- 
mated at $3,418.56 per car per year for a 70-foot steel postal car, on the basis 
of a run of 106,000 miles annually. The only available estimate of the cost of 
maintenance of 60-foot wooden postal cars is that of January 4, 1911, which is 
$1,966.57 per car per year, on the basis of 107,334 miles run. 

4. As already stated, the increased tractive effort necessary to haul the 
present steel equipment is about 20 per cent higher than that required for the 
wooden equipment. 

Thus, not taking into account the question of wages, the increase of 105.1 
per cent in the cost of construction, the increase of 41.2 per cent in the weight, 
the increase of 20 per cent in the resistance, with the large increase in the 
cost of maintenance, would, I think, justify the increase of from 5 to 10 per 
cent in compensation, notwithstanding the fact that it is impossible to attribute 
to each of these factors an exact money value. 

Yours, truly, A. W. Gibbs, 

Chief Mechanical Engineer. 



From test department, Pennsylvania Eailroad: 

With letter, A. W. Gibbs, C. M. E., to Mr. V. J. Bradley, chief supervisor of 

mail traffic, June 14, 1913. 

The following, deduced from the calculated curves on sheet No. 2620, shows 
the per cent increase in resistance per car of 60-ton cars (the approximate 
weight of the M-70 and Ms-70 steel postal cars) and of 40-ton cars (the ap- 
proximate weight of wooden postal cars) : 



Speed, 
M. P. H. 


Resistance. 


Per cent 

increase for 

steel over 

wooden 

cars. 


40-ton car. 


60-ton car. 


30 
40 
50 
60 
70 


210 
258 
315 
382 
460 


252 
310 
380 
460 
560 


20 
20 
20 
20 
22 



This per cent increase in resistance will result in an equal per cent decrease 
in the number of cars which can be hauled by a locomotive at the various 



644 



RAILWAY MAIL PAY. 



P£iMNS> 



Ui^QAQjC£MP_ANY 



SHEET N2 2620 REPORT N9 12-90 

SUBJECT. RESISTANCE; OF STEEL 8k WOOD CARS ( W.J. &.S.R.R. ALTOONA.PA S-ZS-&. 




SP.EED._t MILES PER HOUR. 



SHEET N9 Z6ZO 



The Chairman. Keferring back a moment to your mention of Mr. 
Abbott's work, as I understand, your contention was that the Dio- 
cletian plan was for weight and not for space ? 

Mr. Peters, Yes. 

The Chairman. Was not the charge the same for a wagon or ani- 
mal, whether full-loaded or half-loaded? 

Mr. Peters. The freight charges for a wagon containing up to 
1,200 pounds was, per mile, 8.T cents. 

The Chairman. But really it was space and not weight ? I do not 
think that has any bearing on this matter, as to what they did in 
those times. 

Mr. Peters. Your space was like that; but as to the weight it 
would carry, you could not go above 1,200 pounds. 



KAIL WAY MAIL PAY. 645 

The Chairman. But the charge was the same whether you carried 
100 pounds or 1,200. 

Mr. Peters. That may be true, but it would not go above 1,200 
pounds. In this case the suggestions are that you will have space 
alone, with no limitation as to the weight. 

The Chairman. Except as to the amount of weight that can be 
gotten into the space. Then, in a subsequent study of the problem, 
as I understand, you and your associates, representing the transporta- 
tion companies, see no reason to modify your views as to your position 
that weight and not space should be the determining factor or meas- 
ure of the service rendered? 

Mr. Peters. That is correct. 

The Chairman. Do your associates agree with your position that 
the cost of the service is not a material factor, but simply a collateral 
one. if used at all? 

Mr. Peters. I think that that is the unanimous expression of feel- 
ing that was given out at our meeting — that cost could not be used as 
a basis of compensation. 

The Chairman. But is it not a factor to be taken into considera- 
tion with other data on which to come to a conclusion as to the com- 
pensation to be paid? 

Mr. Peters. It is a useful factor, if it can be accurately ascer- 
tained ; but up to the present time there is too much dependence on 
the judgment and the local conditions surrounding the person figur- 
ing the cost to make it possible to get an accurate, safe measure. 

The Chairman. Mr. Peabody, as I understand, in your testimony 
which you gave some two weeks ago, you said that you thought the 
cost was a vital factor, did you not ? 

Mr. Peabody. Not for the determination of the rate; no, sir. No 
railroad rates have ever been determined upon cost, and costs are so 
variable for different roads, to compete for exactly the same business 
it would not be a factor that would be worth very much. The rates 
necessarily must be the same, but costs may be entirely different. 
The factor of cost for a determination of rates has never been used. 

The Chairman. What value do you give to the cost ascertainment, 
then? What is the use of trying to determine what the cost is in 
transportation business? 

Mr. Peabody. Simply to know whether our rates are remunerative 
to us or not — to each individual road — but not as the basis for trans- 
portation to the public, but as to the returns to the railroad. 

The Chairman. Then, for your own information, you consider 
cost as absolutely vital? 

Mr. Peabody. Yes, sir. 

The Chairman. But it is not to be considered in the compensa- 
tion received for the service rendered? 

Mr. Peabody. Not as a determinant factor. It is useful in deter- 
mining whether or not we are getting below the costs on any of our 
roads, in the making of our rates. 

The Chairman. What do you say to that, Mr. Lorenz ? 

Mr. Lorenz. I think Mr. Peabody, in saying that cost is not used 
in making rates, has in mind the fact that the freight charges could 
not be made upon that basis because, perhaps, some commodities 
would move under such a rate and some would not, but it seems to 
me that that consideration totally fails when you come to the ques- 



646 EAILWAY MAIL PAY. 

tion of fixing a rate for the transportation of mails. There the 
prime question is, What is and what is not a remunerative rate to the 
railroads? It is not a question of what the Government can or can 
not pay, so I think, so far as the present problem is concerned, 
Mr. Peabody's admission that you, can ascertain the costs and can 
tell whether a particular rate is remunerative or not, completely dis- 
poses of the objection which he mentions. 

Mr. Peabody. May I ask this question? Take the Chicago Great 
Western and the Atchison, Topeka & Santa Fe roads. The cost 
to the Chicago Great Western on the passenger business, which car- 
ries mail between Chicago and Kansas City, would be much higher 
than that on the Santa Fe road. Which cost would you take as the 
basis of the rate ? The rate must be the same. 

Mr. Lorenz. Of course, which cost to take as a basis would be a 
matter for the committee to determine, having determined whether 
the one road was more efficiently managed than the other, or whether 
the cost was abnormal on account of local conditions, but if they 
wished to allow a rate which is remunerative to every road they 
would take the higher cost. That would be a difficulty which would 
not be at all in the way of using cost as a basis of determining 
whether the railroads as a whole were overpaid or underpaid. 

Mr. Peabody. I think my statement was, the costs had never been 
considered in the making of a rate. Whether or not it could be 
used as a collateral factor in the determination of a rate may be 
worthy of consideration. We ourselves do use it to determine at 
times whether or not our rates are remunerative to us, but the costs 
varying as they do on different roads and without regard to efficient 
management at all, absolutely makes it an indeterminate factor, if 
you please, in the determination of a common rate which must apply 
to all roads. 

The Cpiairman. How are you gentlemen able to demonstrate that 
you are insufficiently paid by the Government, which I understand 
is your contention, unless you use costs to the transportation com- 
pany in reaching your conclusions upon which you claim your 
demonstration ? 

Mr. Peabody. We can not. 

The Chairman. So that cost is a factor ? 

Mr. Peabody. Cost is a factor to determine whether or not we are 
properly paid as a whole, yes, for each individual road, but how far 
you can use that, as a common basis, is a very serious question. 

The Chairman. What are the factors that you take into considera- 
tion by which you come to your conclusion that you are underpaid ? 

Mr. Peabody. I never have made any figures except in connection 
with the Santa Fe road proper. We use the cost there to determine 
we are underpaid, and we have on file in the record a statement 
showing the basis that we did use and showing the returns to the 
railroads are not remunerative. 

The Chairman. Then, with the Atchison System, cost is your 
primary factor in your determination? 

Mr. Peabody. So far as the minimum rate is concerned, yes. 

The Chairman. You would have the same difficulty with the 
ascertainment of cost, whether space or weight were used as the 
measure of the service rendered. 



KAILWAY MAIL PAY. 647 

Mr. Peabody. Certainly. 

The Chairman. Equally applicable, and hence not a factor to be 
considered in the problem as to the desirability of the substitution 
of space for weight. That is true, is it not ? 

Mr. Peabody. Yes. 

The Chairman. Because the difficulties are exactly the same? 

Mr. Peabody. It would be considered so by us on the Santa Fe. 

Mr. Peters. You make us differ a little on that. 

The Chairman. We want all the different viewpoints we can get. 

Mr. Lloyd. If cost is not to be one of the principal factors, or is 
not to be a factor to be used in determining what should be paid by 
the Government for carrying the mail, what are the factors to be 
used? 

Mr. Peters. Cost is necessary as a measure of defense to show that 
you are not authorizing a service, in a way, that is compensatory. 

Mr. Lloyd. But that defense is made by you. We are tiying to 
reach a conclusion as to what the Government ought to pay, and yCU 
say, now, as I understand you, that cost must not enter into that de- 
termination at all. If so, what are the factors that should enter into 
what should be the rate of pay? 

Mr. Peters. I think you misunderstood me. We are glad to take 
up the cost figures to show that we are underpaid. But cost, as a 
basis of pay, as proposed originally by the Post Office Department 
is what I objected to, and said that we did not make any rate and 
had never attempted to make a rate on the basis of cost. 

Mr. Lloyd. Let me see if I understand you correctly. The posi- 
tion of the railroad companies at the present time is this : They come 
before this commission and say " We are underpaid." They say they 
are not paid as much as it costs to render the service, and they want 
the rate changed so that they will receive pay equal to the cost of the 
service and a reasonable compensation in addition. That, as I 
understand you, is your position ? 

Mr. Peters. Yes. 

Mr. Lloyd. If that be true, then the very first thing to determine 
is, What is the cost? And then you add a reasonable profit and you 
determine what the rate of pay should be. 

Mr. Peters. We welcomed the investigation that was started in 
1909, knowing that it would show the fact that we were not getting 
compensation enough, but, unfortunately, Document No. 105 was not 
prepared with the candor and frankness that it should have been. 

Mr. Lloyd. Do not use that expression. 

Mr. Peters. Well, I do not mean to go that far. They were mis-* 
taken in their ideas and their way of preparing it, and errors crept 
in there that were made to show up very badly for the railroads and 
very favorably for the Government. In the study of that document 
and in the examination here it has been conceded that the document 
was full of errors, that there had been mistakes made in it and that 
correcting of those mistakes showed'a different state of affairs. 

Mr. Lloyd. Do you understand that the Government, through the 
Second Assistant Postmaster General, yet concedes that it made a 
mistake ? 

Mr. Peters. I think the records will show that Mr. McBride stated 
that he did not consider it was fair to put into the space of the 



648 EAILWAY MAIL PAY. 

passenger operation of the train the dead space that really belonged 
with the mails, and that that has not been fair, and that it altered 
the figures very materially. 

Mr. Lloyd. Did you make that concession, Mr. McBride? 

Mr. McBride. I think the record will show that the department 
has conceded that part of the space that was charged as dead space 
should have been charged to the mail service, referring particularly 
to the return movement of full postal cars and storage cars that 
could not be made use of by the companies. The statement is made 
in a letter from the former Postmaster General, Mr. Hitchcock, that 
in the consideration of the question certain modifications in the use 
of the data were proper. 

Mr. Lloyd. And the letter to which you refer is in the record? 

Mr. McBride. Yes, sir ; it is in the record. 

Mr. Peters. I think the investigation has already shown that there 
were errors and wrong deductions in Document No. 105. 
* Mr. Mack. I was going to suggest that at this point the particular 
points in Postmaster General Hitchcock's letter be placed in the 
record, as the letter itself answers the points raised, and it appears 
in your blue book, the preliminary report, Volume I. 

The Chairman. It is already in the record, and there is no neces- 
sity for reinsertion. 

Mr. Peters. You were not present at one or two of the hearings 
at which it was brought out. It was all brought out in a friendly 
and fair way that the costs shown in Document 105 were not an 
accurate and correct exhibition of the statement. It took only one 
month and one method of distribution of accounts, which was not 
the generally accepted method; it took also space from one branch 
of the service and put it into another, in an arbitrary way, where 
it really did not belong ; and it did not take into consideration inter- 
est on the property or the investment that was producing the service, 
so that it was not a correct display of costs. It was the latest investi- 
gation, and the only complete investigation that had ever been 
attempted on the question of costs. In the hearings I suggested that 
we ought to do' that over again, and try, with the department and 
the railroads cooperating, assisted by representatives of the commis- 
sion, to get the actual costs, so that we would have something that 
could not be questioned; yet that would cost a lot of money and it 
would take a lot of time to do it. 

Mr. Lloyd. Now, coming back to the other question: You stated 
positively, as I understood you a few minutes ago, that cost ought 
not to be taken into account. 

Mr. Peters. I said a rate based on cost alone was not a matter 
to be taken into account, that we did not base rates on cost. 

Mr. Lloyd. You took it as a determinant factor. If you take it 
out altogether as a determinant factor, in reaching the determination 
of the rate, then what is the use of making an investigation as to 
cost? 

Mr. Peters. Merely to convince and show the public that we are 
not overpaid for the service that we are performing. It has been 
charged in all directions that the railroads were overpaid for the 
service, and even statements in Document 105 show that our claim 
is correct that we are not overpaid. 



RAILWAY MAIL PAY. 649 

Mr. Lloyd. Will you be kind enough now, in a succinct statement, 
because you have given this matter a great deal of attention, as a 
representative of the railroads, to state what it is that ought to be the- 
determinant factors in the ascertainment of the rate that ought to be 
oharged for carrying the mails? 

Mr. Peters. The value of the service performed for the Govern- 
ment. 

Mr. Lloyd. How do you determine that value? 

Mr. Peters. Perhaps you would take into consideration 

Mr. Lloyd. I am asking what you would take into consideration, 
and not what I would. 

Mr. Peters. The value of the service to the Government and the 
value of the revenues to the railroads. The service is an universal 
service, it has to be performed for all of the people alike and under 
like conditions. One road may get sufficient compensation from it 
to make it a good and desirable service, and may be able to make a 
little money, or get in enough revenue to help bear a portion of the 
overhead charges, while with another road it becomes a burden 
depending on the regulations and the exactions of the service to suit 
the department. 

To determine that value you have to compare rates for other 
services, you have to compare costs, if you wish, although I believe 
in making rates in the past, as they have grown up; they did not 
go to the question of cost, but they made them as to what the traffic 
would stand, and if the railroads had to make a rate for the carry- 
ing of the mails they would go on that basis of making a rate as to 
what the traffic would stand, and they would make a rate that would 
give them that traffic and would not go into the complete analysis 
of the costs and all the other details concerned with it. In this 
case we can not get what the traffic will stand; we can not get any- 
thing more than what Congress is willing to give. You might fix 
a basis of pay on a car measure, as suggested by you, and make a 
rate per car high enough that would give a very good return to the 
railroad, but when you came to apply it and figure it out on a rate 
that would be high enough to permit all sorts of concentration of 
load, you would make such an increase in the total pay for carry- 
ing the mails that you would never get it through, you would never 
be able to pass any bill covering it. Now, we know the ills un- 
der which we have suffered, we know the difficulties of having 
anything put through Congress affecting the question of mails, and 
we prefer to stand right square on the basis of weight and rate per 
mile, as we have stood for 40 years, although in that time we have 
had reduction after reduction. If we had somebody to trade with 
we could sit down and settle this thing in a very short time, but 
Congress will not trade, they can not do it, and we feel that the 
safest basis for the Government and for the railroads is to stand 
by the weight and distance basis. 

Mr. Lloyd. If it were possible to work out a scheme by which the 
general public knew that it paid so much per mile for each car used, 
do you not think that it would be much easier to explain to the people 
than the present system? 

Mr. Peters. It is very simple, but can you ever get such a basis put 
through Congress ? Can you ever have such a basis enacted on a rate 
that would compensate the railroads ? 



650 KAILWAY MAIL PAY. 

Mr. Lloyd. If it produced the same rate as the present you would 
be in the same position that we are now. It could be worked out so 
that you could make practically the same compensation. 

Mr. Peters. The rate at present is not fair when you have added 
from 25 to 30 per cent under the business of the parcel post. 

Mr. Lloyd. You seem to be impressed with the idea that Congress 
has no purpose of paying you for the additional business on account 
of parcel post. I think I can disabuse your mind on that. There is 
no disposition on the part of Congress to avoid the payment for extra 
service rendered by the railroads for carrying parcel-post matter. 
That is a safe statement. 

Mr. Peters. When you had your appropriation bills up, Congress 
was not falling over themselves very rapidly to give a new weighing. 

Mr. Lloyd. Then we knew nothing about it, and you were asking 
for an additional weighing at an unusual time. 

Mr. Peters. Only in order to get the parcel post in. 

Mr. Lloyd. And it was left largely to conferees. 

The Chairman. Who gave you a 5 per cent increase ? 

Mr. Lloyd. We gave you something we may not have given you 
before. 

Senator Bankhead. Do you think, Mr. Lloyd, that the Govern- 
ment, in the last analysis, is going to pay the same rate for parcel 
post that they will pay for first-class mail ? 

Mr. Lloyd. I do not know whether they will or not. 

Mr. Peters. It is all carried together. In England the Govern- 
ment gives the railroads 55 per cent of their receipts from parcel 
post. 

Senator Bankhead. The point I have in mind is, I do not know 
whether it is practicable or not, but sooner or later we will have to 
separate the parcel post from first-class mail matter. 

Mr. Peters. That is going to make it expensive for the Govern- 
ment, and they will have to have separate post offices and separate 
clerks. 

Mr. Lloyd. You are not going to consent to carry it without com- 
pensation ? 

Mr. Peters. You do not want us to carry it without compensation. 
We are part of the people. 

Senator Bankhead. That is the point I am making. This is a 
question I know very little about. There are very many difficulties 
concerning it to meet and overcome. 

Mr. Lloyd. Mr. Peters seems to be impressed with the idea that 
Congress does not want to give anything extra for carrying the par- 
cel post matter. 

Senator Bankhead. I think he is mistaken about that, but the 
thing he has in mind is that Congress is not going to give a sufficient 
compensation. 

Mr. Peters. I believe you suggested some rates here the other day. 

Mr. Lloyd. That was only tentative. I do not want to be under- 
stood as saying that those are the rates, if I were going to write a bill, 
which I would put in the bill. We were just talking amongst our- 
selves about trying to get the matter down to a basis where the people 
could understand what the rate is. If any man asked me to-day what 
we are paying the railroad companies for carrying the mail, I could 
not answer as to the unit. I can say we are paying $55,000,000 in 



RAILWAY MAIL PAY. 651 

round numbers; but if I can say we are paying 25 cents a mile for 
every car we carry, or 50 cents a mile, it is something which we under- 
stand. It is a question like this: What do you pay for passenger 
service from here to Baltimore ? You would say, " 2J cents a mile," 
and a man would understand that ; but if in answer to that question I 
had to say, "What do we pay for passenger service— $275,000,000?" 
they would not have any conception about what the pay is at all. 
However, when I say the pay is 2^ cents a mile a man travels, he can 
understand that. If we can get this down to some system by which 
we can say we pay 25 cents a car or 50 cents a car for every mile that 
car moves, any man can understand that. I do not say it can be 
done; it puts us in a position we can explain to the people what the 
basis of pay is. Here are Members of Congress, and I will warrant 
you that there is not one of the five here that can in an hour's time 
make a speech to a promiscuous audience and satisfactorily explain 
the present system of railway-mail pay so that five persons in that 
audience could afterwards understand and explain it. In the first 
place, I doubt whether any one of us ourselves could explain it. 

Mr. Peters. It is so many pounds per mile of road, averaged daily. 
I got in deep water trying to figure out how much of an increase I 
was getting on a line running from Long Island City to Greenport, 
94 miles, and on 20 miles of that we had an increase of 35,000 pounds 
a day. I wanted to distribute that over my whole line, and it took 
me a long time to figure it out, and I found the increase on 20 miles 
a day, at 35,000 pounds, only amounted to some 600 or 700 pounds a 
day on the 94 miles; but you have to average that up per mile per 
annum. It is difficult to understand, too, when you come down to 
the fine point — your average weight per mile of road per annum, and 
your pay, which is an arbitrary one, based on Diocletian's edict of 
what had been the pay for the wagon and the horse. Your Govern- 
ment has been well protected, and it has applied the test for 40 years. 

Mr. Lloyd. It has stood the test with constant annoyance as to 
whether it is the right rate of pay, and it is constantly being dis- 
cussed all over the country by the railroads and the people — the peo- 
ple themselves believing, as a rule, that they are paying too much, and 
the railroad companies are convinced that they are receiving too 
little. That is the situation to-day after 40 years of experience. 

Mr. Peters. Yes; and a great many Members of Congress still 
feel that that is the case — that the railroads are getting too much 
money. 

Mr. Lloyd. Yes, sir. I suppose I am safe in making the state- 
ment 

Mr. Peters. We want to collaborate with you and join with you 
in helping get up a report or get facts out that will disabuse the minds 
of Congress and the minds of the public, or put this in such a clear 
way that all will understand it, but in doing that we do not see how 
you can get away from the weight basis. If you can make a combina- 
tion of weight and space, all right; but the condition is such that 
we do not see how you are going to get away from what has been the 
basis all along. I understand that Mr. Stewart or Mr. McBride, or 
some of the officials of the Post Office Department, have made some 
figures on the points suggested by you, and I wanted to ask the Sen- 
ator if he would not put Mr. Stewart on and let him give the result 



652 ' RAILWAY MAIL PAY. 

of his calculations from the study that he has made of the suggestions 
of Mr. Lorenz and Mr. Lloyd. 

The Chairman. I will be glad to do that a little later. 

Mr. Peters. I have no prepared statement to make to-day, except 
to repeat that we stand by the weight basis. 

Mr. Lloyd. I regret very much to say I can not tell what the rate 
of pay ought to be. I am going to find that out. 

The Chairman. I was going to ask Mr. Bradley what factors he 
would take into consideration if he had the determinant voice as to 
what compensation should be rendered by the Government for the 
carriage of mail. 

Mr. Bradley. Mr. Chairman, I have been thinking over the matter 
while Mr. Lloyd was seeking for a speech to his constituents ex- 
planatory of the subject, and it occurred to me that this point could 
be made to the inquiring constituents: Congress in appropriating 
money for railway mail pay is perhaps not appropriating public 
funds for public services in the usual sense, but is rather distributing 
the reA 7 enues derived from the postal service to those who perform 
that service in proportion to the value of such service. If we follow 
that line of thought to estimate the proportion of the postal revenues 
or of the postal expenditures (which are about even)* that should be 
devoted to railway mail pay, and if we glance back a few years to the 
time when the last investigation was made by the Wolcott-Loucl 
Commission, we find that the item of railway mail pay at that time 
was about 35 per cent of the total expenditures. At the present time, 
it is, roughly speaking, about 20 per cent of the postal expenditures. 
The total pay to the railroad companies for carrying the mails and 
furnishing the railway post offices is about $55,000,000, and I be- 
lieve the postal revenues are about $240,000,000, or thereabouts. It 
would therefore seem to be a fair conclusion in the passage of time, 
13 years since the last investigation was made when the committee 
reported to Congress that the railroads were then not overpaid, that 
there had been a relative reduction in the total amount which the 
railroad companies received for performance of the service. 

As to the value of the service, I think it will be readily admitted 
that we could not possibly have a national postal system without the 
railway transportation, and that it is perhaps the most important, or 
certainly one of the most important, features of the postal service. 
The determination would be further assisted by the investigation of 
1909. After a careful ascertainment of the car space devoted to the 
mail service by all railroads of the country carrying the mails, in 
comparison with the amount of car space devoted to passenger and 
express business, it was found that the value of the mail-car space 
was represented by an earning of 19 \ cents a car-mile. The repre- 
sentative of the Interstate Commerce Commission testified that the 
average earnings of passenger-car space for the whole country is 25^ 
cents per car-mile. 

The Chairman. That is Dr. Lorenz you have reference to? 

Mr. Be able y. Yes ; Dr. Lorenz. It therefore Seems to be a fair in- 
ference that the railroads are not paid proportionately an adequate 
amount for the car space occupied by the mails in comparison with 
the passenger-car space which itself is generally considered to be 
operated as an unremunerative portion of the railroad company's 
business. 



RAILWAY MAIL PAY. 653 

The Chairman. To summarize, then, what factors would you take 
into consideration in determining what compensation should be paid 
if you had the authority to determine that ? 

Mr. Bradley. I think that the first point toward reaching a result 
would be to ascertain the judgment of the joint congressional com- 
mission as to what should be the percentage of the postal revenues 
to be devoted to that purpose at the present time. 

The Chairman. How are the congressional joint commission to 
come to any determination without they have information and data 
upon which to base their conclusions, and what data would they 
require before basing their conclusions, from the standpoint of 
specialists in transportation matters? 

Mr. Bradley. I think it can only be arrived at in considering such 
facts as I have just outlined, enabling one to reach an approximate 
judgment. 

The Chairman. And the primary question or point being what, in 
any conclusion, that the committee might come to? What factors 
should be given the greatest weight, in your opinion? 

Mr. Bradley. Do I understand the question as applying to the 
ascertainment of the total amount which should be paid to the rail- 
road companies for the performance of the service? 

The Chairman. Yes ; and, secondarily, how that amount would be 
apportioned ? 

Mr. Bradley. The first point, of course, deals with the value of 
the service to the Post Office Department, and to the people, and I 
think that can best be fixed by the judgment of the committee as to 
the percentage of the total postal revenues that should be devoted to 
that purpose. 

The Chairman. What, in your opinion, should be that percentage? 
If you were a member of the committee, what percentage would you 
recommend to the other members of the committee? 

Mr. Bradley. If 35 per cent was a fair proportion in 1900, when 
the railroads were declared to be not overpaid, and in view of the 
fact that expenses have largely increased, perhaps 40 per cent would 
not be too much to assign. 

Mr. Lloyd. Then, at the present time you would assign 
$100,000,000 instead of $55,000,000? 

Mr. Bradley. At the beginning of the final investigation. 

Mr. Lloyd. You say that there was a reduction from 35 per cent 
to 20 per cent. What makes that reduction? 

Mr. Bradley. The reduction is partly due to the legislation of 
1907 which reduced the rate for postal cars and for heavy weights, 
and also to the action of the department in introducing a new divisor 
in order to reduce the average weight carried per mile of line. 

Mr. Lloyd. What is the rest -of it? 

Mr. Bradley. I could not suggest offhand. 

Mr. Lloyd. Is it not true, because of the heavier weight carried 
by the railroad company and the less amount per pound received 
for carrying it? 

Mr. Bradley. Yes. That would be the effect of the legislation I 
spoke of. 

Mr. Lloyd. Without any legislation, would it not be true that the 
per cent would be less? 

49396—14 49 



654 BAILWAY MAIL PAY. 

Mr. Bradley. Yes ; by the natural descending scale of the original 
law, that is true. 

Mr. Lloyd. And you could not tell how much that would be. 

Mr. Bradley. That would be very difficult to estimate. 

Mr. Peters. Would it be possible for the Post Office Department 
to make an analysis of all the services performed in the carrying on 
of the business which results in a gross income of some $280,000,000 
a year? The value of each part of the service? There is first the 
general organization for the conduct of the business, there is next 
the post offices and the postal clerks in the post offices, next the letter 
carriers who gather up the mail, and then there is the transporta- 
tion by rural free deliveries and the transportation by the railroads. 

Mr. Lloyd. That is already ascertained. 

Mr. Peters. I know, but that is the expenditure for each kind 
of service, but it does not say what one of those it is — which element 
is of the greatest value in producing the machinery that enables you 
to take in the $280,000,000. 

The Chairman. Replying to your question, if the Post Office De- 
partment did that, would you accept their valuations? 

Mr. Peters. I want that as an element for you to consider. Is 
it possible for them to give you an estimate for that ? 

Mr. Lloyd. That is already ascertained. 

Mr. Peters. You pay $45,000,000 a year for the Kural Free Deliv- 
ery, but the tonnage and the weight of the mail and the revenue de- 
rived from that mail that is handled by the Kural Free Delivery 
would not begin to compare with the revenue that you get from the 
mail that is transported by the railroads. I should say, offhand, 
that perhaps 90 per cent of your tonnage is carried somewhere on the 
railroads. Could General Stewart give us any figures on that ? The 
thought just occured to me that it might be a help in reaching a con- 
clusion in this matter. 

Mr. Stewart. You would have this difficulty to start with, that 
while the great volume of the mails is carried on the railroads, the 
revenue produced from those mails would not necessarily be asso- 
ciated with railroad traffic; they originate elsewhere, on the star 
routes, on the rural routes, and in the cities ; they are carried by the 
wagons, and all these other functions participate in their transporta- 
tion, so that while you may say that 70 or 80 per cent of the mails 
are carried on the railroads, it would not be fair to say that the 
revenue derived from 80 per cent of the mails should be credited 
to the railroads. 

Mr. Peters. No ; but what would be the relative proportion of the 
whole machinery that enabled you to get that income of $280,000,000 
from the mails ? Your letter carriers perform one part of the service, 
your postal clerks another part, your Rural Free Delivery another 
part, and the railroads still another. In England, under the parcel 
post, they consider the railroad is entitled to 55 per cent of the 
compensation for handling the parcel post. You could not think 
of giving the railroads that much here. You are really giving them 
only about 2 per cent. 

The Chairman. Not in England. According to Mr. Bradley's 
statement submitted some weeks ago the percentage of the expenses 
of the Postal Department that the railroads received was, as I re- 
member, 2H per cent, including the parcel post. 



BAILWAY MAIL PAY. 655 

Mr. Peters. I think ours is about the same now. 

The Chairman. I think ours is a little less — from one computa- 
tion 19.5, and from another computation, taking into consideration 
expenditures made in 1912, but coming over from previous years, it 
would be about 20.7, as I remember. 

Mr. Stewart. Referring to your inquiry and in connection with 
Mr. Bradley's theory, there is one element which has produced this 
difference in ratio which Mr. Bradley has not mentioned, and that 
is the large increase in revenue from postal rates, and it has not 
been mentioned yet that that increase in revenue may be greatly 
disproportionate to the service performed in carrying the mails; so 
that when Mr. Bradley says that at a certain period the railroads 
were receiving such a per cent of the revenue, and that now they 
are receiving a much lower per cent of the revenue, and he names 
two causes which have contributed to that (and I named the other 
cause — the great increase in the revenues themselves) — you see it 
does not follow from the premises that the railroads should have an 
increase in the percentage of the revenue; that does not necessarily 
follow. 

Mr. Peters. Do you not find in the parcel post there is more than 
50 per cent of your parcels that do not touch the railroads at all? 
Is it working out that way now ? 

Mr. Stewart. I do not know what the figures are, and I do not 
suppose anybody has accurate data on that now. 

The Chairman. That is impossible of ascertainment at the present 
time. General Stewart, while you are testifying I wish you would 
ive the committee the benefit of your idea as to what factors should 
e given consideration in determining what compensation should be 
paid to the railroad companies, in order that we may have the differ- 
ent viewpoint while you gentlemen are all here together. 

Mr. Bradley. I would like to say, while I have spoken of 40 per 
cent, 1 would not want to be tied down to 40 per cent. I mean at 
the beginning of the final inquiry that would lead to the ascertain- 
ment of the percentage and the basis that it would not be an unfair 
starting point to assume that 40 per cent to-day would be in fair 
relation to the 35 per cent of 1900. Then that tentative stand should 
be corrected by such suggestions as, for instance, that which General 
Stewart brings up. 

Mr. Lloyd. Here is the unfortunate situation about that: At the 
outset it says we are only getting about half as much as we ought 
to receive, and that scares the general public away at once from the 
general proposition. 

The Chairman. In that connection I would like to ask Mr. Brad- 
ley if he were a member of the commission what he would vote for? 

Mr. Lloyd. You do not expect 40 per cent. That is why I think 
you should state what it ought to be; not 40 per cent as a basis to 
work on, but what, in your judgment, if you have judgment on that 
subject, would be a reasonable percentage to be set apart for railway 
mail pay. 

The Chairman. That is exactly what I want, and I would like 
your judgment, as a specialist who has given great and careful study 
to this problem. 



656 RAILWAY MAIL PAY. 

Mr. Bradley. I have never worked out carefully any line of 
thought that would lead to a definite percentage, but if I express an 
impression on the subject, it would be that after all the processes of 
elimination, correction, and readjustment had been gone through, 
that the railroads, perhaps, should justly receive not less than 25 per 
cent of the postal revenues. 

The Chairman. Is there anything further, Mr. Bradley? 

Mr. Bradley. No; except to put in this last remark, that in the 
postal expenditures there are some very heavy expenditures that are 
made for convenience and others for what might be called sociological 
purposes, the advancement of civilization, the comfort of the people. 
The appropriations for convenience would be for the City Delivery 
Service and the Rural Delivery Service, although these would also, I 
think, partake of the sociological character. When Congress, with 
the full approval of the American people, makes use of the postal 
service as a civilizing agency, it is important while performing that 
very useful act not to lose sight of a fair reward for the more purely 
commercial service and the absolutely essential service rendered by 
the railroads in the maintenance of the postal functions. 

The Chairman. General Stewart, will you now give the committee 
the benefit of your ideas as to what factors should be taken into con- 
* ideration in determining what rates of compensation should be paid 
the railroad companies for carrying the mail ? 

Mr. Stewart. I should have liked, Mr. Chairman and gentlemen of 
the commission, to have had a little opportunity to have given this 
matter close thought with reference to answering so important a ques- 
tion, but I will do the best I can at this time. In the first place, it 
seems to me that any theory which predicates a payment upon reve- 
nue derived from the business must necessarily be fallacious. The 
revenue we derive is based entirely on the rate of postage on the- 
se veral classes of mail matter and upon the amount of business done. 
The amount of business done will have somewhat of a relationship to 
the service performed and rendered by the railroad companies or the 
department, but the rates of revenue on the matter carried have no 
necessary relation at all to the service performed. The rates on first- 
class matter have been shown to be very high as compared with the 
cost to the department of performing the service of carrying and 
handling first-class mail. The rates on second-class matter have been 
shown to be very low. While we are making, according to the state- 
ment of 1911, say, $42,000,000 a year over expenses in carrying first- 
class mail, that is no argument that we should hand over 25 per cent 
of that to the railroad companies if they are getting fair compensa- 
tion for the service they render. I should say, too, that if we are get- 
ting only one-sixth or one-seventh of the amount in revenue of the 
expenses in carrying and handling the second-class matter that it 
would not be fair to the railroad companies to cut their pay down on 
carrying second-class matter six-sevenths, so those two examples 
illustrate clearly, it seems to me, that there is no necessary relation- 
ship between the two things. 

As to what should be taken into consideration, it seems to me first, 
and a fundamental proposition, that the railroad companies should 
not receive more than it costs them to perform the service and a fair 
return, and conversely it would be conceded that they should receive 
that subject to certain qualifications and limitations as the special 



EAILWAY MAIL PAY. 657 

nature of the service should suggest, and, first of all, in that connec- 
tion I should say that the commission should consider, after deter- 
mining something along that line, as to what the relation is between 
what they receive and the fair value of what they give ; then consider 
what it is worth to the railroad companies to carry the United States 
mails and what they owe the Government of the United States, what 
they owe the people, what they owe the country at large for the priv- 
ilege of maintaining their corporate existence and receiving public 
grants of lands, rights of way, and performing practically a monop- 
oly of the transportation service of the country. Those things, I 
think, are very potent in the consideration of the subject, and I think 
very earnest consideration should be given to what the value of those 
intangible elements are and that what you might call the fair com- 
mercial or business gauge of the service should be reduced by such 
an amount as would fairly represent those very material elements 
that are concerned in the matter. 

The Chairman. Are all those factors to be equally taken into con- 
sideration in the compensation for freight and passenger service, 
or do you make a distinction? 

Mr. Stewart. I make a distinction between the mail and all other 
classes of service. 

The Chairman. You think the mail is sui generis? 

Mr. Stewart. I do. I think it is entirely distinct to this extent: 
I assume that in the adjustment of passenger and freight rates that 
the Interstate Commerce Commission would never allow the rates to 
be below what they are commercially worth. 

The Chairman. Is your distinction purely because the Government 
deals with the railroads on mail service and the citizen deals with 
them on passenger and freight service? 

Mr. Stewart. Yes. 

Mr. Bradley. I would like to ask Mr. Stewart if, in considering 
the mail sui generis, he makes a distinction between the mail that 
would be represented by letters coming from the President, we will 
say, to the Secretary of War, who happens to be in Chicago— that is, 
governmental mail, as distinguished from the mail coming from John 
Jones, in New York, to William Smith, in San Francisco? 

Mr. Stewart. No ; I do not for this reason : That while there is an 
apparent difference there is, in fact, no substantial difference, because 
the railroad is performing a governmental function in carrying the 
mails; it is the agency of the Government and it really occupies the 
position of the Government in performing the service. 

Mr. Mack. Does not the position you take, General Stewart, carry 
with it a burden to the freight and passenger service, of making up 
any deficiencies on that theory that would result from the trans- 
portation of the mail? 

Mr. Stewart. Necessarily the railroad companies would have to 
be paying concerns. 

Mr. Mack. I do not know that that fully answers the question 
unless it modifies the general's position, if they must be paying con- 
cerns for the mail, the express, the freight, and the passenger — the 
four general classes of transportation business — should each be on a 
profitable basis? The theory that the mail, because it is carried for 
the Post Office Department, should be carried for less would neces- 
sarily throw a burden upon the other transportation services. 



658 RAILWAY MAIL PAY. 

Mr. Stewart. The railroad companies would necessarily have to 
receive a revenue from some source to make up the difference. Your 
question, if I answered in the negative, would necessarily imply 
that they must make it up from a specific source. Of course your 
reply to that might be that that is the only source of revenue they 
would have in transacting their business. 

Mr. Bradley. General Stewart, if the railroads perform a govern- 
mental function in carrying the mails, what function do they per- 
form in carrying passengers and freight? 

Mr. Stewart. They perform the function of a common carrier 
under the laws governing the rights and obligations of common car- 
riers. 

Mr. Bradley. In performing that governmental function, I take 
it that the Post Office Department is an agency of the people for 
their convenience, and that the relation of the railroads to the people 
would be practically the same if they were carrying mail, passengers, 
or freight. 

Mr. Stewart. No; I do not think it is the same. The railroad 
company comes into existence by reason of the grant of the State, 
which allows it a corporate existence, and it comes into existence for 
a specific purpose. We must assume that their purpose is commer- 
cial — it is business — and the State assumes that when it grants it 
the charter and it gives it its right of way there is no expectation 
on the part of anybody that the railroad company is going to do 
business for the public generally as a common carrier at less than it 
costs them to transact the business, but when it becomes an agency 
of the Government and undertakes to perform a governmental func- 
tion at the direction of the Government, I think there is an entirely 
distinct and separate relationship arising there. 

The Chairman. But you think that it should receive a fair com- 
pensation for the service rendered? 

Mr. Stewart. Most assuredly. 

The Chairman. And not be compelled, if the Government had 
that power, to perform the service at a loss to itself? 

Mr. Stewart. No, sir; I think not. 

Mr. Peters. General Stewart, do you think that applies equally 
when you go beyond the original scope of the mail service, of trans- 
mitting your confidential communications, and you go into freight 
service and take up parcels-post business in direct competition with 
the service performed by the railroads? 

Mr. Stewart. Well, the Constitution has given to Congress the 
power to establish post offices and post roads, and the people were 
the authors of the Constitution ; and it is competent for Congress to 
proceed under that delegated power to monopolize the transmission 
of first-class matter as they have, and to extend that monopoly if 
they choose, either directly or indirectly. Up to the present time 
the Government has not monopolized the transportation of pack- 
ages — parcels post, we will call it — directly and fully, but it has 
provided for the transportation of parcels, and therefore it seems 
to me that the parcels, so far as the practical question is concerned, 
are in the same situation as the letters. 

The Chairman. What do you think of Mr. Bradley's suggestion 
in reference to the solution of the problem on a percentage basis of 



RAILWAY MAIL PAY. 659 

the postal expenditures to the postal receipts? Does it appeal to 
you, or would you criticize such a position, and, if the latter, what 
would be your criticism? 

Mr. Stewart. I do not think it is sound, mainly for the reasons I 
stated when I began. There is no necessary relation between reve- 
nues derived and service performed, and furthermore there is no 
necessary relation between revenues derived and service performed 
by the railroad company or by the rural service or by the letter car- 
riers. They are not comparable. It seems to me it is an effort to 
compare and reach a conclusion between two or more incomparable 
elements. 

The Chairman. Your annual revenues from the first-class mail 
being about what, $90,000,000? 

Mr. Stewart. About $130,000,000 according to the statement of 
1911. The amount we receive above the cost of transporting and 
handling, according to that statement, is about forty-two million 
dollars. 

The Chairman. Then, if the postage was reduced on first-class 
mail from 2 cents to 1 cent, that would reduce the revenue of the 
Government, would it not? 

Mr. Stewart. It would. 

The Chairman. And if the railroads were on a percentage basis, 
they would clearly have an injustice worked against them unless the 
rate of the percentage was increased? 

Mr. Stewart. Yes, sir. They would perform the same service and 
suffer a great reduction in the compensation received. 

Mr. Bradley. In regard to General Stewart's suggestion that the 
revenues have no particular application to the service and the chair- 
man's inquiry as to the revenue derived from first-class mail matter, 
to perfect the thought, I would like to ask General Stewart what 
would be the probable revenue from first-class mail matter if there 
were no railroad service. 

Mr. Stewart. Of course, it would be greatly reduced. We are all 
glad to admit, and it is not an admission, for we are glad to say 
that the railroad companies perform a wonderful service for the 
Government and for the people ; and if it were not for the railroads, 
mail service would be a very insignificant thing. There is that con- 
clusion, that without the facilities to transport the mail as we now 
have them, the revenues would be greatly decreased, for the mails 
themselves would be greatly decreased. You know, however, the 
railroads now carry the great bulk of the mail which originates in 
many other parts of the service. You could not credit the revenue 
from the mails carried on the railroads to the railroad service; it 
would be very difficult to apportion that, because the same mails are 
carried in other parts of the service ; they originate in the country as 
well as in the city. 

Mr. Peters. Would you not consider it a pretty fair division of 
the machinery necessary to produce' your big revenues, which is, in 
the end, very much like the express, that your local post offices or 
depots and your local deliveries and pick-up takes about 50 per cent 
of your expenditures, and the transportation on the railroads is the 
other 50 per cent? I think the Interstate Commerce Commission 
in some recent investigations on the express business — and I know 
from analysis we had made about New York — showed that about 50 



660 RAILWAY MAIL PAY. 

per cent of the revenue derived from the package business covered 
the local delivery and the pick-up and depot expenses, while the other 
50 per cent went for transportation. It looked to me, in the making 
up of the machinery of the Post Office Department, that in pro- 
ducing this big revenue the railroad is about 50 per cent of the 
efficiency of the machinery, and yet it gets only about 21 per cent of 
the expenditures. In the matter of post offices you have a monopoly ; 
nobody else can carry the first-class mail; but in the parcels-post 
and second-class mail there is competition with the express com- 
panies, freight service, wagon service, and different kinds of serv- 
ices. You have no monopoly in that, but you are in direct compe- 
tition. 

Mr. Stewart. I would not be able to say what the relative value of 
the railroad service is compared with other functions. I do not know 
that that has even been figured out carefully by anyone. 

Mr. Peters. I think it ought to be considered. I think there have 
been decisions by the Supreme Court which hold that a railroad is 
not absolutely a public servant that can be used by the public at cost, 
or at less than cost, or that they may not do these things at a loss; 
and I have sent down to the Railroad Bureau of Economies to get a 
copy of the decision of the Supreme Court, and I would like to let 
you look it over, Mr. Chairman. I feel that we ought to be con- 
sidered here in the light that we are in partnership with the Govern- 
ment in performing this service, but all we ask is that we be properly 
paid for it. Whenever the compensation comes up in Congress there 
is an effort to cut down our pay, and there have been reductions after 
reductions all along. 

The Chairman. Mr. Peters : would you like to have the question 
settled on the percentage basis of either postal revenues or postal 
expenditures and have that the measure ? 

Mr. Peters. No ; I am seeking light on the matter. 

The Chairman. Would either one of those systems be satisfactory 
and, in your opinion, be fair ? 

Mr. Peters. If we are in partnership with the Government in per- 
forming this service and doing 50 per cent, we ought perhaps to have 
50 per cent of the revenue. 

The Chairman. Would a percentage basis, in your judgment, be a 
satisfactory and permanent settlement? 

Mr. Peters. No ; I do not think it would be. But the matter came 
up in discussion a while ago that seven or eight years ago we were 
getting 35 per cent of the total expenditures by the Government in 
connection with the Post Office Department, and now we have been 
cut down to about 20 per cent. 

The Chairman. And the causes of that were answered by Mr. 
Bradley in answer to questions by Mr. Lloyd. 

Mr. Peters. The Cortelyou order was one of the largest elements 
in cutting down the pay and the further reduction by Congress, and, 
furthermore, your percentage varies according to the large sum you 
are apportioning the different items to. 

The Chairman. What have those facts to do with the determina- 
tion as to what a fair compensation may be to the transportation 
companies for the handling of the United States mail and the devel- 
oping of an universal practical plan for making the apportionment 
of the compensation among the different railroads ? 



RAILWAY MAIL PAY. 661 

Mr. Peters. I think you are taking an arbitrary basis of so much 
per mile of haul, varying according to the weight of the mail hauled 
per day, which is about as fair a basis as you can reach. It takes in 
the weight Of course you want to take, in connection with that, the 
compensation for the special facilities furnished, for instance, the 
post-office car. It goes back to the same thing we have had up all 
along. 

Mr. Lloyd. Suppose that you cease to carry the mail. Would the 
railroads of the country be benefited or injured? 

Mr. Peters. We would be injured. The whole country would be 
injured. That, however, is not a supposable case. 

Mr. Lloyd. I am talking about it from a purely commercial stand- 
point and not the question of the public good at all. 

Mr. Peters. Nobody else but the Government can perform the 
post-office service. 

Mr. Lloyd. I am talking about the question of carrying the mail : 
would the railroads be benefited or injured if the mail facilities were 
taken from you ? 

Mr. Peters. We would be injured; because that would interfere 
with the general conduct of business, and that would affect us; it 
would affect the prosperity of all the people and consequently 
affect us. 

Mr. Lloyd. Well, purely from a commercial standpoint, what 
would you say? 

Mr. Bradley. Do you mean by the Post Office Department going 
out of business ? 

Mr. Lloyd. Oh, no. I am getting at this proposition : If you did 
not carry the mails, would the railroad companies make more money 
or less money, net ? 

Mr. Bradley. Would that involve a discontinuance of the govern- 
mental monopoly? 

Mr. Lloyd. No. I am not talking about that side of it at all. 
Suppose we found some other way of carrying the mail. You say 
you are carrying the mail at a loss. I am asking the straight ques- 
tion, Suppose you did not carry the mail at all, would the railroad 
companies at the end of the year have a greater net profit or a less net 
profit? 

Mr. Peters. That is a very hard question to answer. I do not 
know as I never figured on that. I believe in the case of the 
Long Island Kailroad we would have more net money if we did not 
carry the mail. We get now only $44,000 for carrying the mail, and 
I know it costs us close to $100,000. But that, however, is not a 
supposable case, that we can discontinue to carry the mail. That 
would so affect the communities that we serve, on whose prosperity 
we depend for our revenue, that we can not consider the question. 

Mr. Mack. I have answered Mr. Lloyd's question, that the actual 
expense of the service is less than the revenue derived, but that pre- 
supposes that there should be no division of expenses at all for the 
entire operation of the service, the maintenance of the railroad, the 
maintenance of the passenger service, and it brings us to the point 
that Mr. Baldwin just mentioned, that the same thing applies to the 
two passengers who come along after a train is made up and say that 
it does not cost anything to carry them because the train is going. 
That is the situation generally. The cost of the service must in- 



662 RAILWAY MAIL PAY. 

elude a proportion of all costs of the operation of the railroad and 
a portion of the capital. 

Mr. Lloyd. Does it not come back to this, that you can not deter- 
mine the rates before ascertaining the cost? I think Mr. Peters is 
entirely wrong in the statement he made at the outset this morning 
that cost is not a determinant factor. I think you must take that 
into consideration, and if you can not determine the cost you can 
not determine what you should receive. 

Mr. Mack. I have adhered to the opinion that the question of 
whether the railroads are underpaid or overpaid is better determined 
from the relative revenues derived from the passenger service, be- 
cause it is a definite, certain thing, rather than to attempt to ascer- 
tain on a basis of cost, for reasons which I think have been very 
fully set forth during the hearings of the commission; that is, in 
the first place, cost would produce 795 different rates. The " cost " 
means a division of accounts which would differ on various rail- 
roads and which there is no authority to settle, consequently, 
when you come to the question of relative earnings, and assuming 
that the mail service requires the very highest quality of passenger 
service there is, and the joint commission appointed by the railroads 
and the Post Office Department says that the earnings are rela- 
tively 97 points less for mail than for other passenger service, that 
we demonstrate the question of underpay very thoroughly and very 
simply and in a way that ought to be understood by citizens of the 
country. After that we come to the question of adjustment of rates, 
but the entire service should bear its proportion of cost. It does so 
if you take relative revenue, but the relative revenue is based upon 
passenger service, which the courts have decided is not excessive 
in the rate cases, and I think Dr. Lorenz can agree in that view, 
that if we were paid on the basis of the passenger service, the pas- 
senger service being the foundation, that it would not be a high 
basis. 

Mr. Lloyd. Just one other point. If you determine the cost on 
the 795 different systems of railroad and added that cost together 
so that we knew what the cost was for all of the railroads carrying 
the mails, would not that be a proper basis to take into account ? 

Mr. Mack. I do not know what that would indicate. You have 
to make your division between the passenger and the freight, and 
there is no authority upon which you can settle that question for 
any road, as I understand it, or for all roads, and I think Dr. Lorenz 
will affirm that. 

Mr. Lloyd. Do you think mails should be treated just the same as 
passengers and freight? 

Mr. Mack. I think mail should pay its proportion of revenue as 
the very highest quality of service is required. I think that is abso- 
lutely sound doctrine. I can not agree in the idea that the railroads 
should perform mail service for less. We are not here considering a 
question of a new incorporation or franchise conditions. The whole 
fabric of rates is based on the theory that the mail will pay its pro- 
portion. Freight rates are not made higher or the passenger rates 
higher because the mails should be carried for nothing or for less 
than cost, or for less than relative earnings, and it seems to me it is 
not just to attempt to get mail service at less than relative revenue 



RAILWAY MAIL PAY. 663 

and then throw the burden upon the individual passenger or upon 
the shippers of freight to make up that deficiency. 

Mr. Lloyd. We have been trying to get at this question for about 
two months, and we have not yet ascertained what the cost is, and 
you say no two roads are alike? 

Mr. Baldwin. Is there any way to determine how much it costs 
the railroads to carry oats? 

Mr. Lloyd. I suppose so. I do not suppose the railroad companies 
carry oats at a loss. That is a very reasonable supposition, that the 
railroads carry oats at a price that will pay them, and the same 
applies with regard to corn and carrying passengers at a cost that 
would pay them. 

Mr. Baldavin. How would that actual cost of carrying oats be 
determined ? 

Mr. Lloyd. I am not in the railroad business, but I am trying to 
get at the question of what we ought to pay for carrying the mail, 
and it seems to me the element of cost is something that ought to be 
taken into consideration. I can not see how you are going to get 
away from the element of cost. If the element of cost is not to be 
considered, then it is purely an arbitrary matter for us, and if we 
fix the rates so that you receive half of what we receive you could 
not complain, because you have given us no basis to ascertain, and 
you have said cost does not figure in the question at all. 

Mr. Mack. I think you show the mail earns 97 points less; that 
the railroads are relatively underpaid fifteen or sixteen million dol- 
lars. An arbitrary rate that would pay less would be manifestly 
unfair. 

Mr. Lloyd. Just as you are testifying at this point, please state 
what you think ought to be the determinant factor on the part of 
the Government as to the compensation you should receive for carry- 
ing the mail. 

Mr. Mack. The service is the transportation of the mail and 
the hauling of postal cars. As I said in my original testimony on 
the weight and space proposition, it is a service of two kinds ; conse- 
quently we have, and I think it should continue, the two bases of 
pay — weight and space. 

The Chairman. In considering those two services, what do you 
consider in conjunction with them? The cost of the service, do you 
not? 

Mr. Mack. The cost of the service? 

The Chairman. Yes. 

Mr. Mack. In fixing the rate? 

The Chairman. Yes. What factors do you take under considera- 
tion? 

Mr. Mack. The weight of the mail transported and the post-office 
cars hauled. Those are the two factors in the performance of the 
service. We have that basis to-day, and a single standard of weight 
or a single standard of space, in my judgment, would not be the 
proper basis for pay. 

The Chairman. Taking weight, what factors do you take into 
consideration, if weight was the basis or the measure of the service 
rendered, to get the compensation you should receive for that weight? 



664 RAILWAY MAIL PAY. 

Mr. Mack. I think that would be determined by the relative earn- 
ings of the service from passenger trains. 

Mr. Lloyd. Suppose the present system of pay were continued, 
which you. people say ought to be continued. What should be the 
determinant factors on the part of this commission as to whether the 
rates at the present' time are proper or not? 

Mr. Mack. We think the present rates are not productive of suffi- 
cient revenue, for the reason that the revenue produced is not equiva- 
lent to the earnings of the other passenger train service. That could 
be adjusted by an increase in the rates for weight or it could be ad- 
justed by an increase in pay for space. 

The Chairman. Then you think the settlement probably would 
be to allow you compensation equivalent to what you receive in the 
passenger service. Is that it? 
', Mr. Mack. Yes, sir. 

The Chairman. That settles it, according to your mind. If you 
get 25J cents per car-mile for passenger service and the same for 
mail service, that Avould settle the question. Is that your judgment ? 

Mr. Mack. I hardly would say that. That leads us to the exclu- 
sive space basis, which I do not consider is the proper one. 

The Chairman. Then, how are you going to get the adjustment 
by using space in the passenger service and weight in the mail 
service ? 

Mr. Mack. The relative space determines whether the relative 
earnings are compensatory. It is a common basis of determining 
whether the pay is adequate or inadequate. 

Mr. Lloyd. Now, let me see if I understand you. Here is a passen- 
ger train with a mail car, baggage car, and two passenger coaches. 
You think the mail ought to pay one-fourth of the expense of that 
train ? 

Mr. Mack. I think it ought to produce the same relative revenue as 
the other space on the train. 

Mr. Lloyd. Then, if the passenger coach has no passengers in it, it 
ought not to pay anything? 

Mr. Mack. The coach would not operate without anything in it. 

Mr. Lloyd. It might at one time. 

Mr. Mack. Well, of course, that would adjust itself on averages. 
The average would determine that. 

Mr. Lloyd. I was getting at your idea as to what the pay should 
be. If you had cars of the same length and you had a mail coach, a 
baggage car, and two passenger cars, then you would say that one- 
fourth of the expense should be borne by the mail ? 

Mr. Mack. Why, undoubtedly. 

Mr. Lloyd. In other words, that mail should pay one-fourth of the 
transportation charges of that train, including all the passengers and 
baggage? 

Mr. Mack. I do not see why not. 

Mr. Stewart. I get your idea that ultimately you think the ques- 
tion should be determined upon the basis of comparison of space, but 
I am not certain as to how you are going to apply that to existing 
rates which we are discussing. You say that the mail should bear 
its same ratio of expense as the passenger car does. That would neces- 
sitate the use of space, would it not, for your comparison. 



KAILWAY MAIL PAY. 665 

Mr. Mack. The railway mail pay committee has stated that so far 
as relative earnings are concerned, that space is the basis of compari- 
son to determine that question. That has been stated, I think, by all 
the committee on railway mail pay. 

Mr. Stewart. How would you apply it to the situation at hand? 
Here we have rates fixed by statute which may be too high or too 
low. You are going to determine that question by a comparison of the 
space, but after you have reached your comparison and your con- 
clusion on your comparison, how will you readjust the rates ? They 
are still on the basis of weight. 

Mr. Mack. The consideration which the railroads give to that 
question has led them to believe that to increase the pay to an ade- 
quate basis, the present plan should be extended to pay for the apart- 
ment cars which are not paid for on a space basis, that is one proposi- 
tion, and on the weight proposition to adjust it by an annual weigh- 
ing instead of a quadrennial weighing, both consistent with the 
present basis of pay, one to readjust the weight and the other to read- 
just the space. 

Mr. Baldwin. You could do it by an increase in the rate, 

Mr. Mack. You could do it arbitrarily by an increase in the rates. 

Mr. Stewart. I can not see how you are going to apply your 
knowledge in that manner. You admit that space is a proper basis 
of reaching a conclusion, but the application of your conclusion to 
existing rates seems to me to be somewhat faulty because it does not 
necessarily correct any difficulty that exists in the rates. You say 
that after ascertaining by the basis of space that you are underpaid, 
you are going to ask for an annual weighing. The two are not asso- 
ciated together, excepting in this far, that the annual weighing will 
give you more money. 

Mr. Mack. But an annual weighing corrects the situation in re- 
gard to the weight plan to which the rates apply. An annual weigh- 
ing provides that we shall be paid more for the transportation 
service rendered by remedying an inconsistency in the present plan. 
The space, as I have just pointed out, is simply extended to give us 
pay which we feel we are not receiving for the apartment cars; the 
apartment cars are upon one basis only at the present time, and that 
is the weight basis, and we believe it should be extended to include 
the space basis also. 

Mr. Lloyd. Mr. Mack, I do not know that I fully understood you. 
If I did, I want to go a little further*. You complain that the mail 
car does not pay its proportion now of the passenger-train expense. 
As I understood you, before the Government can determine what you 
should receive, it would be necessary to know how many passengers 
you carried and how much you received from the passenger traffic, 
would it not? 

Mr. Mack. We have shown that, Mr. Lloyd, in the joint report — 
the earnings for the passenger service. 

Mr. Lloyd. Then, you would take the earnings of the past year 
as the basis for a future payment, would you ? 

Mr. Mack. Well, I do not know that anything else would be 
practicable if you are to adjust a rate; you can not apply it to the 
future. 

Mr. Lloyd. Of course when you come back to the passenger train 
you have abandoned weight altogether, because in that argument 



666 RAILWAY MAIL PAY. 

you insist that this car, or the mail which is carried occupying space, 
does not pay its proportionate part of the passenger expense. Now, 
you insist that it should pay its part of the passenger expense. You 
say it has not done so, because it has not paid for the full space 
which it occupied compared to the space occupied by the passengers. 
That is one theory. The other theory is that you have to determine 
the number of passengers that are carried in order to determine the 
proportionate part that the mail must pay for the expense of the 
passenger-train service. You have two ideas, but neither one of them 
is based on weight; it is totally a space proposition; and you your- 
self, as I understand you, are using this space proposition to ex- 
plain to us that you are not receiving sufficient compensation for the 
part the mail performs in connection with the passenger trains. 

Mr. Mack. We cite a common basis of comparison in order to 
determine the question of underpay or overpay. 

Mr. Baldwin. The department fixed that and we are simply fol- 
lowing the department. 

Mr. Lloyd. You were not here the other day when Mr. Mack 
testified. Mr. Mack testified at length on this question, and I think 
his testimony is as plain as anything we have had. 

Mr. Mack. In fact, it is difficult, and always has been, to find 
what might be considered a common basis of comparison to determine 
the question of underpay or overpay. The transportation of mail 
is practically a freight business ; it is the handling of things. You 
can not make a comparison with freight as the service is on 
passenger trains. That limits us to the passenger train. There 
is no other like service even on a passenger train; the express is 
not like it, the passenger is not like it, but the department thought 
and we furnished figures on the space basis, because it was a common 
basis of comparison, not necessarily a substantial or proper basis of 
pay, because there are other elements which would enter into the 
question if we undertook to use it as a basis of pay. The question of 
whether it is a practical basis would have numerous illustrations to 
show that perhaps it is not. Our experience with the full postal-car 
service, with only 10 per cent of pay, illustrates to us that space would 
not be a satisfactory basis of pay where all of our mail earnings are 
involved. For instance, if I may refer to this feature of the case, 
suppose on an exclusive space basis the question comes up whether 
the Government should pay for a 30-foot or a 60-foot car. What 
would be the controlling factor in that case ? Should the Post Office 
Department and an officer of the service, perhaps a subordinate 
officer, have the right simply to say, without any controlling or de- 
termining factors, that a 60-foot car should be required instead of a 
30-foot car? 

We will take a line 490 miles long, and I made this calculation on 
mv line from St. Louis to Texarkana : The probable increase from a 
30-foot to a 60-foot car would be $36,000. While theoretically it 
looks like a car is a given quantity, and you can tell that if the car is 
furnished it ought to be paid for at such and such a rate, that is not 
the question at all, but it is a question of whether that car is needed, 
and that goes back to the question of opinion. The Post Office De- 
partment would have the authority, by a mere statement, to increase 
the pay on that railroad $36,000 or $37,000 a year, and it has no con- 



RAILWAY MAIL PAY. 667 

trolling factor, and there is not a thing in the world to prevent an 
officer of the postal service from increasing it, except just because he 
wants to. There is nothing to prevent that, in my judgment, and I 
am very sure that is the opinion of every traffic mail officer who has 
had any- experience in the service. 

Mr. Lloyd. You do not complain on that account, and your com- 
plaint is they do not allow you to furnish enough cars.- 

Mr. Mack. We think it is an unsound proposition because the 
service does not itself determine what we should furnish ; weight is a 
given, definite thing that adjusts itself. 

Mr. Lloyd. Suppose we changed it so that we had a uniform car, 
just one mail car, authorizing a 30-foot car and there was no 40-foot, 
50-foot, or 60-foot car, but you have an R. P. O. car like you have a 
passenger coach. Would not that take away from the department the 
complaint that you people make about the 30-foot cars, the 40-foot 
cars, and the space that is required from time to time? 

Mr. Baldwin. You mean the same on the branch lines. 

Mr. Lloyd. On all lines. 

Mr. Mack. You will consider there are in the neighborhood of 
1,400 full cars and in the neighborhood of 3,500 apartment cars, and 
it is questionable whether you want to consider 

Mr. Lloyd. I am talking about R. P. O. cars, for the moment. 
You complain that they are troubled with the department on account 
of demanding a 30-foot space when you use a 60-foot car. Could not 
that be remedied by having a uniform car? An R. P. O. car is an 
R. P. O. car, no difference what its length, and the pay on an R. P. O. 
car would be so much, no matter what its length was, but the pay 
would be the same as if you used the car. That would avoid the 
question, would it not? 

Mr. Mack. It is just as I have said. One-fourth of the cars are 
full cars, and that idea would, in my mind, not be practicable, because 
such cars would manifestly not be needed. I think that would be im- 
practicable. 

Mr. Lloyd. That would remedy the complaints that have been 
made concerning the 30-foot, 40-foot, and 60-foot cars? That part 
would be remedied, would it not? Why can't you have a car unit on 
the apartment car, and whenever an apartment car is used one-half 
of the space of that car shall be considered as used for railway pur- 
poses. Would not that settle that proposition from the departmental 
standpoint ? 

Mr. Mack. There are various practical conditions about the serv- 
ice to be considered. For instance, we operate a 30-foot apartment 
car from Pueblo on the Denver & Rio Grande down to a place 
called Creede. We start with a 30-foot apartment car, and in the 
baggage apartment of that car we have an average of 6 feet of space 
used for mail. When we get to Alamosa, Colo., the superintendent of 
mail service says that from Alamosa to Creede they need but 15 feet, 
and we have to furnish 30 feet starting out of Pueblo in the mail car 
and 6 feet in the baggage car, and when we get to Alamosa he only 
wants 15 feet, but yet we have to haul all of that 30-foot car. 

Mi. Lloyd. I was suggesting as a remedy that whenever you have 
to furnish a car let it be so much space. 

Mr. Mack. But how would you apply it to a condition of that 
kind? 



668 KAILWAY MAIL PAY. 

Mr. Lloyd. I would make it a 30-foot car all the way. 

Mr. Mack. What would you do with the 6 feet of space, average, 
occupied in the baggage apartment ? I am not endeavoring to cross- 
question you, but those are practical conditions that have developed. 

Mr. Lloyd. If there was an understanding that the apartment car 
was to be 30 feet, then it would not make any difference how much 
baggage space you have, you would be paid for the 30 feet. 

Mr. Mack. How would we be paid for the space in the baggage 
apartment if the space in the car would not accommodate the mail? 

Mr. Lloyd. The statement of the case as you made it was, as I 
understood it, that they first used 30 feet. 

Mr. Mack. Thirty feet plus 6 feet of space, according to the 
measurements of 1909. 

Mr. Lloyd. I misunderstood your case. As I understood, your 
case was that you started out with a 30-foot apartment car and 6 
feet in the baggage car and you went to a certain point where they 
required but 15 feet in the car. 

Mr. Mack. That was one 30-foot car to start out with, but we had 
6 feet of space in the baggage car in addition to the space we did 
use for the mail if it could not go in the 30-foot apartment. On 
Monday there was not any mail in the baggage car, and on Sunday 
there was 30 feet in the baggage car. 

Mr. Lloyd. You readily understand the suggestion I make over- 
comes all that, because where you use an K. P. O. car you get pay 
for the R. P. O. car, and wherever you use an apartment car you 
would get paid for an apartment car ; if you needed the two R. P. O. 
cars, you would get paid for two R. P. O. cars. In other words, if 
some such system as that were worked out, would it not overcome 
the complaint you make about departmental regulation ? 

Mr. Mack. I do not believe that you can devise any rule or any 
law that would define space in its application to the service that 
would eliminate the discussion and operate as the weight does, a 
self-determining factor of the service rendered. 

Mr. Lloyd. You are complaining right now that the existing 
law does not give you compensation for the apartment car at all and 
you insist that you ought to have pay for the apartment car. Now, 
that is universal, and all of you have insisted upon that, yet in the 
statement you now make you say that it is impracticable because it 
is a departmental regulation, and the department must determine 
the size of the car and the space that must be used. 

Mr. Mack. I do not think that is a correct statement of our posi- 
tion. Our position is that the entire mail pay should not be deter- 
mined upon opinions, but that for the post-office work, with 10 per 
cent of pay, that is perhaps the only measure of service. 

Mr. Peters. Mr. Chairman, as I understand it, the Post Office De- 
partment wants to make the Post Office self-supporting. _ If they 
were self-supporting they would want the railroads to be fairly com- 
pensated and receive a fair amount for the service they perform, 
which is so essential and necessary to their success. The whole effort, 
apparently, in the past has been to make the department self-sup- 
porting by cutting down the railway mail pay. Now, we have gotten 
to a, point where you have lowered our pay and you have got us down 
to harclpan, you may say. . 

The Chairman. Do you think, Mr. Peters, that that is hardly a fair 
statement toward the Post Office Department ? Have they been in- 



RAILWAY MAIL PAY. 669 

strumental in the reductions that Congress has made? The only 
change in an administrative action is in a change of the divisor. 

Mr. Peters. I think the changes in legislation have generally been 
based on recommendations of the Post Office Department, so whether 
they did it intentionally or indirectly, it had that effect. 

The Chairman. The appropriation bill, so far as the department 
is concerned, is an estimate submitted as opinions of the department 
based on prior experience to cover appropriations that will be neces- 
sary to take care of the compliance of the laws that Congress enacts. 
That is correct, is it not, General Stewart? 

Mr. Stewart. Yes. 

The Chairman. At this point we will take a recess until 2.30 
o'clock p. m. 

Thereupon, at 1.15 o'clock p. m., a recess was taken until 2.30 
o'clock p. m. 

AFTER RECESS. 

The committee met, after recess, at 2.30 o'clock p. m. 

The Chairman. General Stewart, have you had an opportunity to 
go over the suggestions of Mr. Lorenz filed with the committee ? 

Mr. Stewart. No, Mr. Chairman; I have not had more than an 
opportunity to read them over and I have not had the chance to give 
them any study, but hope to do so at an early date. 

The Chairman. We appreciate the calls that you have had on your 
time, the change of administration, and so forth. Mr. Peters was 
anxious, as I understand, to learn from General Stewart, as repre- 
senting the department, how the suggestions made by Mr. Lorenz im- 
pressed the departmental representatives. Was that the point, Mr. 
Peters? 

Mr. Peters. That was the idea, and how General Stewart felt it 
would work out — that is, Dr. Lorenz's and Mr. Lloyd's proposition 
en the question of the four units, the full-car, half-car, quarter-car, 
and the closed-pouch service, instead of coming down to the actual 
car-foot miles, take larger units so as to avoid disputes over small 
things. 

Mr. Stewart. We have given Mr. Lloyd's suggestion some thought 
as to the probable cost and have made some calculations, taking into 
consideration 60-foot full cars, storage cars, 30-foot cars, 15-foot cars, 
and the closed-pouch service. We have some tentative figures at this 
time, but I hardly feel like putting them in the record. I would 
like to go over them more carefully and then we will be glad to 
submit them. 1 

Mr. Lloyd. We will take that later. 

Mr. Peters. Could they not be discussed tentatively, informally, 
without putting them in the record? 

Mr. Stewart. I have no objection to doing that, if the committee 
desires it to be done. 

Thereupon an informal discussion was held by Mr. Stewart, the 
members of the committee, and those attending the hearing. 

1 See p. 670 for letter of Hon. Joseph Stewart. Second Assistant Postmaster 
General, dated May 23, 1913, to Chairman Bonnie, explanatory, from an 
administrative standpoint, of Representative Lloyd's suggested plan. 

49396—14 50 



670 RAILWAY MAIL PAY. 

The Chairman. What about the operation, so far as the depart- 
ment is concerned? 

Mr. Stewart. As I recall the plan detailed in Document No. 105, 
with reference to the authorization of space, it is this: That all 
authorizations which would carry compensation would be made by 
the department following the statistical period, at which time the 
statistics and data would be obtained, which would enable the depart- 
ment to arrive at the cost basis. 

The Chairman. Would your authorization for space depend in 
any manner on the cost basis? 

Mr. Stewart. No. I was saying that the authorizations for the 
year which would carry compensation, as I recall it — I have not 
looked at Document No. 105 for some time — would be based on the 
space actually used at the time of the statistical period, and it would 
have a relation to the cost element in that far, that it is the space 
upon which we ascertain the cost of performing the service. 

The Chairman. The point I wanted particularly was how you 
determined the amount of space you wanted and what your modus 
operandi would be for your authorization for that space, so that the 
railroads would know what they had to comply with ; and what your 
process would be to take care of excess business over your calculation 
in determining your original calculations for space? 

Mr. Stewart. We now have a service entirely established, so that 
we would not be entering a business de novo, or new. If we were 
approaching a statistical period all the space that would be author- 
ized and used for mail purposes would have been authorized pre- 
viously by the department in the same manner that it is now author- 
ized, which is upon careful inspection of the service by the officers of 
the Railway Mail Service to begin with, and the determination of 
the department's officers as to whether the space reported and used 
is necessary for the performance of distribution. We would go into 
a statistical period with space already authorized, and additional 
space as it became needed would be authorized by the department in 
the same manner — that is, upon careful inspection and reports from 
the field as to what the actual operations of the railroads were. 

The Chairman. Suppose your initial authorizations are insuffi- 
cient. How would you take care of the excess business ? Would the 
railroads dump that on the platform? 

Mr. Stewart. No. The plan of the department was to make an 
authorization, based upon the needs at the statistical period, which 
should be good for a year, and that all additional requirements would 
be made known by the department and furnished by the railroad com- 
panies, but that no change would be made in the compensation until 
the next statistical period — that is, if we needed more space we would 
ask the railroad company for it. 

The Chairman. And you would compensate them at the end of the 
year when you came to your annual adjustment ? 

Mr. Stewart. Yes ; just as we do on the additional weight. They 
carry the additional weight, but they do not get the additional com- 
pensation until we have the weighing. 

The Chairman. Who will be empowered to require the railroad 
company to furnish the additional space required? 

Mr. Stewart. Ultimately, the Second Assistant Postmaster Gen- 
eral. 



RAILWAY MAIL PAY. 671 

The Chairman. Suppose, because of an abnormal condition, you 
had double the amount of mail you had estimated on upon which 
your authorization had been made for any one day ; who is going to 
add to the surplus mail, and how many days would it take for the 
administrative machinery to get that mail handled ? 

Mr. Stewart. Such an abnormal increase, taking effect within a 
day or a very short period, would have to be arranged for very 
quickly by reports from field officers and immediate authorization 
of the Second Assistant Postmaster General. 

The Chairman. That would come in by wire? 

Mr. Stewart. Yes. 

The Chairman. Through whose hands does that pass? Where 
does it initiate and where does it end ? 

Mr. Stewart. It would originate in the field of the Superintendent 
of the Division of Railway Mail Service who had charge of that 
immediate line, and it would come from him to the general superin- 
tendent of the Railway Mail Service, and from him to the Second 
Assistant Postmaster General, Division of Railway Adjustments, 
who would prepare the authorization which would be passed on by 
the Second Assistant Postmaster General. In the ordinary course 
of business those requirements would become known by a series of 
reports in that manner. 

The Chairman. Taking how many hours between notification and 
action ? 

Mr. Stewart. Not necessarily a great number of hours. In cases 
of emergency it could be authorized by telegraph, but in the ordi- 
nary course of business it might be several days and might be several 
weeks. 

The Chairman. Would not that be a serious interference with the 
efficiency if it took several weeks? 

Mr. Stewart. Yes; if the railroad companies waited for that 
authorization which was long delayed. 

The Chairman. Would they not be compelled to wait for an au- 
thorization under a plan such as you have suggested ? 

Mr. Stewart. They might furnish the facility if they knew it 
existed. 

The Chairman. I do not see where that is sound. 

Mr. Stewart. This question is one which relates itself very inti- 
mately to the relations between the department and the railroad 
companies, and one who does not understand the mobility of the 
service and the manner in which the railroads respond so quickly to 
the needs of the service would not sufficiently understand how we 
could meet such an emergency under this new plan. As a matter of 
fact, railroad companies under present conditions respond very 
quickly to the needs of the service wherever they exist. 

The Chairman. But upon request? 

Mr. Stewart. Yes. 

The Chairman. They are not going to do so on their own initia- 
tion. There has to be an initiative on the part of the departmental 
representative in order for action to take place ? 

Mr. Stewart. Yes. 

The Chairman. Then you have made a hypothetical case where 
there might be a delay of several weeks possible to take care of the 



672 RAILWAY MAIL PAY. 

excess or abnormal mail. It seems to me, unless that can be reme- 
died, that that is an absolutely serious defect in the plan. 

Mr. Stewart. The delay which I have mentioned, of several weeks, 
could hardly be expected to occur under this new plan where imme- 
diate action would not only be advisable but almost necessary. When 
I speak of " several weeks " I have in mind the ordinary course of 
business under present conditions. We attempt to authorize new 
space or additional space wherever it is needed as speedily as we 
become satisfied that it is needed, but in a determination of that it 
sometimes takes several weeks to become satisfied that it is fully 
needed, but if we were operating under the conditions where no 
space would be allowed us and furnished by the company until actu- 
ally authorized it would change the conditions of authorization. 

The Chairman. Should the company come to you and oiler space 
of their own volition and say to you that you need more space than 
you are taking? Does not the initiation necessarily have to take 
place with the departmental representative? 

Mr. Stewart. Surely ; and I do not mean to convey the idea that 
our officers in the field would not take up the necessity immediately 
and report upon it. 

The Chairman. But they could not act, except to report; before 
action could take place it would require decision and authorization 
from the Second Assistant Postmaster General. 

Mr. Stewart. If the rule were followed strictly they could not 
utilize space until after that specific authorization, but the plan 
could be sufficiently elastic to allow the space to be used before the 
actual authorization could be made. 

The Chairman. Well, suggest the elasticity that would cover the 
case. 

Mr. Stewart. A very simple plan would be to authorize the 
superintendent in the field to make the request and supply the car. 

The Chairman. Then you would not have to wait. 

Mr. Stewart. Then report the facts to the Second Assistant and 
get the formal authority. 

The Chairman. But the Government would be bound by the ac- 
tion of the subordinate. 

Mr. Stewart. To a certain extent, within his authority. 

The Chairman. What authority are you going to give him? 

Mr. Stewart. Exercise his own discretion. 

The Chairman. But the Government is bound if he takes that 
action under his authority. 

Mr. Stewart. It would be until it was revoked. 

The Chairman. And that would hold for the round trip of that 
particular activity, would it not? 

Mr. Stewart. Yes, sir. 

The Chairman. The delay incident to the authorization, I take it, 
where jou mentioned several weeks, would be for the authorization 
of the general annual normal business. 

Mr. Stewart. I had more reference to the present system than to 
the one which would obtain under the new plan, because the annual 
authorization would be made upon the basis of space actually used 
at the statistical period. There is no uncertainty about that; that 
would be reported by the officers of the department — the space actu- 
ally used in handling the mail. 



EAILWAY MAIL PAY. 673 

The Chairman. You expect to have two authorizations, as I un- 
derstand — one an annual, for which the Government is bound and 
upon which the Government settles with the transportation com- 
panies every month ; the other the abnormal or excess authorization — 
and you would have delegated authority to the inspector on that 
route to initiate that authorization, the Government being bound for 
the compensation, according to the standard adopted for that round 
trip? 

Mr. Stewart. Well, that is making it very specific ; but, in general 
terms, that is correct. 

The Chairman. Is it not wise to make it specific in a study of 
this kind? 

Mr. Lloyd. I did not understand General Stewart that way awhile 
ago. I understood him to say the authorization was for 12 months 
at a time, and any additional service would not be adjusted until 
the end of the year, and then it would be adjusted. If they were 
continuously using additional space, then for the next year they 
would pay for the additional space. 

Mr. Stewart. That is right. 

Mr. Lloyd. In other words, it is on the same principle exactly as 
the present weighing system. 

Mr. Peters. Is that fair, that they would go on for six or nine 
months ? 

Mr. Lloyd. No. I say not. 

Mr. Peters. And perform that additional service without any com- 
pensation? Should not the adjustment be made at once without 
going into a daily record of all this ? 

Mr. Stewart. It would be impossible, with such a tremendous 
business as we conduct with all the companies of the United States, 
to undertake to readjust every day, every week, or every month, 
so you would have to approximate it somewhere; and our purpose 
was to approximate it on the space basis, in substantially the same 
way that we do on the weight basis, only with this advantage to the 
company, that it is done every 3> r ear instead of every four years. 

The Chairman. It seems to me extremely simple that, based on the 
volume of business of the previous year, the department figures what 
number of cars would be required, allowing for a normal increase 
in business during the coming year. The department makes authori- 
zations; the Government is bound and pays compensation to the 
railroad on those authorizations; the railroad gets the money once 
every month as it does to-day. Now, when abnormal business comes 
up, authority is given to the inspector in charge to call for addi- 
tional space; he is to call for a 15-foot car, or a 30-foot car, or a 
60-foot car, and the credit is given to the transportation company and 
a debit to the Government for the round trip of that car, whether 
the car is full, half full, or quarter full. The initiation has to take 
place with the departmental representatives. That is the method, 
as I understand, that you practically 'operate under, is it not? 

Mr. Lloyd. That is the difference between his suggestion and the 
one I made. 

The Chairman. That seems to me absolutely simple. I do not see 
where any injustice is done the transportation companies at all; I 
do not see where any irritation can possibly come in or where any 
kind of dispute can enter. The transportation companies are not 



674 KAIL WAY MAIL PAY. 

supposed to represent or advise the postal department; the depart- 
ment must determine what the ordinary business shall be, and the 
transportation companies comply — so far as their ability will permit 
them — with the requirements made by the postal authorities, and 
the Government pays for the service rendered according to a plan 
fixed in the law itself. 

Mr. Peters. Mr. Stewart, do your figures show whether that 
would be a fair remuneration to the short lines, with the apartment 
cars and closed-pouch service? Did Mr. McBride go into that 
deeply enough? 

Mr. Stewart. No. I do not know how this would be related to 
that particular feature of the question, but presumably it would give 
fair compensation where there is apartment-car service. 

The Chairman. Then, as I understand, your adjustments are 
simply that the settlement is to be made at the end of the year with 
the railroads, of the aggregate of credit that has been given to the 
railroads for compliance with the abnormal or the special authoriza- 
tions incident to the abnormal business ? 

Mr. Stewart. I assumed that that was Mr. Lloyd's idea. 

The Chairman. That seems to me to be absolutely simple. 

Mr. Lloyd. It need not necessarily be 12 months, but some spe- 
cific time. 

The Chairman. The railroads get the compensation, and it is 
simply a question of the period of settlement ? 

Mr. Peters. The Second Assistant Postmaster General now could 
make an adjustment if a new line of cars is put on; he makes that 
effective at once, and the same thing would transpire under this 
basis. If you order a new line of service you would not wait until 
the end of the year to adjust that. The discussion the chairman 
had was with reference to the fluctuations; for instance, say on 
Thursday you wanted an extra car — that would take care of itself 
at the end of the year, but if we changed a schedule and put on a 
new train to-morrow you would have that effective at once. 

The Chairman. But you get your compensation for the service 
rendered under any plan. It is simply a question of the period of 
settlement of the compensation, and I do not see why there should 
be any discussion or dispute about that. You get your compensation 
monthly, according to the general authorization; the intermittent 
or special authorization, or whatever you may term it, could be 
settled for quarterly, annually, or monthly, so far as that goes, just 
the same as the other. That is a matter of detail that does not 
affect the general issue. 

Mr. Mack. That is, excessive space, after the authorization for the 
year would be paid for 

The Chairman. Paid for every time it was used on a round-trip 
basis. 

Mr. Mack. If a line, having 30-foot cars, once each way, at the 
statistical period had its service doubled by an additional line there 
would be pay for the two round trips instead of one. They would 
be paid for the extra round trip at the time it was performed instead 
of at the end of the year. 

The Chairman. The idea is this, as I understand it : We will take, 
for illustration, three full R. P. O. cars which are deemed by the 
Government as needed daily to handle the amount of business on 



BAIL WAY MAIL PAY. 675 

a certain route; they would authorize that for the year, whether 
they used them or not and the Government would be bound to pay 
one year's compensation for those cars; that is, the annual authori- 
zation based upon careful ascertainment by the departmental repre- 
sentatives as to the requirements. It is found that there are more 
than 1\ tons of mail some day— we will say 10 tons — and another 
R. P. O. car is required to handle that mail that day, in which event 
a credit is given the transportation company on that route on the 
25 cents a mile basis, or whatever the basis might be, for the round 
trip of that extra R. P. O. car for that particular trip. The business 
comes back to the normal condition of 7| tons a day. You have 
three R. P. O. cars authorized for the year, each carrying 2J tons 
of mail on an average. You have 1 ton extra for a certain day, say 
8J tons, the normal of 7J tons goes into the three R. P. O. cars, and 
the inspectors ask the railroad covering the route for a 30-foot car, 
which is furnished. The railroad gets credit for the round trip on 
a basis of 12J cents per mile for the number of miles traveled by 
that car for the whole round trip from the point of destination to 
point of delivery and return, whether it is used for mail on the 
return or not. 

Mr. Mack. It would not be a case of a 30- foot extra apartment 
car. The service does not require, for instance, a 30-foot apartment 
car as an extra car on the run. 

The Chairman. What do you mean; that the railroad would not 
have in stock a 30-foot car? 

Mr. Mack. I mean the conditions of the service would not call for 
a 30- foot apartment car as an extra car on the odd day of the week. 
That condition does not exist. It is a full car or load in a storage 
car, or an additional storage car. 

The Chairman. If you have the same compensation whether it is 
a storage car or an apartment car, I do not see where it would make 
any difference to the railroads. 

Mr. Peters. Suppose you had a 30-foot car with all the mail it 
would carry and two or three truck loads extra that had to go into 
the baggage car. Would that go as closed pouch service or would 
it have to go in the additional 30-foot car? 

Mr. Stewart. Under any condition you would send that as closed 
pouch. 

Mr. Mack. I was going to inquire a moment ago about a particular 
case that occurs with some frequency on our own lines, to see what 
the application of the new plan would be to that case. For instance, 
the morning train from St. Louis to Kansas City has ordinarily one 
60-foot mail car and it is not infrequently the case that it has a 
second mail car, a 60-foot baggage car and half of the regular 
baggage car on the train loaded. I was wondering how that would 
be paid for. That is an actual condition that occurs with consider- 
able frequency, the authorization, covering, of course, the first car 
only. 

Mr. Stewart. Just one line under authorization? 

Mr. Mack. Yes. I was wondering how that condition would be 
met on a space basis. 

Mr. Stewart. How frequently would that extra service occur? 

Mr. Mack. Quite frequently. It depends entirely on connections. 
It is not due to the difference in the days of the week, but depends 



676 KAIL WAY MAIL PAY. 

on connections. That applies on other lines as well as the one I 
have mentioned. 

Mr. Stewart. As much as once a week? 

Mr. Mack. Well, not with any regularity. It might occur once a 
week and it might occur twice a week. 

Mr. Stewart. I presume, under Mr. Lloyd's plan, that the extra 
lines would be duly authorized and would be paid for during the 
time that it ran. Under the plan suggested by the department, the 
frequency with which you supplied those additional cars during the 
statistical period would influence the question as to what pay you 
would get for them. If they were regular, or were regular to an ex- 
tent they were said to be needed during that period, you would get 
paid for them as a regular line during the year. That particular 
question, however, I do not think we have considered, as to what 
regularity during the statistical period would warrant an annual 
authorization for an additional line, but that could be fairly de- 
termined. 

Mr. Bradley. Mr. Chairman, you asked General Stewart who 
would initiate the demand for additional space when needed and it 
suggested to me the thought that the basis of this change would be 
better appreciated if we asked a question as to what it is at the pres- 
ent time that initiates the demand for the additional space. 

The Chairman. I think that is very pertinent. 

Mr. Stewart. The conditions of the service are subject at all times 
to careful inspection. It is the duty of the chief clerk of the Railway 
Mail Service, who has charge of the particular line, to travel his line 
frequently and ascertain what those conditions are and make report 
to his superintendent, and if it is shown by those reports that addi- 
tional space is needed, he recommends it to his superintendent and 
his superintendent goes over the question and recommends it to the 
general superintendent and ultimately it comes to the department 
for authorization or disallowance as the facts might warrant. 

Mr. Bradley. Is it not a fact, however, that that simply applies to 
mail-car space that now represents 10 per cent of the total appro- 
priation, and is it not a fact that the initiation for additional space 
at the present time is produced by the volume of the traffic — that is, 
by the weight of the mail — the law making it the duty of the railroad 
company to transport all mail offered, so that the weight of mail 
offered to be dispatched automatically fixes the space that is neces- 
sary for the transportation? 

Mr. Stewart. I hardly follow you there. I do not see just what 
the relation of what you say has with the initiation of the recom- 
mendation for additional space, excepting as it shows the condition 
of the service that I have mentioned. The officers of the department 
are obliged to know the condition of the service ; and if we are need- 
ing more space than is authorized, or if we are using more space 
furnished by the company than is authorized, and that is a habitual 
condition, it is their duty to report it to the department for action. 
Very often the question is brought up by the company itself that the 
department is using more space than is authorized, and it is not 
altogether infrequent that the matter comes to the department in 
that shape before it reaches the department by a recommendation 
from the field officers. There is not much chance for the department 
to go very far wrong on the question of space, because the field 



RAILWAY MAIL PAY. 677 

officers are alert all the while, and it is their duty to know the condi- 
tions and report them; and the agents of the railroad companies are 
alert at watching the conditions, and they bring those conditions to 
the attention of the field officers and often to the attention of the 
department independently, where they think they are not being paid 
for the actual space used. 

The Chairman. General Stewart, by the adoption of Mr. Lloyd's 
suggestion, would there be any greater opportunity for diversion of 
mail than exists to-day under the practical operations of the postal 
department? 

Mr. Stewart. No ; not that I can see. I do not see anything in the 
proposition which would influence that question. 

The Chairman. If I correctly understood Mr. Peters this morn- 
ing, he thought that by such a substitution there would be an invi- 
tation or a greater opportunity for favoritism than exists under the 
present system, without any intentional reflection upon the depart- 
ment in any way. Did I understand you correctly ? 

Mr. Peters. Yes. I was basing my statement on the views that 
Mr. Mack made in discussing the point. Mr. Mack brought out some 
features of that kind and, I think, also Mr. Baldwin. I think Mr. 
Baldwin asked you a question a moment ago, supposing you had 
more mail than could be accommodated in a 30-foot car, and there 
was another mail route almost parallel, running to the same termi- 
nals, and a train leaving at very nearly the same time. Instead of 
calling for additional space on that road where the mail naturally 
goes, could you not divert that over the other lines and fill up those 
cars rather than pay for additional space ? 

Mr. Stewart. The department could do that; but I do not think 
there would be any greater liability to do. that than under the present 
conditions, because I assume that the rules regarding the transporta- 
tion of the mail, the distribution of it, or the allotment to the com- 
panies would obtain under the new plan as obtain now. We do not 
take mail from a carrying company now unless there is some material 
advantage to be gained by the competing company; and as long as 
the carrying company can meet the terms of a competitor it retains 
the mails, and I assume that the same general policy would be pur- 
sued under any plan. 

Mr. Peabody. I think, General Stewart, you misunderstand the 
question. Take the case in point : In the Kansas City depot there are 
two trains standing side by side running between Kansas City and 
Denver, the Santa Fe having one train and the Rock Island another. 
Those trains leave at the same time. The amount of mail offered to 
the Santa Fe is more than can be accommodated in the authorized 
space and the Rock Island on that particular day has unoccupied 
space in its train. The point is, would not that extra mail be taken 
and given to the Rock Island, instead of the department calling on 
the Santa Fe for another car to carry that mail ? 

Mr. Stewart. Well, I think it would. 

The Chairman. Would it not be good administration to do that? 

Mr. Stewart. Yes. 

Mr. Baldwin. Between Chicago and Omaha there are four roads, 
so that in this question of space you would have the question of choice 
of four roads to switch it around. 



678 RAILWAY MAIL PAY. 

Mr. Stewart. We certainly would use the space we had author- 
ized somewhere, if we could. 

Mr. Peters. It is quite natural that the department would take 
advantage of all those points and it is proper that they should. 
Therefore, I asked you the question whether you figured, in apply- 
ing that 25-cent rate and getting it up to a total of $64,000,000 for 
railway mail pay, how much you would be able to economize by those 
consolidations and utilization of space, so that if you adopted this 
basis and those rates, you would not actually pay out $64,000,000, but 
by consolidation you would bring it down to perhaps $55,000,000. 

Mr. Stewart. I did not understand your question when you asked 
it. Of course, there would be the possibility of economizing in the 
administration and without some experience it is impossible to tell 
to what extent you could carry that. 

Mr. Peters. As a result of that, the railroads would be carrying 
greater weight and the weight of mail would be increasing all the 
time without any increase in space or increase in compensation to 
the railroads. 

Mr. Stewart. Yes ; but you must remember this, that the space 
which is fixed on here is much more in excess of what we are using 
now. 

Mr. Peters. You say that it is in excess? 

Mr. Stewart. Yes. 

Mr. Peters. Part of it is based on figures of four or five years ago. 
Things have grown since then. You have added the parcel post? 

Mr. Stewart. No. I am speaking of the apartment-car service, 
which is practically up to date; the railroad companies would start 
out on this plan, receiving more money than for the space we are 
actually using, and it would be perfectly proper for the department 
to use that space as fast as it could without any additional pay. 

The Chairman. And the railroads would not be any losers, because 
they would not be authorized to carry additional cars for which they 
did not receive additional compensation. 

Mr. Peters. No; but they would be carrying cars more heavily 
loaded and not getting any share in the growth of the mail business 
that is going on. Now we do get a share as the weights increase. 

The Chairman. And you get your compensation for four years, on 
a computation four years old? 

Mr. Peters. Yes. Therefore we ask for a weighing every year. 
If such a basis were worked out, the rate per car should be made high 
enough to let the railroads have a reasonable chance at this thing; 
reasonable compensation to overcome the condensation and concen- 
tration of load that the department would make? 

The Chairman. Mr. Peters, I call to your attention this thought : 
That under the computation made, which the department has ex- 
pressed a desire to check and verify, and is not submitted formally, 
but on a basis of 25 cents a car-mile, the transportation companies 
would receive $62,855,294 in the aggregate for R. P. O. 60-foot cars, 
storage cars, 30-foot apartment cars, and 15-foot apartment cars, 
worked down upon the present volume of business. So far as the ag- 
gregate compensation to the transportation companies goes, it is 
immaterial whether it is carried on this line, that line, or the other 
line ; it has to be carried and the Government has to pay for the car- 



RAILWAY MAIL PAY. 



679 



riage. That is simply a matter of apportionment as between the 
railroad companies performing the service. 

(Under date of May 23, 1913, the chairman received a letter from 
Hon. Joseph Stewart, Second Assistant Postmaster General, ex- 
planatory, from an administrative standpoint, of Eepresentative 
Lloyd's suggested plan for payment of transportation of the mails 
on railroads, which letter reads as follows:) 

Post Office Department, 
Second Assistant Postmaster General, 

Washington, May 23, 19 IS. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class 

Mail Matter and Compensation for the Transportation of Mail, 

Congress of the United States. 
My Dear Mr. Chairman : Referring to the proposed plan suggested to the 
committee by Representative Lloyd for payment of transportation of the mails 
on railroads, whereby compensation in the railway post-office and storage-car 
service would be based upon car-mile units for cars of 15 feet, 30 feet, and 60 
feet in length, respectively, and in the closed-pouch service upon a unit of 
miles traveled, and to the informal discussion at the hearings of May 14 of the 
estimate of the cost of service under such plan, prepared by the Superintendent 
of the Division of Railway Adjustments, I have the honor to transmit herewith 
the estimate referred to, with an explanation of the manner of its preparation. 
The estimate has necessarily been based upon such data as were found avail- 
able, and while it is believed to be sufficiently accurate to enable an idea to be 
gained of the probable expenditure under the suggested plan, it should not be 
accepted as a conclusive calculation. 

The following table recapitulates the calculations made: 

Estimate of cost for railroad transportation under plan proposed oy Hon. 

James T. Lloyd. 



Character of service. 



R. P. O.i 

Storage 2 

30-foot apartment. 
15-foot apartment. 
Closed pouch 



Total. 



SECOND ESTIMATE.* 



R. P. 0. 



Storage 

30-foot apartment. 
15-foot apartment. 
Closed pouch 



Total. 



Rate per 
car mile. 



SO. 25 
.25 
.12| 

.06i 



.25 
.25 
.121 

.061 



Amount. 



$31,699,601 
5. 524, 554 

3 20.882,468 
s 4. 748, 399 
4 1,372,821 



64,227.843 



Rate per 
car mile. 



31,699.601 

5, 524, 554 

6 19. 394. 949 

M. 410. 039 

8 1,372,821 



62.401.964 



$0. 22i 
.224 



. 22* 
• 22JL 



Amount. 



$28, 529. 641 

4,972.099 

120,882,468 

i 4, 748, 399 

1,372,821 



, 505, 428 



28,529.641 
4,972,099 

19.394,949 
4.410.039 
1,372.821 



58, 679, 549 



i On basis of car miles of service for 1912 reported by Railway Mail Service. 

2 On basis of car-foot miles of service reported in H. Doc. 105, storage and deadhead. 

3 On basis of seA^en times a week mail service. 

4 On basis of car-foot miles reported in H. Doc. 105 at $0.00435 per car-foot mile, average passenger service 
revenue per car-foot mile reported by railroads. 

5 Same as above, except that apartment car service based on 50 per cent being performed six times a week 
service, and 50 per cent seven times a week. 

s Based on estimate that 50 per cent of apartment car service performed on Sundays. 
" Based on estimate that 50 per cent of apartment car. service performed on Sundays, 
s On basis of car-foot miles reported in H. Doc. 105 at $0.00435 per car-foot mile, average passenger service 
revenue per car-foot mile reported by railroads. 



680 EAILWAY MAIL PAY. 

The method of ascertainment of the different items contained in the foregoing 
table was as follows: 

EAILWAY POST-OFFICE CAB SEEVICE. 

The car mileage of full railway post-office cars for the fiscal year 1912 was 
reported to have been 126,79S,405 car-miles. Multiplying this car mileage by 
25 cents and 22$ cents a car-mile, the former rate being the average car-mile 
revenue for passenge service of the country and the latter rate being that rate 
less 10 per cent, the result is $31,699,601 and $28,529,641, respectively, as the 
probable cost of full railway post-office car service. 

APARTMENT RAILWAY POST-OFFICE CAR SERVICE. 

The suggested plan provides for two standard sizes of apartment postal cars, 
15-foot and 30-foot. In the actual operation of the service there are apart- 
ments in use ranging in length from 7 feet to 30 feet. Statistics as to the daily 
route mileage of apartment cars of the various lengths were compiled in the 
department about a year ago, upon which the estimate of the probable cost 
for this kind of service was based. The process was to first ascertain from 
the data the daily route-foot miles of all lines of apartment cars. Inasmuch 
as but two sizes of cars are proposed to be furnished under the plan, namely, 
15-foot and 30-foot, cars of the minimum length and up to 17 feet in length 
were considered as 15-foot cars, and those 18 feet or more in length were 
considered as 30-foot cars, and the route-foot miles increased or decreased 
accordingly. From the daily route-foot miles the annual car mileage was then 
ascertained by the following formula : The daily route-foot miles multiplied by 
2 equals the daily car-foot miles. This product divided by the length of car 
(15 or 30 feet, as the case may be) and multiplied by 365 (for seven times a 
week service) or 313 (for six times a week service) equals the annual car- 
miles. Multiplying the car-miles thus obtained by 12$ cents (for 30-foot cars) 
and 6^ cents (for 15-foot cars) produced the estimated cost of apartment postal 
car service. 

STORAGE-CAR SERVICE. 

Estimated cost based on the car-foot miles for this class of service (includ- 
ing deadhead cars) reported in House Document 105 as having been operated 
during the month of November, 1909 (110,491,094 car-foot miles), extended to 
embrace a year's operation (1,325,893,128 car-foot miles) reduced to car miles 
on a 60-foot basis (22,098,218 car-miles) at same rates as full railway postal 
car service, viz, 25 cents and 22$ cents per car-mile, producing $5,524,554 and 
$4,972,099, respectively. 

CLOSED-POUCH SERVICE. 

The estimated cost of the closed-pouch service was based upon the car-foot 
mile statistics for this class of service reported in House Document 105 for the 
month of November, 1909 (26,299,260 car-foot miles), extended to cover the 
operation for a year (315,591,120 car-foot miles). The cost was figured at the 
rate of 4.35 mills per car-foot mile, the rate of revenue per car-foot mile re- 
ported by the railway mail pay committee as being received from all passenger 
service. This produced $1,372,821 as the estimated cost of closed-pouch service. 
Yours very truly, 

Joseph Stewart, 
Second Assistant Postmaster General. 

Mr. Peters. And that would depend on the character of the service 
they gave? 

Mr. Baldwin. At one time I was complaining to an officer as to 
the meager pay on the smaller roads that furnished apartment cars 
on the basis of the present space. He said that is not a correct state- 
ment on the basis of space, and he said if he were paying for the 
space we would not use any more than half as much as we do now. 

The Chairman. Let me ask you in that connection, Mr. Baldwin, 
if in the operation of your road you would take the ipse dixit or the 
impression of a single employee and assume that to be determinative 
and change or modify your general policy because of that individual 
statement ? 



KAILWAY MAIL PAY. 681 

Mr. Baldwin. No. It would depend a great deal on who it was 
and his experience. 

The Chairman. And also on his ability to demonstrate to you the 
soundness, before you would authorize it being put into operation? 

Mr. Baldwin. Yes. 

The Chairman. Well, let us deal with this the same as you gentle- 
men deal with your transportation questions. That is what we are 
trying to do. 

Mr. Baskerville. Say, for instance, a line on which we have a 
mail and baggage car every day, for instance, where you have a 
30-foot car authorized. Under Mr. Lloyd's plan, what would you 
authorize? You claim you can not get in our 30-foot car all the 
mail, and you put part of the mail back in our baggage car every 
day. 

Mr. Stewart. The working mail? 

Mr. Baskerville. It does not make any difference whether it is 
working mail or not? 

Mr. Stewart. Yes. It would make a difference whether it was 
working mail. 

Mr. Baskerville. Under Mr. Lloyd's plan? 

Mr. Stewart. Yes; it would. 

Mr. McBride. They would authorize a 60-foot car under that 
statement of fact? 

Mr. Stewart. Perhaps I do not understand Mr. Lloyd's plan 
fully. I was not here when Mr. Lloyd gave it. Mr. McBride says 
he thinks that would justify a 60-foot authorization. 

Mr. Peters. If it was not working mail you would pay closed- 
pouch rates on what was in the baggage car. 

Mr. Baskerville. I do not think you would pay closed-pouch 
service on an R. P. O. train. Any train that carries postal clerks is 
an R. P. O. train. 

Mr. Lloyd. According to my plan, if you use a 30-foot car you 
pay for it ; if you use a 60-foot car, you pay for it. I would put it 
all in one car, and if you need a 60-foot car I would put it in a 60- 
foot car and pay for it. Candidly, what I am aiming to do is to 
take away from the department everything that can be taken from 
it, so that there will be no ground for misunderstanding between 
the railroad companies and the department. I want to avoid the 
friction that exists between the two. If you can not get the mail in a 
30-foot car, you must put in a 60-foot car and pay for it. 

Mr. Bradley. I think the principal difficulties with that plan are 
the administrative features. General Stewart, in speaking of a 
hypothetical case, said that if a case were presented to the depart- 
ment where they were running a 30-foot car and needed more space, 
that the department would, of course, authorize it as promptly as 
possible. Now, would not the first attitude of the department be 
against that authorization, and properly so, to protect the interest 
of the Government? 

The Chairman. Why, if the mail accumulated and was not de- 
livered, would they not be criticized right away by the American 
people for poor administration? 

Mr. Bradley. The question is, Would it accumulate? Would not 
the officers of the department say to the field officers, have you 



682 RAILWAY MAIL PAY. 

used every means of getting that mail into the 30-foot car already 
authorized? 

The Chairman. Would not that be proper ? 

Mr. Bradley. Yes. However, that brings us back to the field 
officer. The case presented is that there is a 30- foot car authorized 
and there is a surplus of mail; the railroad officer says to the field 
officer, you need 30 feet additional car space, and the field officer 
says, " Oh, no; we only need 15 feet." There is a weakness in the 
plan ; that is to say, the field officer might be competent to state his 
necessity, but he is not willing to admit the operating necessities that 
affect the railroad company. The department ought to have a repre- 
sentative to ask for precisely what it needs, if the railroad company 
can fix the rate, but inasmuch as Congress, or the law, fixes the rate, 
then it is important that both sides have some protection against each 
other, the department against the undue demands of the railroad 
company and the railroad company against the undue demands of the 
department. 

The Chairman. Then all your criticism against the plan would be 
abolished if there was but the one unit, a 60- foot car. In other 
words, if there were not any other cars than a 60-foot car and all 
compensation was based on a 60-foot car, and whenever any mail 
was carried outside of each full 60-foot car, whether it was a pouch, 
or a ton or 100 tons, the railroads would receive compensation for 
that 60-foot car. Is not that true? 

Mr. Bradley. That is true if it were practicable. 

The Chairman. Well, that is a hypothetical case. Your objection 
is not to the plan proper, but it is to the practical operation of it, 
as I understand. Yet, if the department calls for 15 feet, it can not 
call for 10 or 5. If it needs 5, it has to call for 15, the railroad 
receives compensation for 15, or whatever measure is adopted, and 
the railroads, so far as compensation is concerned, get the best of 
it all the way through, providing the compensation determined upon 
is based on the assumption as to the authorization being fully used 
during the latter period of service. Is not that true ? 

Mr. Bradley. As I understand you, I think it is. 

The Chairman. So that there would be an actual reversal of 
existing conditions. Now, you are at a disadvantage in the fact 
that you do not get compensation for the growth of the mail. All 
growth of the mail would be decidedly to your advantage, because 
you would get compensation on the vacant space up to the time it is 
utilized, and then immediately a new vacant space must commence 
because of the additional authorization required. I must say; that 
if I were the representative of a railroad, as between the existing 
conditions, this plan would appeal to me very strongly. 

Mr. Bradley. My personal opinion is that theoretically it is very 
attractive indeed. 

Mr. Peters. Do you think it would be possible, in connection with 
this tentative rate, that that rate could be left out of your law and 
the rate filed with the Interstate Commerce Commission, and not 
changed except by an order of the commission, after investigation 
or ruling as to its reasonableness ? 

The Chairman. Suppose that plan were adopted. Would not the 
same difficulty exist that you gentlemen have advanced here in ref- 



RAILWAY MAIL PAY. 683 

erence to the compensation that you would receive; that is, a dif- 
ference of opinion between the departmental representative and 
your own representative as to the amount of space that was used? 
Would that simplify it any? 

Mr. Peters. No. If you filed your rate with the commission your 
rate is not subject to change every year when your appropriation bill 
is made, but your rate, being filed with the commission, like any 
other rate, would only be changed after investigation and determi- 
nation as to its reasonableness. 

The Chairman. It would be changed at any time there was a dis- 
pute between the departmental representatives and the railroad rep- 
resentatives, and a hearing held, and the Interstate Commerce Com- 
mission reached a conclusion. It is subject exactly to the same 
change, it seems to me, and I do not see how by the adoption of that 
plan you would avoid these difficulties that you have suggested as 
arising under the adoption of Mr. Lloyd's suggestion. 

Mr. Peters. At the present time whenever your appropriation bills 
come up the question of rate and total pay is the subject for legisla- 
tion. 

The Chairman. It would not be if we were able to work out a 
scientific, just, equitable, and demonstrable plan as to what was fair 
compensation. 

Mr. Lloyd. What we want to do is to get it settled, so that it will 
not come up every year. 

Mr. Peters. We would all be very thankful to see it settled. 

Mr. Robinson. Unfortunately I was not present when either of 
the two plans were submitted, and I do not know if it has been 
brought out as to what effect it would have on the short lines. Take, 
for example, my road, which handles only 200 pounds a day. Would 
the department order a 15-foot car, or would they throw the mail into 
the pouch service ? 

Mr. Lloyd. What do you use now ? 

Mr. Robinson. We have no assignment of a car now. For ex- 
ample, we have a route agent in charge of the service, and, of course, 
we get no compensation 

Mr. Stewart. Are you carrying about 200 average daily weight ? 

Mr. Robinson. Yes. 

Mr. Stewart. That would be closed-pouch service? 

Mr. McBride. Do you have a clerk on there now ? 

Mr. Robinson. Yes. 

Mr. McBride. In the distributing car ? 

Mr. Robinson. Yes. 

Mr. McBride. It would probably continue. 

Mr. Robinson. We get no compensation for the car, because we do 
not use a 40-foot car. 

Mr. Bradley. You have a mail-apartment car? 

Mr. Robinson. We have a mail-apartment car, and we handle less 
than 200 pounds a day. 

Mr. Lloyd. The proposition suggested tentatively was to have three 
kinds of cars, a 60-foot car, 30-foot car, and a 15-foot car. If the 
department used a 30-foot car you would get paid for a 30-foot car, 
and if they used a 15-foot car you would get paid for that. 

Mr. Robinson. But the question which I want to bring out now is. 
Would the department think it necessary to have a 15-foot car to 



684 eailway mail pay. 

handle 200 pounds of mail a day, or would they throw it into the 
pouch service? 

Mr. Lloyd. If they did you would get paid for pouch service only. 
There have been two plans suggested with reference to the pouch 
service, one to use something like the present electric system, which 
provides for so many cents per mile just the same as the other — say, 
for instance, 3 cents a mile where you use the pouch service. 

Mr. Kobinson. That is easily ascertained, what it would be on so 
many miles. 

Mr. Lloyd. That would be my idea of the best way to do it. 

The Chairman. Mr. Peabody, right after recess you made a sug- 
gestion to me which I would like to have you repeat now, in order to 
get it into the record, as a possible solution of the problem we have 
before us. Would you kindly state for the information of the com- 
mittee what that suggestion was? 

Mr. Peabody. It occurred to me as a possible solution, if it was 
workable or permissible under the law in the first place and it could 
be adopted. I have not figured on this as to the results, but I thought 
it might be well to talk it over. The proposition is to treat the mail 
*he same as you would treat any commercial business, the department 
being the shipper. I see no reason why the mail can not be treated in 
that way. The Government has a certain commodity to ship ; they 
may ship that commodity either on a basis of 100 pounds or on the 
basis of the carload, dividing it, if you please, into various carloads 
of 15, 30, and 60 feet, or closed-pouch service, having that proportion 
as a unit — it makes no difference what the unit is, whether it is 100 
pounds or a portion of a car — the department to designate the unit 
that they want to ship. They say they have so much to ship every 
day, on some roads two cars, other roads one car, other roads half a 
car, and other roads a quarter of a car, and on other roads closed- 
pouch service, but the department to designate the service that they 
want from the railroad companies, and having designated that, let 
the railroad companies exercise their present prerogative of naming 
the rate as to what the compensation shall be. 

The Chairman. You mean in all services outside of the mail, 
their present prerogative? 

Mr. Peabody. Yes ; as to initiating what the rate shall be. If that 
rate is deemed by the shipper, which in this case is the Post Office 
Department, to be reasonable, they can accept it and make up their 
budget and recommend to Congress an appropriation on that basis. 
If they do not deem it reasonable, they can refer it, the same as any 
other shipper, to the proper tribunal for determining what the rate 
shall be. That gives the railroad the opportunity of appearing be- 
fore the tribunal to sustain their rate, if they are able to sustain it 
and the commission will authorize it; if not, the commission will 
determine what a reasonable rate will be, and that rate, as determined 
by the commission, will be used in their recommendations for a 
budget to be presented to Congress. I was wondering whether or 
not that would be feasible. Of course that would take out of the 
hands of Congress all practice of making the rates. 

(To further elucidate the thought expressed by Mr. Peabody in the 
foregoing paragraph and the second next preceding, the following 
correspondence is, by direction of the chairman, here inserted:) 



RAILWAY MAIL PAY. 685 

Chicago, May 22, 1918. 
Hon. Jonathan Bourne, Jr.. 

Chairman of the Joint Committee on Postage on 

Second-Class Mail Matter and Compensation for 

Transportation of Mails, Washington, D. C. 

Dear Sir : Referring to the suggestion made by the writer at the hearing in 
Washington last week as to the possibility of putting the transportation of the 
mails upon a strictly commercial basis, bringing it under the administration of 
the same rules that govern all other transportation, it has occurred to me that 
the proposition was not as clearly stated as it might and should have been. 

The Congress of the United States has asserted its right to regulate the inter- 
state commerce of the country. In the assertion of that right it has prescribed 
that all transportation service shall be performed by the railroads at reason- 
able rates, and for the purpose of insuring that this regulation in common with 
other requirements shall be properly observed, it has created an expert com- 
mission, giving to it the power not only to determine whether or not existing 
rates are unreasonable, but also to prescribe, after investigation, what are 
reasonable rates, and to direct not only that such rates shall be charged in the 
future, but to award reparation to shippers on rates charged which may be 
found to have been unreasonable. Under this scheme of regulation the rail- 
roads initiate the rates and file them with the Interstate Commerce Commission, 
which rates are subject to investigation as to their reasonableness by the com- 
mission, either upon complaint of the shipper or of their own motion. If the 
commission finds them to be reasonable, no change is made ; if found to be un- 
reasonable, the commission proceeds to determine a reasonable rate, which rate 
is prescribed for a specified term and must be charged on all shipments made 
thereunder. 

There is nothing inherent in the transportation of the mails that, from a 
transportation standpoint, distinguishes it from any other commodity. The Post 
Office Depnrtment is a snipper, having a commodity which it desires to have 
transported between various points. It can predetermine with reasonable cer- 
tainty the amount it will have to transport, and may make a tender of its 
business upon the space or weight basis, as may be preferred. The carriers can 
then name their rate, filing some with the Interstate Commerce Commission. 
If such rate is satisfactory to the Post Office Department, no further action is 
needed except to make up a budget for the report to Congress as to the amount 
of the appropriation needed for the transportation of the mails. 

If the rate named by the carriers shall be deemed by the Post Office Depart- 
ment to be unreasonable, it can appeal to the Interstate Commerce Commission, 
the authority created by the Congress for the determination of this exact ques- 
tion, which authority will proceed to determine and prescribe what is a reason- 
able rate, which rate will then govern the transportation of the mails for at 
least a period of two years, and thereafter until changed. This procedure would 
seem to be the most logical and ought to be the most satisfactory method that 
could be adopted. The determination of a reasonable rate is neither a legisla- 
tive nor administrative function. It is purely a judicial question. 

In your efforts to obtain information which would enable you to arrive at 
some conclusion in the matter, you have held many hearings, but a careful 
reading of the testimony presented fails to disclose any sufficient evidence to 
enable anyone to say what is a reasonable rate to be paid for the transportation 
of the mails. Such evidence as has been submitted is practically ex parte, and 
therefore inconclusive in the solution of such a question. It is equally certain 
that Congress neither has nor can have such evidence before it as will permit 
of any intelligent or just conclusion of the matter. 

As already stated, the determination of a reasonable rate is purely a judicial 
function, and, recognizing that fact, the Congress of the United States has 
wisely designated a tribunal for this very purpose, authorized to pass upon this 
very question, and it would seem to be wise, therefore, both on the part of the 
railroads and the United States authorities to submit the question to this 
tribunal, that no injustice to either party may be done. 

The entire subject is one that is too large, too complicated, and too vital 
to all parties to be determined otherwise than by a most careful investigation 
by the Interstate Commerce Commission. That body, by reason of its long 
experience, has become expert in the matter of rate making, and while the 
railroads have frequently been unable to agree with its conclusions, the 
writer nevertheless believes that substantial justice will be more nearly accom- 
plished by pursuing the method outlined above than by any other means. 

49396—14 51 



686 KAILWAY MAIL PAY. 

An additional reason why the question of the rate to be charged for the 
transportation of the mails should fall within the purview of the Interstate 
Commerce Commission is the varying transportation conditions of the different 
parts of the country. Speaking broadly, the United States is commercially 
divided into three transportation divisions, which are operated under different 
conditions. The lines serving the territory north of the Ohio and Potomac 
Rivers and east of the Mississippi, known as Trunk Line and Central Associa- 
tion Territory, are governed by the official classification; the territory south 
of the Ohio and Potomac and east of the Mississippi is governed by what is 
known as the Southern Classification ; while the lines operating in the terri- 
tory west of the Mississippi River are controlled by the Western Classification, 
all of these classifications varying greatly in their terms and conditions. These 
different classifications are necessitated because of the diverse transportation 
conditions existing in these territorial sections, and, although repeated efforts 
have been made to unify them, they have not as yet been successful. It is 
not unnatural to infer that in a territory, like group 2 of the Interstate Com- 
merce Commission territorial divisions, embracing New York, New Jersey, 
Pennsylvania, Delaware, and Maryland, with a traffic density of nearly 
3,000,000 ton-miles per mile of road, a lower rate may possibly be justified 
than one applicable to group 8, comprising the States of Missouri, Arkansas, 
Oklahoma, Kansas, and Colorado, with a density of less than 6,000 ton-miles 
per mile of road. 

It is such considerations as these that led to the suggestion of bringing the 
rate question, so far as it applies to the mails, under the same regulative 
control as are all other transportation services. Congress may well and should 
define with exactness the unit of service, such as the whole car, one-half car, 
and one-quarter car for the general service and the car-mile for the closed-pouch 
service, in case the space basis is adopted, leaving to the Post Office Department 
to determine the frequency of the service, thereby permitting a discretionary 
adjustment as between economy and efficiency, but, as it seems to me, it would 
welcome any plan which would relieve it of the annual discussion over the 
rate of pay to the carriers of the mail. As already stated, the floor of Congress 
is neither the logical nor possible place for the equitable settlement of such a 
question. 

Yours truly, Jas. Peabody, Statistician. 

May 26, 1913. 
James Peabody, Esq., 

Statistician, Atchison, Topeka & Santa Fe Railway System, 

Railway Exchange, 80 East Jackson Boulevard, 

Chicago, III. 

Deae Sib : Your favor of the 22d received and contents noted. 

Your conclusions, based on the hearings held by our joint committee as to 
the lack of evidence to demonstrate what is a reasonable rate to be paid for 
the transportation of mail, is quite likely correct, but certainly the joint com- 
mittee is in no manner to blame. No committee has ever given a larger oppor- 
tunity to make out a case than the transportation companies have received 
from our committee. It is evidently your opinion, according to the terms of 
your letter herein acknowledged, that the railroads have failed utterly; yet, 
after such a determination, you propose that the railroads shall be given the 
power to name the rate that shall be charged until declared unreasonable by 
the Interstate Commerce Commission. How could you defend the joint com- 
mittee if it recommended to Congress that the power to make the rate to be 
charged be delegated to the railroads until declared unreasonable by the Inter- 
state Commerce Commission when, after many months preparation and several 
months' hearings, according to your own statement, you have been unable to 
demonstrate what a reasonable rate would be? If you and other specialists 
in rate making are unable to demonstrate a reasonable rate, then, necessarily, 
an arbitrary rate must be adopted, in which event, it seems to me, it is much 
better that the representatives of the people, the Post Office Department, and 
the railroads, namely. Members of Congress, shall declare what the arbitrary 
rate shall be than delegate that power to either the postal department or the 
railroads themselves. 

I am herein simply expressing my own individual views, and in no manner 
attempting to express those of the joint committee, but would appreciate your 
reply to my view. 

Yours very truly, Jonathan Botjbne, Jr., 

Chairman. 



RAILWAY MAIL PAY. 687 

Chicago, June 3, 1913. 

Hon. Jonathan Bourne, Jr., 

Chairman Railway Mail Pay Committee, 

Washington, D. C. 
Dear Sir : Acknoweldging receipt of your favor of May 26. While there 
is no doubt that the railroads have been given large opportunity for the dis- 
cussion of the question, I doubt if any of them had any idea that they would 
be called upon to demonstrate what was a reasonable rate of pay for the 
transportation of the mails. They expected to reply, and their efforts were 
mainly directed to replying to Document 105, of the Postmaster General, and 
I think you will agree with me that not only did they totally disprove the 
statements contained in that document, but also established the fact that the 
present pay received by them for the transportation of the mails was inadequate. 
I think you will also agree with me that with the exception of the Second 
Assistant Postmaster General, who seemed obsessed with the idea that the 
Government was a preferred shipper and therefore entitled to lower rates than 
other shippers, it was the universal sentiment at the hearings that the rail- 
roads should receive a reasonable rate for the service they perform, but up to 
the time of the adjournment of the last hearing there had been no sufficient, 
nor indeed any considerable evidence offered as to what would constitute such 
reasonable rate. The omission on the part of the railroads to produce evidence 
in this particular may have been their fault, but that they considered that they 
were not expected to do so is evident from the composition of the committee 
having the case in hand, the immediate members of which, with perhaps a sin- 
gle exception, being practically unfamiliar with the data required to maintain 
such a proposition. It was easy to disprove the statements of Document 105, 
nor was it difficult to show that the present compensation paid the railroads 
for the transportation of mails was inadequate, but the proposition as to what 
would constitute a reasonable rate for such service presents an entirely dif- 
ferent question, and one that can only be properly solved through the medium 
of a judicial inquiry. It was for this reason that at the close of the last 
hearing I made the suggestion, which was designed to bring the case before 
the Interstate Commerce Commission, the tribunal created by Congress for the 
determination of that exact question. 

The form in which the proposition was submitted did not contemplate putting 
into the hands of the railroads any power to determine the rate which should 
be charged for the transportation of the mails irrespective of its reasonable- 
ness, but only followed the line of present practice under the law so as to have 
the case determined by the Interstate Commerce Commission. That tribunal, 
as it exists, has no power to initiate a rate, but it has the power, when once 
a rate is made, either of its own motion or on complaint, to investigate and 
determine what is a reasonable rate to be charged thereafter. My thought 
was to have the railroads make a rate to become effective after such time as 
would give the commission opportunity for action, say, six months or a year, 
that tribunal to immediately proceed with such inquiry and determine the 
result. It might perhaps be better for Congress to specifically direct the com- 
mission to take such action without the preliminary naming of a rate by the 
railroads. That would be immaterial, the main thing to be accomplished 
being the submission to and determination by the commission of a reasonable 
rate for the transportation of the mails. 

I am unable to agree with your conclusion that " If you and other specialists 
in rate making are unable to demonstrate a reasonable rate then necessarily an 
arbitrary rate must be adopted." There is no such thing as a reasonable rate 
per se, nor is such a rate susceptible of mathematical demonstration. It is 
wholly a judicial question, to be determined by legal authority, after full hear- 
ing. The question of railway-mail pay is too important for the people and too 
vital for the railroads to be left to the arbitrary action of any body. All other 
rate questions, many of them even more important for the people as well as 
vital to the railways, have been removed from the zone of arbitrary action and 
brought under proper control. As I have before stated, the railroads can not 
always agree with the Interstate Commerce Commission as to the result 
reached by that body, and in many cases during the past years have felt that 
the commission has failed to appreciate the full force of attendant conditions, 
but I think the railroads believe that regulation, even if at times mistaken, is 
better than chaos, and that the commission, with its larger experience, is com- 



688 KAIL WAY MAIL PAY. 

ing into a better knowledge of all the ci renin stances, and has become better able 
to accomplish approximate justice than can be expected as the result of any 
nonjudicial inquiry. 

Yours truly, Jas. Peabody, Statistician. 

The Chairman. Is it your idea, under this suggestion, that a sepa- 
rate rate would be made for each one of the 795 railroads and a 
separate rate on each one of the over 3,400 routes, which I under- 
stand you have to-day? 

Mr. Peabody. I think likely that the railroads could get together 
in time and agree upon a uniform rate. Perhaps it might be neces- 
sary to make two rates, one for the East and one for the West, on 
account of the density of the traffic, which is always of consideration 
in making rates, but that is a detail to be met by the railroad com- 
panies ; they have the initiation, and I presume they could determine 
upon a rate, either a uniform rate as to the entire country or as to 
districts, possibly two different rates, applicable to long and short 
routes, but there would be no difficulty, I apprehend, in the railroads 
arriving at a rate at which they would be willing to carry the mail 
offered to them by the department. 

The Chairman. What would be your reply to a criticism that 
might arise in the minds of some people as to possible collusion be- 
tween the departmental representative and the railroad itself ? 

Mr. Peabody. I hardly think that is worthy of any consideration. 
The days of collusion between the shippers and the railroads have 
gone by, and I do not apprehend any trouble on that score. 

The Chairman. You do not imagine there would be any criticism 
of that plan because of that possibility by anyone ? 

Mr. Peabody. I do not think so. 

Mr. Stewart. Would there be a possibility of the department 
getting competitive rates between large points — for instance, like 
Chicago and Kansas City or New York and Chicago ? 

Mr. Peabody. Not at all ; not any more than there is now. There is 
no competition as to rates any longer. There can not be any com- 
petition as to rates. 

Mr. Stewart. No ; because it is fixed by law, but if we should get 
into the open market 

Mr. Peabody. It is fixed by law in the way of freight. The com- 
mission determines what a reasonable rate is. If the rate between 
Chicago and Kansas City is a certain rate and a shipper does not 
like it, the shipper can take it to the commission, and they will de- 
termine what is a reasonable rate. There is no longer any competi- 
tion in rates. 

The Chairman. There is a competition for business? 

Mr. Peabody. Yes. 

The Chairman. And there is competition for the mail business ? 

Mr. Peabody. That same competition would exist then. 

Mr. Stewart. And the competition would be offered the Govern- 
ment under the law. The restrictions of the law do not apply to the 
Government. 

Mr. Peabody. The Government has to-day troops to ship and 
munitions of war to ship; the Government offers them to the rail- 
roads and the railroads make a rate. 



KAILWAY MAIL PAY. 689 

Mr. Stewart. I was asking whether your plan would give the 
advantage to the Government of a competitive rate between points? 

Mr. Peabody. Yes ; if there was any competition in it. 

Mr. Stewart. But you do not think they would compete ? 

Mr. Peabody. I do not think there would be any. It would hardly 
be proper, under the arrangement. I want to make one remark con- 
cerning a point made by General Stewart this morning in regard to 
the difference between the mail compensation and other transpor- 
tation compensation. He thought that because of the advantages in 
the way of charter privileges and power of condemnation, that the 
railroads ought to contribute a portion of their service to the public 
for nothing, or, in other words, to make a less rate on account of 
the mail than is made on freight. I see no reason why there is any 
difference of treatment due a railroad in that regard than there is 
to any other carrier. The department hires a wagon to do service 
just as it hires the railroads to perform service. They would not 
expect a wagon route to deduct anything on account of the peculiar 
service offered, and so far as the charter privileges are concerned. 
We might use, as an illustration, the International Harvester Co., 
which has a charter just as much as a railroad has a charter, and 
I donbt if the Government would consider that they were entitled 
to buy a harvesting machine any cheaper than anyone else. 

Mr. Lloyd. They have no right of eminent domain? 

Mr. Peabody. So far as that is concerned, they have no more rights 
than a wagon. The wagon uses a highway that is provided in the 
same way. 

Mr. Lloyd. That is done by the Government. It is not done by 
any corporation. 

Mr. Peabody. There is no advantage in the eminent domain so 
far as the railroad is concerned except that it furnishes to the 
Government and the people a through route? 

Mr. Lloyd. That is something that is very necessary to give to 
a railroad, but it is giving to a railroad that which is not given to 
anyone else, and, having received that which no one else receives, 
it looks reasonable that they might be willing to give some com- 
pensation for it. 

Mr. Peabody. That is not to the advantage of the railroads gener- 
ally. They pay for everything they get under the eminent domain. 

Mr. Lloyd. Under the eminent domain you are required to pay 
for the property over which your roadbed is made the reasonable 
value of such property. You do not pay any more than the reason- 
able value? 

Mr. Peabody. Theoretically we do not, 

Mr. Lloyd. Theoretically you do not pay a cent more than the 
property is really worth. 

Mr. Peabody. But actually we do. Further than that, the railroad 
does not own it. then. The} 7 simply have the easement ; they can use 
it for that privilege, and when they do not use it for that it goes back 
to the original owner. They simply have the privilege of establish- 
ing a through route for the benefit of the people, and there is no 
compensation that should be allowed on that account. 
• Mr. Peters. There was a decision from the Supreme Court of 
Pennsylvania on that question, which I previously thought was 
from the Supreme Court of the United States. There was a decision 



690 KAIL WAY MAIL PAY. 

from the United States Supreme Court in October, 1876, in the case 
of the Atchison, Topeka & Santa Fe against the United States. In 
that connection I will read a portion of an article from the New 
York Sun under date of April 14, 1913 : 

So recently as October, 1876, the Supreme Court of the United States, in 
Lake Superior & Mississippi Railroad Co. v. United States and Atchison, 
Topeka & Santa Fe Railroad Co. v. United States (U. S. Repts., Supreme Court, 
vol. 93, p. 442), held that the act of Congress providing that a railroad shall be 
"a public highway for the use of the Nation of the United States, free from 
all toll or other charge, for the transportation of any property or troops of the 
United States" decrees to the Government the free use of the road only, and 
not of the rolling stock or other personal property of the company. 

Still later, October 2, 1S83, it is declared, in a Pennsylvania case (Pierce v. 
Commonwealth, 104 Pa., 150, 155 ; 13 Am. and Eng. Cas., 74, 79, per Gordon, J., 
citing Presbyterian Society v. Auburn and Rochester Railroad Co., 3 Hiil 
(N. Y.) 567), that— 

"A railroad company is not public, nor does it stand in the place of the 
public; it is but a private corporation, over whose rails the public may travel 
if it chooses to ride in its cars. 

COMPANY ITSELF PRIVATE. 

" Indeed, we regard it as a misnomer to attach even the name ' quasi-public 
corporation ' to a railroad company, for it has none of the features of such cor- 
porations, if we except its qualified right of eminent domain, and this is because 
of the right reserved in the public to use its way for travel and transportation. 
Its officers are not public officers, and its business transactions are as private 
as those of a banking house. Its road may be called a quasi-public highway, 
but the company itself is a private corporation, and nothing more." 

Those decisions are based on the English law. 

Mr. Peabody. The first case you referred to was because of a land- 
grant road. That was the reason ? 

Mr. Stewart. Those cases express the condition I mentioned this 
morning in what I said on the subject — that in so far as the general 
public was concerned, with reference to the general business, their 
relations are exactly as stated in those opinions, but when they deal 
with governmental matters, carrying the mails, they become agencies 
of the Government, and you will find the opinions read very differ- 
ently in that respect; they say the railroads are performing a gov- 
ernmental function and they are the agents of the Government, 
establishing an entirely different status than that which is named in 
those opinions. 

Mr. Peters. Yet the act of the Interstate Commerce Commission 
has held that there shall be no discrimination ; that the passenger and 
freight traffic shall not make up the loss, if any there be, that occurs 
on account of handling the mail or any Government business. 

Mr. Scott. Is not that based on the premises that the railroads first 
signed the contract? There is nothing in the law that requires the 
railroad companies to carry the mail; but if they do sign a contract 
to do so, then they become an instrument of the Government in carry- 
ing the mail. 

Mr. Stewart. That was the opinion of the Supreme Court in the 
Santa Fe case recently decided, but in the opinion of the United 
States court for the district in which Minnesota is situated, a case 
involving the liability of the company for the loss of registered 
mail the road was carrying (Bankers' Mutual Casualty Co. v. Min- 
neapolis, St. P. & S. S. M. Ky. Co., 117 Fed., 434), the court there 



KAILWAY MAIL PAY. 691 

said that the railroad company was acting as agents of the Govern- 
ment, performing a governmental function, and, regardless of the 
contract made in signing the distance circular, that they were under 
a statutory contract, mentioning the statutes under which the depart- 
ment acts, so that the courts have really gone much further than the 
contract which was involved in the Santa Fe case. 

Mr. Baldwin. Mr. Chairman, Mr. Drake was here all the forenoon, 
and I think his intention was to ask you to incorporate into this 
hearing a memorandum of the hearings of the short-line roads. 

The Chairman. Have you that with you ? 

Mr. Baldwin. Yes, sir. Here is a copy. He has one copy brought 
down to date, which I will ask you to substitute for that, but that is 
what I think he would like to have incorporated into this hearing. 
There are tables in that which have been prepared with a good deal 
of care, and I would like to have that incorporated into the hearing 
to-day. 

The Chairman. This pamphlet shows the difference between the 
short-line and the trunk-line roads, as I understand? 

Mr. Baldwin. It gives a large number of illustrations of the actual 
earnings and the actual space, in comparison with express, on various 
short-line roads. Mr. Drake has one under date of 1912 which em- 
bodies this same thing, and I will ask him to substitute it for that 
one, which is for the previous year? 

The Chairman. This is brought down to date? 

Mr. Baldwin. Yes, sir ; that is brought down to date. 

The Chairman. That will be inserted in to-day's proceedings. 
(See addenda, p. 830, for pamphlet referred to.) 

Mr. Peabody. Just here, I would like to give a little information 
to correct a possible misapprehension and a possible impression 
which exists in regard to the proper rate of compensation for the 
pouch service. Three cents has been referred to here as the com- 
pensation that has been paid the electric lines. I took the oppor- 
tunity just before coming to Washington to segregate our exclu- 
sive pouch mail routes, those that have nothing but pouch mail on 
them, checking the present compensation of those routes and apply- 
ing it to the service performed on those routes, which is exclusively 
pouch service. 

The Chairman. That is on the Atchison system? 

Mr. Peabody. On the Atchison system, and the present compensa- 
tion is 4.386 cents per mile run for that service. 

Mr. Lloyd. Then, in order to give you as much as you now re- 
ceive, you would have to have 4.386 cents. 

Mr. Peabody. Yes ; per train-mile for that service. That embraces 
every exclusive pouch route on our system. 

The Chairman. Have you a statement there, Mr. Peabody, show- 
ing how you have worked out that conclusion as to the compensation ? 

Mr. Peabody. I have just lead-pencil figures, but I will put it 
down accurately and send it to you: 

(Under date of May 24, Mr. Peabody addressed a letter to the chair- 
man, inclosing the statement referred to, which letter and statement 
read, respectively, as follows:) 



692 



BAIL WAY MAIL PAY. 



Chicago, May 24, 1913. 

My Dear Mr. Bourne: In accordance with my promise I am handing you 
herewith a statement giving the details of all of the exclusive closed-pouch 
routes operated on the Santa Fe, 38 in number. We have considerably many 
routes which embrace both apartment-car and closed-pouch service, but inas- 
much as there is no way of dividing the total pay of the route between the 
closed-pouch and the other service we can not, of course, use the data in arriv- 
ing at the present compensation paid for closed-pouch service. 

You will notice that the total run of service on these closed-pouch routes 
aggregates 950,415 miles annually, the revenue for the service amounting to 
$41,680.24. This makes an average pay per mile run of 4.386 cents, which 
slightly varies from the figures I stated at the meeting, for the reason that 
some few routes were omitted in the computations I had with me in Washing- 
ton, and which I apprehended was the case at that time. 
Yours very truly, 

Jas. Peabody, Statistician. 

Statement of exclusive closed-pouch routes on Santa Fe system, showing miles 
run, revenue, and average revenue per mile run. 



No. of 


Length 
of route 
(miles). 


Total 
service 


Annual 


No. of 


Length 
of route 
(miles). 


Total 

service 


Annual 


routes. 


(miles 
per year). 


mail pay. 


routes. 


(miles 
per year). 


mail pay. 


150053 


12.33 


18,002 


$522. 40 


155108 


37.36 


23,387 


$1,601.41 


150070 


76.30 


111,398 


3,261.82 


165027 


93.88 


58, 769 


4,013.37 


150104 


27.71 


17,346 


1,183.32 


167001 


18.85 


55,04? 


1,659.93 


150108 


43.74 


27,381 


1,869.88 


167008 


12.86 


8,050 


548. 48 


150109 


18.60 


13,578 


790.02 


167010 


27.42 


34,329 


1,217.31 


150116 


10.20 


7,446 


470. 93 


167013 


18.67 


11, 687 


803. 70 


150117 


9.60 


6,009 


450. 18 


167017 


5.83 


3,649 


274.88 


150160 


17.39 


10,886 


762. 66 


168009 


22.62 


14, 160 


967. 00 


153021 


10.14 


29, 609 


462. 16 


168016 


64.34 


93,936 


2,747.97 


153031 


15.90 


19,907 


966. 86 


176013 


26.20 


16,401 


1,047.92 


155005 


16.84 


35, 128 


950. 28 


176025 


5.86 


4,278 


250. 21 


155034 


34.70 


21, 121 


1,661.43 


176038 


17.80 


11, 143 


826. 78 


155055 


20.57 


25, 753 


881.93 


176050 


28.55 


20, 841 


1,222.65 


155065 


26.33 


16,482 


125. 60 


176057 


21.00 


28, 474 


1, 339. 54 


155066 


12.02 


7,524 


515.56 


176085 


29.35 


21, 425 


1, 455. 46 


155072 


25.67 


32, 137 


1,097.39 


176086 


10.87 


31, 740 


464. 69 


155101 


16.40 


11,972 


685. 71 


176092 


2.12 


5,308 


90.63 


155103 


23.39 


14, 642 


999. 92 


176119 


6.95 


15, 220 


297.31 


155104 


23.85 


29, 860 


976. 83 


176132 


26.84 


36,395 


1,216.12 


456, 181 


19,634.88 


494,234 


22,045.36 



Total miles run 950, 415 

Total revenue $41, 680. 29 

Average revenue per mile run cents. . 4. 386 

Mr. Peters. I notice Mr. McBride's calculations were based on 
the one unit of the 60-foot car, half car, quarter car, the half car 
being one-half rate and the one-quarter car being the one-quarter 
rate of what I would assume was the full rate for the whole car, 
but it seems to me that the principle of wholesale and retail should 
apply in fixing rates for the smaller units, that your 15-foot car 
ought not be just one-fourth of the rate for the 60-foot car, but 
should be a little bit higher. 

Mr. Lloyd. Say, 25 cents, 15, and 10? 

Mr. Peters. 25, 18, and 10, something like that, or 25, 15, and 8. 

The Chairman. On the wholesale and retail principle, you can 
buy cheaper at wholesale than retail, can you not ? 

Mr. Peters. It is the principle applied on the railroads on car- 
loads and less than carloads of freight, and your larger unit for the 
60-foot car, the concentrated load, is supposed to be handled more 
economically than the smaller unit. 



RAILWAY MAIL PAY. 693 

The Chairman. In that connection, that is very interesting and 
illuminating. Now, would you state specifically your accurate rea- 
sons why, in your opinion, the compensation rate should be higher 
per foot basis on the 15 than on the 30 foot car, and higher on the 
30-foot than on the 60-foot car? 

Mr. Peters. Well, you have to haul the whole car. We do not 
have a car 15 feet long, but we have a combination car; so, the 15- 
foot apartment would be one part of a triple combination car with a 
section of 15 feet for mail, 15 feet for baggage, and 30 feet for 
passengers. 

The Chairman. But you get your compensation, or presumably so, 
for that part of the car used for passengers and that part of the car 
used for baggage ; so, why should the Government pay an additional 
compensation for the 15 feet they use? 

Mr. Peters. That is a special equipment, more expensive, and has 
to be kept for this special service, and you can not get the mileage 
out of that car in general service that you would otherwise if it was 
not kept for that particular purpose of handling the mail. 

Mr. Peabody. Furthermore, supplementing Mr. Peters's remarks, 
it usually occurs that on a route when 15 feet is called for by the 
department or 20 feet is called for by the department, that the 
balance of the car is not available for the service of baggage and 
express ; so that, in effect, we would be obliged to haul a 60-foot car, 
simply providing space for the mail to the extent of 15 or 30 feet, as 
the case might be, and still put other cars in the train to carry the 
baggage and the express. 

Mr. Peters. I had that same proposition present itself last Febru- 
ary, to put on mail cars out of the Pennsylvania station for starting 
the service out of the new post office. That meant, if we ran our 
combined cars out of the Pennsylvania station, we would still have 
to have a 60-foot car on every one of our trains to take our express 
and baggage. 

The Chairman. I assume your contention is that the general busi- 
ness would not correlate with the mail increase, so that you would be 
able to get some payment in the utilization of the car. 

Mr. Peters. No; it is requiring special equipment for that pur- 
pose, and therefore the smaller unit car is more difficult to keep 
regularly occupied and get more mileage out of it than the larger 
car, especially those used sometimes for storage. 

Mr. Safeord. That condition obtains largely in the South, where 
we have to have separate cars for the races. It is frequently the case 
that putting a mail apartment car in a train involves the hauling of 
a full car. We have our equipment arranged to carry a combination 
car, and that car takes care of the baggage and the colored people. 
Consequently it involves a 50 or 60 foot car in the train. 

Mr. Mack. With a 30-foot car that is quite a common occurrence. 

Mr. Eowan. It occurs frequently on our line that we have to put 
on a whole car, especially in the suburban territory. Under the full- 
crew bill, if we handle baggage we have to have a baggage-master, 
and on lots of local trains we might run a train a whole week and 
not take a single piece of baggage, and we could not possibly use the 
baggage end. In our suburban territory we only handle baggage on 
designated trains, and on those trains we have a baggage-master; so 



694 RAILWAY MAIL PAY. 

that when the Post Office Department, as they do to-day, asks for 
a 30-foot apartment car, we are forced to put on an apartment car 
with the baggage end vacant, not used for any purpose at all. 

The Chairman. How much time do you ordinarily have, under 
notification from the Post Office Department, as to additional cars, 
in hours? 

Mr. Rowan. We usually have a week or 10 days' time. 

The Chairman. How about the storage car? 

Mr. Rowan. Sometimes they have 15 or 20 minutes before the 
train goes out. 

The Chairman. That is all? 

Mr. Rowan. Yes, sir. 

The Chairman. You would not have an opportunity to drum up 
additional outside business in order to fill that car? 

Mr. Rowan. No, sir. 

Mr. Peters. I think in the statement that Mr. Wade presented of 
the case on the Erie Railroad, he showed where they had to run 
extra cars on nearly every train where they were running apartment 
cars because the baggage end was not sufficient to take cars of the 
extra baggage, while the 28-foot apartment car took care of the mail. 
This is bearing on the point I raised awhile ago as to the higher rate 
on the smaller apartment than on the full car. 

The Chairman. Now, is it the opinion of you gentlemen repre- 
senting the railroads of the country that you have been given every 
opportunity of appearing before the committee to present your 
views ? 

Mr. Peters. We do feel so, and we appreciate your consideration, 
kindness, and patience. 

The Chairman. Do you think you will require any further time in 
order to present any additional viewpoints that may develop, based 
on the hearings that have been held, and other viewpoints that have 
been presented by departmental representatives or Mr. Lorenz, of 
the Interstate Commerce Commission? 

Mr. Peters. We would like very much to file a statement giving 
our brief criticism generally of the testimony that has been presented 
and of the arguments of the railroads; just a brief conclusion or sum- 
ming up. (For brief referred to see addenda, pp. 720-736.) 

Mr. Lloyd. Mr. Chairman, we have plenty of time, and if it is not 
objectionable at this point to give Mr. Lewis 15 minutes, I would sug- 
gest that we do so and let him make his statement now. 

Mr. Peters. Before Mr. Lewis proceeds, would it be possible to 
put in the record to-day those figures which Mr. McBride submitted 
m order that we will have them to study ? It is already understood 
that they are purely tentative. 

The Chairman. They will go into the record before it is printed, 
just as soon as the department can furnish them. It may be two 
weeks, however, before you will receive your copies. (See p. 679 for 
letter of Second Assistant Postmaster General containing statement 
referred to.) 

Mr. Peters. We will send you, in about two weeks, a brief. 



RAILWAY MAIL PAY. 695 

STATEMENT OF MR. DAVID J. LEWIS. 

Mr. Lewis. Mr. Chairman, my name is David J. Lewis, a Member 
of Congress from Maryland. At the outset I desire to thank you 
very much for the opportunity of appearing before you, especially 
since the representatives of the railroads are here and are informed 
as to conditions. In dealing with this subject I think it altogether 
better that the committee should consider my suggestion in the pres- 
ence of the railroad men present, and they, too, can judge whether it 
has any merit. 

Mr. Chairman, I shall not go into the merits of the rate of postal 
pay to railroads at this time beyond a brief description of existing 
conditions. Nobody seems to be satisfied with the present amount 
or method of railroad payment, and this is necessarily true, perhaps, 
not so much because the railroads are overpaid or underpaid in the 
aggregate as, unfortunately, because there exists no formula or stand- 
ard for determining just what is the right rate of compensation. It 
is not a difficulty peculiar to postal railroad rates, but results from 
the circumstance, common to all railroad rates, namely, that the 
expenses of a particular service can not be allocated to such service 
with enough precision to determine its real cost. Under these cir- 
cumstances conflict of opinion is unavoidable, and only general com- 
parisons can be employed. 

RATE OF PARCEL RAILWAY PAY. 

Mr. Chairman, in the 10 countries reporting express statistics the 
ratio of the express to the freight charge has been shown to be about 
five (5.23) to one; and in these countries the railroad performs the 
whole, and not merely the locomotive part of the service, excepting 
the service of " pick-up " and delivery. In the United States the 
railroads receive as a whole, for the locomotive act alone, nearly eight 
(7.80) times their charge for the average freight shipment; or, stated 
in the concrete, the railroad receives $1.90 and $14.82 for the average 
ton of freight and express matter, respectively. In the other 10 
countries the like average charges are, by freight, per ton, $0.87, and 
by express, $4.37. In the absence of a satisfactory costs standard, 
these comparisons indicate that our railways receive nearly twice 
what they should for their part of the express service. But domestic 
conditions may differ enough to measurably impair this reasoning. 
However, the census of 1890 shows the express traffic to have been 
1,646,273 tons, while that of 1909 was 4,248,355 tons, with railroad 
pay of $19,327,280 and $64,032,126, respectively, representing an in- 
crease in the rate of express railroad pay of 26 per cent. During the 
same period the average freight charge declined about 5 per cent per 
ton- journey and the passenger rate per mile declined 6 per cent. 
Meanwhile the freight traffic increased in vohime 32 per cent more 
than the express traffic and the passenger mileage quite as much, 
clearly indicating the inhibitory effect of increased rates upon the 
potential traffic, an effect as unfavorable to gross railroad revenues as 
to express commerce. 

On the assumption of a 200-mile haul, the freight haul being over 
250 miles, the railroads received for hauling express matter in 1890 
about 6 (5.87) cents per ton-mile, and 7 cents for the same service in 



696 RAILWAY MAIL PAY. 

1909. The Interstate Commerce Commission has ordered reductions 
in express rates which the express companies say equal 25.6 per cent, 
but which the commission estimates at 17.5 per cent. Taking the 
commission's estimate as correct, the effect on the amount paid the 
railroads by the express companies (47.53 per cent of express 
revenues), the railroad ton-mile pay, would be to reduce it from 7 
cents to 5.77 cents, or about the rate paid them in 1890. The diver- 
sion of the very small shipment to the parcel post will likely further 
reduce the express railway ton-mile rate to 5 cents. 

Mr. Chairman, the joint effect of these comparisons would suggest 
that waiting the time when cost principles can be satisfactorily ap- 
plied to determining the amount of postal-railroad pay, a rate of 5 
cents a ton-mile for postal express matter, excluding the weight of 
equipment, would not be unjust to the railroads; as an aggregate 
payment, while such a rate in connection with postal-service econ- 
omies would permit the making of postal-express rates with effective 
concessions to the mobility of the potential traffic, and save three- 
fourths of it, now penalized out of transportation commerce by 
prohibitive express tariffs. It may be confidently asserted that the 
railroad would not suffer by such a rate of pay, for it would convert 
from five to fifteen millions of tons of relatively lower-priced freight 
traffic into the highest-paying railroad freight, with little added cost 
of plant or locomotion for the railway. 

METHOD OF PARCEL-RAILWAY PAY. 

Mr. Chairman, the ton-mile standard is the ideal one for Govern- 
ment purposes. Its parcels rates are all predicated on weight and dis- 
tance, and if it is desired to know how much to load such rates to 
pay the railways for their service, such service must be measured in 
terms of weight and distance. If this standard should be replaced by 
a car-space standard alone, it would require years to learn the con- 
vertible proportions of the parcels weights, ratios with car-space 
values. Meanwhile, the loading for railroad pay would be either too 
high or too low, with attendant effect disastrous to either the potential 
traffic or the Treasury. 

But this weight- distance standard, so ideal for the Government, is 
not quite so ideal for the railways. If paid only by the weight and 
distance carried, the railroad company having a line of full-car traffic 
would receive two or three times the compensation for moving its 
car a mile as would the small railroad company moving a car one- 
half or one-third full. And yet it is obvious that the expensiveness 
of the service for both railroads would be substantially the same. 
What a railroad company does in the mail, express, or passenger 
service is to move the car — and whether it is empty or partly empty 
or loaded barely affects the expense of movement. We have thus 
two contradictory interests here in the matter of standards or units 
for measuring the service. What is absolutely essential to the Gov- 
ernment in its rate making, the weight-distance unit of pay, would 
mulct the small railroads with one-half or one- third pay ; while the 
car-mile standard, the measure of costliness of railway service, 
would be quite impracticable for parcel rate-loading purposes. 

Now, Mr. Chairman, with all modesty on a subject so inherently 
difficult, I make this suggestion as a solution: Let us apply both 



RAILWAY MAIL PAY. 697 

standards — the ton-mile unit to make certain the amount the Gov- 
ernment shall pay the railroads for parcels so it can intelligently 
load its rates for parcel service to the public, and the car-foot-mile 
unit to secure a just relative distribution of the fund thus derived 
among the railroads, according to the amount of car-foot mileage 
service rendered by each. 

The details of this proposal, briefly, are these : 

(a) The postal department would make notations of the weight 
and zone findings for each parcel, which occur in determining the 
rates to be charged the shipper. The gross weights of such parcels 
in each zone, when multiplied by the average mile journey of the 
respective zones, would by a simple computation give the total ton- 
mileage of parcel matter receiving railroad transportation. Let this 
ton-mileage be multiplied by the rate to be paid per ton-mile, say 5 
cents, and the gross sum due the railroads as a whole is obtained. 

(b) The gross sum thus payable the railroads would then be di- 
vided by the total number of car-foot miles of car movement per- 
formed, which would give the common car-foot rate payable, when 
each railroad company would be paid this rate for the car-foot mile- 
age service performed by it under orders from the postal department. 

Now, the postal car mileage is a matter of easy ascertainment and 
record for any railroad, while the weight-distance parcels statistics 
can be almost automatically recorded during the act of weighing by 
pencil notations, as now, upon blanks having distinct columns for 
the several zones. These latter data are necessary in postal adminis- 
tration for other important purposes and can be obtained with prac- 
tically no expense. I am informed that the Auditor of the Post 
Office, Mr. Kram, has perfected an invention by which these weight 
and zone notations can be carded by the local postmaster and thus 
be totaled by machine. 

LETTER RAILROAD PAY. 

It is obvious that more than one rate of pay will be necessary to fit 
the widely different services rendered by the railroads in the carriage 
of letters as distinguished from express matter. No single rate could 
be just to both kinds of traffic. Stated in terms of ton-miles, the 
letter mail would tend to consume much greater car space and com- 
mand greater speed than the like weight of express matter. And 
since there is no known or probably constant ratio between future 
postal express and mail weights, anyone who suggests but one rate 
of railroad pay for these differing services must have neglected to 
give sufficient time to the subject to fully appreciate the conditions 
of the problem. 

Now, Mr. Chairman, it is suggested that for the carriage of the 
ordinary mails — that is, other than express matter — the same methods 
might be employed, with a change in the amount of the rate, and in 
two or three of the incidents, to 'meet the circumstances that the 
weight-distance journey of each letter and paper could not be eco- 
nomically ascertained, and that the rate of railroad pay ought to be 
higher for such matter. The total weight of the railroad-moving 
mails, including equipment, was ascertained to be 887,278 tons for 
1908. Postal receipts increased 28.34 per cent in 1912 over 1908. 



.698 RAILWAY MAIL PAY. 

This would indicate the total weight of mail and equipment for 1912 
to be 1,138,692 tons, which divided into the gross railroad pay for 
1912 gives a rate of $43.65 per ton, or on the experience of the aver- 
age mail journey in 1908, 8 (8.12) cents a ton-mile. Assuming this 
rate to be continued (I do not here discuss its justice) , all ordinary or 
first, second, and third class railway-going mail, during the weighing 
period, would be pouched in bags by itself and weighed at the post 
office before going to the railroads. These weights totaled into tons 
for the entire country would give the gross amount of railway service 
rendered the ordinary mail, and multiplied by the ton rate, say 
$43..65 per ton, as now, would give the total fund payable to the' rail- 
roads for this branch of the service. This fund should be then dis- 
tributed among the railroads according to the car- foot mile basis 
employed for the payment of parcel transportation. 

We should thus have a rate of 5 cents a ton-mile for postal express 
matter, excluding the weight of equipment, and of 8 cents a ton-mile 
for the other mails, equipment weight included. These bases of 
compensation and methods of distribution having been legislatively 
established, I should provide that either the Postmaster General or 
the railroads should * have access to the Interstate Commerce Com- 
mission to make any changes necessary to move the potential traffic, 
or to meet future contingencies in railroad operating costs. In con- 
sideration of the lowered rate proposed for parcel-post railway pay 
the burden of delivering the mails from the depot to the post office 
should be shifted from the railway to the local postmaster. 

Mr. Chairman, the plan as a whole would have signal advantages 
for all the interests concerned. For the Government it would save 
the special expense of the weighings and provide it with simple 
standards for determining its obligations to the railroads. For the 
shipping public, through reduced postal express rates, it would pro- 
vide a means by which the potential traffic in life's necessaries could 
be moved direct from producer to consumer, or otherwise, and lower 
our aggravated price levels. And for the railroads it ofl'ers the great 
advantages of distributing postal transportation compensation equi- 
tably between them, of paying them for the actual weights carried 
rather than the out-dated weighings, while assuredly doubling and 
probably quadrupling the volume of their highest-priced traffic. 

Mr. Chairman^ this problem must be settled, and should be con- 
sidered with a view to the interests of all concerned. I submit the 
plan just outlined as an earnest proposal to reconcile all the interests 
involved. 

The Chairman. Do any of you gentlemen desire to ask Mr. Lewis 
any questions? Do you, Mr. Peters? 

Mr. Peters. I would like to read Mr. Lewis's statement first before 
asking any questions. I do not think I could ask any questions now. 

Mr. Bradley. I would like to ask a question. The Congressman 
spoke of the rate now paid to the railroads as $43.65 per ton. 

Mr. Lewis. I spoke from recollection. 

Mr. Bradley. Well, I am assuming that that is it. The depart- 
ment's estimate of the average haul of all mail matter, as I under- 
stand it, is 620 miles. 

Mr. Lewis. I do not know that that includes equipment as well as 
mail. 

Mr. Bradley. I believe it does. I think very little distinction is 
made, and dividing 620 into $43.65 would give about 7 cents a ton- 






EAILWAY MAIL PAY. 699 

mile, and as you had mentioned 8 cents a mile I wondered if there 
was any distinction in your mind as to the basic fact. 

Mr. Lewis. Eight and twelve -hundredths is my deduction, and it 
was reached in this way : In 1908 the department weighed every piece 
of mail and determined its distance of journey. That study showed a 
given number of ton-miles of service for equipment and mail. I 
added to that datum the increased ton-mileage up to 1912, as deter- 
mined by the increase of postal revenues. That was my lead. That 
produced a result of 8.12 per ton-mile. I have not divided 620 into 
$43.65, to determine the per ton-mile rate that datum would produce. 
My feeling was that there was a difference between the mail haul of 
620 and the equipment haul, which was slightly less. 

Mr. Bradley. I would only like to suggest that in that test of 
1907, with which I am quite familiar, there were a number of doubt- 
ful points that need to be gone over by experts before one could even 
reach a fair approximation of the true averages. Taking the ques- 
tion of mail-bag equipment, which is practially the envelope of the 
mail, the assumed estimate of the department was an average haul 
of 411 miles, but I think on close examination that would be very 
much reduced. 

Mr. Lewis. I was looking over Prof. Adams's postal ton-mile tables 
up to 1898, and carrying them forward on the increased revenue 
basis, after allowing for the change in the divisor, there was a very 
slight difference between the 8.12 figures and what his figures would 
have produced. 

Mr. Peabody. I would like to ask Mr. Lewis if I understand him 
correctly in saying that the fund to be arrived at for the railway 
pay was arrived at by a common rate per ton-mile, or was it arrived 
at by a double rate per ton-mile, one for the letters and one for the 
parcels ? 

Mr. Lewis. You would have two funds, one derived from the let- 
ters at an absolute per ton rate, say, $43.65 per ton of ordinary mail, 
and the other derived from the parcels, whose rates should be loaded 
for railway pay at, say, 5 cents a ton-mile. 

Mr. Peabody. Then the division would be made and the applica- 
tion of the car space would be made in one case to the fund ascer- 
tained on the ton basis, and in the other to the fund ascertained on 
the ton-mile basis. 

Mr. Lewis. My idea was that it would relieve the particularly 
aggrieved condition that the very small road finds itself in without 
any car-space pay and with very small loads to carry, and more- 
over would give the Government what seems to me it will absolutely 
need, a precise standard for its loading of parcel rates, and such load- 
ings for railway pay parcels are going to be 80 per cent of the load- 
ing, if the rate is made with any view to the cost of the service. I 
notice the parcel traffic now runs about 450 miles; that is, its journey, 
and it is easy to see that on an average journey like that the rate is 
going to be composed mainly for paying the railroads for the service. 

Mr. Bradley. Is it your idea the parcel post should be self-sus- 
taining? 

Mr. Lewis. Most assuredly so ; yes, sir. 

The Chairman. Mr. Lewis, we thank you very much for your 
views. 



700 RAILWAY MAIL PAY. 

STATEMENT OF MR, WALTER S. BASKERVILLE. 

The Chairman. Mr. Baskerville, will you kindly state your full 
name, residence, and the official capacity, if any, in which you ap- 
pear before the commission. 

Mr. Baskerville. Walter S. Baskerville, St. Paul, Minn. I am 
agent of mail traffic of the Great Northern Railway. 

The Chairman. How long have you been in that position? 

Mr. Baskerville. Four years. 

The Chairman. You have a statement, which you have prepared, 
especially in reference to the Great Northern? 

Mr. Baskerville. I have sir. 

The Chairman. We will be glad to hear it. 

Mr. Baskerville. In the preparation of Document No. 105 the 
fast mail trains of the country were treated as ordinary service, in 
which the mails were to bear only a percentage of the cost of all 
service, based on car-foot miles of space furnished. 

The Great Northern fast mail was established in September, 1909, 
for the purpose of expediting the delivery of the mails at Pacific 
coast terminals. It reduced the time in transit from New York to 
Seattle from four and one-half to three and one-half days; from 
Chicago to Seattle from three and one-half to two and one-half days ; 
and from St. Paul to Seattle from three to two days. 

The time from St. Paul to Seattle is 47 hours and 33 minutes — 39 
miles per hour, the first 1,072 miles of which — east of the mountains — 
is made at an average speed of 44.66 miles per hour, and this on a 
single-track road. 

This train is superior to and has the right of track over all other 
trains, and is, therefore, the most expensive train operated by this 
company. The rules governing the movement of this train are " spe- 
cial," and provide for an absolutely clear track. Trains moving in 
the same direction must be clear at the time this train is due to leave 
the next station in the rear, and opposing trains must clear 5 to 10 
minutes. That it is more expensive of operation than any other train 
run by this company is a fact, yet how much more it would be diffi- 
cult if not impossible to determine ; but that the free movement of trains 
under the regular rules is seriously interfered with is a fact patent 
to all connected with the operating department. The high rate of 
speed at which this train is operated also tends to make its operation 
more expensive, due to the unusual strain on equipment and roadbed. 
Yet in showing the cost of this service I have in the following state- 
ment used only the average cost of all passenger-train mileage. 

With the inauguration of this service express matter for competi- 
tive points was carried on this train, which amounted to approxi- 
mately 20 per cent of the earnings of this train, and should bear that 
proportion of the expense. 

Document No. 105 assigns $1,049,938.59 of the operating expenses 
of the Great Northern Railway for November, 1909, to passenger- 
train service. 

The passenger- train mileage of the company in that month was 
889,842 miles, and on this basis the actual cost per train-mile was 
$1.17991. 

The fast mail and its return in November, 1909, made 111,240 miles, 
which, at $1.17991 per train-mile, would amount to $131,253 for 



RAILWAY MAIL PAY. 701 

November. Deducting 20 per cent as chargeable to express leaves a 
balance of $105,002 as the cost of carrying the mail for the month of 
November, or $1,260,024 for the year, that is, the operating cost. 

No allowance was made in this estimate for return upon capital in- 
vested. The physical valuation of the Great Northern Eailway, as 
made by the master in the Minnesota Eate Case, was $470,264,331, 
and the mails should certainly pay their proportion of a fair return 
upon this investment. 

The mail revenues for the month of November were 2 per cent of 
the gross operating revenues and should have yielded the company 
$46,000 for that month at 6 per cent upon the capital invested, in 
addition to the cost of the service, or at the rate of $552,000 per 
annum. Adding a fair share of this capital cost to the operating 
cost of this train upon the basis of a proportion of mail-car foot 
miles on this train to the total mail-car foot miles (12/43 of $552,000, 
or $154,000) makes the cost of operation of that train $1,414,000 
annually. 

The total mail pay for the Great Northern system for that year 
was $1,458,000, or just about the actual cost of running the fast mail 
train, calculated upon this basis. 

The fast mail furnished about 12,000,000 car-foot miles of the 
space credited to this company by Document No. 105, which, at the 
cost shown by Document No. 105, $0.003254 per car-foot mile would 
only earn $468,576 per annum. This would be less than one-third of 
the cost of the operation of this train as shown by Document No. 105, 
not including anything for capital cost. 

Owing to the long run and high speed of this train there is great 
concentration of weight of mail, as an inducement for us to run it, 
and the space basis of payment would so reduce our pay and render 
it so unprofitable that no company can afford to continue it. As be- 
fore stated, we are not now paid its actual cost on the basis of Docu- 
ment No. 105. Any space basis upon any plan I have heard suggested 
would give us still less. 

This company is opposed to the present method of side and ter- 
minal-messenger service. That is no part of railroad transportation. 
There is a total of 840 stations at which mails are exchanged on the 
Great Northern Eailway. The Post Office Department furnishes 
mail-messenger service at 135 of these stations, the railway company 
performing messenger service at 705 stations. 

The cost reported in Document No. 105 by the railway company 
for side and terminal service was $1,800 for the month of November, 
1909, or an average of $2.52 per station. The company objects to 
the performance of this service because at many of its stations there 
is not sufficient business to justify the employment of more than one 
man and the time of this man is occupied in selling tickets and 
checking baggage under State regulations and laws just at the time 
when the mail must be handled between the post office and the station. 

Much of this side service could be performed by the postmaster 
in one-half the time that it takes the agent, in view of the fact that 
the agent must make two round trips from the station to the post 
office — one in going to the post office for the pouch and returning 
with it to the station, and another taking the pouch to the post office 
after the departure of the train and returning to the station — where 

49396—14 52 



702 RAILWAY MAIL PAY. 

the postmaster would only have to take the pouch to the station and 
return to his office after the departure of the train. 

This company does not admit the accuracy of Document No. 105. 
It claims that the assignment of expense made by the company was 
correct, and that the space it reported was correct, and that this 
service was furnished the Post Office Department and should be 
paid for. 

The Chairman. Do I understand you would be better off in net 
earnings if you discontinued carrying the mail on that train? 

Mr. Baskerville. Yes, sir. 

The Chairman. Have you given consideration to the suggestion of 
Mr. Lloyd about taking the four units and adopting them? How 
does that appeal to you ? 

Mr. Baskerville. That would work out with us under proper 
regulations and rates in territory where there is frequency of service, 
but where there is infrequency of service — as on our main line be- 
tween Fargo and Spokane — it would not justify us in continuing our 
fast service; it would reduce our pay from the present pay, which 
we claim is too small. 

The Chairman. Was the fast service which was put on by the 
Great Northern at the request of the department or was it on the 
initiation of the officers themselves ? 

Mr. Baskerville. It is voluntary service put on with the hope of 
building up business that would justify its continuance, if there 
was no change in the basis of pa^. 

The Chairman. The service is necessarily much more expensive 
than the ordinary service ? 

Mr. Baskerville. It is. 

The Chairman. If put on entirely at the initiation of the rail- 
road's representatives themselves, should the Government, in your 
judgment, be forced to pay the extra cost because of the railroad 
voluntarily increasing the expense, although it does increase the 
efficiency of the service ? 

Mr. Baskerville. We think the department should pay for effi- 
ciency whether it is voluntary or whether it was requested. They 
have requested it from a number of roads, and it was furnished, and 
they reimbursed the roads in the way of tonnage. 

The Chairman. Is not this true, that it is put on for the purpose 
of establishing through competition, if you please, a more efficient 
service than that which other roads perioral which reach the same 
territory that you do ? Is not that the purpose, of getting the advan- 
tage over your competitors in order to secure the traffic? 

Mr. Baskerville. I assume so. 

The Chairman. Because there is an asset, intangible if you please, 
in the carriage of mails. 

Mr. Baskerville. We do not think so. We did think the weight 
would eventually justify the additional expense. We knew when 
we put the train on it was not a profitable train. 

Mr. Bradley. This thought occurs to me: Suppose the basis of 
railway mail pay was 25 cents a car-mile at the time that you con- 
templated establishing that fast train. Would it have been estab- 
lished? 

Mr. Baskerville. I can not answer that, Mr. Bradley. That had 
never been contemplated. We simply worked on the weight basis. 



RAILWAY MAIL PAY. 703 

The Chairman. Mr. Bradley, in that connection will you answer 
your own question, not for the Great Northern, but if you were 
similarly placed ? I assume you wish to draw out a certain thought ? 

Mr. Bradley. The illustration presented by Mr. Baskerville 
brought out a thought that if the car-space rule were ever adopted it 
might possibly not meet the condition presented by special mail 
trains and that perhaps the law would have to include a rate for the 
special mail trains in addition to a rate per car-mile, or for a fraction 
of a car. 

Mr. Baskerville. Answering your question this way, knowing 
now what the fast mail has developed, one working car west of 
Fargo or Devils Lake, making it a three- car train for mail purposes 
would only pay us 75 cents a niile for this service for mail purpose. 

Mr. Bradley. Then, under those circumstances, I doubt whether 
you would have ever established the train? 

Mr. Baskerville. We never would if we had known in advance 
what it would do, but we had estimated the ordinary increase in the 
mail and we felt we were getting a little more than the ordinary 
increase in the northwestern territory, because the increase has been 
more rapid there than in the balance of the country. 

Mr. Stewart. What did you have in mind specially that you did 
not get by the establishment of this special train, in weight? In 
other words, haven't you gotten practically all that you had in mind 
that you could get when you offered the train ? 

Mr. Baskerville. Not when I figured on the train, but that is not 
your fault at all. I am not criticizing or reflecting on the department, 
but I had other things in mind when the train was established that 
did not work out. The weights would have eventually paid us 
better than they do now. The weights now are fully 50 per cent 
more than they were three years ago. 

The Chairman. In that connection, should the Government pay 
for your miscalculations or the failure to work out the deductions that 
you drew from certain premises? 

Mr. Baskerville. We are giving the service; the people are get- 
ting the service, and the Government is their agent. We think we 
ought to be paid for that service, and if we are willing to wait for 
the increase, we do not think snap judgment should be taken and 
wipe it out. 

Mr. Stewart. We do not want to lose this train, but you have 
been operating it for some time and you know about what you are 
getting out of it and what is due to be gotten out of it for the 
future, but you are not taking any steps toward discontinuing it? 

Mr. Baskerville. Now? 

Mr. Stewart. Yes. 

Mr. Baskerville. Oh, no. 

Mr. Stewart. How much more increase would make your train 
a paying train? 

Mr. Baskerville. I have never figured that out. No man wants 
to operate his business at prime cost. 

Mr. Lloyd. Is not this true, that that fast train is the best adver- 
tised train that has been operated by the Great Northern road? 

Mr. Baskerville. I could not tell you that. 

Mr. Lloyd. I have never been on the Great Northern road in 
my life, but I have heard of that mail train time and time again. 



704 RAILWAY MAIL PAY 

Mr. Baskerville. Naturally you would hear of a train that would 
reduce the time of mail in transit or delivery 24 hours. 

Mr. Lloyd. That is right, and that is a splendid advertisement for 
the road. 

Mr. Bradley. The possibility of weight accumulation is what 
stimulated your enterprise to put on that train? 

Mr. Baskerville. Yes. 

Mr. Stewart. According to your statement, you have not realized 
out of this fast train what you expected to in compensation and you 
do not see the immediate prospect in the future of doing so, but 
you say that you have no intention of taking the train off? 

Mr. Baskerville. Not at this time ; no sir. 

Mr. Stewart. Therefore there must be some consideration to the 
company besides the mail pay which induces you to continue that 
train. I should like to know what that is. 

Mr. Baskerville. What do you mean by that, that we are haul- 
ing something else? 

Mr. Stewart. No; I mean this, to come right to the point: That 
the mail service to a railroad company means something more than 
the amount of money which the Post Office Department is able to 
pay you for the specific service. Does not your experience with 
this train fully demonstrate that, and how can you avoid the con- 
clusion that that is true ; you are maintaining that train ; you intend 
to maintain that train, and we are very glad that you are; we get 
the benefit of it, and your road certainly gets a very material benefit, 
and the country you serve and the people who patronize your road 
get an advantage. Now, isn't it true there is a consideration in the 
operation of the mail service which goes far beyond the mere money 
consideration which you get from the department? 

Mr. Baskerville. I consider the carrying of the mails on the 
same basis as any other commerce. 

Mr. Stewart. But you would not run a passenger train at a 



Mr. Baskerville. We do run passenger trains, Mr. Stewart, and 
continue them for years at less than they actually produce. 

Mr. Stewart. You make it up on freight? 

Mr. Baskerville. I do not know how it is made up. That is up 
to the management. I do know that you can take the earning sheets 
which show passenger earnings each month of the various passenger 
trains, and there are trains that never pay. 

Mr. Stewart. Well, there is this additional consideration, then, 
that you take account of both in your passenger and mail trains. 
It must be something material and substantial or you would not 
continue it? 

Mr. Baskerville. Passenger trains are frequently continued be- 
cause the conditions require them. We owe a certain duty to the 
public that we have to perform. 

Mr. Stewart. Do you not owe the same duty to the Government 
and the people in connection with the mail service? 

Mr. Baskerville. We would in the ordinary train service. 

Mr. Mack. Is it not true that the train was put on and is being 
continued in anticipation of its developing into a paving proposi- 
tion? 



TRAIL WAY MAIL PAY. 705 

Mr. Baskerville. I so stated. 

Mr. Mack. And put on and maintained strictly on that basis 
without regard to any other outside factor? 

Mr. Baskerville. It was. 

Mr. Stewart. But Mr. Baskerville is not going to take it off now 
when he knows it is not going to develop into that kind of a train. 

Mr. Baskerville. I do not know that it will not develop into that 
kind of a train. I have every reason to believe it will develop into 
a paying train. 

Mr. Stewart. Then, your loss is not very great '$ 

Mr. Baskerville. Fifty per cent in weight would make consider- 
able difference in compensation. 

The Chairman. Is not the initiatory influence in transportation 
in a sparsely settled country an additional attractiveness to bring 
people to that country, develop it, and furnish the business? 

Mr. Baskerville. That would not be so with this special train, 
Senator. That is so with the ordinary passenger service, but not 
with this special train. The country between Spokane, Wash., and 
Fargo, N. Dak., is very sparsely settled, and there is no necessity 
for such service as this, but when you get to Spokane and beyond 
you get in the great coast country and it brings those people a day 
nearer to the eastern markets. 

The Chairman. It would be to your disadvantage materially tor 
the service from New York to Seattle to be a day longer than from 
New York to Portland? 

Mr. Baskerville. Yes, sir; it would. 

The Chairman. So you are, as one of the largest producers and 
largest factors from a money standpoint in that section of the 
country, vitally interested in your terminals having equal facilities 
with your competitors? 

Mr. Baskerville. Yes, sir; but the terminal competitor you men- 
tioned did not have any such facilities until we put the train on. 

The Chairman. Then, you will have the advantage from blazing 
the trail? 

Mr. Baskerville. Yes, sir. 

The Chairman. But you do not receive any compensation for it, 
from your standpoint? 

Mr. Baskerville. No, sir. 

The Chairman. That is the result of progress and development? 

Mr. Baskerville. Yes. 

The Chairman. Could you give us the benefit of your experience 
as to what factors we should take into consideration upon which we 
should reach a conclusion in making a report to Congress, which 
we are instructed to make, in reference to this problem of railway- 
mail pay? 

Mr. Baskerville. That is a pretty hard question to answer, sir. 

The Chairman. We find it so. 

Mr. Baskerville. I suppose you gentlemen are in better position 
to answer that than I would be, because you have attended all of 
these hearings and know everything that has been brought out. 

The Chairman. You would not have any suggestions ? 

Mr. Baskerville. I have not any suggestions, but I think the 
weight basis is the proper basis. 



?06 EAILWAY MAIL PAY. 

The Chairman. You think the present system, with the removal 
of what, from your viewpoint, you consider injustices, is the only 
way of solving the problem ? 

Mr. Baskerville. Yes. 

The Chairman. That is, that you get compensation for the side 
service or be relieved from it ? 

Mr. Baskerville. We would like to be relieved from the side 
service. We would like to have annual weighings or take them at 
the end of four years and make a settlement at the end of four years. 

The Chairman. Have you formed any estimate of the additional 
cost to you for the side service you perform ? 

Mr. Baskerville. We put it at about $20,000 a year for side 
service. 

The Chairman. And you claim the side service is no part of trans- 
portation? 

Mr. Baskerville. No, sir ; and it is the annoyance of the side serv- 
ice we want to get rid of. At some places we have only one agent, 
and he must be in the station or go to the post office, and he can not 
do both things together. 

The Chairman. Suppose you receive compensation from the Gov- 
ernment to perform the side service just as you do now. Would 
that be an irritation to the railroad companies ? 

Mr. Baskerville. The irritation exists, Senator, wherever we have 
only one man employed and can not justify the employment of more 
than one man. 

The Chairman. What do you do under that circumstance? 

Mr. Baskerville. The agent has to violate the law and leave his 
station and go to the post office. Where a post office is within but a 
few hundred feet of the station, the postmaster would not agree to 
give him the mail more than 10 or 15 minutes before the train is 
due, and the department will sustain the postmasters in it, to keep 
the office open to the last possible hour, and the agent must go after 
the mail at the hour they designate. Another feature is the night 
service, where they claim we have agents where we have no night 
agent and no necessity for a night agent. There may be a little sta- 
tion out in the country with a store or two around, but most of the 
people live away and they do not take the night train, yet we must 
handle mails at night and we have to keep a man there. 

The Chairman. Do you not have to keep a telegrapher there? 

Mr. Baskerville. No, sir; at a number of these stations we do 
not have telegraph offices. 

- The Chairman. How do you get into communication in the case 
of an accident? Do you go to the nearest telegraph or telephone 
office ? 

Mr. Baskerville. Yes, sir. We have no agent on duty, and yet 
the department requires that we handle the mail because we handle 
it in the daytime. Why would not the same rule apply to the post 
offices? They have postmasters in the daytime, but none at night. 
The business of the railroad company can be handled in hours of 
service, 13 hours for the agent. The business of the post office 
is performed in 10, 12, or 13 hours and then it is closed, and there 
is no other postmaster or agent there, but yet the department holds 
us for an agent and we frequently have to put on men at night to 
take care of the mails. 



RAILWAY MAIL PAY. 707 

The Chairman. We are very much obliged to you, Mr. Basker- 
ville. 

I was just going to ask Mr. Lorenz if he would give us the benefit 
of his ideas as to what factors should be considered in the study 
regarding the best method of paying the railroad companies in the 
matter of transportation of mail. 

Mr. Lorenz. I am not prepared to discuss the matter in a com- 
prehensive way. I have already, in various memoranda, indicated 
my ideas. 

The Chairman. I did not know but what you might summarize 
and give the salient features as set forth in the different memoranda 
that have been presented. 

Mr. Lorenz. Thinking over all the discussions that I have listened 
to, it seems to me that the representatives of the railroads have not 
put anything in place of the suggestion of the Post Office Department 
that the fundamental determinant factor upon which we must base 
our judgment as to whether the railroads are over or under paid must 
be upon some estimate of what the cost of the service is. It need not 
necessarily be a separate estimate for every railroad, but it might be 
an estimate for representative railroads, but nevertheless that esti- 
mate, in some form, it seems to me, again and again has been shown 
to be the factor upon which those rely who attempt to say that the 
railroads are over or under paid. I do not know that anyone has at- 
tempted to say that they are overpaid, but that question having been 
answered by that method, either directly or indirectly, it becomes 
necessary to discuss another question, and that is the method of dis- 
tributing the money among the railroads. I think Mr. Mack indi- 
cated that the comparison of revenues of passanger cars with mail 
cars was a basis different from the cost basis, but in order to be con- 
vincing such a comparison must again rest back upon some previous 
cost determination. In other words, you are indirectly making use 
of the cost estimates which have been prepared from time to time in 
passenger rate cases in order to sustain your position that the pas- 
senger rates are not too high. That seems to me to be a general 
conclusion to be drawn from all this discussion, whether you derive 
your immediate opinion from comparison of passenger car-mile 
earnings or whether you make an independent cost estimate. In the 
last analysis, what is called a cost estimate determines your mind upon 
that question. 

I may say at this point a good deal of opposition to determining 
the cost of a service might disappear if people recognize that the 
cost estimate is not strictly a cost estimate. The costs can be clearly 
determined only to a certain point; common expenses can not 
be satisfactorily related to some special branch of the service as a 
matter of cause and effect. The only thing you can do is to measure 
the use which the various branches of the service make of the com- 
mon facilities and use that measure, whatever it may be, as the basis 
of distributing the expense, so that that so-called cost accounting is 
really cost and use accounting, but so understood, it seems to me, 
that the statement I have made can not be challenged, and in the last 
analysis some form of cost accounting must really be your basis of 
determination as to whether the railroads are overpaid or underpaid. 
On the question of the method of payment, which is entirely dis- 



708 RAILWAY MAIL PAY. 

tinct, the controversy between the weight basis and the space basis, 
it seems to me, has not developed as much close discussion of the 
merits of the space basis as it might have done. Frequently in 
the discussions here it has been mixed up with the cost basis, 
whereas it is not directly related. I have listened intently at 
the various hearings for specific objections to the space basis, and it 
seems to me that there is really only one fundamental objection, and 
that is the administrative detail, and that is a question on which I 
have not formed any special opinion. The question of space was 
discussed in the former report of the postal commission, the Wol- 
cott commission, by Mr. Adams, and the main reason urged against 
it at that time was the danger of removing the check which now 
exists against using too much space by the Post Office Department. 

It was argued that at the present time it is to the interest of the 
railroad companies to restrict space. Being paid upon a basis of weight 
largely, the smaller the space in which they can carry that weight 
the better it is for them. The Post Office Department, on the other 
hand, desires as much space as possible, in order that they may more 
effectively distribute the mails. These two operate in different direc- 
tions and tend to hold the amount of space at a reasonable level. 
Under the space system it is urged in that report that the check to 
using too much space which the railroads now offer would be re- 
moved ; it would be to their interest also to furnish as much space as 
possible, and it would be to the interest of the Post Office Department 
to have as much space as possible, the only check being the desire of 
the higher officials— not the lower officials — to make a record for 
economy, and I should think that would have to be very seriously con- 
sidered by this committee — whether that check would be sufficient to 
prevent an extravagance in the matter of space. 

The Chairman. That appears sound to me ; General Stewart, what 
do you say of that ? 

Mr. Stewart. Dr. Lorenz has no doubt studied the points found in 
that report. I do not agree with the opinions as to the stated facts. 

The Chairman. Would not the tendency be more space for the 
railroads under the suggested substitution plan because of additional 
comforts desired by the employees, and the check be the inclination of 
the department heads to administer efficient and economical service? 

Mr. Stewart. That would be true under the proposed system, 
just as it is true under the present system. 

The Chairman. I agree with you that they neutralize each other, 

Mr. Stewart. What I took exception to is this : That the premises 
assumed by that report appear to be wrong with reference to the 
present service. It is not to the interest of the railroad companies 
to restrict space, as you have probably learned at these hearings. 
The great complaint of the railroads is that we do not give them 
enough space, because space means more money to them, and the 
facts are just the opposite of what have been stated in that report. 
The pressure from the outside at the present time is for more space 
all the while, and the tendency of the department is to restrict the 
space which we pay for at an extra rate of pay and at the same time 
furnish all the mail facilities that the mail needs. 

The Chairman. You do not, in the apartment cars, give any addi- 
tional compensation, do you? 



RAILWAY MAIL PAY. 709 

Mr. Stewart. I say, when the railroads use space for which we 
pay additional money. 

Mr. Mack. With regard to the full cars, I think it is the position 
of the railroads not to seek additional space, but to seek pay for the 
space which is used by the department. For instance, where a 50-foot 
line is authorized and a 60-foot car is used, the railroad wants pay 
for that 60-foot car. It is not that they want an additional car, but 
they want pay for the space which they think and believe, whether 
rightly so or not, is used. 

Mr. Stewart. That is only another way of stating the facts. 
There is always a pressure for more allowance for space, whether 
the space is now being used and not paid for, or whether it be other- 
wise. As a matter of fact, the space is ordinarily either used or the 
car is so congested that the railroad company's representative, as 
well as the representative of the department in the field, believes 
we ought to have more space. I do not want to interrupt Dr. Lorenz 
further. I think his presentation of the matter has been very ad- 
mirable. 

Mr. Peters. You referred to Mr. Mack's claim about the relative 
revenue per car foot. You spoke of it as relating to the cost 
accounting. The distribution or placing the mail on the same basis 
as the discharge of express revenue would not cover the matter of 
the cost at all. You have only ascertained the total car-foot space 
on your passenger trains and then divided your revenues by that, 
and cost did not enter into that account. We showed by our pre- 
liminary report, which was afterwards checked over, that we got it 
pretty closely together — we averaged about 4.35. There was a 
difference of a few cents. Most of us in discussing this matter felt 
that the mails should produce relatively as much revenue per car- 
foot mile as the passenger service. 

Mr. Lorenz. On the assumption that the passenger revenues are 
not too high ? 

Mr. Peters. Yes. 

Mr. Lorenz. But how did you arrive at that without a cost 
estimate ? 

Mr. Peters. We can not arrive at that without a cost estimate; 
but leaving out the fact that the passenger service is not too high, 
we know that the net results of the railroad at the present time are 
not very attractive. Railroad credit is getting worse and worse, and 
it is due to the fact that the revenues do not keep above the expenses 
as much as they should. If the passenger service produces a just 
revenue per car-foot mile, and that does not produce any too much, 
vre feel that we are fully justified in asking that the mail should 
come up to practically the same basis in order to bear its share of 
whatever the total expense may be in operating that train. 

Mr. Mack. I think Dr. Lorenz has illustrated very well the point. 
The fact, however, is pointed out that the passenger train service is 
not earning too much, as shown in the rate cases. 

Mr. Safford. It seems to be fair to assume that the passenger 
rates, being fixed by law, are not too high, because the legislative 
bodies who fix those rates did so in all cases after thorough investi- 
gation of all the facts. We are generally able to demonstrate the 
fact that thev are not remunerative. 



710 RAILWAY MAIL PAY. 

Mr. Lorenz. I do not believe, Senator, I have any new ideas to 
bring out. 

Mr. Peters. In your last memorandum you did say that the side 
and messenger service was not a part of the passenger service. 

Mr. Lorenz. It seems to me that it is not. 

Mr. Peters. I think that the Senator and the committee have 
pretty nearly reached that conclusion. There is part of it that the 
railroad can perform and there is a part of it that is a burden and 
means an outlay of money. 

Mr. Lorenz. It might be suggested that in this, as in many sub- 
jects, a great deal of discussion would be saved if you make a trial 
of the space basis. In past hearings this same debate has been gone 
over again and again and will be probably gone over again and again 
in the future unless we actually have it tried out, and perhaps the cost 
of trying it out will be less than the cost of future investigations. 

The Chairman. In that connection, suppose Congress did enact 
legislation which substituted the space basis for the weight basis and 
it was demonstrated by such a change that the railroads received 
more compensation than they receive to-day under existing condi- 
tions. You would simply demonstrate a fact. You would not 
demonstrate any light on the relative desirability of the two systems, 
would you? 

Mr. Lorenz. You would demonstrate its practicability or imprac- 
ticability as actually worked out in its administrative details. The 
general question of whether it would lead to justness of payments 
between the railroads or whether it would lead to a just total amount 
of pay to railroads would not, of course, be determined by trial, but 
that, it seems to me, will be determined automatically in the future 
by the progress of railway cost accounting which, I feel sure, is 
bound to come. 

Mr. Mack. Do you not think that our statement of the rela- 
tive earnings of passenger and mail service showed a practical dem- 
onstration of material underpay to the railroads, the statement filed 
by the joint committee showing respectively 4.34 and 3.37 mills per 
car- foot mile? The total applied to the service shows a deficiency 
in mail pay of nearly fifteen and one-half million dollars. We think 
that the illustration shows that we are underpaid that much, or very 
nearly so. 

Mr. Lorenz. That is an indication, I should say. 

Mr. Peters. When comparing it with all the revenue produced by 
the train mail carried on the same train with the passengers? 

Mr. Lorenz. That is a strong indication. 

Mr. Stewart. I think the record should show that that question 
is predicated on the company's figures and not upon the department's 
figures as rendered. 

Mr. Mack. The space actually used in the service at the time the 
space was taken? 

Mr. Stewart. That includes dead space. 

Mr. Rowan. Did not the department check up all the space that 
was used? I think Mr. McBride testified that they did, in order 
to satisfy themselves that the reports of the companies were sub- 
stantially correct. 



RAILWAY MAIL PAY. 711 

Mr. Stewart. Yes; but the companies charged to us all the dead 
space as well as deadhead space and we excluded the dead space from 
the mail charge. 

Mr. Mack. That was also done in the passenger space, and I think 
Dr. Lorenz has previously testified that, in his opinion, if it was 
included in one case it ought to have been included in the other; 
so, for the purposes of this comparison, it seems to me eminently 
fair that it should be done, not as determining a definite rate, but, 
as Dr. Lorenz has unqualifiedly stated, it is a clear indication of 
underpay. It may not be exactly $15,000,000, but, so far as we can 
arrive at any general sort of figure, it seems to me that that is about 
right. 

Mr. Stewart. Of course, I am not objecting to Dr. Lorenz's per- 
sonal view about the matter, but I want the record to show that he 
answered the question upon the basis of the companies' own figures 
and not the department's figures as to the service rendered. 

The Chairman. Before we adjourn I want to know if there is 
anything further you gentlemen would like to submit. 

Mr. Peters. I do not know anything from our side. We want to 
prepare a summing up. (For summary, or brief referred to, see 
Addenda, p. — .) 

The Chairman. It is the desire of the committee to give every 
possible opportunity; but, after consultation with members of the 
committee, it is our opinion that we would like to have you file what- 
ever briefs you have, or supplemental information or views, with 
the committee by the 1st of June, and we will close the hearings by 
that time. 

Mr. Stewart. For the department I want to ask the privilege of 
filing a brief in review of the testimony that has been taken before 
you. I do not know whether it will be possible to finish that by the 
1st of June, but I will try to do so. (In response to inquiries of the 
chairman, the Post Office Department, by Hon. Joseph Stewart, its 
Second Assistant Postmaster General, in a letter, dated July 12', 
1913, stated that it would be impracticable to submit the brief re- 
ferred to at an early date. The brief, when submitted, will appear 
in a supplement to this volume.) 

Thereupon, at 6 o'clock p. m., the hearing adjourned. 



ADDENDA TO HEARINGS 



JANUARY 28 and 29, FEBRUARY 7, 12, and 17, 1913 (Vol. 1) 
MARCH 27 and 28, 1913 (Vol. 2) 
APRIL 8, 1913 (Vol. 3) 
APRIL 22, 1913 (Vol. 4) 
MAY 14, 1913 (Vol. 5) 



713 



ADDENDA. 



The following data presented during the course of and subsequent 
to the hearings, which were closed on May 14, 1913, are by direction 
of the chairman here inserted in the hope that same may be of assist- 
ance to the reader in elucidating and clarifying the points brought 
out in the hearings proper. 

714 



ARE OUR RAILROADS FAIRLY TREATED? 

To supplement his testimony why mail earnings should be equiva- 
lent to the earnings from otner train service and to indicate the 
necessity of increased rates, generally, including mail rates, Mr. H. E. 
Mack, manager, mail traffic, the Missouri Pacific Railway Co. et al., 
submits the following address on the subject above indicated by 
Mr. Benjamin F. Bush, president of the Missouri Pacific Railway Co. 
and the Denver & Rio Grande Railroad Co., delivered before the 
Economic Club, New York City, Tuesday, April 29, 1913: 

Mr. President and gentlemen of the Economic Club, a careful and impartial anal- 
ysis of the railroad situation as it exists to-day irresistibly forces the conclusion that 
there is no subject before the people, no policy engaging the attention of the Govern- 
ment, that in its future economic aspect foreshadows more dangers, both to the com- 
merce of this country and to our institutions, than does that of railroad transporta- 
tion; therefore, that it be solved rightly it should receive the most scrupulous 
consideration. 

The wonderful commercial progress of the United States has been made possible 
only by the railroads. Since 1870, when the impetus given railroad construction 
began, the wealth of this country has increased from $30,000,000,000 to the enormous 
sum of $140,000,000,000. Its foreign commerce, in the main largely dependent upon 
the railroads, from $800,000,000 to $4,000,000,000. The internal commerce of the 
railroads to-day has reached the stupendous figures of over 293,000,000,000 of units 
of service — being the tons of freight hauled 1 mile and the passengers carried 1 mile. 

The volume of this railroad commerce has nearly doubled in 12 years, and taking 
cogDizance of the alert and progressive spirit of our people and our still latent ana 
undeveloped resources — in farm, mine, forest, and factory— an alluring promise is fore- 
shadowed for a continued increase. 

The fulfillment of this promise rests entirely upon the ability of the railroads to 
improve their existing plants to a higher state of efficiency, to extend their lines into 
the undeveloped regions, and thereby provide the necessary facilities for the prompt 
movement and distribution of the products arising from the awakened activity. The 
commercial supremacy of the world is the heritage of our Nation if the means at out 
command are wisely applied. 

As to how the railroads can secure the money necessary to make the improvements 
and extensions to efficiently provide for the carriage of the existing and increasing 
traffic, so that all lines of industry may develop and operate to full advantage ana 
our vast tide of commerce still further expand and flow unrestricted to its final haven,, 
is "the railroad problem." 

As the conditions are to-day, by reason of not having the means at their command, 
the railroads, with few if any exceptions, can not give proper movement to the large 
volume of existing traffic. This was likewise true in 1906, 1907, 1910, and 1912. The 
transportation facilities are not keeping pace with the increasing traffic requirements. 

At the period of their inception, railroads were crudely constructed, but they sup* 
plied the needs of the time in moving the sparse traffic then offered for shipment.. 
They were built on the lines of least resistance, to meet the varying characteristics of 
the contour and topography of the country traversed. Later, with the growth of traffic 
and more urgent requirements, radical improvements had to be made to meet the 
changed conditions. Practically the lines had to be almost rebuilt — in reducing 
grades, eliminating curves, replacing wooden with more substantial steel and concrete 
bridges, widening roadbed and embankments, ballasting track, deepening and widen- 
ing ditches, constructing cross drains, building viaducts over road crossings, building 
sidings, passing and double tracks, providing heavier rails and ties, larger engines 
and cars, spacious terminals in large cities, more commodious station buildings, engine 
houses, shops, and many other appurtenances. As the means have permitted, this 
work of rebuilding and enlarging and improving the roadbed and equipment has been 
prosecuted, so that a higher standard of service and efficiency might be forthcoming, 

715 



7 16 RAILWAY M.UL PAY. 

Billions of dollars have been already expended in this work, but much yet remains 
to be done before the roads reach that stage of completion that the constantly increas- 
ing traffic can be satisfactorily handled. This will require more billions of dollars. 
The money can not be supplied from earnings, as on account of inadequate compen- 
sation for service rendered the earnings in many cases are scarcely sufficient to main- 
tain the properties in a solvent condition. 

How then can this necessary capital be obtained? A railroad to obtain money for 
extensions' into new -fields or for the improvement of existing lines must, like a mer- 
chant, have an established credit. It must be able to show by past or current opera- 
tions that it will be able to meet the new interest obligations it assumes and have a 
surplus over and above all its requirements. Not many railroads are able to do this 
under the existing operating conditions of high wages paid for labor, increased cost of 
materials, the higher standard of service demanded by the people and governmental 
compulsory expense and regulation of charges for transportation. 

Legislation of the most onerous character has in recent years been enacted by 
Federal and State authority, entailing numerous expenditures without any compensa- 
tory provision, many of the acts being entirely without beneficial results to the public 
and only an economic waste. Three or four bills now being urged upon Congress are 
estimated to involve an expenditure by the railroads within the next four years of 
nearly $1,500,000,000. 

These many expenses over which the railroad manager has no power of control have 
steadily increased the unit cost of operation, and as the unit of compensation for 
transportation service is regulated by Federal and State authority and is more often 
reduced than advanced, it follows that the unit of profit is steadily decreasing. If 
these two opposing units of conditions, cost and compensation, are allowed to continue 
in their course, it means they will meet in time and all profit will be expunged. 

It may be thought, however, that the revenue derived from the increased business 
will more than offset the increased expense. Such is the view of the ordinary layman 
who has given the matter only cursory study. If the roads were not working to their 
full capacity — that is, if they had unused engines, cars, tracks, and terminal facili- 
ties — they could to some degree for a time offset the increased expenses by addi- 
tional earnings, but when, as in 1906, 1907, 1910, and 1912, they were burdened with 
business beyond their capacity, the excess entails an expense much greater than the 
average cost. 

The gross earnings of the railroads increased largely during the last half of 1907, but 
notwithstanding this, the net earnings decreased over $22,000,000. For the last six 
months of 1910 the gross earnings increased over $55,000,000, while the expenses in- 
creased over $84,000,000. The volume of traffic moved in those years was very large, 
and for many months was in excess of the capacity of the carriers. 

The Interstate Commerce Commission in 1907 declared that the inadequacy of 
transportation facilities was alarming, yet when the railroads sought to advance their 
rates in 1910 to enable them to make better provision for the public demands and 
establish a higher financial credit the commission would not sanction the advance. 
The earnings for the roads for the two following years, 1911 and 1912, increased 
$11,054,000, but the operating expenses and taxes were swelled $98,544,000, leaving 
a less net revenue for 1912 than for 1910 by $87,490,000. This loss was equivalent to 
the impairment of their abilitv to raise over $2,187,000,000 at 4 per cent. It is thus 
that the net revenues of the railroads are depleted and their inability to borrow money* 
is further emphasized. Tf the railroads could retrieve such yearly net losses, they 
would be able to strengthen their credit in the financial marts and raise the necessary 
funds to meet the exigent demands of the business public. 

It is a mistaken conception, though one generally prevalent, that the railroads are 
overcapitalized and seek to obtain exorbitant rates from the public to pay interest 
on the excessive capital. The fact is that the physical properties of the railroads 
could not be duplicated to-day for anything like the present capitalization. The 
money of the owners which has not been capitalized, that has been expended on the 
roads from year to year since their pioneer days in betterments and improvements, 
roadbed, equipment, and their accessories, has long since absorbed any water there 
may have been in the securities. 

Such high authority as the Interstate Commerce Commission declared some time 
ago that the value of the physical properties of the American railroads was more than 
that represented by their stock and bonds. This capitalization is less than one-fourth 
that of the English railways and less than one-half that of the other European countries; 
yet, high as this capitalization of foreign railroads is, they are permitted to charge such 
rates as yield reasonable net returns. 

The average rate received by the United States railroads for hauling a ton of freight 
1 mile is three-quarters of 1 cent while the rate received in England for a like 



RAILWAY MAIL PAY. 71 7 

service is over two and a quarter cents, or three times as much. The rates of other 
European countries are also much higher than ours. As has been well said by Mr. 
Hill, "The American railway pays the highest wages in the world out of the lowest 
rates in the world, after having set down to capital account the lowest capitalization 
per mile of any of the great countries of the world." He might have added, they 
also give the best service in the world. 

I believe it can be truthfully said that the causes of complaint in the past against 
the railroads have been entirely eliminated . The published tariff of charges, acces- 
sible to all, governs to-day without discrimination or favoritism to any shipper. Com- 
plaints may arise and do arise as to^ rates on specified commodities between given 
markets, on account of their relation to the rates on like or correlated commodities 
to and from other markets. These complaints grow out of the rivalry between com- 
munities and are the main grievances of shippers now brought before the commission. 

Shippers naturally endeavor to get the lowest rates possible, and from the stand- 
point of their individual interests they believe that unjust inequalities exist in rates, 
although such inequalities may be the result of inexorable economic laws beyond 
the carrier's power to control. In the adjustment of these differences between mar- 
kets or rival communities, the decision of the commission is almost invariably in 
the direction of reducing the higher rates to the lower level. In this way there is a 
constant nibbling at the rate fabric, which ultimately will prove as injurious as a 
general reduction. 

It is axiomatic that mutuality of interest exists between the railroads and the 
shipper; that one can not prosper unless the other does and that injury to one will 
later bring injury to the other. If the shipper is charged unreasonable rates or is 
afforded poor service for the transportation of his wares, he suffers in his business, 
and this in time reacts upon the carrier. On the other hand, if the carrier receive'? 
insufficient compensation for its service by reason of inconsiderate legislation, or, by 
unwise direction of regulative authority, undue burdens are imposed which increase 
its expense, then it may, for lack of means, be unable to maintain its former standard 
of service and thus the shipper and the carrier are both injured. 

I recognize that the railroads are in duty bound to serve the public in the best 
possible manner and that the public, through the State, has the authority to regulate 
their operations, but when that authority is exercised with reference to the most 
minute and varied details, burdening the carrier with an unnecessary expense, which 
it cannot afford, then it would seem only just that the public, through the State, 
should allow it the necessary protection in the way of maintaining compensatory 
rates. This is on the principle that the right to regulate or control carries with it the 
obligation of reasonable protection. Authority carries with it responsibility and con- 
trol imposes the duty of protection. I believe that the same principle of justice should 
be administered to an association of individuals known as a corporation as is adminis- 
tered to the individuals personally in other capacities. 

Considering what the railroads have done through the investment of private capital — 
in upbuilding and developing the country, improving the conditions of living, uplift- 
ing the people and adding to all the comforts and conveniences of life — they certainly 
are entitled to that necessary protection which will enable them to continue in their 
vocation and elevate to a still higher plane the social, commercial; industrial, and agri- 
cultural conditions of our people. 

An eminent public official, an authority upon this subject, has said: "No just 
legislation upon this subject will proceed upon the theory that the public alone is in 
need of protection and that the railroads can take care of themselves. I have no 
sympathy with such an unfair and illogical contention. " 

The United States census returns show that from 1900 to 1910 the capital value 
of agriculture increased from nearly $20,500,000,000 to $41,000,000,000, or 100 per 
cent, and the capital value of manufactures increased from $9,000,000,000 to nearly 
$18,500,000,000, or over 105 per cent, while the capital of the railways increased 
from $10,250,000,000 to less than $14,500,000,000, or only 40 per cent. 

Here we have an increase in the capital of $30,000,000,000 in those two important 
industries of agriculture and manufacture which are almost entirely dependent upon 
the transportation lines for their successful operation, whereas the capital of the trans- 
portation lines with their many appurtenances increased only to the value of 
$4,250,000,000. 

And again, we find that the value of the products of manufactures increased from 
$11,500,000,000 to over $20,500,000,000, or 81 per cent. As the railroads get a double 
haul on a large portion of manufactures — the raw material in to the factory and the 
finished product out — it may be judged how essential it is that they beep abreast 
of the tiroes in road and equipment to properly take care of the constantly increasing 
tonnage implied by these enormous values. The largely increased volume of agricul- 

49396—14 53 



718 BAILWAY MAIL PAY. 

tural products, which last year exceeded $9,000,000,000 in value, must meet with 
more prompt consideration on the part of the carrier, for through the economic condi- 
tions governing the greater portion of it is rushed to market within a limited time. 

The census further shows that notwithstanding the large increase in the capital of 
manufactures of 105 per cent, the net return to the owners on the total of $18,500,000,000 
was over 12 per cent. Yet on the railway capital there was nothing paid on 
$3,500,000,000 and less than 5 per cent on $7,500,000,000. The services of the rail- 
roads make secure the most liberal returns on the enormous capital of $59,500,000,000 
invested in these two industries, and therefore the manufacturers and farmers should 
willingly aid in an effort to get the transportation rates advanced. It is of paramount 
importance to their own continued welfare that they exert themselves in that direction. 

I have already alluded to the immense volume of traffic conducted by the railroads 
and to the fact that it has increased double-fold in 12 years. Will it continue to in- 
crease in the same ratio in the coming years? 

The marvelous resources and latent strength of this country are in many respects 
scarcely trenched upon. Of the total land area of the country 46 per cent is in farms, 
but of this land in farms only 54 per cent is improved. Only 25 per cent of our great 
domain is producing anything of value. Ex-Gov. Hadley, of Missouri, when in 
office, stated in a public address that the development of Missouri's natural resources 
had scarcely begun; that there were three counties in the State which had no rail- 
roads and seven counties with less than 25 miles; and that of the 44,000,000 acres of 
land in the State more than one-half had never been touched with a plow. A like 
statement is applicable to many of our Western and Southern States. The opening 
up and cultivation of these undeveloped lands by the building of railroads would 
give a further impetus to general trade and industry. 

Then, again, our farmers are now awakened to the benefits to be derived from the 
application of scientific methods in agriculture, and more intensive yields will be the 
result. A more careful culture of our wheat lands will easily double the yield and 
still be less than that of European countries, whose land has been under cultivation 
for more than 2,000 years. A like increase can be effected in the other cereals and 
products of the soil. Our project for the reclamation of the swamp and arid lands 
goes on apace. 

There are vast mining lands with their hidden treasures yet awaiting development. 
The completion of the Panama Canal will open to us more directly the trade of the 
Orient and western South American countries, with their hundreds of millions of beings 
whose wants may be supplied with our merchantable wares. The value of our exports 
of manufactures is now over $1,000,000,000 annually, and at the present rate of increase 
it doubles every three or four years. Our foreign trade in other commodities is taking 
on a greater momentum. 

In all these we have a magnificent vista of possibilities which portends the con- 
tinual upward trend of our trade and commerce, with its concomitant of future steady 
employment for our people — the desideratum of all governments. The illimitable 
prospects betoken its continuance if ample provision is made for transportation. 

Now, with the present traffic of the railroads reaching the stupendous figures of over 
293,000,000,000 of units of service, what will the future increase mean if kept up in 
the ratio of the past? 

You all Joiow something of the capacity of the New York Central Railroad within 
your own great State, and the magnitude of its operations and transportation facilities. 
Four per cent of the volume of traffic now annually moved by our railways would at 
the present day tax the full capacity of that road, working day and night for one year. 
As the railroads operated to their full capacity in years of active business, like last 
year and other past years, an idea may be formed from this illustration of the magni- 
tude of the work that will have to be done in fitting response to the demands of com- 
merce. The commerce is increasing on an average of 8 per cent and more per year, 
and notwithstanding one-half of this yearly increase would tax the capacity of one of 
the first railroads in the land, no provision is being made, and no provision can be 
made, under tha rates now received for transportation service for the proper and safe 
conduct of this prospective traffic. 

Can the railrods meet this serious situation with which they are confronted? Yes, 
if allowed to charge a fair compensation for their services. The railroads now receive 
on an average per mile 1\ mills for hauling a ton of freight and less than 2 cents for 
carrying a passenger. If this average compensation could be increased even 1 mill, 
or the equivalent of the price of a postage stamp for 20 miles' service, it would extri- 
cate them from all further trouble and anxiety. It is scarcely conceivable that such 
* slight advance would injuriously affect any trade, industry, or person, yet it would 
be the means of conferring untold benefits upon the entire business of the country. 



BAILWAY MAIL PAY. 719 

The Hon. Martin A. Knapp, late chairman of the Interstate Commerce Commission, 
who had 20 years' experience on that board, after a careful study of this question from 
all viewpoints, expressed his deliberate judgment as follows: 

"Without regard to the personnel of railroad officials, without regard primarily to 
the interest of stockholders, but in the interest of public welfare and national pros- 
perity, we must permit railroad earnings to be adequate for railway improvement at 
advantage and profit. 

"The prosperity of the country is measured, and will be measured, by the ability 
of its railways and waterways to transport its increasing commerce. With a country 
of such vast extent and limitless resources, with all the means of production developed 
to a wonderful state of efficiency, the continued advancement of this great people 
depends primarily upon such an increase of transportation facilities as will provide 
prompt and safe movement everywhere from producer to consumer; and that we shall 
not secure unless the men who are relied upon to manage these great highways of 
commerce have fitting opportunity and the capital which is required for their needful 
expansion is permitted to realize fairly liberal returns." 

If the railroads are not allowed to charge a compensation for their services that will 
enable them to make a fair return on the investment with a reasonable surplus for 
betterments, improvements, and the establishment of their credit, the task on their 
part of meeting the situation will be hopeless. In equity and justice they are entitled 
to this, and I believe if the question were understood in its different phases the good 
sense and fairness of the American people would be asserted in support of the railroads. 

Not only have the railroads' expenses steadily increased of late years, but the pur- 
chasing power of the compensation received for their service has decreased. In other 
words, while the value of a given quantity of farm products will purchase 69 per cent 
more ton-miles of transportation than in 1900, the purchasing power of the compensa- 
tion received by the railroads for the transportation 1 mile of a given number of 
tons of freight in 1910 was 13 per cent, less than in 1900. 

With these adverse conditions confronting the railroads, it is absolutely necessary 
in order that they perform their functions to the public that they be allowed to advance 
at an early date their service charges. This is a matter of more vital concern to the 
welfare of the entire people than it is to the individual owners of the railroads. 

If the railroads deteriorate in the service rendered, as they undoubtedly must if 
the conditions are not changed, it unmistakably means that commerce will be retarded; 
that industry will languish; that the many fruits of agriculture will wane; that the 
proud eminence we have attained in our many varied pursuits will crumble, and the 
unrest, discontent, and dissatisfaction of an unemployed people may lead to the 
establishment of a new order of things with respect to the ownership and operation of 
the railroads of the country, with the attendant dangers to the perpetuity of our 
republican institutions. So the conclusion is irresistibly forced upon us that this 
railroad question is a Government problem, and one of very grave and serious concern, 
which should be satisfactorily settled, and the ominous dangers threatened averted 
thereby. 

The President of the United States, before his inauguration into office, asserted 
that— 

"The measure of service rendered by business to the people will be the measure by 
which the merit of business shall be judged." 

The railroads can accept this declaration and be satisfied to stand or fall by its 
concrete application. 

I believe it will always be found that in anv estimate made of the dignity and 
strength of our Nation, of the enlightenment and social comforts of our people, of the 
wealth and commercial greatness of our country, the significance of the railroads must 
stand forth — a marked, conspicuous, and important feature. 



BRIEF OF COMMITTEE ON RAILWAY MAIL PAY. 1 

Under date of June 26, 1913, Mr. Ralph Peters, chairman of the 
committee on railway mail pay, addressed two letters to the chairman 
of the joint committee, one submitting a brief or summary of prin- 
cipal points established by the testimony prepared by counsel for his 
committee, and the other a supplementary summary by Mr. V. J. 
Bradley, general supervisor of mail traffic, Pennsylvania Railroad Co. 
which read, respectively, as follows : 

Committee on Railway Mail Pay, 

Office of the Chairman, 
Pennsylvania Station, New York, June 26, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail Matter and 

Compensation for the Transportation of Mail, 

Senate Office Building, Washington, D. C. 
My Dear Sir: In compliance with the understanding at the close of the hearing 
on May 14, 1913, we beg leave to submit herewith a statement of the position of the 
railroads with reference to the question of compensation for the handling of the mails. 
This statement is a summing up of the principal points established by the testimony 
brought out in the hearings. 

We have endeavored as far as possible to make this statement brief and concise, so 
that a careful study will be sufficient to give anyone a clear understanding of the 
matter without wading through all of the testimony. 

In closing, our committee desires to call attention to the fact that the postal revenues 
will probably be increased this year, as the result of the operation of the parcel post, 
between $30,000,000 and $40,000,000. The greater portion of this is made possible 
by the use of the facilities furnished by the railroads. With the 5 per cent increase 
allowed under the last appropriation bill of Congress, it is estimated that the rail- 
roads will receive extra pay on this account of about $2,500,000, which will be only 
from 6 to 8 per cent of the increased gross revenue to be derived by the Post Office 
Department from the extra traffic. 

In view of the continued growth of the parcel-post traffic, and the consequent 
growth in revenues, it will be necessary for Congress to have information in regard 
to the weight of parcels, as well as of the remainder of the mails, in order to make a 
proper analytical study of the traffic. While securing the weights as a basis of com- 

Sensation for the railroads, information is thus secured for the benefit of the Post 
•ffice Department. Our committee feel that we are entitled to more compensation 
for this additional service we are performing, and that it would be dangerous to depart 
from the present basis of compensation until a longer experience has been obtained 
in the handling and developing of this traffic. 

We again desire to express our high appreciation of the fair and impartial consid- 
eration given us in all the hearings by yourself and the members of your committee. 
Very respectfully yours, 

Ralph Peters, Chairman. 

i Brief of Post Office Department summarizing the testimony from its viewpoint will appear in a sepa- 
rate volume, Hon. Joseph Stewart, Second Assistant Postmaster General, advising the chairman of the 
joint committee under date of July 12, 1913, that on account of press of other matters it would be imprac- 
ticable to have same ready for submission at an early date. 

720 



RAILWAY MAIL PAY. 721 

Summary of Principal Points Established by the Testimony, and Comments 
Thereon by the Committee on Railway Mail Pay. 

Point I. — In so far as House Document No. 105 (62d Cong., 1st sess.) may have seemed 
to support the allegation that the mail-carrying railways are overpaid in the annual 
sum of $9,000,000 or any other sum, that conclusion has now been officially aban- 
doned by the Post Office Department, and it has been made plain that, properly 
understood, that document demonstrates that these railways are actually underpaid. 

The language of Document No. 105 and of the contemporaneous reports and state- 
ments of the former Postmaster General created a widespread belief that the railways 
were overpaid about $9,000,000 for carrying the mails and supplying facilities for their 
distribution in transit. 

The earliest effect of this investigation was the complete abandonment by the 
Post Office Department of any claim that any reduction in the annual payments for 
railway services would result from the proper and equitable application of the plan of 
payment generally outlined in Document No. 105. 

Document No. 105 made no allowance for return on the investment; the Postmaster 
General now recommends such allowance, and allowance therefor will far more than 
wipe out the alleged overpayment of $9,000,000. 

In a brief statement of its position, submitted to the joint committee in October, 
1912, the committee on railway mail pay said, in part: 

'"The Postmaster General's erroneous assertion that the railways were overpaid 
'about $9,000,000 ' in the year 1909 rests primarily upon his adopting an unprecedented 
theory which allows nothing for a return upon the capital invested in railway prop- 
erty. " (Preliminary Kept., p. 9.) 

In response to this criticism the Post Office Department admitted that just compen- 
sation for the railway services and facilities supplied in connection with the postal 
service necessarily includes a fair return upon the capital invested. In a letter to 
Hon. Jonathan Bourne, jr., chairman of the joint committee, dated January 9, 1913, 
Postmaster General Hitchcock said, in part: 

"* * * I am willing to recommend * * * that in addition to the operating 
expenses and taxes apportionable to the mail service and 6 per cent thereof companies 
may be allowed such additional amounts, if any be necessary, as shall render the 
whole a proper proportion of a fair and reasonable return on the value of the property 
necessarily employed in connection with the mail service." (Preliminary Rept., 
p. 96.) 

Subsequently Postmaster General Hitchcock prepared and, on January 20, 1913, trans- 
mitted to the chairman of this joint committee, with his approval, a proposed sub- 
stitute for S. 7371 (the bill formulated in accordance with the supposed original pro- 
posals of Document No. 105), which substantially embodied provision for the return 
on invested capital. (Preliminary Rept., pp. 109-111.) 

Discussing this provision of the bill, in giving testimony on January 28, 1913, Hon. 
Joseph Stewart, Second Assistant Postmaster General, who had direct charge of 
the investigations reported in Document No. 105, answering an inquiry as to the 
reasons that led the Post Office Department to recommend "an allowance of a reason- 
able compensation on capital charges," said: 

"Because, Senator, upon a further and more careful consideration of the subject 
we were convinced that the railroad companies were entitled to consideration for 
this additional element. * * * It is a difficult question, but we believe that 
that is an element which should enter into compensation to some extent, and having 
come to that conclusion we submitted this amendment to our original plan. " (Testi- 
mony, p. 9.) 

The effect of adding to the estimated payments shown in Document No. 105 the 
just allowance for return on invested capital thus conceded would be to increase 
the aggregate of those estimates beyond the present total payments. This is fully 
admitted by the Post Office Department. The testimony of Gen. Stewart includes 
the following: 

"Mr. Stewart. * * * If the railroad companies are to be allowed credit for what 
would be a fair return on the value of the property employed in performing the service, 
it would increase the amount considerably. 

"The Chairman. Have you any idea as to what the increase would be? 

"Mr. Stewart. I have no definite idea, because of the difficulty of arriving at a 
physical valuation of the property employed. 

"The Chairman. Have you an impression? In other words, what change would 
the last suggested bill, printed on page 109 of this blue pamphlet, make on the 
$9,000,000 estimated difference in payment to the railroads, as indicated in Document 
No. 105? How much, if any, would it decrease that $9,000,000 difference in pay? 



722 KAIL WAY MAIL PAY. 

• 

"Mr. Stewart. Stating from a general impression of the subject — and that is all I 
have— I should say that it would eliminate the $9,000,000; that is, if a fair return 
were allowed the railroad companies upon a fair valuation of the property employed 
in performing the mail service in addition to the cost of performing it and 6 per cent 
The aggregate amount paid the railroad companies now is probably not in excess of 
what that aggregate amount would be. 

"The Chairman. So that, in the adoption of the suggested plan of substitution of 
space for weight, an allowance of a fair amount on the capital with no duplication of 
credit, such as the 6 per cent, the actual operating expenses for handling the mail, 
there would be no reduction, in your opinion, of the gross amount now paid under 
the present system to the railroads? 

"Mr. Stewart. That is my judgment on the best information I have . ' ' (Testimony 
p. 8.) 

The further testimony of this high officer of the department, to whom was intrusted 
the responsibility of representing the Post Office Department before the joint commit- 
tee, indicates that the elimination of the $9,000,000 difference is the minimum effect 
which he estimates a reasonable allowance for a fair return to invested capital could 
have; that the actual increase in the estimates of Document No. 105 might consid- 
erably exceed that sum. 

"The Chairman. If I understand, should Congress see fit to enact legislation as 
presented by your modified plan it is your opinion that the net result in dollars to 
the Government would be practically the same, or possibly we would pay the trans- 
portation companies even more than they are now paid under the present method, 
90 per cent of the mail transportation being paid for according to weight, and 10 per 
cent according to space as represented in the R. P. O. cars. Am I correct in that 
statement? 

"Mr. Stewart. That is substantially correct." (Testimony, p. 10.) 

A little further along Gen. Stewart was asked (testimony, p. 20) whether, supposing 
the railways to be entitled to 6 per cent on property worth not less than $14,000,000,000 
and that 1.78 per cent of that return should come from the mails, they "ought to 
receive $15,000,000 annually more than they now receive." He replied: "That is 
true, granting those premises." 

That the validity of the premises is not open to doubt is evident when it is noted 
that the book value of the investment in road and equipment of the American railways, 
reported by the Interstate Commerce Commission, as of June 30, 1910 (Statistics of 
Railways for 1910, p. 78), was $14,387,816,099 and the same authority shows (p. 71) 
that 1.78 per cent of the gross receipts of that year was derived from the mails. Since 
June 30, 1910, the additional capital invested in railway property, in actual cash, 
has probably exceeded $3,000,000,000. 

In the Minnesota rate case, decided on June 9, 1913, the Supreme Court of the 
United States has indicated that, in ascertaining the intrastate return upon railway 
property, the apportionment of the value of that property between intrastate and inter- 
state business ought to be on the basis of the relative use of the property in the two 
sorts of business rather than on the basis of the relative revenue. On the same prin- 
ciple the apportionment of value of railway property to mail service ought to be on 
the basis of use rather than on the basis of revenue. If the apportionment were 
made upon the basis of use, the portion of value chargeable to mail service would be 
more than 1.78 per cent of the total because the revenue from mail service is relatively 
smaller in proportion to use, than from any other branch of railway service. The 
Postmaster General's own apportionment of expenses (Doc. No. 105, p. 280) showed 
that the mail service should be charged with 1.95 per cent of the total expense. This 
figure of 1.95 per cent is probably a much more accurate indication of the use of rail- 
way property in the mail service than is the figure 1.78 per cent derived from the 
revenue. 

The Post Office Department now concedes that Document No. 105, through errone- 
ous treatment of so-called "dead space," underestimated the pay due the railways. 

The Post Office Department, in addition to admitting that Document No. 105 
should be revised in order to make a reasonable allowance for a just return on invested 
capital, also concedes that the so-called "dead space" was erroneously treated, with 
the result of underestimating the compensation fairly due the railways. 

Messrs. Joseph Stewart, C. H. McBride, and A. N. Prentiss, for the Post Office De- 
partment, and Messrs. H. E. Mack, V. J. Bradley, and H. P. Thrall, for the railways, 
agreed upon the following, which was submitted to the joint committee under date of 
March 15, 1913: 

"The differences between the car-foot mile earnings by the two calculations are due 
entirely to the fact that the Post Office Department, upon receipt of the data as to space 
from the railroads, made certain modifications therein, based upon the space deemed 



KAILWAY MAIL PAY. 723 

by the Post Office Department to be necessary for its purposes and upon its rules with 
respect to assigning other space reported by the companies as mail space, which 
resulted in a reassignment of the car-foot mile space to the different subdivisions of 
passenger- train service." (Testimony, p. 324.) 

The foregoing shows that unless the modifications referred to were justified, addi- 
tions to the estimated payments under the proposed system would have to be made 
corresponding in extent to the erroneous changes. In his letter of January 9, 1913, 
already quoted from herein (p. 721), Postmaster General Hitchcock conceded, in effect, 
that these modifications ought not to have been made as to railway post-office cars, by 
saying— 

"I am willing to recommend * * * that in computing the car-foot miles the 
mail service shall be charged in both directions for a line of railway post-office cars 
with the maximum space authorized in either direction." (Preliminary Rept., p. 96.) 

Mr. C. H. McBride, Superintendent of the Division of Railway Adjustments in 
the Post Office Department, testifying for the department, acknowledged this error 
and the necessity for its correction. 

"Mr. McBride. I think where the demand of the service requires them to run an 
additional car in addition to the regular baggage car they should be credited with 
the return space if they do not use it. 

"The Chairman. If it is not used? 

"Mr. McBride. Yes. 

"Mr. Rowan. Did you carrv that out in practice in the preparation of Document 
No. 105? 

"Mr. McBride. No; we did not. But I think we have said since that we should 
have done so." (Testimony, p. 511.) 

Other erroneous modifications of the space reported by the railways were also 
admitted on behalf of the department. The corrected edition of Document No. 105 
shows (p. 59) that 211,413,012.90 car-foot miles of so-called "dead space," reported 
by the railways as chargeable to the mail service, were not only disallowed as charges 
against that service, but were actually transferred bodily and made charges against 
the passenger service. During the proceedings of the joint committee on May 14, 
1913, the following colloquy took place: 

"Mr. Peters. I think the records will show that Mr. McBride stated that he did 
not consider it was fair to put into the space of the passenger operation of the train 
the dead space that really belonged with the mails, and that that has not been fair, 
and that it altered the figures very materially. 

"Mr. Lloyd. Did you make that concession, Mr. McBride? 

"Mr. McBride. I think that statement is made in a letter from the former Post- 
master General, Mr. Hitchcock. In the consideration of the question he stated that 
certain modifications of the use of the data were proper." (Testimony, p. 648 ^ 

Mr. M. O. Lorenz, associate statistician of the Interstate Commerce Commission, an 
impartial expert, responding to an inquiry by the chairman of the joint committee, 



"I can not see how there can be two opinions. It seems to me just as you can not 
operate a freight service without hauling empty freight cars, and just as you can not 
operate passenger service without hauling empty space, you can not operate mail 
service without hauling empty space, and in comparing the various departments, 
either on cost or revenue basis, you should include all of the space used and unused 
which is hauled in connection with that service, and I can not understand, therefore, 
why on this particular point the Post Office Department should have rejected the 
dead space from the mails and put it in the passenger service. It seems to me they 
made a clear error." (Testimony, p. 514.) 

The testimony also shows (pp. 512-513) that Mr. McBride, speaking for the depart- 
ment, admitted that the space in passenger coaches occupied by employees permitted 
to travel in those coaches without charge, on postal business but not actually in charge 
of mails — worth, in November, 1909, at 2 cents per mile, $97,650.89— (testimony of 
Second Assistant Postmaster General Stewart, p. 27), was attributed, in the prepara- 
tion of Document No. 105 to the revenue passenger service and not to the mail service. 
This value for an entire year upon the basis of November, 1909, was $1,171,810.68. 
(Testimony, p. 579.) 

Document No. 105, properly understood, demonstrates that the railways are actually 
underpaid. 

These considerations lead to the inevitable conclusion, formally admitted on the 
record, by the department, that, although the adoption of the plan of payment sug- 
gested in Document No. 105, as modified by the Postmaster General on January 9 
and January 20, 1913 (Preliminary Rept., pp. 96-97, 109-111), might increase the cost 
of railway service to the department, it could not decrease that cost. They fully 



724 RAILWAY MAIL PAY. 

support the statement made by the associate statistician of the Interstate Commerce 
Commission, Mr. Lorenz, who, referring to Document No. 105, said: "* * * that 
document seems to demonstrate the fact that the railways are underpaid." (Testi- 
mony, p. 379.) 

Point II. — The existing law has never worked to the disadvantage of the Govern- 
ment, but has failed to do justice to the railways by reason of infrequent weighing; 
absence of pay for nearly 40 per cent of the space occupied as traveling post offices; 
the performance, without pay, of side and terminal messenger service, and the 
unjustifiable reduction in pay by the act of Congress dated March 2, 1907, supple- 
mented by order No. 412 of the Postmaster General, changing the divisor. 
The foregoing is an extract from the response of the chairman of the committee on 
railway-mail pay, dated October 3, 1912 (Preliminary Rept., pp. 7-8), to the inquiries 
propounded by the chairman of the joint committee (Preliminary Kept., p. 6), which 
response was somewhat in the nature of a formal preliminary statement of the case of 
the railways. It has been fully corroborated by the testimony subsequently taken. 
The several propositions will be considered separately. 

A. THE PRESENT LAW HAS NEVER OPERATED TO THE DISADVANTAGE OF THE GOVERN- 
MENT, BUT IS UNJUST TO THE RAILWAYS. 

These general conlusions are substantiated by the references to and quotations 
from the testimony already introduced, which lead directly and unmistakably to the 
conclusion that the railways are underpaid. 

A further proof that the present law is not disadvantageous to the Government but 
is unjust to the railways is afforded by a comparison of the compensation for mail 
service with the compensation for other services performed on passenger trains. 

The committee, consisting of representatives of the Post Office Department and of 
representatives of the railways, agreed that the data reported by the railways foi No- 
vember, 1909, representing 187,760 miles of service, showed that the earnings pei car- 
foot mile in mail service was only 3.37 mills as compared with 4.34 mills, the earnings 
per car-foot mile in all other services on passenger trains. (Testimony, p. 324.) 

The only criticism of this comparison offered by the representatives of the Post Office 
Department was that the comparison was based upon the full amount of space charged 
by the railways to the mail service without any deduction for dead space. It was not 
disputed, however, that in this respect the mail service had been treated just as the 
other services on passenger trains had been treated. 

A further proof that the present law is not disadvantageous to the Government is 
afforded by the testimony that on the Atchison, Topeka & Santa Fe Railway for the 
months of September and October. 1911, the railway company actually received 
much less from the Government per gross ton -mile on mail traffic than was received 
from freight shippers per gross ton-mile on less-than-carload freight traffic . The figures 
were that the revenue per gross ton-mile on mail traffic was 4.08 mills, as compared 
with the revenue of 6.50 mills per gross ton-mile on less-than-carload freight traffic. 
The combined weight of the car and its contents was taken as the basis of this com- 
parison, and this basis was expressly approved. (Testimony, pp. 518-519.) 

A system that produces underpayment is not disadvantageous to the Government 
in the ordinary sense (although it is actually disadvantageous in the broad sense that 
no government can afford to deal unjustly with any citizen or group of citizens), but 
is manifestly unjust to the railways, which must suffer impairment of their capital or 
recoup the losses due to underpayment for the mails by higher charges for passengers 
or freight. 

B. MAILS SHOULD BE WEIGHED ANNUALLY. 

It is admitted that the railways ought to be paid for all the mail which they carry 
(testimony, p. 188), and for no more than they carry. Changes in the volume of mails 
on particular routes are frequent and often large in amount (testimony, pp. 190, 584, 
585). A four-year period is entirely too long to be the term of any contract for uni- 
form annual payments, conditioned on the volume of any kind of traffic movement at 
its commencement (Preliminary Rept., pp. 18-19; testimony, pp. 117-118) and would 
not be considered or tolerated in any other business. The consequences of this system 
of quadrennial weighings are frequently so intolerably unjust that no one couM 
attempt to defend them. One such instance was occasioned when the manufacture of 
stamped envelopes and newspaper wrappers, made for the department, was removed 
from New England to Dayton, Ohio, just after the mails carried by the Ohio railways 
had been weighed and their rates of pay fixed for the four years ensuing. After carry- 
ing all this matter in the mails for more than three years the greater portion of it was 
taken out ol the mails just prior to the next weighing. So that not a dollar of com- 



RAILWAY MAIL PAY. 725 

pensation was ever received or ever will be received by any railway on account of 
this heavy mail movement. An officer of the Post Office Department testified that 
during the fiscal year 1912 no less than 4,588,339 pounds of this matter, similar to that 
formerly carried in the mails, went out of Dayton as freight (testimony, pp. 584-585). 
It is also in evidence that during this year the mails from Dayton were being weighed 
< uring the disastrous floods which practically brought all the business of that region 
to a standstill (testimony, p. 585). The following is quoted from the testimony of 
Mr. A. H. Rowan, assistant to the vice president of the New York Central Lines: 

"In the fall of 1908 when the mails were weighed in New England the country was 
just recovering from the financial depression of 1907, and the weights of the mail on 
the Boston & Albany Railroad between Boston and Albany showed a loss in weight 
over the four years previous, a most unusual thing to have happen. The weighing 
of the mails on the Boston & Albany during the fall of 1912, which will govern the 
compensation for four years beginning July 1, 1913, shows an increase of 34 per cent 
over 1908 weighing, from which you can readily see that we have been carrying for 
several years past a considerable volume of mail for which we have had absolutely no 
compensation, as the weighing was conducted at an abnormal time. Conditions 
became normal again in the spring of 1909." (Testimony, p. 585.) 

Innumerable instances of similar import could be adduced. Annual weighings 
covering 30-day periods need not increase the expense of ascertaining the basis of 
payment, and the railways confidently appeal for a statutory rectification of the 
administrative provision of the present law which has lately been regarded by the 
department as an obstacle to weighings oftener than once in four years. In no other 
way can the railways be guaranteed payments fairly proportioned to the services 
rendered nor the Government fully protected against the danger of paying for services 
that it no longer receives. 

C. RAILWAYS SHOULD BE PAID FOR APARTMENT CARS. 

It is scarcely necessary to argue me injustice involved in the discrimination which 
denies payment for distributing space of less than 40 linear feet on trains while the 
law recognizes the necessity of paying for precisely similar space of 40 linear feet and 
upward. The Postmaster General, in Document No. 105 (p. 3) recognized the arbi- 
trary character of this discrimination when he says, "No additional compensation is 
allowed for space for distribution purposes occupying less than 40 feet of the car 
length. This distinction is a purely arbitrary one and without any logical reason for 
its existence." 

The especial injustice to the shorter and lighter routes is set forth on pages 172-173 
and on page 71 of the preliminary report. 

It has been shown that there are over 4,000 of these mail apartment cars in daily 
use, performing the same work for the Post Office Department as the full railway 
post-office cars. 

With the recent introduction of the parcel post there is still greater demand for 
this kind of facility. 

The Post Office Department is now requiring that these mail apartment cars shall 
be of the highest standard of construction. In many cases steel cars are demanded. 
And the rate of pay should undoubtedly recognize these facts. 

D. RAILWAYS SHOULD BE RELIEVED FROM THE PERFORMANCE OF SIDE AND TERMINAL 
SERVICES OR FAIRLY PAID THEREFOR. 

The stagecoach which, although superseded some 80 years ago, was the immediate 
predecessor of the railway as the principal mail carrier, could readily make a short 
detour for the purpose of delivering the mail pouch at any post office on its route or 
extend its journey to any post office located in city or village at either terminus. It 
was required to make terminal deliveries and to make detours en route that did not take 
it more than one-fourth of a mile from its regular road. Without interruption, from 
1835 to 1913, the same services have been required from the railways, although their 
tracks of steel are highways from which their vehicles can not deviate. (Preliminary 
Rept., pp. 18-19; testimony, p. 118.) Postmaster General Meyer, on February 19, 
1909, gave the annual value to the department of these services as $4,393,000 (testi- 
mony, p. 211) and Second Assistant Postmaster General Stewart declared that it 
would cost the Government "over $4,000,000 a year" (testimony, p. 17) te undertake 
them. These services probably cost the railways less than the aggregates stated, but 
they are costly and arduous, and in many cases their cost exceeds the payments for 
the routes on which they are rendered. (Preliminary Rept., p. 20; testimony, pp. 
66-69, 129, 231, 254, 268, 570.) The railways do not wish to thrust upon the depart- 
ment the burden of services which would aetuallv cost the latter more than they really 



726 RAILWAY MAIL PAY. 

cost the former, and under proper conditions are not disposed to refuse responsibilities 
that increase the efficiency or diminish the cost of the postal service. They insist, 
however, that these services are not reasonably a part of the railroad transportation 
service, and can not lawfully be required of them as common carriers. Therefore, if 
they are to be further called upon to aid the postal service in this manner, they do not 
hesitate to urge that they ought to be specially and adequately compensated for all 
side and terminal services. 

E. REDUCTIONS OF MAIL PAY IN 1907 AND SUBSEQUENTLY UNWARRANTED. 

Every considerable element in the cost of supplying railway transportation in any 
part of the United States has greatly increased since the year 1901. The wages paid 
to railway employees (and wages absorb little less than two-thirds of the aggregate 
expended for operation), have been repeatedly and greatly augmented; fuel has 
become much more expensive; locomotives and cars are more costly; the standards 
of service demanded by the public have been notably raised; employers' liability 
laws, hours of service laws, full-crew laws, etc., have increased operating expenses; 
taxes have been multiplied in amount and new and additional forms have been 
imposed; even the rates of interest demanded by investors have advanced. These 
factors operate with peculiar force as to passenger- train service, because of the increas- 
ing necessity for the use of steel cars in passenger trains, involving heavier trains, and 
consequently larger cost, and also involving larger investment. Recent legislation 
specifically requires the more extensive adoption of steel mail cars. Hence there is 
no conceivable justification for the reduction of any rate for any considerable volume 
of service, and especially of mail service, unless that rate was excessive before these 
changes occurred. The rates of railway mail pay were not excessive in 1901. The 
Congressional Joint Commission to Investigate the Postal Service, which reported 
on January 14, 1901, after a prolonged and exhaustive inquiry reached this conclusion. 
Its report shows that Senator William B. Allison, of Iowa; Senator Edward S. Wolcott, 
of Colorado; Senator Thomas S. Martin, of Virginia; Representative Eugene F. Loud, 
of California; Representative W. H. Moody, of Massachusetts; and Representative 
T. C. Catchings, of Mississippi, concurred in the following: 

"Upon a careful consideration of all the evidence and the statements and arguments 
submitted, and in view of all the services rendered by the railways, we are of the 
opinion that 'the prices now paid to the railroad companies for the transportation of 
the mails' are not excessive, and recommend that no reduction thereof be made at 
this time. " (S. Doc. No. 89, 52d Cong., 2d sess., pp. 19, 22, 25, 29.) 

Notwithstanding the judgment above quoted, the railways were subjected to the 
heavy reduction provided for in the acts of Congress of March 2, 1907, and May 12, 1910 
(testimony, pp. 98-99, 101-110), and by the Postmaster General's divisor order, No. 
412, which superseded order No. 165 of March 2, 1907 (testimony, pp. 99-100). 
The annual reduction effected by the acts of Congress referred to amounted to 
$2,723,658.90, on the basis of the volume of mail transported on the respective routes 
from three to six years ago, and is now much larger, while the aggregate annual reduc- 
tion effected by the divisor order on July 1, 1910, amounted to $4,941,940.34. The 
latter aggregate, if brought up to date, would also be greatly increased. The natural 
operation of the system of decreasing rates for increasing weights, supplemented by 
these unjustifiable reductions, reduced the percentage of postal revenues expended for 
railway services from 34.18 per cent in 1901 and 27.10 per cent in 1907 to 21.26 per cent 
in 1911. (See testimony and chart submitted by W. A. Worthington, testimony, pp. 
341-342.) That a restoration of the rates in force prior to 1907 and the revocation of 
the divisor order are plainly required is most respectfully submitted. Jt should be 
noted that the Court of Claims of the United States, in Chicago & Alton Railroad v. 
United States, decided on June 2, 1913, held that the Postmaster General had no 
authority to impose the reduction effected by the divisor order. 

P. THE WEIGHT BASIS IS SIMPLE AND, WITH THE MODIFICATIONS ABOVE SUGGESTED, 
WILL BE FAIR BOTH TO THE GOVERNMENT AND TO THE RAILWAYS. 

The present system of payment is based as to 90 per cent upon weight, and therefore 
utilizes the commonly accepted basis for charges applied to the movement of com- 
modities by rail, while it has the least complexity possible in any system that would 
prove sufficiently elastic progressively to adapt itself to the varied and changing con- 
ditions of the service. 

This system is easily understood or explained if it is borne in mind that it rests 
on the principle of (a) payment for the volume of mails transported, measured by 
weight and distance carried, and (b) payment for car space required for distribution 
in transit (at present, however, illogically and unjustly confined to car space not 
less than 40 feet long). About 90 per cent of the whole amount expended for rail- 



RAILWAY MAIL PAY. 



727 



way services is included under the first heading and the balance under the second 
heading. 

The 90 per cent paid on the weight basis is expended under nine separate per 
mile per year rates, beginning with a rate for the least weight recognized and decreas- 
ing rapidly as the weight carried increases. The lowest rate is $19.24, applied to 
mail in excess of a daily per mile average of 24 tons, and to earn this rate the railway 
to which it is paid must carry a daily average of 1 ton 1 mile for an entire year, 
making the average rate per ton per mile 5.27 cents. A passenger on the same train, 
if he weighed 160 pounds and paid 2 cents per mile, would pay at the rate of 25 cents 
per ton per mile; if he paid 3 cents per mile it would be at the rate of 37.50 cents per 
ton per mile. Land-grant routes receive 80 per cent of these rates. The .following 
table shows the standard rates and the proportions thereof to which land-grant routes 
are entitled: 



Average weight per mile per day in pounds. 



200 

500 

1,000 

1,500 

2,000 

3,500 

5,000 '. 

Each additional 2,000 pounds up to daily average of 48,000 pounds 

Each additional 2,000 pounds beyond average daily weight of 48,000 
pounds 





Proportion of 


Annual rate 


annual rate per 


per mile of 


mile of route 


route. 


allowed to land- 




grant routes. 


S42.75 


$34.20 


64.12 


51.30 


85.50 


68.40 


106. 87 


85.50 


128. 25 


102. 60 


149. 62 


119.70 


171.00 


136. 80 


20.30 


16.25 



15.39 



Weights intermediate between those shown in the first column of the table are proportionately paid for, 
but no fraction of any unit weight is recognized unless it is sufficient to entitle the carrier to a payment of 
85.5 cents. 

In addition to the pay received at these rates for weight if a railway supplies car 
space on any train equal to 40 or more linear feet, such space being occupied by 
postal clerks who distribute the mails while in transit, for whose transportation no 
other charge is made, it receives pay for this additional facility at one of four rates 
per mile per year, the lowest rate being $25 for 40 feet and the highest $40 for 55 
feet or more. The other rates are $27.50 for a 45-foot car and $32.50 for a 50-foot car. 
This is what is called R. P. O. pay. 

Space pay amounts to about 10 per cent of the aggregate. No payment is made 
for less than 40 linear feet of space so occupied and used. 

It is submitted that there is no real complexity in this scheme of payment. It 
rests primarily upon weight, a factor easily verified by either the Post Office Depart- 
ment or the railways, and therefore one that supplies a basis on which, if the rates 
are fair and the weighings are sufficiently frequent, the payments are necessarily and 
justly proportioned to the expansion or contraction of the services required. That 
small fraction of the aggregate which is paid for distributing space on trains is fairly 
proportioned to the amount of space required, and if supplemented by payment for 
precisely similar space utilized in apartment cars would also be . reasonably just to 
the carriers as it is plainly not unfair to the Government. 
Point III. — The underlying principle of the plan embodied in Senate bill 7371 and 

in the modified plan substituted therefor (Preliminary Rept., pp. 109-111) is not 

correct. 

The measure drafted by former Postmaster General Hitchcock (Preliminary Rept., 
pp. 109-111) and recommended by him as a substitute for his earlier proposals (Sen- 
ate bill 7371) contains important concessions, already noted herein (p. 721), but it 
preserves the basic notion of an adjustment of rates to the estimated cost of each 
particular carrier. As there are 795 different railways which carry the mails, and 
as the cost would necessarily be different on'each line, this would mean 795 different 
rates of payment. (Testimony, p. 44.) It would also mean that if the expenses of a 
particular line increased for any cause, including improvident management, or de- 
creased by reason of especial efficiency, the payments would move correspondingly 
upward or downward. In other words, incompetence would receive a premium in 
the form of advanced pay, and merit would be penalized by reductions. Such results 
are not desirable, and would not justify the substitution of the new and untried cost 
basis for the weight basis that has borne the test of 40 years' experience. 



728 RAILWAY MAIL PAY. 

A. ASCERTAINMENT OF COST. 

The large share of the time of the joint committee that was occupied in discussion 
of methods of apportioning the common expenses of railway operation and main- 
tenance is itself proof that there is, at present, no generally accepted rule or formula 
for making the necessary assignments or for estimating to any close approximation 
the cost of any particular service. The record shows that, although the Interstate 
Commerce Commission, after attempting such an apportionment between the pas- 
senger and freight services, abandoned the effort some 21 years ago (testimony, pp. 
628-629), it has recently sought suggestions as to methods that might produce satis- 
factory results. 

A subcommittee of the American Association of Railway Accountants, consisting of 
Messrs. A. H. Plant, C. I. Sturgis, L. A. Robinson, M. P. Blauvelt, Frank Nay, C. M. 
Bunting, C. B. Seger, and R. A. White, all men of long experience in the field of rail- 
way accounting, adopted a resolution, in part, as follows: 

' ' Resolved, That this subcommittee concurs in the view expressed by the special com- 
mittee on corporate, fiscal, and general accounts in the year 1906, and that this sub- 
committee, after due and deliberate consideration, reiterates that no fixed rule for the 
division of common expenses between freight and passenger can be devised which will 
be equitable to all carriers, to the same carrier under all conditions, or to all divisions 
of the same carrier." (Testimony, p. 632.) 

Mr. M. 0. Lorenz, associate statistician to the Interstate Commerce Commission, 
clearly expressed the truth that, for the present at least, such apportionments can not 
rest upon any general rule having any more solid foundation than the judgment or 
opinion, or the arbitrary decision, of some authority. He testified, in part, as follows: 

"In other words, how to determine the division of all the common expenses is not 
simply a question of accounting, but a question of justice, and that necessarily pre- 
sumes adjustment by some one who is in a more or less judicial position, and I think 
very properly that would have to be made a matter of arbitrary decision, in the sense 
that a jury finally arbitrarily decides a case in view of all the facts as to what is right 
and what is wrong." (Testimony, p. 366.) 

The foregoing simply expresses in another form the view stated to the joint com- 
mittee by a member of the committee on railway mail pay, Mr. Worthington (testi- 
mony, p. 348), that in the present state of the art of railway accoiinting, such estimates 
"will vary with the person who makes the estimate." 

Without questioning the utility of any particular efforts in the apportionment of 
expenses that have been made by anyone, or venturing any prediction as to the future 
success of the effort to formulate a general rule or system for such apportionments, 
this committee now asserts that to direct any governmental agency or any set of experts 
to ascertain the cost to every railway or to any group of railways of supplying mail 
transportation and sendees would now be, at the least, premature and unprofitable. 

B. THE SPACE BASIS. 

This committee believes that a change from the present basis of payment, which is 
principally a weight basis, to a space basis would be ill advised and detrimental both 
to the" Government and to the railways. The joint commission to investigate the 
postal service, which reported in 1901, recognized both the superficial plausibility of 
the space basis and the intrinsic imperfections that render it impossible of satisfactory 
application. The majority of the commission therefore reported against a change, 
while former Senator William E. Chandler, one of its members, in a separate report, 
stated some of the objections with convincing force. In part he said: 

"Theoretically, payments to the railroads based upon the car space furnished in 
the trains would be the most nearly just. * * * But unfortunately for the method 
of paying for space, it so happens * * * that the system theoretically the best is 
practically the worst. If the railroad is to be paid for the number of mail cars which 
it hauls, no rules can be devised which will limit the number of cars used for a given 
weight of mail. If a railroad has 10 cars on its sidings ready for use, who is to determine 
whether 1, 3, 5, 7, 9, or all, shall.be sent out with the mails presented for transporta- 
tion? And the difference between hauling 2 tons in a car and 4 tons may make the 
annual compensation $40,000,000 instead of $20,000,000." (S. Doc. No. 89, 56th Cong., 
2d sess., p. 31.) 

Testifying before the same commission Prof. Henry C. Adams, employed by it as 
an expert in transportation economies and for more than 20 years statistician to the 
Interstate Commerce Commission, said: 

"When we come to the question as to what ought to be the basis of a law fixing com- 
pensation, I should submit the opinion that weight is a better basis than space, for 



RAILWAY MAIL PAY. 729 

three reasons. In the first place, it is the basis used in freight traffic, and on this 
account renders possible the comparisons between the tendencies in mail and freight 
traffic. 

"* * * Now, if you adopt space as the basis of the law of compensation, you 
take a basis that is not used in railway practice excepting for the purpose of modify- 
ing general rates in the shipments of commodities. * * * 

"Now, in the second place, if the ton be accepted as the basis of comparison, it is 
comparatively easy, by a process of differentials, to modify any rate per ton per mile 
so as to make allowance for special considerations, such as peculiar facilities, space, 
and the like. It is essential that a general law should rest upon some general course 
which has the same meaning under all conditions. You could proceed in this way, 
just as railroads do, making their general schedule, and putting here and there arbi- 
traries in the exceptions to the schedules. 

"A third reason is found in toe fact that should the department desire to classify 
its own services for administration purposes as to dispatch, putting first-class matter 
upon different trains from second-class matter, and so forth, the ton mileage would, 
it seems to me. be the be«t basis of compensation. * * * weight seems to be a 
satisfactory basis." (Part 2, S. Doc. No. 89, 56th Cong., 2d sess. ; pp. 40-41.) 
In another place, in the course of the same testimony (p. 27), Prof. Adams said: 
" T regard the law of 1873 as superior to the suggestions made witn regard to space." 
Again, in his formal report to the joint commission, Prof. Adams said: 
"Attention should, in the second place, be called to the fact that payment to the 
railways in proportion to facilities would probably result in an oversupply of facilities. 
It is true that the Post Office Department need not pay for more facilities than it 
demands, but when it is recognized that the reputation of the postal administration 
rests upon a quick and showy service rather than upon the introduction of economies 
in the service, it must be admitted that this check to extravagance is of relatively 
slight importance. Under the present law, whicn accepts weight as the basis of pay, 
the railways have a commercial motive in resisting as far as possible the demand of 
the Government for increased space, a motive which would of course be removed if 
payment were made in proportion to facilities. From the point of view of motive, 
therefore. ; t seems clear that greater economy would be obtained by a law which 
accepts weight rather than space as the basis of payment." (Part 2, S. Doc. No. 89, 
56th Cong., 2d sess., p. 199.) 

A further objection to such a change at the present time is found in the uncertain ties 
concerning the future growth and development of the recently inaugurated parcel 
post. Until experience has shown how the addition of this new volume of mail is 
likely to affect the conditions of railway mail transportation it would be the worst 
of folly to admit any radical departure from a system that is thoroughly tried and 
comprehended. While earnestly protesting that the space basis would be detri- 
mental and unsatisfactory both to the Government and the railways, this committee 
feels that it should also direct attention to the fact that, if adopted in any form, the 
railways would be placed wholly in the hands of the Post Office Department unless 
they were permitted to take any matters of dispute to some tribunal like the Interstate 
Commerce Commission. The direct interest of the Post Office Department in the 
matters that might lead to differences of opinion is so great that it is obvious that it 
ought not to have the last word where so much depends upon the judgment and there 
is so great opportunity for arbitrary action. 

Point IV. — The existing law has been in effect for nearly 40 years, and those who 
have worked under it are more or less familiar with its operations. If it were 
amended to correct serious inequities, as suggested under Point II, and fairly and 
impartially administered by the Post Office Department, it would be preferable 
to any untried or theoretical plan that could be proposed. 

The truth of the foregoing proposition is largely self-evident. In so far as it requires 
argument or evidence both have been abundantly brought to the attention of the 
joint committee and some of the most salient points have been briefly referred to or 
summarized herein. It has been shown, on the basis of the compilations of the Post 
Office Department, as well as by the testimony of witnesses, that the railways are 
seriously underpaid. The way to the correction of the present system by removing 
present -defects and inequalities has been pointed out. It has thus been made evident 
that the railways ought to receive pay for — 

A. Distribution space on trains when such space is less than 40 linear feet as well as 
when it exceeds that limit (p. 725 herein). 

B. For side and terminal service (pp. 725-726 herein). 

C. For the mail tonnage they actually carry, to be secured by means of annual 
weighings (pp. 724-725 herein). 



730 EAILWAY MAIL PAY. 

The justice of these proposals has been substantially admitted on this record on 
behalf of the Post Office Department. The railways therefore rely with confidence 
upon the record here made, and trust that the present investigation will be the occa- 
sion of a restoration of their mail service to a more nearly compensatory basis and of 
the relief which they have long sought. 

Some general ideas advanced from time to time during the hearings call for a few 
words in conclusion. 

One of these ideas is that the mail service, being a governmental function, ought 
to be performed for less than what would be a reasonable compensation for a similar 
service performed for persons other than the Government. The first observation on 
this idea is that no such principle is applied to anybody else. Any individual who 
works for the Government is paid for his services and in a great many instances he 
is paid more than he would be paid if he were performing similar service for a pri- 
vate employer. Again, it is a fundamental principle of the Constitutions, both 
Federal and State, that property shall not be taken for public use without just com- 
pensation. If a tract of land is condemned in order to obtain a site for a post office, 
the owner is entitled to the fair value of the land, notwithstanding the fact that it is 
to be used to promote the postal service. It is also a well-founded constitutional 
principle that to take the use of property without just compensation is the same as 
taking the property itself without just compensation. The Government could not 
appropriate the entire use of a railway to governmental service without making a 
fair compensation therefor; and likewise there is no basis for its appropriating a part 
of the use of the railway to the governmental service without making a fair compen- 
sation therefor. Again, in addition to these controlling constitutional principles, 
there can be no justifiable political or economic basis for the idea that the people 
who use the mails shall do so at the expense of the passengers and shippers who use 
the railways; and in the last analysis any inadequacy in the compensation made to 
the railways by the Government for the carriage of the mails must be made up by 
the railways in the charges imposed upon shippers of freight and upon passengers. 
This observation becomes even more obvious in connection with the recently estab- 
lished parcel post, which is principally used by merchants in the conduct of their 
ordinary business. Why should the man who ships by freight pay for the transpor- 
tation service of the other man who ships by parcel post? There may be plausible 
arguments for a plan of taxing the entire people through the ordinary forms of gov- 
ernmental taxation in order to provide for the transportation by the Government of 
letters at less than cost; but there can be no pretext for compelling individuals who 
use transportation in other forms to pay for transportation for letters. 

Another of these ideas is that the railway transportation of mail is a mere incident 
or by-product, and on that ground not entitled to full compensation. Certainly the 
passenger service as a whole is not a mere incident or a by-product and as a whole 
ought to yield, as far as possible, an adequate compensation for the property devoted 
to that use and for the services performed in that use, Yet there is no part of the 
passenger service which is of greater importance to the general public than the mail 
service. There is no part of the passenger service which imposes greater demands 
upon the railways for speed and certainty of operation of their passenger trains than 
is imposed by the mail service. Certainly a service which is of such paramount 
importance to the public, and of such an exacting and costly nature from the stand- 
point of the railway, can not in any proper sense be regarded as a mere incident or 
by-product. 

Another way in which the idea here discussed is sometimes suggested is that if we 
assume that the railways did not carry the mail, the railway cost would be but little 
less than it is at present. Such an assumption is utterly inconsistent with the exist- 
ence of the Post Office Department under present conditions. The railroads could 
exist without the postal service, but the postal service could not exist, in any modern 
sense of the term, without the railways. An assumption which is thus inconsistent 
with the very nature of the Post Office Department ought not to be indulged for the 
purpose of depriving the railways of a just compensation for carrying the mails. 

The further idea has been advanced that on account of carrying the mails the rail- 
ways enjoy the power of eminent domain and the protection of the Government in 
case of strikes, and that therefore they should carry the mail for less than what would 
be a full compensation therefor. The same reasons would apply equally to all other 
carrying functions of the railways. They enjoy the power of eminent domain because 
they are common carriers of passengers and freight and they enjoy the protection of 
the Federal Government because they are instrumentalities of commerce among the 
States. If these are reasons for their being paid less than full compensation for their 
services, the reduction of compensation can not be restricted to the mails. If the 



BAILWAY MAIL PAY. 731 

power of eminent domain and the governmental protection operated as an excuse 
for giving the railways less than just compensation, then there would be no induce- 
ment whatever for anybody to invest his capital in the construction and operation 
of railways. 

The railways owe to the public and to every member of the public the duty to 
transport all passengers and all commodities seeking their services efficiently and safely 
and at just and reasonable rates. This is the highest of obligations, and the sum of 
their obligations to the individual members of the public is their obligation to the 
Government. They owe no obligation to the State which is separate or apart from, 
or independent of, or inconsistent with their obligations to individual applicants for 
their services. They can have no obligation to the people's Government which could 
require them, except when necessary to the public defense, to discriminate in rates 
in favor of traffic offered by the Government when, in order to offset such unneces- 
sary discrimination, they would be compelled to collect higher charges from some 
members of the public and upon other traffic. Words better adapted to the assertion 
of this principle could not be chosen than those used to express it by the Joint Com- 
mission to Investigate the Postal Service which reported in 1901. We quote: 

"It seems to the commission that not only justice and good conscience, but also 
the efficiency of the postal service and the best interests of the country demand that 
the railway mail pay shall be so clearly fair and reasonable that while on the one hand 
the Government shall receive a full quid pro quo for its expenditures and the Public 
Treasury be not subjected to an improper drain upon its funds, yet on the other hand 
the Railway Mail Service shall bear its due proportion of the expenses incurred by 
the railroads in the maintenance of their organization and business, as well as in the 
operation of their mail trains." (S. Doc. No. 89, 56th Cong., 2d sess., p. 10.) 

All of which is respectfully submitted. 

Committee on Railway Mail Pay, 
By Ralph Peters, Chairman. 



Committee on Railway Mail Pay, 

Office of the Chairman, 
Pennsylvania Station, New York, June 26, 1913. 

My Dear Sir: I sent you to-day the brief, summing up the main points in favor of 
the railroads as brought out in the testimony taken at the hearings of your joint com- 
mittee. It has taken us much longer to complete this summary than we had expected. 
The work was assigned to different members of our committee, and we succeeded in 
getting several very good presentations — one written from the editorial point of view 
after a most thorough study of all the testimony by one of our officers; another by Mr. 
Bradley, who went over all of the testimony and made a summary from the point of 
view of the practical mail expert; and the last and one which we have sent you, having 
been drafted by our counsel after a most careful study of all of the testimony. This 
last brief or summary was very carefully gone over at a meeting of a portion of our 
committee, who decided that this should go to you in order to avoid any further delay 
notwithstanding the fact that nearly all of us felt that if we had the time we could have 
combined the three summaries and perhaps evolved a better one. 

Mr. Bradley's statement is so valuable that I am sending it to you, herewith, as a 
matter of information, whether you make use of it or not. It was prepared, as stated 
above, after a most careful study of all the testimony from the viewpoint of a man 
brought up in the mail service, and familiar with both sides of the question, and one 
who had attended all of the hearings and had heard all of the discussions, formal as well 
as informal, and therefore better equipped than any one else to make a digest of the 
points brought out by the investigation, and to sum them up in a way that should be of 
great service to your committee. If you care to put Mr. Bradley's statement in the 
record, in addition to the summary that we have already sent you, we would be very 
glad to have you do so, as we think it is too valuable to be left out. 
Very truly yours, 

Ralph Peters, Chairman. 



732 RAILWAY MAIL PAY. 

Railway Mail Pay— Condensed Review of the Main Questions Examined 
Before the Joint Congressional Committee During the Hearings from 
January to May, 1913. 

The subject of railway mail pay, which has been under consideration by the joint 
congressional committee for the past few months, may be briefly summarized under 
two questions: 

I. Is the total amount inadequate, fair, or extravagant? 

II. Is the amount properly apportioned between the railways? 

The very valuable and interesting testimony taken under oath by your committee 
in its recent thorough and painstaking investigation supplies the answers to these 
questions. It will be the purpose of this final statement on behalf of the railways to 
present for your convenience a condensed account of what we believe has been 
demonstrated. 

I. THE INADEQUACY OF THE TOTAL AMOUNT. 

The railroads have contended for many years that the pay received from the United 
States Government for the transportation of the mails and for incidental services in 
connection therewith was not a fair return, and their argument has been sustained in 
the recent hearings in several different ways: 

First. By comparing the relative return from each class of traffic on passenger 
trains. 

It was shown by the figures gathered by all the railroads for the month of November, 
1909, that all of the car space on the trains of 178,710 miles of railway was devoted to 
the three principal services, as follows: 

Per cent. 

Passenger service 80. 01 

Express service 10. 67 

United States mail service 9. 32 

The actual earnings derived from the same services were in the following proportions: 

Per cent 

Passenger service 83. 26 

Express service 9. 66 

United States mail service 7. 08 

Therefore, treating the three services as on an equality and overlooking for the 
moment the preference accorded to the United States mails and the special and 
unusual facilities provided for them, it appears that while the mails were chargeable 
with 9.32 per cent of all the car space, the pay was only 7.08 per cent of the total pas- 
senger-train earnings. It also developed that on the basis of a 60-foot car the earnings 
of each car per mile run was: 

Cents 
per car. 

Passenger service 26. 52 

Express service 23. 16 

United States mail service 19. 38 

All passenger- train service except United States mail 26. 10 

Therefore, the express car paid 19 per cent more and the passenger car paid 37 per 
cent more than the mail car. Yet, in general, the passenger-train service is not re- 
garded as a profitable service. 

If the mail service yielded the same rate per car per mile as the rest of the passenger 
train, i. e., 26.10 cents, the total mail pay to the railways would have been increased 
over 34 per cent. The Government paid the railways in the year 1910 $49,405,311. 
If this sum had been increased 34 per cent it would have been $66,203,117, an increase 
of nearly $17,000,000. 

Second. By comparing the ratio of railway-mail pay to postal revenues in 1901 and 
1912. 

On January 14, 1901, the Joint Committee of Congress for the Investigation of the 
Postal Service reported to Congress that "the prices now paid to the railroad com- 
panies for the transportation of the mails are not excessive, " and recommended "that 
no reduction thereof be made at this time." 



KAIL WAY MAIL PAY. 733 

The postal revenues and the railway-mail pay then and now are as follows: 



Year. 


Postal reve- 
nue. 


Railway- 
mail pay. 


Per cent. 


1901 


$111,631,193 

246, 744, 015 

120 


$38, 158, 969 

51,691,301 

35 


34.18 


1912 


20.91 


Increase 




percent.. 









If the total amount of the railway-mail pay was not excessive in 1901, when it 
amounted to 34 per cent of the postal revenues, it is a fair presumption that it is too 
low in 1912, when it amounts to less than 21 per cent of the postal revenues. 

The amount of work performed for the Post Office Department by the railroads has 
grown enormously in that period. The second-class mail has grown from 429,000,000 
pounds to 939,000,000 pounds, an increase of 118 per cent, and it is evident that the 
other classes of mail have grown greatly, partly because of the rapid and frequent 
mail train service. The number of railway postal clerks employed by the Post Office 
Department on railway lines has increased 81 per cent. 

If the railways received in 1912 34.18 per cent of the postal revenues, the amount 
would have been $84,337,104.33, or an increase of $32,000,000. 

Third. Measured by the cost of performing the service and a fair profit.'— The test 
instituted by the Post Office Department in November, 1909 (Document No. 105), 
to ascertain the cost to the railways of performing the mail service was faulty in its 
methods in the following principal respects: 

(a) By omitting any return for the capital invested. 

(b) By rejecting an amount of car space used for mails which should have been 
accepted as reported by the companies. 

(c) By using its own specially made formula for dividing the railroad companies ' 
expenses — a formula certain to minimize the amounts chargeable to the mail service. 

(a) By omitting any return for the capital invested. — In the hearings of January 28, 
1913, the Second Assistant Postmaster General announced that the Post Office De- 
partment had given further consideration to the subject and was convinced that 
some allowance should be made to cover the capital cost, and that this, when arrived 
at, would probably make the total amount greater than is now paid by the Govern- 
ment to the railways (pp. 8, 9, and 10). If this concession had not been made, the 
position of the Post Office Department in Document No. 105 would be that a railway 
could receive for the service only the money it actually spent out on account of that 
service plus 6 per cent, with no return whatever upon the working plant. 

The capital cost, if calculated on the Post Office Department's figures (Document 
No. 105, p. 280), would take note of the fact that railway expenses and taxes charge- 
able to the mail service were $2,682,797.92, in comparison with total operating ex- 
penses and taxes (both freight and passenger) of $137,355,150.79, or 1.95 per cent. 
Hence the mail service should be charged with the use of 1.95 per cent of the total 
railway property having a net capitalization of $14,000,000,000, or a charge of 
$273,000,000. Interest at 6 per cent on this sum would require an annual payment 
by the Post Office Department of $16,380,000. Matching this against the finding of the 
Post Office Department of a saving to the Government of $9,000,000 per annum, it 
is evident that despite its rejection of essential car space and despite its special formula 
for dividing railway expenses, its own investigation shows an underpavment to 
railways of $7,000,000 a year. 

(b) By rejecting an amount of car space used for mails which should have been accepted 
as reported by the companies. — After the railroads had reported that 9.32 per cent of 
all the car space was devoted to the United States mails, the Post Office Department 
reduced the ratio to 7.18 per cent. It has conceded in the recent hearings that most, 
if not all, of the rejected space should be restored to make a proper and just com- 
parison. The representative of the Interstate Commerce Commission, responding to 
an inquiry of the chairman of the joint committee, said (p. 514): 

" T can not see how there can be two opinions. It seems to me, just as you can not 
operate a freight service without hauling empty freight cars, and just as you can not 
operate passenger service without hauling empty space, you can not operate mail 
service without hauling empty space, and in comparing the various departments, 
either on cost or revenue basis, you should include all of the space used and unused 
which is hauled in connection with that service, and I cannot understand, therefore, 
why on this particular point the Post Office Department should have rejected the 
dead space from the mails and put it in the passenger service. It seems to me they 
made a clear error." 

49396—14 54 



734 



RAILWAY MAIL PAY. 



The effect of restoring the mail-car space which the department had rejected would 
add about $10,000,000 per annum to the cost of performing the service by the railroad 
companies (p. 13). 

(c) By using a peculiar formula.. — The use of its special formula for assigning raif- 
way operating expenses to the freight service and to the passenger-train service, thus 
reducing the charges to the latter, and consequently to the mail service, produced a 
heavy reduction in the stated cost of performing the mail service. There is no avail- 
able computation to reveal the total result for all the railroads combined, but, judging 
from the fact that in the case of a number of important railway systems the formula 
transferred from 10 to 20 per cent of the passenger- traffic expenses to the freight column, 
it seems to be a conservative statement to say that the use of the more standard practice 
would have added at least $5,000,000 per annum to the stated cost of the service. 

To sum up under this heading, we find the total amount of railway-mail pay in 1909, 
as compared with a fair estimate of the total cost, deficient as to — 

(a) Portion of capital cost omitted , $7, 000, 000 

(b) Mail-car space disallowed 10, 000, 000 

(c) Post Office Department formula 5, 000, 000 

22, 000, 000 
Add value of transportation of postal officers and employees in passenger 
cars (p. 27) 1, 000, 000 

Total 23, 000, 000 

Fourth. Compared with growth oj other raihoay traffic and earnings, 1901 and 1910. — 
The year 1901 is taken because the joint congressional committee then made its report 
that the railways were not overpaid for mail service. 

Traffic. 





1901 


1910 


Increase. 


Freight: Tons carried 1 mile 


147,077,000,000 

17,353,000,000 

318,000,000 


255,016,000,000 

32,338,000,000 

581,000,000 


Per cent. 
73.37 


Passengers, carried 1 mile 


86.35 


Mail: Tons carried 1 mile 


82.70 






Railway ret 


enues. 






From freight traffic 


$1,118,000,000 

351,000,000 

38,158,969 


$1,925,000,000 

628,000,000 

49,405,311 


72.18 


From passenger traffic 


78.92 


From mail traffic 


29.47 







If the railway mail pay had increased in the same ratio as the freight revenue it 
would have been over $65,000,000 in 1910, instead of $49,405,311. If it had increased 
the same as the passenger revenue it would have been over $68,000,000. The fact 
that railway mail pay increased only 29 per cent, while the mail tonnage carried 
increased over 82 per cent, is due partly to the descending scale of pay prescribed in 
the law and partly to the law of March 2, 1907, making special reductions in the pay 
for transportation and postal cars, and partly to administrative action, such as the 
"divisor" order, etc. Whatever the cause, the railway mail pay in 1910 was at 
least $15,000,000 below the sum which the increase in other railway revenues would 
justify one in expecting. 

Summary as to adequate railway mail pay. — The several comparisons and illustra- 
tions thus far set forth can now be summarized to show approximately the annual 
deficiency in the total amount of railway mail pay : 

1. Measured by revenue from other car space on passenger trains $17, 000, 000 

2. Measured by the proportion of United States postal revenues used for 

railway mail pay in 1901 32, 000, 000 

3. Measured by the cost of performing the service 23, 000, 000 

4. "Measured by the relative increase in other railway revenues, 1901- 

1910 15, 000, 000 

The proof seems to be conclusive that there is an underpayment of not less than 
$15,000,000 per year. 



BAILWAT MAIL PAY. 735 

II. IS THE AMOUNT PROPERLY APPORTIONED AMONG THE RAILWAYS? 

The committee on railway mail pay is fully aware from its own study of the subject 
during the past three years that the apportionment of the total amount among the 
various railroads is not entirely equitable, and that this is due as much to the defi- 
ciency in the total amount as it is to the method of apportioning it. 

The measures of relief recommended in the letter of October 3, 1912, from the 
chairman of the committee on railway mail pay to the honorable chairman of the 
joint congressional committee are considered to be the most practicable method of 
correcting this condition of inequality. 

In this respect it is necessary to take issue with the concluding statement made by 
the Second Assistant Postmaster General in his memorandum of January 17, 1913, in 
reply to the statement entitled "Mail Carrying Railways Underpaid" (pp. 97-108). 
He said : 

" However, it should be further stated that the railroad committee on railway mail 
pay has entirely failed to notice a fact of fundamental importance shown in Docu- 
ment No. 105, namely, that under the present system of pay for railroad mail service 
the compensation that can be allowed under the law to some railroad companies is 
inadequate and probably less than the cost of performing the service. This feature 
of the results of Document No. 105 is, as we understand, undisputed by the railroad 
committee on railway mail pay. It is therefore difficult to understand how any 
system for compensating the railroad companies for carrying the mails can be consid- 
ered the most desirable if it does not fully compensate each railroad company for the 
service rendered the Post Office Department. The present plan does not do this 
whilst the plan proposed by the Postmaster General in Document No. 105 seeks to 
do it." 

Aside from the argument presented throughout the hearings that the plan proposed 
in Document No. 105 was not calculated to fairly compensate, let alone fully compen- 
sate, the railroad companies for the service rendered to the Post Office Department, 
it is believed that the present method of pay, based upon the weight of mail carried 
and the distance carried, is not only safer and more practicable for both the Govern- 
ment and the railroads, but it will, if modified as suggested in the letter of October 
3, 1912, be more successful in correcting the inequalities now noticeable than the 
plan of payment based upon space and estimated cost set forth by the former Post- 
master General in Document No. 105. 

While it is no doubt generally believed that the short-line railroads are underpaid 
for the transportation of the mails, and it has been suggested that Congress was already 
impressed with this fact, there has been an impression that the railway trunk lines 
and the great railroad systems were either adequately paid or overpaid. This has 
been popularized by sensational articles which have appeared from time to time in 
the magazines dealing with certain superficial aspects of the subject without giving 
a sufficiently adequate statement of the case to do justice to both sides of the question. 
The announcement of the former Postmaster General in presenting Document No. 105 
stating that the performance of mail service at the present rates is profitable to certain 
railroad companies and unprofitable to others and that through a readjustment of 
railway mail pay on the basis of cost with 6 per cent profit a saving to the Government 
could be made of about $9,000,000, also tended to produce the same erroneous im- 
pression. 

In the testimony taken under oath before the joint congressional committee 
recently, it was shown (p. 329) that the — 

Southern Pacific Railway System, operating 10,052 miles of mail routes and with 
annual mail pay for the year 1911 of $2,474,263, did not recover out of this sum the 
operating expenses chargeable to the mail service by $397,104, leaving, of course, 
nothing for taxes, fixed charges, or dividends. 

The Pennsylvania Railroad System of about 9,800 miles of mail routes, and with 
mail pay for the year 1909 of $5,871,562, testified (p. 431) that the amount received 
did not cover operating expenses and taxes chargeable to the mail service by $348,462 
per annum, and consequently made no contribution to the fixed charges, dividends, 
or surplus. 

The Atchison, Topeka & Santa Fe Railway, with 9,300 miles of mail routes and 
receiving mail pay for the year 1909 of $1,914,804, testified (p. 526) that this amount 
was about $36,000 a year under the operating expenses, taxes, and fixed charges 
chargeable thereto, and consequently made no contribution whatever to dividends 
or surplus. 

The New York Central Lines, with 10,042 miles of mail routes, and with mail pay 
for the year 1909 of $6,016,778, testified (p. 602) that the amount received barely cov- 



736 RAILWAY MAIL PAY. 

ered operating expenses and taxes chargeable thereto and left nothing for interest upon 
the necessary investment in the property. 

Measures of relief. — The definite recommendations made by the committee on rail- 
way mail pay in the letter of October 3, 1912, were: 

(a) The repeal of the act of March 2, 1907, which reduced pay for heavy weights 
carried and reduced pay for full postal car service. 

(b) For annual weighings and a definite and just method for ascertaining the daily 
average weights. 

(c) For pay for mail apartment car service on a basis that would compensate for the 
service. 

(d) A fair allowance for "side" and terminal messenger service. 

(e) That all rates of pay should be definite and not subject to the discretion of the 
officers of the Post Office Department. 

The short-line railroads would be benefited by most of this legislation, but especially 
by that described in (c) and (d). If suitable action be taken by Congress to grant a 
fair allowance to the railroads for "side" and terminal messenger service the relief to 
the short-line railroads would be especially great, because in many cases this service 
now absorbs a large proportion of their mail earnings, and in some cases their entire 
mail earnings. Further, if Congress would grant pay for mail apartment car service, 
this would also tend strongly to the relief of the short-line roads and probably make 
their pay remunerative. 

The recommendations for annual weighings and for legislation to prescribe a fair 
daily average and definite rates of pay would also be beneficial to the short-line roads, 
and would also include a moderate measure of relief to the trunk lines which do not 
at present enjoy a compensatory rate. 

The incidental services performed by the railways for the Post Office Department, 
such as those enumerated in the brief entitled "Weight or space" (pp. 624-627), are 
distinct from the transportation service and should not be left at the discretion of the 
Post Office Department, which claims that it is within its province to fix the terms 
upon which the railroad company shall perform service for the Government, which, 
if the company performs the service, it will be bound by. These auxiliary services 
should be defined in the law and an appraisal of their value included in the rate of 
pay, and there should be an inhibition upon the Post Office Department restraining it 
from demanding new and expensive service from the railways, without first estimat- 
ing, in conference with the railways, the fair value thereof and then obtaining author- 
ity and an appropriation from Congress to cover the necessary outlay. 

V. J. Bradley. 



RAILWAY MAIL PAY IN CANADA. 

At the request of the chairman of the joint committee the State 
Department procured and under date of May 31, 1913, submitted a 
dispatch from Hon. John G. Foster, consul general, Ottawa, Canada, 
in relation to above heading. The dispatch reads as follows: 

Railway Compensation for Transportation of Mails. 

.Ottawa, May 23, 1913. 

The Canadian railways were paid during the fiscal year ended March 31, 1913 
$2,046,110 for the transportation of mails. 

This compensation is not based on weight of mails nor strictly on car space occ pied, 
b 1T t is computed i nder two systems — one what is known as a track-mile basis and the 
other as a running mile. 

Under the track-mile basis the department pays a certain fixed s:m per annum for 
each mile of track used. Under such payment the department is entitled to use any 
and all passenger trains running over such track, irrespective of what railway company 
they belong to, and operate either a postal or a baggage car service, as the requirements 
of the department demand. The railway companies have to f rnish postal cars as 
req" ired with interior fittings. 

The regular payment on a running-mile basis is 8 cents per running mile for a postal- 
car service. The company has to supply the postal cars and interior fittings. 

The space furnished when postal-car service is required runs from 144 square feet 
(i. e., 16 by 9) to about 270 square feet. In two instances where mails are exception- 
ally heavy, req • iring more space than 270 square feet, a rate of 12 cents per ruining 
mile is paid. The rates of payment for a baggage-car service are from 1 cent to 4 cents 
per running mile. 

The following railway companies are partly paid on a track-mile basis: 

GRAND TRUNK RAILWAY. 

Between Levis, Quebec, and Windsor and Sarnia, Ontario, payment is made at 
the rate of $160 per mile per annum with $25,000 for additional services between 
Montreal and Toronto, and $7,500 for carrying United States mail through Canadian 
territory between Suspension Bridge and Windsor, the department paying for side 
services. Branch Grand Trunk lines are paid at the rate of $80 per track mile, the 
department paying for the side services. Branch lines built since the above arrange- 
ment was entered into are paid on a running-mile basis. The basis of payment to the 
Grand Trunk Railway was arranged in 1865, with a few subsequent changes. 

CANADIAN PACIFIC RAILWAY. 

Payment on main lines of the Canadian Pacific Railway between Fairville, New 
Brunswick, and Vancouver, British Columbia, is on a track-mile basis of $130 per 
mile per annum. The department has to pay for all side services and also for certain 
additional trains running over that section of the main line between St. John, New 
Brunswick, and Carleton Junction, Ontario. To that section of the Canadian Pacific 
Railway between Montreal and Quebec payment is at the rate of $100 per mile per 
annum, the department performing all the side services. The same payment is made 
between Ottawa and Prescott. All the other branch lines of the Canadian Pacific 
Railway system are paid on a running-mile "basis. 

737 



TOO ±CAJLL,WAY MAIL .FA*. 



INTERCOLONIAL RAILWAY. 



All parts of the Intercolonial Railway are paid for on a track-mile basis of $130 per 
mile per annum, the department paying for all side services except for that section 
between Chaudierre and St. Rosalie, Quebec, and between Millerton and Renoua 
Bridge, New Brunswick, which is under the running-mile system. 

The section of the Intercolonial Railway between Fredericton and Chatham, New 
Brunswick, is paid on the running-mile basis, as it was previous to its being acquired 
by the Intercolonial Railway. 

PRINCE EDWARD ISLAND RAILWAY. 

This railway is paid on a track-mile basis of $76 per mile per annum, with 50 cents 
per running mile for special trains supplied during part of each winter, the depart- 
ment paying for all side services. The quantity of mail carried over this railway is 
necessarily small in comparison with nearly all other railways in Canada paid either 
on a track-mile or running-mile system. 

Except the above mentioned, all other railways and branch lines are paid on a run- 
ning-mile basis, as above set forth. 

Such payment includes all branches of the Canadian Pacific Railway system and 
the Grand Trunk Railway system built since the track-mile basis was arranged. 

Payment for railway service is not made on the basis of weight carried or space 
occupied except as above mentioned, and in so far as the Grand Trunk Railway is con- 
cerned there has been no readjustment of rates since 1865 and none as regards the 
Canadian Pacific Railway since 1895. No changes have been made in rates paid to 
other lines since same were put into operation. 

The railway companies claim that the greatly changed conditions and increased 
business make the rates of compensation inadequate for present service, and for the 
past three years they have been strongly urging upon the Government a readjustment 
of compensation . The post office department officials admit that greater compensation 
should be given, and this whole subject is now under advisement. 

I am informed that the department is opposed to compensation by weight. It is 
probable that some method of adjustment will be reached on the basis of compensa- 
tion for car space occupied. The compensation for transporting mail is the same for 
all classes. 

John G. Foster, 

Consul General. 



COMPARISON OF MAIL PAY FOR LOADED APARTMENT CAR 
MILE WITH FREIGHT EARNINGS PER CAR MILE (EQUIVALENT 
SPACE). 

Under date of June 13, 1913, Mr. A. W. Anderson, general manager 
Charleston & Western Carolina Railway Co., addressed two letters 
to the chairman of the joint committee transmitting statements duly 
sworn to before a notary public on the subject matter of above head- 
ing and a summary of the figures presented by the railroads making 
same, which letters and summary, together with a letter from Dr. 
M. O.Lorenz, associate statistician, Interstate Commerce Commission, 
commenting on same, are in the order respectively stated, as follows : 

Augusta, Ga., June 13, 1913. 

My Dear Sir: I inclose a statement giving a comparison of mail pay per loaded 
apartment car mile, with freight earnings per car mile and per loaded car mile of 
equivalent space. In support of these figures I attach statements and affidavits to 
cover. 

A member of your committee, Mr. Lloyd, in a hearing at Washington which I at- 
tended, several months ago, stated that our line was rather unfortunately located with 
reference to mail pay, and he asked if I did not so regard it. My reply was that what 
applied to our road applied to most of the local lines throughout our section, if not 
throughout the country, and that I believed that a comparison would show that others 
were faring, with reference to their mail pay, as badly as ourselves. 

The statement comprises 12 roads, located throughout North Carolina, South Caro- 
lina, Georgia, and Tennessee, and were selected without any possible knowledge in 
advance of what the figures would show, except my own experience with local lines; 
that is, lines not handling through mail between large cities or from the Northeast 
through to other sections. I also endeavored to pick out, in the various States, roads 
with as much mileage as ours. The result, startling as it may be, shows that of the 
12 roads, ranging in length from 71 miles to 640 miles each, with an average of 261 
miles, that the mail revenue per loaded apartment car mile is but a little over one- 
third of the freight revenue per loaded car mile, based on the same space as the apart- 
ment cars, and with our road this is particularly astonishing in view of the fact that 
about 50 per cent of our traffic is coal, which carries the lowest average rate of any 
business that we handle. 

The statement further shows that had the 12 roads on an average earned as much 
per mile, equal space, on their mail cars, occupied as they are by the Government's 
employee, for whom we are responsible, as they earned on their freight business for 
the same space, that their total mail revenue would have averaged $29,790.56 as 
against $17,283.25, or nearly twice as much. 

Upon a careful analysis of the statement you will observe that the roads showing 
the higher rate per mail car mile is accounted for by the very small size of 
the apartments. 

As I stated in my testimony before your committee, it is a well-known fact that if 
all of our business carried our lowest revenue per ton per mile that we would not earn 
enough to pay operating expenses, and I submit, therefore, to pay us about one-third 
as much per mile for handling the mail, including the care of a passenger, the Gov- 
ernment's employee, as we earn on an average per loaded freight car mile, is inde- 
fensible from any point of view, and I am sure confiscatory. 
Yours very truly, 

A. W. Anderson, General Manager. 

739 



740 



RAILWAY MAIL PAY. 



Augusta, Ga., June 13, 1913. 
Dear Sir: Referring to my letter of even date, attaching comparison of mail pay, 
etc. 

I wish to explain that much of the statement consists of figures used simply to show 
the accuracy of the two important and rather startling, at least to my mind, facts that 
the railroads are being paid by the Government for handling the mail about one-third 
of what we earn for handling freight, and that had they been paid as much for handling 
the mail as they would have earned had the same space been used for freight, they 
would have been paid almost twice as much. 

I believe that your committee, and especially Mr. Lloyd, will feel, from the showing 
made, that our road is not peculiar in that it is being underpaid, but instead that it is 
rather a common condition, at least throughout the southeast. 
Yours very truly, 

A. W. Anderson, General Manager. 



Comparison of mail pay per loaded apartment car mile with freight earnings per car mile 

{equivalent space) . 



Road. 



Charleston & Western Carolina 
Ry 

Georgia & Florida Ry 

Atlanta, Birmingham & Atlantic 
Ry 

Norfolk Southern R. R 

Tennessee Central R. R 

Gulf & Ship Island R. R 

Carolina & North Western R. R . . 

Macon & Birmingham Ry 

Wrightsville & Tennille R. R 

Macon, Dublin & Savannah R. R.. 

Augusta Southern Ry 

Northwestern Ry. of South Caro- 
lina 

Total 

Average 



Total 

freight 

revenue. 



$1,475,670.84 
511,861.11 

2,405,340.83 

2,189,600.29 

1,053,872.35 

1,427,619.76 

300,526.70 

104,625.08 

209,077.75 

369,005.66 

130,253.10 

92,347.62 



10,269,801.09 
855, 816. 76 



Total 
freight car 

miles, 
loaded and 

empty. 



10,640,576 
3,401,155 

27, 143, 192 

12,131,158 

6,415,958 

6,593,063 

775, 294 

624,916 

756, 132 

2,432,626 

532,290 

326, 549 



71,772,909 
5, 999, 409 



Freight 

revenue 
per freight 

car mile, 
loaded and 

empty. 



$0. 13869 
.150 

.08862 
. 18132 
.164 
. 21653 
.387 
. 16742 
.276 
. 15169 
.244 



14309 
14309 



Freight 
revenue 
per freight 
car mile, 
loaded. 



$0. 22141 
.209 

.12789 

.24520 

.2143 

.30690 

. 50209 

.24004 

.40538 

. 20080 

.33077 

.41153 



20366 



Total 

mail 

revenue. 



$22,917.00 
10, 561. 95 

45,342.59 

37,090.80 

27,683.74 

28,459.77 

9,392.17 

4,761.55 

7,204.94 

5,940.25 

5,311.70 

2,932.58 



207,596.04 
17,283.25 



Road. 



Gharleaton & Western Carolina 
Ry 

Georgia & Florida Ry 

Atlanta, Birmingham & Atlantic 
Ry 

Norfolk Southern R. R 

Tennessee Central R. R 

Gulf & Ship Island R. R 

Carolina & North Western Ry 

Macon & Birmingham Ry 

Wrightsville & Tennille R. R 

Macon, Dublin & Savannah R. R. 

Augusta Southern Ry 

Northwestern Ry. of South Caro- 
lina 

Total 

Average 



Miles 

of 
road. 



340 
349 



640 



134 
105 
103 
93 
83 



3,128 
261 



Total loaded 
apartment 
car miles. 



400,543 
354,040 

932,575 
610,960 
373,068 
386,099 
97,820 
76,821 
135,050 
135, 780 
112, 277 

46,324 



3,561,357 
297, 780 



Mail 
revenue 
per loaded 
apart- 
ment 
car mile. 



$0.05721 
.042 

. 04862 
. 06071 
.074 
.07371 



.0533 
. 04375 
.0473 

.065 



.05829 
, 05829 



Freight 
revenue 
per car 
mile 
based 
on the 



in apart- 
ment 



$0.08702 
.095 

.05585 
. 12351 
.138 
. 11923 
.215 



.116 
. 10653 
.1079 

.07210 



10038 
10038 



Freight 

revenue 

per loaded 

car mile 



on same 



apart- 
ment 
cars. 



$0. 13893 
.1333 



. 16703 
.1807 



.27894 
. 12708 
. 17104 
. 14101 
. 14597 

. 10498 



. 14288 
. 14288 



Total 
revenue 
from 
apart- 
ment 
cars if in 
freight 
service. 



$34,855.25 
24, 133. 80 

52,095.32 
75,459.67 
51,483.38 
46,034.58 
21,031.30 
6,808.65 
15,665.80 
14, 464. 34 
12,114.66 

3,339.96 



357,486.71 
29,790.56 



BAILWAY MAIL PAY. 741 

To illustrate the method by which the railroads indicated in the 
foregoing summary arrived at the figures presented, the statement 
of the Tennessee Central Railroad Co. is here inserted: 

TENNESSEE CENTRAL RAILROAD CO. 

[H. B. Chamberlain and W. K. McAlister, receivers.] 

Miles. 

Main line mileage 253. 27 

Number of branches, 4. 
Branch line mileage . 40. 44 

Total mileage 293. 71 

(a) Mail revenue for year $27, 683. 74 

(6) Miles run by apartment cars during year 373, 068 

(Multiply mileage run each day by trains carrying apartment 
cars by the number of days during year that mail is carried.) 

(c) Mail revenue per apartment car mile . . cents . . $0. 074 

(Divide (a) by (b), carry result to 3 decimal places.) 

(d) Freight revenue for year $1, 053, 872. 35 

(e) Freight car miles run during the year: 

Loaded 4, 916, 876 

Empty 1, 499, 082 

6, 415, 958 

(/) Freight revenue per freight car mile cents. . $0. 164 

(Divide (d) by (e), carry result to 3 decimal places.) 

(g) Average floor area of mail apartments square feet. . 258 

(If the cars are of different dimensions, add together the areas 
of each apartment and divide the total by the number of apart- 
ment cars.) 
h) The floor area of average freight car is approximately, .square feet . . 306. 

Ratio of floor area of average freight car to floor area of average mail 

apartment 1. 186 

(Divide (h) by (g), carry result to 3 decimal places.) 
(k) Thus, the space devoted to mail service would have earned in 

freight service, cents per mile run $0. 138 

(I) And, had the mail service been as profitable to the road as the 
freight service, the mail revenue for the vear would have been, 

instead of the above " $51. 483. 38 

(Multiply (*) by (&).) 

Interstate Commerce Commission, 

Division of Statistics, 
Washington, June 19, 1913. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
My Dear Senator Bourne: In compliance with your request, I have examined 
the statements submitted to you by Mr. A. W. Anderson, general manager of the 
Charleston & Western Carolina Railway Co. The facts which he gives do not, in my 
opinion, warrant the sweeping conclusion "that the railroads are being paid by the 
Government for handling the mail about one-third of what they earn for handling 
freight." We may note, first, the minor fact that the fraction "one-third " is changed 
to "one-half" when the comparison is made with loaded and empty car-miles instead 
of simply loaded freight car-miles. But it is doubtless true that for the roads men- 
tioned the earnings on a space basis are greater for freight than for mail under the 
present law. The roads studied by Mr. Anderson appear to have no full R. P. O. car 
service, the mail being carried almost entirely in apartment cars, for which no extra 
payment is made under the present law. This probably accounts for the relatively 
low earning for the mail on a space basis. A different result is obtained if we take the 
roads of the United States as a whole. We find they earn about 10 cents per freight 
car-mile, irrespective of whether loaded, empty, or caboose. This is about one-half as 
much as they earn for hauling a 60-foot postal car a mile. (Hearings No. 2, p. 324.) 
The average freight car is probably from 30 to 35 feet long, inside measure, so that 
on a lineal foot basis, the earnings in the two services would be similar, assuming the 
freight car to be half as long as the postal car. But if we take account of the load in 



8 



742 RAILWAY MAIL PAY. 

the care, and make the comparison on the basis of gross weight of car and contents, the 
mail revenue would be decidedly higher than the freight, carload as well as less than 
carload freight being included. It will be recalled that Mr. J. A. Peabody testified 
(Hearings No. 3, p. 515) that per gross ton mile, less than carload freight on the 
Santa Fe earned decidedly more than the mail. 

Respectfully, M. 0. Lorenz, 

Associate Statistician. 



COMPARISON OF RELATIVE RATES PAID RAILROADS FOR 
TRANSPORTATION OF EXPRESS AND MAIL MATTER. 

For the purpose of securing views with reference to the relative 
rates paid the railroad companies of the United States for the trans- 
portation of mail and express, the chairman sent a circular letter to 
various express companies, the committee on railway mail pay, 1 Short 
Line Railroad Association, American Electric Railway Association, 
and the Post Office Department. 

The following is a copy of the circular letter: 

Dear Sir: In the consideration of the question of railway mail pay there has fre- 
quently arisen a question as to the relative rates paid to the railroads for transporta- 
tion of express and of mail matter. It has been frequently asserted that the mail 
rates are much in excess of the express rates. I wish to ask you to advise the joint 
committee how the rates compare and in what particulars and to what extent the 
service rendered to the Post Office Department differs from the service rendered to 
the express companies. I wish this to include a statement of the difference, if any, 
in the amount of responsibility the railroad companies assume in case of injury to mail 
or express or employees. 

Thanking you for your courtesy in the matter, I am, 
Yours very truly, 

Jonathan Bourne, Jr., Chairman. 

The replies received by the chairman in response to the circular 
letter referred to are arranged in alphabetical order of the organiza- 
tions answering same, as follows: 

The Adams Express Co. 
[W. M. Barrett, president, 71 Broadway, New York City.] 

March 27, 1913. 

My Dear Senator: I have given very careful consideration to your letter of 
March 13, 1913. submitting the question as to the relative rates paid to the railroads 
for transportation of express and of mail matter and conclude that it would be very 
difficult to make a reply of any value, because the basic conditions are so different. 

The Adams Express Co. pays to the railroad companies over which it operates a 
certain percentage of its gross receipts upon all the business transported. As I under- 
stand the matter, the existing laws provide for the payment for mail traffic mainly 
according to the average weight of mail carried on each route, with a small additional 
allowance for extra space in full postal cars. 

It would seem to me to make a comparison between the relative revenue to the 
railroad company from mail and express traffic it would be necessary to compare the 
transportation service for both classes of traffic on a common basis, either weight or 
space, and then estimate the relative amount of incidental or supplementary service 
rendered by the railroad company to the mail and to the express in connection with 
such transportation. Any such compaiison would require an extraordinary amount 
of investigation and clerical labor and could be made more appropriately and much 
more effectively by the railroad company. 

My general opinion is that the transportation service performed by the railroad 
companies for the express companies occasions less expense to the railroad company 
than does the mail traffic. I am also inclined to believe that the incidental services 
are more exacting in connection with the mail than in connection with the express. 
Further, there are certain reciprocal services which the express company renders to 
the railroad company which are not paralleled by anything I know of in the mail 
service. 

It might be added that the express company assumes all loss or damage of whatever 
character arising out of its operations, including personal injury to and death of 
employees while traveling on the railroad. 

1 The answer of the committee on railway mail pay by its president, Mr. Ralph Peters, will be found 
on pages 360 and 361 of volume 2 of the hearings had on Mar. 27, 1913. 

743 



744 



KAILWAY MAIL PAY. 



American Electric Railway Association. 1 
[A. R. Piper, 85 Clinton Street, Brooklyn, N. Y.] 

March 21, 1913. 

Dear Sir: In reply to your favor of March 13, 1913, please note that the following 
figures have been taken from the monthly statement of this road, and I think will give 
you the information that you desire. 

At the present time on independent railway post-office cars, electrically driven, 
we are paid 1 cent per linear foot for inside measurement of car. We have two sizes 
of cars m use, and are paid respectively 19.58 cents per mile and 15.5 cents per mile. 
The larger size cars, that is, the 19.58, were formerly used in express service in haul- 
ing express for the American Express Co. Later they were converted into mail cars 
and are now in service of the post office. 

The following tabulation shows you by year the revenue paid this company by the 
express company, the mileage made by the car, and the rate per car-mile paid us: 



Year. 


Revenue. 


Miles. 


Per mile. 


1905 


$43,612.52 
51,612.61 
57,875.12 
59,231.08 


162,041 
173,815 
179,405 
154,989 


$0.27 


1906 


.298 


1907 


.322 


1908 


.382 







American Express Co. 

[James C. Fargo, president, 65 Broadway, New York City.] 

March 26, 1913. 
Dear Sir: We duly received your favor of the 13th instant, asking for certain 
comparative information in respect of railway and express rates of payment on mail 
and express traffic and regret our inability to comply with your request for the reason 
that no reliable data is available to us in respect of the compensation received by 
railroad companies for carriage of the mails. 

Northern Express Co. 
[J. M. Hannaford, president, St. Paul, Minn.] 

April 11, 1913. 

Dear Sir: Your letter of March 13, asking question as to the relative rates paid to 
the railroads for transportation of express and mail, duly received. 

The difficulty in making a comparison between the two classes of service is in 
securing a satisfactory unit or basis. The compensation paid by the express company 
to the railway company is based on the gross revenue of the former regardless of weight, 
space occupied, or distance carried. If it could be known what the revenue of the 
Government is on mail carried on lines over which the Northern Express Co. oper- 
ates, a comparison could be made on that basis; but this can not be known, and as 
from the nature of the express business, the weight of the latter for any given period 
can not be known, a comparison can only be based on the space occupied relatively 
by the two classes of business. 

For the year ending June 30, 1912, the records of the Northern Pacific Railway Co. 
and the Northern Express Co. show as follows: 

Car-foot miles used in express business 360, 859, 668 

Proportion of total car-foot mileage per cent. . 7. 894 

Car-foot miles used in mail service 336, 000, 737 

Proportion of total car-foot miles per cent. . 7. 35 

Compensation paid by express company to railway (equal to $3.56 per 

1,000 car-foot miles) $1, 283, 352. 39 

Compensation received by railway company from Post Office Depart- 
ment (equal to $2.92 per 1,000 car-foot miles) $981, 528. 33 

i While the circular letter was addressed to Mr. Piper as one of a subcommittee of the American Electric 
Railway Association, the figures presented in his letter refer only to his own road: namely, the Brooklyn 
Heights Railroad Co. 



RAILWAY MAIL PAY. 745 

In the matter of responsibility assumed, the railroad companies are held responsible 
for all damage to mails and injuries to Post Office Department employees, etc. 

In the express company's contract with the railway the latter is relieved from liabil- 
ity for loss of or damage to any article transported in any of the said cars for the express 
company arising from theft, robbery, mob violence, or fire, or from any other cause, 
save the gross negligence or willful misconduct of the agents, servants, or employees 
of the railway company. 

We also pay rentals for the use of all station space set apart for the express company ; 
as an illustration, we pay $6,000 annually at the King Street Station, Seattle. 

Post Office Department. 
[Hon. Albert Sidney Burleson, Postmaster General, Washington, D. C] 

The following letter was addressed to Hon. Albert Sidney Burleson, 
Postmaster General: 

In the consideration of the question of railway mail pay there has frequently arisen 
a question as to the relative rates paid to the railroads for transportation of express 
and of mail matter. It has been frequently asserted that the mail rates are much in 
excess of the express rates. I presume the matter of express rates is one which does 
not come within the knowledge of your department, and full information on that 
point we can secure from the Interstate Commerce Commission. I wish to ask you, 
however, to advise the joint committee in what particulars and to what extent, so far 
as the information is available, the service rendered to the department differs from 
the service rendered to the express companies. I wish this to include, if practicable, 
a statement of the difference, if any, in the amount of responsibility the railroad com-, 
panies assume in case of injury to mail or express or employees. Thanking you for 
your courtesy in the matter, I am 
Yours very truly, 

Jonathan Bourne, Jr., Chairman. 



Post Office Department, 
Office of the Postmaster General, 

Washington, D. C, July 25, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail Matter 

and Compensation for the Transportation of Mails, 

Congress of the United States. 
My Dear Mr. Chairman: I hand you herewith a memorandum prepared by the 
Second Assistant Postmaster General in response to your inquiry respecting differ- 
ences between the requirements imposed upon the railroad companies in the per- 
formance of mail service, as compared with similar requirements in the performance 
of service for express companies. 
Yours very truly, 

A. S. Burleson, Postmaster General. 



Post Office Department, 
Second Assistant Postmaster General, 

Washington, July 25, 1913. 
Postmaster General: 

In reply to the inquiry of the chairman of the joint committee on postage on second- 
class mail matter and compensation for the transportation of mails respecting the 
differences between services rendered by railroad companies to the Post Office Depart- 
ment in transporting the mails and to express companies in transporting express 
matter, I have the honor to advise you as follows: 

Mr. V. J. Bradley, representing the Pennsylvania Railroad Co., submitted to the 
commission a statement of "Differences in the requirements imposed upon the rail- 
road companies in the performance of United States mail service as compared with 
similar relations in the performance of service for the express companies," which is 
printed on pages 437 and 438 of the hearings. The matter is there treated under 17 
different headings of subject matter and the statement as to each subject set forth 
with reference to the service performed for the Post Office Department and service 
performed for the express companies. 



746 KAILWAY MAIL PAY. 

With respect to the statements concerning the services performed by the railroad 
companies for the express companies, the department has not the official information 
to verify them. 

With reference to that part of the statement regarding the Post Office Department, 
it is subject to amendment or further elaboration, as follows: 

1. Contracts. — The terms of the contract between the Post Office Department and 
the railroad company are fixed by the postal laws and regulations not inconsistent 
with law and the orders of the Postmaster General respecting them. The railroad 
company undertakes to carry the mails upon these terms and becomes subject to 
such laws, regulations, and orders by performing the service. 

2. Differences. — Differences between the Post Office Department and the railroad 
companies are subject to consideration and readjustment through the administrative 
officers of the department. 

3. Pay adjustments. — The Postmaster General is authorized by law to make read- 
justments of pay for carrying the mail on railroad routes not less frequently than 
once in every four years and is authorized to weigh the mails for that purpose. The 
contract period has usually been fixed at four years, and it is the theory of the law 
and of the practice under it that all increases in the weight of mails during the con- 
tract term are adequately compensated for by the statutory rates fixed. 

4. Transportation facilities. — The law provides that every railway company carry- 
ing the mail shall carry on any train which may run over its road all mailable matter 
directed to be carried thereon, with the person in charge of the same, and that the 
Postmaster General shall in all cases decide upon what trains and in what manner the 
mails shall be conveyed. 

5. Car space. — For closed pouch service and storage mail the Post Office Department 
requires only the space which is necessary for the proper transportation of the same. 
For the distribution of mails en route it requires a car or apartment in a car specially 
fitted for the same. This latter requirement is provided for by law. When the needs 
of the service require 40 feet or more linear space in the car the law permits payment 
for the space in addition to the payment for the transportation of the mails. 

6. Railway post-office cars; mail apartment cars. — The law requires that all cars or 
parts of cars used for the Railway Mail Service shall be of such style, length, and 
character, and furnished in such manner as shall be required by the Postmaster Gen- 
eral, and shall be constructed, fitted up, maintained, heated, and lighted by and at 
the expense of the railroad companies. 

7. Construction; maintenance. — The law requires cars to be sound in material and 
construction, and equipped with sanitary drinking water containers and toilet facil- 
ities; that after the 1st of July, 1917, all full railway post-office cars paid for shall be 
of steel or steel underframe, or equally indestructible material; and that all new cars 
accepted for the service and contracted for by the companies after August 24, 1912, 
must be of steel. 

8. Loading and unloading . — The railroad companies load and unload the mail cars. 

9. Employees accompanying traffic en route. — The law provides that railroad com- 
panies shall carry the mail, with the persons in charge of the same. Practically this 
means the carriage of the railway postal clerks who distribute the mails en route. 

As to liability for injury or death of clerks it is understood that the courts hold the 
companies to the same degree of responsibility that they are held with reference to 
passengers. 

10. Station room. — The regulation requires that railroad companies at stations where 
transfer clerks are employed shall provide suitable and sufficient rooms for handling 
and storing the mails, and without specific charge therefor. These rooms are to be 
lighted, heated, furnished, supplied with ice water, and kept in order by the railroad 
company. 

11. Side and terminal messenger service. — The regulations require every railroad com- 
pany to take the mails from and deliver them into all terminal post offices, whatever 
may be the distance between the station and post office, except in cities where other 
provision for such service is made by the Post Office Department. The company is 
also required to take the mails from and deliver them into all intermediate post offices 
and postal stations located not more than 80 rods from the nearest railroad station at 
which the company has an agent or other representative employed. 

12. Free or reciprocal service. — The Post Office Department does not render any free 
or reciprocal service to railroad company. 

13. Mail cranes and mail receivers. — At all points at which trains do not stop where 
the Post Office Department deems the exchange of mails necessary, a device for the 
receipt and delivery of mails satisfactory to the department must be erected and 
maintained. The erection of the crane may be obviated by the stopping of the train 
to make a safe delivery if the company so elects. 



RAILWAY MAIL PAY. 747 

14. Advance loading of railway post-office cars. — The Post Office Department requires 
the placing in terminals of cars for distribution purposes in advance of their leaving 
time where such advance distribution is necessary in the handling of local mails for 
points near the initial terminal and to avoid such mails being carried past destination. 

15. Handling traffic. —The Post Office Department requires the railroad company to 
handle the mails excepting when they are in charge of railway postal clerks, which 
handling is paid for under the compensation allowed for the transportation of the mails. 

16. Responsibility for loss or damage.— The loss, or rifling of, or damage to registered 
and other mail is investigated by the chief inspector. In case the facts establish re- 
sponsibility for loss upon the mail carrier by reason of the failure or negligence of such 
person, company, or corporation, or that of his or its agents and employees, the chief 
inspector makes a demand upon the contractor for the amount of the loss. If said loss 
be not paid, the facts are reported and disciplinary fines imposed. If the chief inspec- 
tor determines that further proceedings shall be had, he submits all facts to the 
Assistant Attorney General for the Post Office Department, who advises whether suit 
shall be brought by the United States for the recovery of the amount involved. If 
it is determined that suit shall be brought, the request is made upon the Solicitor of 
the Treasury to take appropriate action. 

17. Fines and penalties. —The law provides that the Postmaster General may make 
deductions from the pay of contractors for failure to perform service according to con- 
tract, and imposes fines upon them for their delinquencies. The regulations provide 
for fines for specific delinquencies set forth therein. 

Joseph Stewart, 
Second Assistant Postmaster General. 

Short Line Railroad Association. 

[John N. Drake, secretary and treasurer, 1419 F Street, NW., Washington, D. C] 

Washington, D. C, April 24, 1913. 

Dear Sir: In conformity with your request to advise the joint committee how the 
mail rates compare with express rates on our mail-carrying railroads, I annex hereto a 
statement covering such rates from the roads which have filed reports with us; also a 
statement of the cost of terminal and side deliveries in performing messenger service. 

If this report is lacking in any detail, or it is your desire that the officials of any of the 
roads named appear before your committee, kindly advise me. 

STATEMENTS OF VARIOUS ROADS. 

BELLEFONTE CENTRAL RAILROAD, operating between Bellefonte and 
State College, Pa., 19.51 miles: 

Total mail compensation received $1, 167. 67 

Mail-messenger service - 370. 00 

Making the amount received for the mail service 797. 67 

The express service performed by the Adams Express Co. over the same route pays 
11,738 in cash, also 26.66 per cent of the salaries of the joint-train baggage and express- 
man, in addition to paying $540 per year as their proportion of the railroad station 
employees' salaries, making a total per year of more than $2,500. The express service 
pays in excess of the mail $1,702.33. 

BUFFALO, ROCHESTER & PITTSBURGH RAILWAY, operating eight mail 
routes between the following points: (1) 289.21 miles between Rochester, N. Y., and 
Butler, Pa., 64 round trips weekly; (2) 1.11 miles between Silver Lake Junction and 
Silver Lake, 33 round trips weekly; (3) 48.22 miles between Buffalo and West, N. Y., 
34 round trips weekly; (4) 5.10 miles between Lanes Mills and Coal Glen, Pa., 18 
round trips weekly; (5) 26.55 miles between G v & M. Junction and Clearfield, Pa., 13 
round trips weekly; (6) 44.69 miles between Butler and Pittsburgh, Pa., 13 round 
trips weekly; (7) 33.93 miles between Indiana Junction and Indiana, Pa., 14 round 
trips weekly; (8) 18.89 miles between Ridge Junction and Iselin, Pa., 12 round trips 
weekly. 

This service requires the use of five mail apartment cars covering the following 
number of miles daily, except Sunday: Two 30-foot apartment cars, 326 miles each; 
one 25-foot apartment car, 156 miles; one 25-foot apartment car, 208 miles; one 20-foot 
apartment car, 144 miles. Total, 1,160 miles per day, or 353,080 apartment car miles 
for year 1912. 

Three extra combined mail and baggage cars in addition to those used are held in 
reserve. 



748 RAILWAY MAIL PAY. 

Three all-steel apartment cars were installed in August, 1912, and three have since 
been ordered, so as to equip all through trains with steel equipment. The cost of 
the new steel mail and baggage cars combined is $10,356.61, while the cost of straight 
baggage cars is $9,306.44. It is thus seen that the additional cost of a combined car 
for the mail service is $1,050.17 in excess of a baggage car. 

The use of these cars fitted up for mail purposes, heated, lighted, and iced, is given 
without one penny being paid for the use of the car for post-office purposes. In 
addition, mail messengers are carried free. 

The mail revenue received for the year 1912 was $50,247.21. Out of this amount 
there was paid in cash for side and terminal deliveries for messenger service, $1,865, 
and for employees' time there was charged $1,500, making a total of $3,365, leaving 
the net amount received for the mail service $46,882.21. The revenue from express 
carried on the same trains was $82,558.39. 

The express earnings as thus shown were $35,676.18 in excess of the mail earnings. 

In connection with this, the railroad has entered into a new express contract taking 
effect May 1, 1913. By the terms of this contract the road is to receive a minimum 
revenue of $100,000 per year. 

The relative earnings per cent of mail and express in 1912 were: Mail, 0.0474; ex- 
press, 0.0780. 

Passenger train mileage for year ending 1912 was 1,317,794 miles, on all of which 
mail in some form was carried. 

Attention is called to Document 105, submitted by the Postmaster General to 
Congress, in which, on pages 272-273, there is shown by the department's own figures 
that this railroad's loss in carrying the mail was $1,746.15 per month. 

THE BLOOMSBURG & SULLIVAN RAILROAD CO., operating between Blooms- 
burg, Pa., and Jamison City, Pa., 29 miles: 

Apartment car, also pouch service is employed in carrying the mail. 

The amount received for mail transportation for vear ending June 3, 

1912 -. $1, 830. 40 

Oo.-t of mail delivery 120. 00 

Net revenue received by the road 1 , 7 1 0. 40 

The revenue received from the express company in cash 2, 263. 87 

The express company also paid as its proportion of the baggageman's salary. 240. 00 

Making a total of 2, 503. 87 

The revenue from the express service exceeded that received from the mail by 
$793.47. 

The car space occupied by the express company is very considerably le^s than the 
space used for the mail; with that space, without extra compensation, the road fur- 
nishes a post office on wheels fitted up at its own expense with the following accommo- 
dations: Hot and cold water for washing purposes, iced drinking water, toilet, light, 
and heat. 

BUTTE, ANACONDA & PACIFIC RAILWAY, between Butte and Anaconda, 
Mont., 25.67 miles, four round trips seven days a week, with a daily average of 2,827 
pounds. The mail service is performed in two (19| feet) apartment cars on four trains 
daily, also in closed pouches on four other trains. The closed pouches range from 
24 to 62 pouches daily, and the average pouch weight handled is 700 pounds, by the 
road's baggagemen. The pouch service on this road, if charged at the express com- 
pany's rate, would yield $1,500 per year. 

The total compensation received for apartment cars and pouch service is, 
gross $3,187.28 

Mail messenger service at terminals on the route costs: 

Butte $900. 00 

Anaconda 720. 00 

Side deliveries: 

Silver Bow 39. 96 

Durant 17. 76 

Gregson 13. 32 

1,691.04 

Thus leaving the road, for all the mail service performed during the 

year, net 1, 496. 24 

Express earnings were, net 7, 702. 58 

The express earnings exceeds the mail earnings, per year 6, 206. 34 



RAILWAY MAIL PAY. 749 

CENTRAL RAILROAD CO. of Pennsylvania, between Bellefonte and Mill Hall, 
Pa., 26.13 miles. There are six round trips with messenger service in a 15-foot mail 
compartment car and 15 round trips with closed-pouch service. The daily average 
weight of mail is 173 pounds. 

The annual compensation is, gross $1, 198. 28 

The mail messenger service at terminals and side stations costs as follows: 

Bellefonte $108. 00 

Hublersburg 39. 00 

Clintondale 42. 00 

Mill Hall 108. 00 

297. 00 

Leaving the net amount received for the service 901. 28 

Express earnings 1, 732. 04 

Express earnings exceed mail earnings 830. 76 

The road earns, per car mile, for passengers, 14.24 cents. Its earnings from mail, per 
car mile, for the apartment car (15 feet), is 2.62 cents, or about the fare of the Govern- 
ment clerk in charge oithe mails. 

COUDERSPORT & PORT ALLEGANY RAILROAD, between Port Allegany 
and Ulysses, Pa., 39 miles; 12 round trips weekly, with a daily average of 534 pounds 
of mail. Mail route 110144. 

The mail service is performed in a 12-foot mail apartment car, also pouch mail 
on four trains each week day; two trains Sunday between Port Allegany and Couders- 
port. The average number of mail sacks handled per day is 22, weighing 398 pounds. 
The pouch service on this road, if charged at the express company's rate, would 
yield $1,491.25. 

The total compensation received for apartment-car space and pouch-mail 

service is, during the year 1912 $2, 556. 24 

The mail messenger service at terminals on the route costs: 

Port Allegany $180. 00 

Ulysses 162. 00 

$342. 00 

Side deliveries: 

Burtville 60. 00 

New Field Junction 120. 00 

Mina 100. 00 

280.00 

622. 00 

This leaves the road, net, for the entire service 1 , 934. 24 

Of all the passenger-car space on this road, 119 feet are devoted to passengers, 14 
feet to express, and 17 feet to mail. Of the entire passenger-car space, 79J per cent 
is devoted to passengers, 9 J per cent to express, and 11£ per cent to mail. 

The American Express Co. operates over the line. The total cash receipts from 
the expesss company are $2,165.66. The express company also pays, as its share 
of the salaries of joint trainmen, $780. It also pays a percentage of the station agents' 
salaries ($960) for handling the express and carries free local packages and remittances 
from the railroad. 

The total value, in money, to the railroad company from the express company 
amounts to $3,905.66, compared with $1,934.24 received for carrying the mails, while 
the mails require 11£ per cent of the passenger-train space, compared with 9£ per 
cent devoted to express. 

Applying to the total passenger expense the percentage of space in passenger trains 
devoted to the mails (11£ per cent), the C03t of mail transportation on this road is 
$6,644.75, while the net earnings from mail were $1,934.24. 

The transportation of the mail messenger for the distance he travels during the year 
(48,828 miles), at 3 cents a mile, the regular rate, if paid for, would net the road 
$1,468.84. 

DENVER, LARAMIE & NORTHWESTERN RAILROAD CO., between Milliken 
and Greeley, Colo., 12.69 miles; daily average of mail, 13 weekly round trip3. 

This service is performed in combination cars devoted to mail, passengers, express, 
and baggage. 

49396—14 55 



750 RAILWAY MAIL PAY. 

The total compensation received for carrying mail is $542. 40 

Mail messenger service at terminals on the route costs: 

Milliken $96. 00 

Greeley 72. 00 

168.00 

Which, when deducted from the amount received, leaves 374. 40 

The Adams Express Co. operates over this line. The revenue yielded from the 
express service averages $4,220.51 per year. The express company also performs 
service for the railroad in transporting agents' remittances along the road. A separate 
service for this work on the part of the road would require a bonded messenger. 

The revenue from the express company nets the road $4,220.51 per year, against 
$374.40 received for mail transportation. 

EAST BROAD TOP RAILROAD & COAL CO., operating two mail routes between 
the following points: 

Route 110085, between Mount Union, Pa., and Robertsdale, Pa., 29.6 miles. 

Route 110185, between Rockhill Furnace, Pa., and Neelyton, Pa., 9.3 miles. 

Total mileage, 38.9. 

Amount received for mail transportation over both roads $1, 819. 20 

The cost in mail deliveries for messenger service over these routes is 823. 43 

Leaving the net amount received by the road for mail 995. 77 

The express company pays the road in cash $2,654.07; also pays the rail- 
road's employees $1,511.55, making a total of 4, 165. 62 

The express-service revenue to the railroad and its employees exceeded 
the amount paid for mail service 3, 199. 85 

FLORIDA RAILWAY, between Live Oak and Perry, Fla., 52 miles, seven round 
trips and six round trips on 22 miles of the route. Mail route 123047. 

The mail is carried between Live Oak, Fla., and Perry, Fla., in an apartment car 
17 feet long, with a postal clerk in charge. On the 22-mile route, between Live Oak 
and Mayo, the service is pouch mail. 

The average weight of mail per day is 200 pounds. 

The compensation received for the service, gross $2, 195. 64 

Deliveries at terminals cost per year as follows: 

Live Oak, Fla $84. 00 

Mayo 84.00 

Perry 84. 00 

252. 00 

Leaving the road, net, for the service performed 1, 943. 64 

Express earnings 3, 470. 00 

Express earnings for the year exceed mail earnings 1, 526. 36 

Between Live Oak and Mayo, Fla., 22 miles, six round trips weekly, four pouches 
of mail are carried daily. The road would charge a private shipper 75 cents a pouch, 
or $3 per day, for this service, which requires delivery to and from the post offices. 

The actual cost to us for lights for apartment car and for heating the car, cleaning, 
water and ice, repairs, interest on cost of car, and depreciation is 3 cents per mile, and, 
as the car runs 51,768 miles per year, such actual cost is $1,553.04; our actual pay is 
$1,943.64. 

FONDA, JOHNSTOWN & GLOVERSVILLE RAILROAD, operating between 
Fonda and Northville, N. Y., 33 miles: 

Total mail compensation received $3, 147. 72 

Mail messenger service at terminals deducted 540. 00 

Leaves the amount received for mail compensation during the year 

1912 2,607.72 

The express service performed over the same route paid in cash during the same 
period, $15,829.47. The express service netted the road $13,221.75 in excess of the 
mail. 

In addition to the revenue the road received from the express company its em- 
ployees received for handling express matter for the year ending June 30, 1912, the 
sum of $1,293.36. 



RAILWAY MAIL PAY. 751 

GEORGETOWN & WESTERN RAILROAD, between Lanes and Georgetown, 
S. C, 36 miles, six weekly round trips in one apartment car with a mail messenger; 
one round trip of closed pouch service on Sunday. Mail route 120020. 

The averageweight of mail handled, for which pay is allowed, is 595 pounds. 

The total compensation received, gross $2, 473. 92 

Deliveries at terminal and side stations cost as follows: 

Georgetown : $300. 00 

Rosemary 96. 00 

Lanes 96. 00 

Taft 60. 00 

Trio 60.00 

Employees' extra time ,. 318. 00 

930. 00 

Leaving the road, net 1, 543. 92 

The employees' extra time in handling the mail is based upon the percentage of 
time actually given to the service. 

The cost of fitting up the apartment space in the car for post-office purposes waa 
$380, but this does not include any part of the cost of the car. The lighting, heat- 
ing, etc., cost, per year, $167.50. 

The cost, per car mile, of handling the apartment car space is 6 cents per car mile. 
The annual mileage the car is hauled is 49,494 miles, and estimating the cost of hauling 
at 6 cents per mile the actual cost is $2,969.64; the pay,, less messenger cost, is $1,543.92. 

The number of miles, per year, traveled by postal clerks is 49,494 at a rate of 2 cents 
per mile; this would amount to $989.88. 

The express company paid, the last fiscal year, $3,083.25. They also paid the train 
baggageman per year and a commission to station agent at Andrews, S. C, $60 per year, 
making a total of $3,623.25 against $1,543.92 paid in carrying the mail. 

LOUISIANA & ARKANSAS RAILWAY, between Hope, Ark., and Minden, La.," 
78.26 miles, seven round trips weekly, Minden, La., to Alexandria, La., 116.87 miles, 
seven round trips weekly. Mail route 149023. 

Between Packton, La., and Jena, La., 29.07 miles, seven trips per week. Mail 
route 149045. 

Between Minden, La,, and Shreveport, La., 30.78 miles, seven round trips per week. 
Mail route 149073. 

The mail service is performed in two apartment cars with postal clerks, the car 
space used in each 18 feet; also a pouch service on other trains. 

The total compensation received for the mail service is, gross (year ended 

Feb. 28, 1913) $15, 611. 38 

The messenger service for mail delivery is as follows: 

Per year. 

Hope, Ark $120. 00 

Minden, La 96. 00 

Alberta, La 60.00 

Alexandria, La 240. 00 

516. 00 
The proportion of the time consumed by railroad employees in delivering 
mail at other points along the routes is estimated at $132.25 per month, 
for $1 ,587 per year 2, 103. 00 

This leaves the net amount received for carrying the mail 13, 508. 38 

The value of the mail apartment car space, compared with the total value of the car, 
is about $1,600 each. The cost, however, of fitting up the space for post-office pur- 
poses is $350 each. 

The annual cost of heating, icing, lighting, and cleaning the mail apartment space, 
based on its proportion of the entire car expense, is $155. 

The road carries over its three routes 61 pouches daily. To handle these pouches 
at the express rate would cost $5,565.25 a year. 

The Southern Express performs the express service over the road, and pays in cash 
$12,159.29. It also paid seven-eighths of the salaries of joint train baggage and express 
men employed by the road, except in the case of one man, to whom they paid one- 
half of his salary. To the railroad station agents they paid $2,472. The express 
company paid $1,142.91 more than the mail, aside from the salaries paid joint trainmen. 



752 RAILWAY MAIL PAY. 

LANCASTER & CHESTER RAILROAD, between Lancaster and Chester, S. C, 
2^.58 miles, including terminals; six weekly round trips in two apartment cars 9 by 9 
each, with mail messengers and six weekly round trips with closed pouches handled 
by train baggagemen. Mail route 120013. 

The total compensation received for the service is, gross $1, 292. 80 

Deliveries at terminals and side stations cost as follows: 

Chester $120. 00 

Richburg 48. 00 

Fort Lawn 48. 00 

Lancaster 120. 00 

336. 00 

Leaving the road for mail service, net 956. 80 

At Lancaster the mail is delivered by an employee of the road, and 10 per cent of 
his salary is charged ($120) to mail delivery. Cash for delivery is paid at the other 
points. 

There are from four to five closed pouches taken out of Chester and four out of Lan- 
caster, also one out of Fort Lawn and one into Fort Lawn on two trains a day. A 
minimum charge for this service would be $1 per train, or $626 per annum. 

Of the three classes of traffic, mail occupies 9 linear feet, express 7| linear feet, and 
passenger and baggage 77§ linear feet, a total of 94 feet. 

The number of miles traveled by postal clerks is 18,154. The regular legal rate of 
fare is 3 cents per mile, which would make the cost of their transportation $544.62. 

The Southern Express operates on this road. There is no minimum nor any agree- 
ment in regard to their charges. The express company pays in cash $1,327.07. They 
also pay one-half of baggageman's salary, amounting to $240, and a commission to sta- 
tion agents amounting to $466.35, besides carrying railroad packages free; a service 
worth altogether $1,000 a year. 

The revenue from express and the service rendered the road exceed that from the 
mail $2,076.62. 

Applying to the total passenger expense of $17,542.39 its proportion of the total 
operating expenses of the road ($170,169.55), the percentage of space in passenger 
trains (one-tenth) devoted to mail costs $1,754.24, with no pay for pouch service. 

MARYLAND & PENNSYLVANIA RAILROAD CO., operating between York, 
Pa., and Baltimore, Md., 77.1 miles, 12 round trips weekly; also between Dallastown 
Junction, Pa., and Dallastown, Pa., 0.8 mile, 12 round trips weekly. 

Two mail apartment cars used, 15 feet by 9 feet, carrying postal clerks. Pouch mail 
is also carried on the trains. 

The amount received from the Post Office Department during three months ending 
March 31, 1913, for handling mail, $1,493.22. 

The messenger service for mail delivery cost in cash for the three months ending 
March 31, 1913, as follows: 

Towson $30. 00 

Woodbine 30.00 

Bridgeton 15. 00 

$75. 00 

The side deliveries made by employers of the road charged at one-tenth of the 

salary paid for the service during the three months was as follows : 

Loch Raven $13. 50 

Glenarm 12. 00 

Baldwin 15. 00 

Fallston 15.00 

Felton 13.50 

Yoe 15. 00 

Dallastown ; 13. 50 

Red Lyon 18. 00 

115. 50 

Total cost of messenger service 190. 50 

This leaves the net amount received for carrying the mail three months, $1,302.72. 
The net amount received from the express during the three months was $2,740.58. 
The revenue from the express exceeded the revenue from mail, $1,437.86. 



RAILWAY MAIL PAY. 



753 



The total length of passenger equipment (not including locomotives) operated on 
the schedule during the three months was 1,595 lineal feet divided as follows: 
r Passenger coaches, 1,210 lineal feet, 75.9 per cent of total length; baggage and milk, 
285 lineal feet, 17.9 per cent of total length; express, 40 lineal feet, 2.5 per cent of total 
length; mail, 60 lineal feet, 3.7 per cent of total length; total, 1,595 lineal feet, 100 per 
cent. 

Cost of running passenger trains, 34.96 cents per mile. 

Total mileage made by passenger trains on schedule in effect during above-mentioned 
period, 58,751 miles. 

Cost of running passenger trains during period mentioned $20, 539. 35 

Cost of repairs to passenger cars during period mentioned 2, 555. 88 

Cost of cleaning passenger cars during period mentioned 647. 82 

Cost of heating passenger cars during period mentioned 250. 00 

Maintenance of way expenses during period mentioned, $16,551.52; total 
car and engine mileage during period was 437 ,821 miles, of which passenger 
car and engine mileage was 253,290 miles or 57.8 per cent of total mileage, 
and this percentage of maintenance of way expenses is properly charge- 
able to passenger service 9, 567. 78 

Total operating expenses chargeable to passenger service 33, 560. 83 

Note. — This total does not include switching service in yards, cost of passenger 
equipment, depreciation, traffic, or general expenses. 
From the figures given the following is deduced: 



Equipment. 


Length 
in feet. 


Total 
length. 


Proportion 

expenses 

chargeable. 


Revenue 
from. 


Coaches 


1.210 

285 

40 

60 


75.9 
17.9 
2.5 
3.7 


$25,474.19 

6,007.75 

839.07 

1,241.82 


$32, 196. 39 


Baggage and milk 


12,443.33 


Express 


2,740.58 


Mail 


1,302.72 








1,595 


100.0 


33,562.83 









Net mail revenue as above $1, 302. 72 

Expenses 1, 241. 82 



Leaving 60. 90 

The expenses thus deducted include only the actual cost of running the mail apart- 
ment and do not include any general expenses, a proportion of which is properly 
chargeable to this service; also note that no charge is made for considerable quantities 
of pouch mail carried, as it is difficult to accurately ascertain this. If all the costs 
attending the service were added, the expenses of mail carriage would largely exceed 
the revenue. 

Jno. Wilson Brown, President. 
State of Maryland, 

City of Baltimore, ss: 

Be it known that on this 20th day of May, 1913, before me, the undersigned, a 
notary public of the State of Maryland, in and for the city of Baltimore, duly com- 
missioned and qualified, came John Wilson Brown, president of the Maryland & 
Pennsylvania Railroad Co., and made oath in due form of law that, to the best of 
his knowledge and belief, the matters and facts set forth in the aforegoing statement 
are true. 

In witness whereof I hereunto subscribe my name and affix my notarial seal on 
the day and year above written. 

[seal.] William J. Roth, Notary Public. 

MUNISING, MARQUETTE & SOUTHEASTERN RAILWAY, operating two 
mail routes, one between Munising, Mich., and Princeton, Mich., 45.72 miles, and 
one between Lawson, Mich., and Big Bay, 50.84 miles. 

The total mail revenue received for the year 1912 was $4, 748. 12 

The mail messenger service for side and terminal deliveries was 835. 20 



Leaving the net amount received by the road 3, 912. 92 

The express service earnings over the same routes was 7, 015. 25 



754 RAILWAY MAIL PAY. 

The express service revenue netted $3,102.33 in excess of that received for carrying 
the mail. 

In addition to this the express company allows the railroad company $40 a month for 
the services of the train baggagemen acting as express messengers. This, if added to 
the cash revenue received from the express company by the railroad, would make the 
express revenue exceed that for carrying the mail $3,582.33. 

The express company also pays the agents of the road 10 per cent of the earnings on 
in-and-out business. They also assume liability for injury to express messengers, with 
no responsibility in handling express matter. 

The railroad alone is responsible for injury as to United States mail employees. 

OKLAHOMA CENTRAL RAILWAY CO., between Frisco Crossing and Chickasha, 
Okla., 88.94 miles; seven weekly round trips. Average daily weight is 224 pounds. 
Route 153047. 

Between Ada and Frisco Crossing, Okla., 3.20 miles; seven weekly round trips. 
Average daily weight is 80 pounds. Route 153048. 

The service is performed in two apartment cars, but an extra car is maintained, at 
the road's expense, as a relief car to be used in case of emergency. 

The space used for the mail in. these cars is 15 feet each. 

,The total compensation received is, gross $4, 091. 07 

*The mail messenger service costs : 

Per year. 

Ada, Okla $120. 00 

Chickasha, Okla 180. 00 

$300. 00 

A t Vanoss one-eighth of the employees ' time is ch arged . 60. 00 

Stratford, one-twenty-fifth. 28. 80 

Washington, one-tenth 72. 00 

160.80 460.80 

Leaving the net amount received 3. 630. 27 

The annual mileage of mail apartment cars is 67,262. 

The proportion of passenger car space devoted to passengers, express, and mail is as 
follows : 

Passengers, 77.5 per cent; express, 6.3 per cent; baggage, 6.3 per cent; mail, 9.9 
per cent. 

The number of miles traveled by postal clerks is 67,262 per year; at 2 cents per mile 
this would be $1,345.24. 

The American Express operates over the line and paid for the service, in the last 
fiscal year, $2,546.79 in cash; $420 in salaries to joint baggage and expressmen; 
$1,062.51 for station agents' salaries, and performed work for the railroad amounting 
to $1,000, making a total of $5,029.30 from the express service against $3,631.27 for 
carrying the mail. 

For the past year the average number of passengers carried per car was 12. The 
actual earnings per car-mile for carrying passengers was 36 cents. 

The earnings per car-mile for apartment car snace was 5 cents. 

PITTSBURGH, SHAWMUT & NORTHERN RAILROAD, between Wayland 
and Moraine, N. Y., 11.98 miles, 18 weeklv round trips pouch service, weight of mail 
200 pounds. Mail route 107038. 

Between Hornell and Olean, N. Y., 76.40 miles, weight of mail 282 pounds per day, 
six weekly round trips over 66.27 miles and 18 weekly round trips over 10.13 miles 
pouch service. Six weekly round trips over 76.40 miles with a mail compartment 
car and postal clerk. Route 107139. 

Between St. Marys and Shawmut, Pa., 25.43 miles, weight of mail 333 pounds per 
day, six weekly round trips pouch service, and six weekly round trips compartment 
car with postal" clerk. Route 110282. 

Between Brockport and Ramsaytown, Pa., 31.88 miles, weight of mail 200 pounds 
per day, six weekly round trips pouch service, and six weekly round trips compart- 
ment car with postal clerk. Route 110204. 

t Between Norman and Conifer, Pa., 4.23 miles; weight of mail per day 38 pounds, 
six weekly round trips pouch service, six weeklv round trips compartment car. 
Route 110*290. 

Between Paine and Force, Pa., 10.87 miles; weight of mail per day 51 pounds. 
Twelve weekly round trips, pouch service. Route 110238. 

Between Carmen and Hallton. Pa., 10.89 miles; weight of mail per day, 120 pounds. 
Route 110221. 

The annual compensation received for carrying the mail over all routes 
is, gross $8, 144. 40 



EAILWAY MAIL PAY. 755 

The mail messenger service costs as follows: • Per year. 

Wayland, N. Y $120.00 

Hornell, N. Y 168. 00 

Olean, N. Y 120. 00 

Garwoods, N. Y 120.00 

St. Marys, Pa 300. 00 

Boliver, N. Y 96. 00 

924. 00 

Leaving the road for the mail service, net 7, 220. 40 

The car space occupied by the mail in each apartment car is 15 feet. One addi- 
tional car is provided for an emergency. The average cost of fitting up the cars for 
post-office purposes with metal is $773.51 each. This does not include the propor- 
tionate cost of the full car. 

The annual cost for lighting, icing, heating, and cleaning each car for the space used 
is $97.32. This estimate is based on the average cost per car of the service for all 
passenger cars, $317.92 per year. 

Fifty-eight pouches of mail are handled daily on 152 miles of pouch train service, 
making a total of 18,154 pouches per year. At 25 cents per pouch, the minimum 
package freight rate, this would earn $4,538.50 per year. The number of miles 
traveled by postal clerks during the year was 86,896 miles. At 2 cents per mile the 
value of the service would be $1,737.92. 

The United States and the Adams Express Cos. perform the express business over 
the line. 

The cash compensation for the service is $5,214. In addition to this, the express 
companies pay in salaries of joint train baggage and expressmen, $2,484.28. They also 
pay in salaries to station agents $1,800 and render service to the railroad valued at 
$350 per year, making the total amount derived from express $10,048.28, against 
$7,220.40 received for carrying the mail. 

The express paid in excess of mail $2,767.88. 

ROSCOE, SNYDER & PACIFIC RAILWAY, between Roscoe and Fluvanna, 
Tex., 49.76 miles, seven round trips weekly, all pouch mail. Daily weight of mail, 
359 pounds. Mail route 150137. 

The total compensation received for the mail service is, gross $2, 680. 07 

The cost of mail delivery is as follows: 

Per year. 

Roscoe, Tex $54. 75 

Hermleigh, Tex 60. 00 

Fluvanna, Tex 96. 00 

210. 75 

Leaving for the mail service, net 2, 470. 32 

The amount charged against mail delivery at the above points is one-tenth of the 
wages of the railroad employees doing the work; they are paid $1.50 a day. The road 
charges out of this at the rate of 15 cents per day to mail delivery. 

The Pacific Express operates over this line and pays in cash $2,000 per year; they 
also pay $360 per year to joint train baggage and express men and in salaries to station 
employees $800 per year, making a total of $3,160 received for the express service, 
against $2,470.32 for mail. 

WABASH, CHESTER & WESTERN RAILROAD, operating between Mount 
Vernon, 111., and Menard, 111., 64.83 miles. Apartment car with postal clerk and 
pouch service is used over this route. 

Total mail compensation $3, 768. 63 

Cost of side and terminal deliveries 374. 00 

Net amount received for mail service 3, 394. 63 

The express service performed over the same route paid in cash 3, 354. 11 

They also paid for services of railroad employees 2, 000. 00 

And performed services for the road amounting to 96. 00 

Making a total for express revenue of 5, 450. 11 

The express service, as a matter of fact, pays the road $2,055.48 in excess of mail, as 
the amount paid its employees by the express company reduces by $2,000 the amount 
the road would otherwise have to pay in order to maintain the same standard of effi- 
ciency. 



756 KAIL WAY MAIL PAY. 

The Globe Express Co. 1 

[Joel F. Vaile, general counsel for the Denver & Rio Grande Railroad system and counsel for the Globe 

Express Co.] 

Denver, Colo., June 14, 1913. 
Hon. Jonathan Bourne, Jr., 

United States Senate, Washington, D . C. 

Dear Sir: Under date of March 13 you addressed a letter to Mr. Charles H. 
Schlacks, president of the Globe Express Co., at San Francisco, Cal., making certain 
inquiries concerning comparison between mail rates and express rates, and as to the 
extent in which the service rendered to the Post Office Department differs from the 
service rendered to the express companies, with a statement of difference as to the 
amount of responsibility assumed by the railroad companies in case of injury to mail 
or express or employees. 

Your letter, after divers references by officers, came to me as counsel for the express 
company. 

As it seemed to me the inquiries were not such as could be fully answered by an 
express company; but as I am general counsel for the Denver & Rio Grande Railroad 
Co. I prosecuted certain inquiries from a railroad standpoint and received informa- 
tion that came to my desk at a time when I was greatly pressed with other very impor- 
tant matters, with the result that reply to you has been long delayed. I very greatly 
regret this delay, and trust that it has not been a matter of inconvenience to you. 

I now hand you herewith a letter from the manager of the Globe Express Co., and 
also a letter from the general auditor of the Denver & Rio Grande Railroad Co. The 
latter will give pretty full information in response to your inquiry. 

Begging pardon for delay in response, I am, 

Very sincerely yours, J. F. Vaile. 



The Globe Express Co., 
Denver, Colo., April 10, 1913. 
J. F. Vaile, Esq., 

General Counsel, Denver & Rio Grande Railroad. 
Dear Mr. Vaile: Referring to your letter of the 9th instant attached and copies 
of correspondence, in which information is asked relative to the handling of United 
States mail by the Denver & Rio Grande Railroad, I beg to state that I am not 
familiar with the questions asked by Senator Bourne as to the pay the railroad 
receives for handling of mail matter. I believe that General Auditor Murphy would 
be in a better position to give you such information as is requested than this company. 
Any information that Mr. Murphy may want so far as we can give, I will be glad 
to assist him. 

Yours truly, D. D. Mayo, General Manager. 



The Denver & Rio Grande Railroad Co., 

Denver, Colo., April 11, 1913. 
Mr. J. F. Vaile, 

General Counsel. 
Dear Sir: Replying to yours of April 9 concerning the inquiry of Senator Bourne 
as to the relative rates paid to the railroad for transportation of express and mail 
traffic. Under the direction of the Postmaster General measurements in car-foot 
miles were taken for the month of November, 1909, to determine the relative space 
used for passenger service, mail service, and express service. The results on the 
Denver & Rio Grande were: 

Per cent. 

Passenger 88. 06 

Mail 5. 20 

Express & 74 

1 The correspondence under this heading will disclose that the officials of the express company were 
unable to give the informations called for in the circular letter, and the inquiry was referred to its counsel, 
Mr. Joel F. Vaile, who in turn referred same as general counsel for the Denver & Rio Grande Railroad sys- 
tem to the general auditor of that system, who responded by a presentation of a comparison between the 
mail and express business, from a railroad standpoint, as applicable to the Denver & Rio Grande Railroad 
system. 



RAILWAY MAIL PAY 



757 



Passenger expenses for the month of November, 1909, were subdivided on this 
basis, and the results, as published on page 276 of Document 105, Sixty-second Con- 
gress, first session, are shown in the following statement in the first column, headed 
"Mail." We have used the same formula to figure out the results for express traffic. 
These are shown opposite in the second column, headed "Express." 



November, 1909. 



Mail. 



Express. 



Denver & Rio Grande operating revenue. 
Denver & Rio Grande expenses and taxes 

Denver & Rio Grande net revenue 

Revenue per car-foot mile 

Expenses and taxes per car-foot mile 

Net revenue per car-foot mile 



$25,481.90 


$44, 812. 35 


20, 275. 40 


26, 280. 04 


5, 206. 50 


18,532.31 


. 005410 


. 007336 


.004305 


. 004302 


.001105 


.003034 



The Postmaster General did not take into account rental of road, yards and terminals, 
and interest on funded debt, which for the month of November, 1909, amounted to 
$390,662.26, of which $5,560.06 is the proportion chargeable to mail traffic on the 
formula used in dividing expenses, and $7,206.70 chargeable to express traffic on the 
same formula. It will be observed from the above figures that the rates paid to the 
Denver & Rio Grande Railroad Co. for transportation of express matter are much in 
excess of the rates paid for transportation of mail, and that after assigning to mail 
traffic its share of income charges, the operations were conducted at a loss. 

The following statement shows the ratio of return on property invested in mail 
service and express service for the fiscal year ended June 30, 1912 : 



Denver & Rio Grande Railroad Co. 



Mail. 



Express. 



Operating revenue 

Operating cost 

Net return from operation 

Property investment 

Ratio of return on property , per cent. 



$294,515.90 

284,116.76 

10,399.14 

2,317,478.85 

0.45 



$496,818.27 

375,083.34 

121,734.93 

2,884,651.18 

4.22 



The amount shown as operating cost includes expenses, taxes, rents, and hire of 
equipment. The property investment is the book value of road and equipment June 
30, 1912, after deducting depreciation on equipment and adding value of material and 
supplies on hand. The apportionment to mail and express traffic is based upon the 
car-foot mileage in November, 1909, no other measurements having been taken. 

There has been a considerable increase since January 1, 1913, in space used by 
the Post Office Department and a decrease in the space used by the express company, 
owing to the parcel-post business now being carried in the mails. The decrease in 
express packages weighing 11 pounds and less is 30 per cent. The increase in mail is 
considerably greater than the decrease in express for the reason that the volume has 
largely increased, owing to the inauguration of the lower parcel-post rates. The rail- 
road company, while bearing a loss in revenue from the decrease in express shipments, 
receives no compensation for the additional facilities provided for the mail traffic. 

There is no difference in the railroad company's responsibility in the case of injury 
to mail or express or to employees. 

Yours truly, E. R. Murphy, General Auditor. 

Southern Express Co. 



[T. W. Leary, president, 71 Broadway, New York City, N. Y.] 

March 28, 1913. 
Dear Sir: Absence has prevented earlier response to your inquiry of 13th con- 
cerning the relation of rates paid for the transportation of mail and of express matter. 
Without definite knowledge of the precise character of facilities and accommoda- 
tions and extent of the service, furnished the Post Office Department, or the rates 
of pay received and obligations assumed by the railroad companies in carrying the 
mails, it is, I beg to say, impracticable for us to make the suggested analysis. 
Respectfully yours, 

T. W. Leary, President. 



758 EAILWAY MAIL PAY. 

United States Express Co. 
[E. T. Piatt, vice president and general manager, 2 Rector Street, New York City, N. Y.] 

New York, March 19, 1913. 

Dear Sir: Replying to yours of the 13th instant (postmarked Mar. 15, 11 p. m.) 
in regard to relative rates paid to the railroads for transportation of express and mail 
matter, which was received a day or two ago: 

I have not at my command Government or railway data from which the informa- 
tion you desire can be produced, and would not know where to look for such. 

There are many officials in the Government service who must be qualified to do 
this work; it is certainly beyond me. 

Wells, Fargo & Co. 

[B. D. Cardwell, president, 51 Broadway, New York City.] 

New York, March 26, 1913. 

Dear Sir: I note your favor of the 13th instant, advising that in the consideration 
of railway-mail pay there have arisen questions relative to the rates paid transportation 
companies for the transportation of mail matter, and asking us to advise the committee 
how the rates and service compare. 

I regret that we are not in a position to give you any information at first hand as to 
mail pay, since we have no accurate knowledge as to the rates paid the railway com- 
panies for transporting mail matter, nor as to the exact character of the service ren- 
dered by the railroads or the liability assumed by them in case of injury to mail or 
employees. Have no doubt that you can obtain the information from the railroads, in 
view of their direct relations with the Post Office Department. 

Western Express Co. 

[W. S. Stout, general manager, Toronto, Canada.] 

Toronto, Canada, March 20, 1913. 
Dear Sir: I beg to acknowledge your letter of the 13th addressed to Mr. E. Pen- 
nington, president Western Express Co., in reference to comparison of amount received 
by the railway companies for transportation of express and mail matter, which will 
receive prompt attention. 

Toronto, Canada, April 18, 1913. 
Dear Sir: Further referring to your letter of March 15 addressed to the president, 
I beg to say that this company pays to railway companies over which it operates 45 to 
55 per cent of the gross earnings and assumes all claims for loss and damage to express 
matter and for death or personal injury to employees. I have no particulars as to 
the amounts the railways receive or the responsibility they assume in connection 
with mail matter. 
Yours truly, 

W. S. Stout, General Manager. 



COSTS AND PROFITS TO THE RAILROAD COMPANIES IN THE 
TRANSPORTATION OF MAIL. 

The following letter, together with a pamphlet entitled "The Mail 
Pay on the Chicago, Burlington & Quincy Railroad," prepared in 
accordance with requests of the Post Office Department, by Mr. 
W. W. Baldwin, vice president Chicago, Burlington & Quincy Railroad 
Co., indicating the costs and profits to his company in the carriage 
of mail, is submitted : 

[Chicago, Burlington & Quincy Railroad Co. Office of Vice President.] 

Burlington, Iowa, February 19, 1913. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Sir: In the course of the hearing before your commission to investigate railroad 
mail pay some inquiry was made why railroad companies do not lay before you detailed 
statements showing the costs and profits in this branch of their business. 

I beg to say that this has been done. For an illustration I call attention to a pam- 
phlet entitled "The Mail Pay on the Burlington Railroad." This pamphlet is based 
upon the space and expense figures which we sent to the Post Office Department for 
the month of November, 1909. It cost the Chicago, Burlington & Quincy thousands 
of dollars to collect this information and put it in tabulated form. Mr. De Witt and 
myself spent many days compiling and comparing it in order to insure accuracy and 
in the preparation of the pamphlet. 

It covers every question of cost and space and earnings and explains in detail how 
the work was done. It shows the financial results not only upon the road as a whole 
but upon five typical mail routes carrying, respectively, a daily weight of 216, 282, 
1,303, 8,087, 19,727, and 192,540 pounds, in order to show the varying features of the 
service on small and large mail routes. 

It then, in the appendix, exhibits the results upon our system disclosed by each 
of the forms (2601, 2602, 2603, and 2605) submitted to us by the department. It 
collates the results of coat and expense and earnings in the carriage of passengers and 
of express and of the mails, and discusses them all. 

Copies of this pamphlet were sent to every Member of Congress. How many Mem- 
bers do you think found the time to read it? I sometimes think that a lurid headline 
in Mr. Debs's Age of Reason newspaper, entitled "Railroads robbing the Government 
$9,000,000 a year in mail transportation," influences more public opinion than the 
most careful statements of fact which the railroad companies can prepare. 

In the three volumes of the hearings before the Wolcott Commission, embracing 
hundreds of pages, you will find elaborate and detailed statements showing every 
feature of expense and earnings and service prepared with great care by many rail- 
roads. There will probably never be a more thorough and painstaking showing made 
by the railroads of the country regarding their mail business than appears there in 
print. It is supplemented by the elaborate compilations and arguments of Prof. 
Henry C. Adams, acting for the Government. 

The commission was practically unanimous in the view that the prevailing public 
opinion was all wrong and that the rates of compensation were reasonable. Prof. 
Adams said that if the department could not and would not load the mail cars more 
economically and densely he would withdraw any suggestions for a reduction. 

But what did it all amount to? The department soon thereafter issued the arbi- 
trary and illegal divisor order, reducing mail pay about $5,000,000 a year and gave 
as a reason that the railroads were being overpaid. Congress then took a hand; so 
that our rates have, by all these various measures for cutting the pay, been reduced 
almost 20 per cent, while wages and all other expenses have increased. 

And now that public sentiment is again said to claim that we are overpaid 
$9,000,000 a year we are asked: "Why do you not furnish the facts as to the cost and 
earnings and profits of your mail business?" 

759 



760 BAILWAY MAIL PAY. 

I appreciate the courtesy which your commission has shown in this investigation 
and take pleasure in sending to each member a copy of the pamphlet to which I have 
referred. 

Mr. Peters has prepared and printed for his company a similar showing and sent 
copies to all Members 6f Congress. 

The exact recent and present situation, as placed before the railroad companies, 
has not been the general question of earnings and cost and profits, but the specific 
questions raised by Document 105, to which they were asked to make reply, involving 
theories of "space ' ' and whether the opinions of department officials on what is " cost, ' ' 
furnish correct and reliable principles upon which to base just rates of compensation 
for carrying the mails. 

I am confident we shall all be glad to furnish you with any further information that 
is within our power to give, and beg to subscribe myself, 
Yours respectfully, 

W. W. Baldwin. 



The Mail Pay on the Chicago, Burlington & Quincy Railroad. 

The present system under which the Government employs railroads to carry the 
mails was established in 1873, 37 years ago. Under this system the Post Office 
Department designates between what named towns upon each railroad in the 
country a so-called "mail route" shall be established. Congress prescribes a scale 
of rates for payment per mile of such mail route per year, based upon the average 
weight of mails transported over the route daily, "with due frequency and speed," 
and under "regulations" promulgated from time to time by the Post Office Depart- 
ment. To this is added a certain allowance for the haulage and use of post-office cars 
built and run exclusively for the mails, based upon their length. The annual rate 
of expenditure to all railroads for mail service on all routes in operation June 30, 1909, 
was $44,885,395.29 for weight of mail, and for post-office cars $4,721,044.87, the "car 
pay," so called, being 9.5 per cent of the total pay. The payment by weight is, 
therefore, the real basis of the compensation to railroads. The rate itself, however, 
varies upon different mail routes to a degree that is neither scientific nor entirely 
reasonable. The rate per ton or per hundred pounds upon a route carrying a small 
weight is 20 times greater than is paid over a route carrying the heaviest weight. 
The Government thus appropriates to its own advantage an extreme application of 
the wholesale principle and demands a low rate for large shipments, which principle 
it denounces as unjust discrimination if practiced in favor of private shippers by 
wholesale. The effect of the application of this principle has been to greatly reduce 
the average mail rate year by year as the business increases. This constant rate reduc- 
tion was described by Hon. William H. Moody (now Mr. Justice Moody of the 
United States Supreme Court) in his separate report as a member of the Wolcott 
Commission in the following language: 

"The existing law prescribing railway mail pay automatically lowers the rate on 
any given route as the volume of traffic increases. Mr. Adams shows that by the normal 
effect of this law the rate per ton-mile is $1.17, when the average daily weight of mail 
is 200 pounds, and, decreasing with the increase of volume, it becomes 6.073 cents 
when the average daily weight is 300,000 pounds." 

Note. — Since 1907 the railroads have been paid at much reduced rates. On the 
heavy ro- tes the pay is now 5.54 cents per ton per mile. 

Post Office Department officials have announced, as their conclusion from the 
res Its of the special weighing in 1907, that the average length of harl of all mail is 
620 miles. 

The b Ik of the mail is now carried on the heavy routes at 5.54 cents per ton per mile, 
or $34.34 per ton for the average haul, that is, for 1.7 cents per pound. 

The railroads therefore receive less than If cents per pound for carrying the 
greater part of the mails. 

But the rate reduction for wholesale quantities has not had the effect of reducing 
the actual remuneration of the railroads for carrying the mails to nearly so great an 
extent as the increasing requirements for excessive space for distributing mails en «r te. 
This feature was likewise disci ssed by Judge Moody in bis report in the following 
language : 

"The r le of transportation invoked is based upon the assumption that the increase 
ol traffic permits the introduction of increased economy, notably the economy which 
results in so loading cars that the ratio of dead weight to paying freight is decreased. 
Yet this economy is precisely what our method of transporting mail denies to the 
railroads. Instead of permitting the mail cars, whether apartment or full postal cars, 



RAILWAY MAIL PAY. 761 

to be loaded to their full capacity, the Government demands that the cars shall be 
lightly loaded so that there may be ample space for the sorting and distribution of 
mail en route. In other words, instead of a freight car, a traveling post office." 

An illustration of the extent to which the reductions have been carried, as shown 
upon one railroad system, is set forth in the letter of January 21, 1909, addressed to 
the Committee on Post Offices and Post Roads of the House of Representatives by 
Mr. Ralph Peters, president of the Long Island Railroad, who states that the actual 
cost to his company of carrying the United States mail for the year was $122,169, while 
the total compensation for that service paid by the Government was $41,196. Mr. 
Peters says: 

''The Long Island Co. received from the Government for mail service performed 
in expensive passenger trains one-half the rate received by it per car mile for average 
class freight in slow-moving freight trains. " 

The Long Island Co. notified the Government that it would decline to carry the 
mails by the present expensive methods unless Congress makes some provision for a 
more adequate compensation. A notification of similar import has been given by 
the New York, New Haven & Hartford Railroad Co., the principal carrier in New 
England. Their position in this matter will undoubtedly be taken by other roads, 
because the same condition of inadequate compensation prevails upon hundreds of 
small railroads and mail routes, especially in the Southern and Western States. 

Notwithstanding these facts, a powerful interest, which commands the public ear 
and derives great profit from the 1-cent-per-pound rate of postage, has, in order to 
divert public attention from itself, for years industriously and systematically circu- 
lated false statistics and false statements among the people regarding the railroad- 
mail pay, and is now circulating them. 

The extent to which the public is being deceived regarding the railroad-mail pay 
is disclosed daily. In a recent hearing before the Senate Committee on Post Offices 
and Post Roads, Senator Carter, of Montana, said: 

"We are all getting letters on this subject. I received the other day a letter from 
a very intelligent lady in Montana claiming that the Government is paying to the 
Northern Pacific Railway on that branch line for carrying the mail $97,000 per year. 
On inquiring at the Post Office Department, I find that the total compensation of the 
Northern Pacific Co. for mail service on that line is $3,070 per year." 

This state of things was a sufficient reason for the Post Office Department to insti- 
tute the present series of inquiries tending to show the space in passenger trains upon 
the railroads demanded and used by the Government for the mails in comparison 
with the space devoted to express and passenger service, and the relative rates of 
compensation in each class of service and the extent to which the roads are receiving 
for carrying the mails the cost to them of performing the service. In order to give 
these facts fair consideration, it is not necessary to admit that "space" is, or is not, 
a better and more workable basis for determining what is reasonable mail pay than 
"weight," nor to admit that the companies are only entitled to be paid by the 
Government for the service rendered to it the bare cost of rendering that service, 
that is, to receive back the train operating cost. Questions of speed and facilities 
furnished, and the preference characte of the traffic and the exceptional value of the 
service, and other elements, must be considered as well as space and cost, but that is 
no reason why the relative proportion of space used and the relation of compensation 
to cost should not be ascertained and given due weight, in the consideration of the 
important question of what is adequate mail pay to the railroads. 

The following pages are based upon answers to the interrogatories of the Post Office 
Department and contain a statement of the mail service performed by the Chicago, 
Burlington & Quincy Railroad Co., a system extending westward from Chicago into 
11 different States and embracing approximately 10,000 miles of main and branch lines. 

The two principal tables of interrogatories were sent out under date of September 
28, 1909, by the Post Office Department as the basis for this investigation. 

These tables indicate the minute and thorough manner which the department 
employed in making this inquiry. 

Some questions having arisen regarding the meaning and scope of the word "author- 
ized " in connection with the returns of space occupied and used for the mails in 
post-office cars and department cars, and in certain other features, the department, 
under date October 23, 1909, issued an important supplementary letter of instructions. 

Pursuant to these interrogatories, instructions, and requests the Burlington Co. 
has filed with the department the exact and detailed statements, train by train and 
car by car, of the mail service upon each of the 102 mail routes on its system, large 
and small, for the month of November, 1909, which were thus called for. These 
answers state the facts and state them in the manner prescribed wherever possible. 
Every inch of space on passenger trains and cars which in these tables is shown to be 



762 



EAILWAY MAIL PAY. 



occupied or used for mail or express or for passengers is set down from actual measure- 
ments made, car by car, and not upon any "estimate" or "consist" basis. 

In the appendix will be found four tables prepared under the direction and super- 
vision of Mr. De Witt which contain the results of this investigation into the mail 
service upon the Burlington, as disclosed in these statements. 

Exhibit A is a statement of the car facilities or space used in every car in service 
on the road during the month of November for mail, and for express or occupied by 
passengers, based upon replies to questions prescribed in Form 2601. 

Exhibit B is a statement of the station facilities, furnished for the mail, prepared 
on Form 2602. 

Exhibit C is a statement of revenues and expenses and of train and car mileage, 
prepared on Form 2603. 

Exhibit D is a statement of the number, and cost, and present value of post-office 
cars and apartment cars, prepared on Form 2605. 

THE INTEGRITY OF THE RETURNS. 

In November, 1909, all the service rendered in all passenger trains and cars of the 
Burlington system, reduced to a common basis of car-foot miles (that is, each foot of 
linear space that was carried 1 mile), amounted to 529,936,590 car-foot miles, divided 
as follows: 



In passenger 
service." 


Mails. 


Express. 


428,164,920 
(80.8%) 


62, 246, 130 
(11.75%) 


39,525.540 
(7.45%) 



The original circular of the Post Office Department contained certain "notes," to 
the effect that in reporting the length of postal cars and apartment cars, and the space 
therein used for mails, the railroad companies should only report the length or space 
"authorized" by the officials of the department; also that in reporting space used in 
cars for what is known as the "closed pouch service," the railroads should make 
an arbitrary allowance of 6 linear inches across the car for the first 200 pounds or less 
of average daily weight of pouch mail and 3 linear inches for each additional 100 
pounds. 

These directions were modified by the subsequent circular letter of the department, 
dated October 23, 1909. 

This letter, among other things, directs the company to take credit for "surplus" 
space in post-office cars and apartment cars, if actually used for the storage of mails. 

The practical difficulties attending the measurement and proper allotment of the 
space used for the mails in postal and other cars run on a passenger train will be better 
understood when it is known that such space is or may be described in at least eight 
different ways, and is actually used on the Burlington road as follows, namely: 

1. Space in post-office cars specially "authorized," 43.03 per cent. 

2. Space in apartment cars specifically "ordered," 20.69 per cent. 

3. Space ordered in post-office cars operated in lieu of apartment cars, 4.3 per cent. 

4. Additional space actually used for storage of mails when the railroad company 
operates larger post-office or apartment cars than the authorization calls for, 1.5 per 
cent. 

5. Space in storage cars actually used for mails, 12.87 per cent. 

6. Space in baggage cars used for closed-pouch mails, 4.06 per cent. 

7. The return deadhead movement of space ordered and required in one direction 
only, 8.35 per cent. 

(Ninety-five per cent of all the "space" shown in these returns for the Burlington 
as used for the mails comes within the foregoing seven classes, as properly authorized 
space about which no question can arise.) 

8. "Surplus" space; that is, space furnished to the Government in post-office and 
apartment cars in excess of actual requirements, 5.2 per cent. 

This 5 per cent is the only portion of the space claimed as used for mails regarding 
which any question can be raised affecting the integrity of these returns. 

What is the correct view as to this 5 per cent? 

It is manifestly against the interest of the railroad company to furnish space for mails 
that is not required, and it will never furnish such space if it can be avoided. But the 
"requirements " of the Post Office Department are not fixed and certain quantities by 
any means. It is entirely impracticable for any railroad company to keep on hand at 



RAILWAY MAIL PAY, 



763 



all times a supply of cars of all lengths in order to meet exactly the requirements of the 
department officials. 

These statistics have been called for by the Post Office Department to enable it to 
make accurate comparisons between the space used and the facilities furnished on 
passenger trains for the three classes of service performed; that is, for express companies, 
for the Government in mail carriage, and for passengers. The point of the whole 
inquiry is this: 

Does the Government contribute to the cost of the passenger train service upon the 
railroads of the country its fair share — that is, in proportion to the space and facilities 
it demands and requires the companies to furnish for the mails? 

In making the comparison all the car space in all passenger trains must be measured 
and tabulated and has been measured and tabulated in the tables here submitted. 

A passenger car may have seats to accommodate 80 persons; the average load it 
carries may be 15 persons. But in making up these returns of ' ' space, " all the empty 
space in that car is credited as passenger space. That car may likewise be loaded 
only one way and returned "dead head, " but these returns have credited such return 
movement as passenger space. 

The same is true of the express service in these returns.^ All space in all baggage 
and express cars set aside for the express company's use is, in these tables of statistics, 
credited to express, whether in fact loaded or "surplus," or "dead head" space. 

How is a comparison possible, unless the space credited to the mails is recorded in 
the same way? As stated above, only 5 per cent of the whole space is involved in 
the question of "surplus" space, and if that 5 per cent should be entirely thrown 
out, the percentage results would not be materially changed. 

RESULTS UPON THE BURLINGTON ROAD. 

The Government can not justly ask a railroad company to carry the mails without 
profit. 

The passenger business on the Burlington road is conducted without profit if it is 
charged with the expenses assignable to passenger traffic, and a proper proportion of 
the expenses not thus specifically assignable, and a fair share of the taxes and the 
charges for capital in the form of interest on bonds and dividends on stock. The 
profit in the business comes from the freight. 

This fact gives force to the present inquiry of the Post Office Department to deter- 
mine whether the Government, in proportion to the service and facilities it requires 
from the roads on passenger trains, is contributing a fair proportion of the passenger- 
train earnings. If the passenger-train business, as a whole, is carried on at a loss, the 
Government ought, in fairness, to stand at least its share of the loss. 

The earnings of the Burlington Co. from all passenger train service in November 
were $2,242,099. 

The following table shows the earnings from passengers, from mail and express, 
and the space used in passenger trains by the three classes of traffic and the proportion 
of earnings contributed for facilities so used: 





Earnings. 


Car-foot miles. 




Amount. 


Per cent. 


Miles. 


Per cent. 




$1,859,839 
187,825 
194, 435 


82.95 
8.38 
8.67 


428, 164, 920 
39,525,540 
62, 246, 130 


80.80 




7.45 


Mails 


11.75 






Total 


2, 242, 099 




529,936,590 











This table shows that for each 1,000 feet of space used in passenger trains the three 
classes of passenger traffic contributed in earnings as follows: 





Amount. 


Per cent. 


Passengers 


$4.34 
4.75 
3.12 


139.1 


Express 


152.2 


Mails 


100.0 







764 



KAILWAY MAIL PAY. 



In proportion to the space occupied and facilities used on passenger trains, the 
Burlington road receives from passengers 39 per cent more than the Government 
pays for mail transportation, and from the Adams Express Co. 52 per cent more; 
that is, the express business pays the railroad company better than the Government 
pays for carrying the mails by 52 per cent. 

If the Government had paid to the railroad company as much as the express company 
for each foot of space required and used on passenger trains, it would, for November, 
have paid $101,233 more than it did pay, or an increase in annual mail pay of more 
than a million dollars. 

It may be of interest to note that the returns for the Pennsylvania system just 
being filed show the following: 




Express 
Mails 



Per cent. 

79.8 

12.6 

7.6 



Car-foot 
miles. 



Per cent. 
76.2 
13.7 
10.1 



For each 1,000 feet of passenger train space used on the Pennsylvania the traffic 
contributed in earnings as follows: 




Amount. 


Per cent. 




$4.45 
3.91 
3.20 


139 




122 




100 







On the Pennsylvania the passenger business is worth to that company 39 per cent 
more than the Government mail business, and the express business is worth 22 per 
cent more than the mails, indicating that express rates are relatively higher in the 
West than the East, but that neither in the East nor in the West is it a paying business 
to carry the mails at present rates. 

IS THE GOVERNMENT PAYING THE RAILROADS FOR CARRYING THE MAILS THE COST 

OP DOING THE WORK? 



No. The Government paid the Chicago, Burlington & Quincy for carrying the 
mails in November $194,435, or at the rate of $2,333,220 annually. 
The total operating expenses of the road for that month were $5,452,830. 
The items of passenger train operating expense strictly assignable were as follows: 

Transportation expense: 

Fuel passenger engines $132, 709 

Salaries passenger engineers 100, 511 

Salaries passenger trainmen 87, 557 

Train supplies, etc 55, 664 

Injuries to persons 19, 904 

Station employees 17, 160 

Joint yards and terminals 15, 610 

Miscellaneous 25, 093 

$454,208 

Maintenance of equipment: 

Repairs, passenger cars 67, 650 

Depreciation, passenger cars 39, 639 

Miscellaneous 337 

107, 626 

Traffic expense: 

Advertising 17, 249 

Outside agencies 16, 673 

Superintendence 10, 272 

Miscellaneous , 4, 777 

48, 971 



RAILWAY MAIL PAY. 765 

Maintenance of way, etc.: 

Buildings and grounds $7, 053 

Joint tracks, etc 4, 440 

Miscellaneous 1, 477 

$12, 970 

General expense: 

Salaries, clerks, etc 8, 994 

Insurance 2, 478 

Legal expense 1, 153 

Miscellaneous 955 

13, 580 

Total 637, 355 

Proportion operating expense not assignable 1, 278, 016 

Total 1,915,371 

A large part of the operating expenses of every railroad, such as maintenance of road- 
way, station expense, general office expense and the like, are common to both the 
freight and passenger service, and it seems impossible to assign all of them specifically. 
The Post Office Department, in the circular under which the roads are reporting, 
recognizes this condition and calls for the "proportion" of the expense "not directly 
assignable and the basis of such apportionment." 

The apportionment of nonassignable expense on the Burlington has been made on 
the basis of train mileage. 

In the month of November the mileage of passenger trains was 45.4 per cent of the 
total train mileage, and the foregoing sum ($1,278,016) of nonassignable expense is 
45.4 per cent of the operating expenses for that month, common to both kinds of traffic, 
and therefore incapable of specific assignment to either. 

These two classes of passenger expense (assignable and nonassignable) aggregate 
$1,915,371 monthly, or at the rate of $22,984,452 per year, and 11.75 per cent of this 
sum, or $2,700,675, is the annual operating cost to the Burlington company of trans- 
porting the Government mails. 

Cost of carrying the mails $2, 700, 675 

Earnings from carrying the mails 2, 333, 220 

Loss 367, 455 

These figures show that, in proportion to the service rendered, the Government 
paid to that company $367,455 less than the actual cost of doing the work, not includ- 
ing anything for taxes nor for interest paid by the company upon its funded debt, 
which was necessary to be paid in order to preserve the property, to say nothing of a 
return upon the capital represented by the capital stock. 

The correct mail's proportion of taxes and interest for the year is $634,713, which, 
added to the $367,455 loss above operating expenses, shows a loss of $1,002,168. 

Loss operating expenses over revenue $367, 455 

11.75 per cent of taxes and interest 634, 713 

Annual loss on mails 1, 002, 168 

This takes no account of the annual value at 2 cents per mile of the transportation 
of inspectors and postal employees, other than clerks in charge of the mails ($74,352), 
nor of clerks in charge of the mails ($746,340). 

These two items of service rendered to the Government by the Chicago, Burlington 
& Quincy road are of the admitted value of $820,692 annually. 

The railroad company has the same duty and legal responsibility toward these 
clerks as toward passengers. 

Is there another fair way of testing this question? 

In a letter dated March 2, 1910, from Hon. Frank H. Hitchcock, Postmaster General, 
to Hon. John W. Weeks, chairman of the Post Office Committee of the House, printed 
in full herewith, he states it is estimated that the average annual cost to the railroads 
of operating a post-office car for the Government is $19,710, including $2,049 for 
lighting, heating, repairs, etc., and that the total average pay received for the car 
and its contents, including post-office car pay, is $16,638 per annum, showing a loss 
in this branch of the service of $3,073 per car. There are 1,111 full postal cars in 
actual service in the country, and the loss thereon, therefore, aggregates $3,414,103, 
to say nothing of the 231 postal cars in reserve. 

49396—14 56 



766 



RAILWAY MAIL PAY. 



But that is the smaller part of the loss. There were 3,116 apartment cars in actual 
use in 1909, averaging 20 feet in length, and the cost of operating each of these, accord- 
ing to Mr. Hitchcock's figures, would be one-third of $19,710, or $6,570. 

The average haul of apartment cars is 48 miles, and the average load in a 
20-foot apartment car is officially stated as 607 pounds, making the rate per mile on 
routes carrying an average daily weight of only 607 pounds, $68.40 per annum, and 
the average earnings, therefore, $3,283 per year, an average loss of $3,287 per car, and 
an actual loss per year from operating the 3,116 apartment cars of $10,642,292, to say 
nothing of the 639 apartment cars in reserve. 

The Chicago, Burlington & Quincy has 76 full post-office cars and 104 apartment 
cars, and applying to them the foregoing figures given in Mr. Hitchcock's letter, the 
loss from operating them in 1909 was $575,396, adding to which $634,713, the mail's 
proportion of taxes and interest that must be included in estimating "cost" in which 
the Government's business should share, the estimated loss on the business was 
$1,210,109, compared with $1,002,168, arrived at by charging the Government busi- 
ness with 11.75 per cent of the passenger expense, that being its proportion of the 
space used in passenger trains. 

The Government should be willing to pay fairly for what it exacts from the rail- 
roads, and it exacts from the Chicago, Burlington & Quincy 11.75 per cent of its 
passenger-train facilities. If it had paid 11.75 per cent of the passenger- train expenses 
of the road in 1909, it would have paid approximately a million dollars more than it 
did pay. 

The Government which demands from the railroads that they build and transport 
daily over their roads for its benefit 5,100 traveling post offices as full postal cars and 
apartment cars should be willing to pay what the Postmaster General estimates to be 
the actual cost of operating those cars and a fair proportion of the taxes and interest. 

If it had paid such cost in 1909, it would have paid to the Chicago, Burlington & 
Quincy approximately a million dollars more than it did pay. 

RESULTS ON VARIOUS MAIL ROUTES. 

The foregoing are statements of results on the Burlington system as a whole, showing 
earnings and expenses and facilities furnished to the Government mail service. 

It may be of interest, and throw light on the situation, to show results for November 
upon several separate mail routes in the system, ranging from small routes carrying 200 
pounds of mail daily, up through routes carrying weights, respectively, of 1,300 and 
8,000 and 20,000 pounds daily, to the heaviest route carrying 192,000 pounds, covering 
the fast-mail service from Chicago to Omaha. 

Weights of express packages are not kept on separate mail routes and statements 
therefore of express earnings for such separate mail routes are necessarily estimated, 
but, as given in the following tables, they are approximately correct and corroborate 
the comparative results for the Burlington system as a whole, which results are based 
upon exact figures for express as well as for mails and for passengers. 

I. ROUTE 157030, KENESAW TO KEARNEY, NEBR., 24.68 MILES. 
[Average daily weight 216 pounds.] 





Percentage 
of space 
occupied. 


Percentage 
of earnings. 


Should 

earn on 

basis of 

space used. 


Did 

actually 

earn. 


Pass enger 


83.79 
9.37 
6.84 


88.90 
6.02 
5.08 


$1,238 
139 
101 


$1,314 


Mail 


89 


^Express 


75 






Total 








1,478 













The mail earnings on this route are $89 per month, or $3.44 daily. The service for 
the Government is performed in an apartment car 15 feet long, and closed pouch 
service, four trains carrying mail daily, except Sunday, giving an actual return to the 
railroad of 3£ cents per mile run, or about one passenger fare at 3 cents per mile, although 
the Government demands the use of a 15-foot car fitted up as a post office in which a 
postal clerk is carried free, and this car must be lighted, heated, and kept in repair, 
and carried over the route each way daily, except Sunday. 

On this branch the actual earnings on passengers per passenger car are 55 cents per 
car-mile. 



RAILWAY MAIL PAY, 



767 



The post-office apartment car equals one-quarter of a passenger car, and the mail 
should, on this basis, earn at least 14 cents per mile, but it does earn, for all the mail 
service, at the rate of 3^ cents per mile, less the expense of delivering mail to and from 
post offices. 

During the weighing period the mails are carried on 90 days and weighed on 90 days, 
but under the Cortelyou order, these aggregate weights are divided by 105 and the 
result is called the "average " and forms the basis of pay on this route for four years. 

This mail service in a traveling post office on an expensive railroad is paid about one- 
third the rate per mile that the Government pays to a rural route carrier who carries 
an average of 25 pounds of mail . 



II. ROUTE 157028, ODELL TO CONCORDIA, KANS., 72 MILES. 
[Average daily weight, 282 pounds.] 





Per cent 
space. 


Per cent 
earnings. 


Should 
earn on 

space. 


Did earn. 


Passenger 


80.82 
11.76 
7.42 


81.44 
9.38 
9.18 


82,482 
361 
228 


$2, 501 
288 


Mail 


Express 


282 






Total 








3,071 











Mail earnings $288 per month (26 days), or $11 per day. 

This service demands a 25-foot apartment car each way for which the pay amounts 
to 7.64 cents per car mile run, or about the fares of two passengers at 3 cents per mile 
who may occupy one seat. 

The service is six days per week, but the aggregate weight carried in the six days 
is divided by seven to obtain the Cortelyou "average" on which the pay is based. 

The payment for a 25-foot traveling post office is a little over half the pay per mile 
for a rural route carrier. 



III. ROUTE 135012, STREATOR TO AURORA, ILL., 60 MILES. 
[Average daily weight, 1,303 pounds.] 





Per cent 
space. 


Per cent 
earnings. 


Should earn 
on space. 


Did earn. 




72.84 
17.38 
9.78 


85.64 
7.51 
6.85 


$4,800 

1,145 

644 


«5,643 
495 


Mail 




451 






Total 








6,589 











Mail earnings (26 days), $495 per month, or $19 per day. 

Four trains on this road carry mail daily, two each way, two in a 25-foot mail apart- 
ment and two in a 30-foot mail apartment, an average earning rate of 7.88 cents per 
car mile. 

The passenger cars on this branch carry an average of 24 passengers each, and earn 
48 cents per car mile. The average mail apartment furnished is half a passenger 
coach. 

These four apartment cars, at the same rate as the passenger cars (24 cents per 
mile), would earn $18,029 per year. 

The passenger train earnings on the branch are $79,000 a year. The mails demand 
17.38 per cent of the facilities, and on that basis should earn for the company $13,730. 

The mail earnings were $5,940, this being the annual compensation after a reduc- 
tion of 9£ per cent through the Cortelyou order, requiring the aggregate of 90 weigh- 
ings to be divided by 105 to ascertain the "average." 



768 



RAILWAY MAIL PAY 



IV. ROUTE 164004, EDGEMONT TO BILLINGS, WYO.. 366 MILES. 
[Average daily weight, 8,087 pounds.] 





Per cent 
space. 


Per cent 
earnings. 


Should 
earn on 
space. 


Did earn. 


Passenger f. 


85.79 
10.43 
3.78 


89.22 
6.18 
4.60 


$85, 476 
10,392 
3,766 


$88,895 
6,156 
4,583 


Mail 


Express 




Total 








99,634 











Two 60-foot postal cars are run daily each way. 

The mail earnings are $6,156 per month, or $205 per day. 

The total earnings of the passenger trains on this road are $1,195,000 a year, and the 
mails required 10.43 per cent of the passenger-train facilities; on this basis they ought 
to pay $125,000 a year. 

These post-office cars are hauled 534,000 miles every year. The Postmaster General 
estimates that the actual cost to the railroads of operating a 60-foot postal car is 18 
cents per mile. At this rate the Burlington Co. should be paid $96,000 a year for the 
service of the postal cars only. 

It is, in fact, paid for all the mail service on this road $73,872 annually. 



V. ROUTE 135010, GALESBURG TO QUINCY, ILL., 99.93 MILES. 
[Average daily weight, 19,727 pounds.] 





Per cent 
space. 


Per cent 
earnings. 


Should 
earn on 
space. 


Did earn. 


Passenger 


69.45 
19.70 
10.85 


79.44 

8.45 
12.11 


$28, 864 
8, 187 
4,509 


$33,015 
3,511 
5,034 


Mail 


Express ' 




Total 








41,560 











Mail earnings from all sources $3,511 per month, or $117 per day. 

The service is performed in three 60-foot postal cars, two 16-foot apartments, and 
one 27-foot apartment, each way daily; also one 44-foot postal car and one full storage 
car, daily except Sunday, in addition to some space furnished ,/for closed pouches in 
•ordinary baggage cars. 

The car space provided for the mails on this route is equivalent to 10 full 60-foot 
cars daily over the whole length of the route, or 365,000 car miles a year. At 18 cents 
per mile the pay would be $65,700, whereas the actual pay is only $42,132. If the 
Government paid for the service in porportion to the facilities it demands and receives, 
it would pay $98,244. 

VI. ROUTE 135007, CHICAGO TO BURLINGTON, 205 MILES. 
[Average daily weight, 192,540 pounds.] 





Per cent 
space. 


Per cent 
earnings. 


Should earn 
on space. 


Did earn. 


Passenger 


73.14 

17.19 

9.67 


74. 72 

13.74 
11.54 


$210, 134 
49,387 
27,782 


$214, 671 


Mail . . i. 

Express 


39, 462 
33, 170 






Total 








287,303 













On the basis of space used and facilities provided for the mails, the Burlington road 
is underpaid $119,000 a year on this route. 

f^Two-thirds of the weight of mail is carried in special trains run at great speed and un- 
usual expense, for which no extra allowance is made. The extension of the route to 
Omaha is across Iowa, where it is "land grant" and subject to land-grant deductions. 



RAILWAY MAIL PAY. 769 

The Government made a "gift " to the company in 1856 of lands amounting to 358,000 
acres and then valued at $1.25 per acre, or $447,500. 

The mail-pay deductions to June 1, 1910, on account of this Iowa land grant aggregate 
$1,650,000, and still continue at the rate of $62,000 a year. 

Neither in the foregoing six statements of results upon separate mail routes, nor in 
the general statement of results upon the Burlington road, has any allowance been made 
for the expense to the company of what is called the "mail messenger service." 

At all points where the post office is not over one-fourth of a mile from the railroad 
station the railroad company must have all the mails carried to and from the post office. 

What an important item of expense this amounts to appears in the following extract 
from the report of the Wolcott Commission, which states: 

"Out of 27,000 stations supplied by messenger service 7,000 are paid for by the de- 
partment at a cost of between $1,000,000 and $1,100,000 per annum, leaving the other 
20,000 stations to be supplied by and at the expense of the railroads." 

Investigation has shown that on mail routes where the average mail pay of the rail- 
road company is $900 a year the average cost of this mail messenger service is $400, 
calculating only $100 as the expense for each station where they are required to perform 
the service . There are instances where the company pays in cash each year for deliv- 
ering the mails between station and post office considerably more than the Govern- 
ment pays for the entire mail service over its line of road . There is no such feature in 
the express service . 

WHY DO RAILROADS CARRY THE MAILS WITHOUT PROFIT? 

The question is sometimes asked why the railroads continue to carry the mails if 
there is no profit iu the business. Carrying the mails is not the only traffic which 
railroads take upon terms that would bankrupt them if applied to all their business. 

There is no profit in running passenger trains on most railroads — that is, the receipts 
from all the traffic carried on passenger trains are not sufficient to pay a train-mileage 
or car-mileage share of operating expenses and taxes and charges for the use of capital. 
But a large part of this cost of conducting the business of a railroad, such as taxes, 
interest, maintenance of roadway, general office expenses, and many others, would 
continue substantially the same if the passenger trains were discontinued. Having 
the railroad, and its taxes, and interest, and maintenance expenses to meet, anyhow, 
no railroad can afford to refuse any income from passenger trains that amounts to more 
than their train-operating cost. On the same principle they accept low rates per mile 
as a share of through passenger fares which, if applied to all passenger fares, would show 
a loss. The road is there, the trains are running, and the cars only partially loaded; 
the addition of through passengers may not materially increase the expense, and the 
road is better off to accept the business at less than the average cost rather than to 
reject it. But whatever the passenger trains lose must be made up by the freight 
trains if the road is to continue in business. 

The constant aim of the managers of the railroad is to secure from each class of traffic 
not only the operating cost peculiar to that traffic, but a proportion of the general cost; 
but business is not necessarily rejected on which it is impossible to secure such 
proportion. 

Many of the reasons which impel them to run passenger trains without profit apply 
to their acceptance of the Government mails. They facilitate the freight business; 
it is better to carry them at a loss than not to carry them at all. 

But is that any reason why the Government should not pay fair value for what it 
receives? Is it good policy for the Government to force upon the companies the 
alternative of carrying the mails at a loss or refusing to carry them at all? 

What are the mails? 

They are the letters and packets that are conveyed from one post office to another 
under public authority. 

Who conveys them? The railroads convey nine-tenths of them. 

The railroads are the mail service of this country. The Post Office Department 
states that it receives from the people who use the mails $84 on every 100 pounds of 
letters and post cards. Who makes that money for them? The railroads. The rail- 
roads convey those letters and cards from post office to post office — not the Government. 

For a service like that the Government can afford to pay. 

What does it pay? 

On the great bulk of the business the railroad companies which do the work and earn 
the money receive less than $2 a hundred. On every pound of first-class mail the 
Government collects $84 a hundred. 

The fact that the Congress for purposes of general education or other reasons thinks 
it is good public policy to carry the magazines and other second-class matter at $1 a 
hundred is something about which the railroads have nothing to do and nothing to say. 



770 KAIL WAY MAIL PAY. 

The mail pay of the railroads has been reduced in the past four years more than 
$8,000,000 a year. Part of this was done by act of Congress, but the greater part came 
from the arbitrary and illegal Cortelyou order. 

These reductions were made without any hearing being granted to the railroads. 
Hearings were refused by the committee which reduced the pay three and a half 
millions, and no pretense of a hearing was made by Secretary Cortelyou when his 
autocratic order was issued reducing the mail pay approximately $5,000,000 a year. 
This order was an arbitrary and unwarranted and illegal exercise of executive power. 

The last hearing allowed to the railroad companies on this subject was by the WoL 
cott Commission, 1897 to 1900, composed of eminent Senators and Representatives. 
They reported, after two years' investigation, that the mail pay was reasonable and 
should not be reduced. Upon the question whether railroads should be asked to carry 
the mails at a loss their report expressed the following views: 

"It seems to the commission that not only justice and good conscience, but also'the 
efficiency of the postal service and the best interests of the country, demand that the 
railway-mail pay shall be so clearly fair and reasonable that while, on the one hand, the 
Government shall receive a full quid pro quo for its expenditures and the public 
treasury be not subjected to an improper drain upon its funds, yet, on the other hand 
the Railway Mail Service shall bear its due proportion of the expenses incurred by th 
railroads in the maintenance of their organization and business as well as in the opera- 
tions of their mail trains. 

"The transaction between the Government and the railroads should be, and in the 
opinion of the commission is, a relation of contract; but it is a contract between the 
sovereign and a subject as to which the latter has practically no choice but to accept 
the terms formulated and demanded by the former; and, therefore, it is incumbent 
upon the sovereign to see that it takes no undue advantage of the subject, nor imposes 
upon it an unrighteous burden, nor 'drives a hard bargain' with it. The commission, 
therefore, believes that the determination whether the present railway-mail pay is 
excessive or not should be reached, as near as may be, upon a business basis, and in 
accordance with the principles and considerations which control ordinary business 
transactions between private individuals." 

THE POSTAL-CAR PAY. 

The wide credence which has been given to the statement that the Government is 
paying to the railroads an annual rent for postal cars equal to the cost of building them 
is remarkable. 

The Government does not pay a rental for any car. The idea is an erroneous one, 
and is based upon ignorance regarding the payment of what is called ' ' post-office car 
pay." 

Originally the mail business on railroads was the transportation of mail bags, and 
was essentially a freight traffic. But its character has entirely changed. 

The business now consists almost wholly in providing moving post offices, expensive 
to build and expensive to operate, in which the average weight for which pay is 
received is about 2 tons in full postal cars and 600 pounds in apartment cars. 

The Post Office Department weighed all the mails carried in all postal cars and 
apartment cars in the country during October, 1907, and the average weight of mail on 
the Burlington road loaded in a 40-foot postal car was found to be less than 2,000 
pounds; in 50-foot cars it was 2,500 pounds; and in 60-foot cars it averaged less than 
4,500 pounds; in apartment cars it was 607 pounds. 

The average load carried in an ordinary freight car on the Burlington road is from 
36,000 to 40,000 pounds. Railroads, as a rule, haul a ton of paying or productive 
freight for every ton of dead or unproductive load. In the Government mail business 
they carry 19 tons of dead weight for each ton of paying weight. 

These cars are fitted up as post offices and are used for distribution en route in order 
to expedite and facilitate the prompt transmission and delivery of mails. hey 
largely take the place of very expensive distribution offices in cities. 

The railroads provide cars for freight traffic, but refused to build, and maintain, 
and haul these moving post offices with their clerks and paraphernalia, without pay. 
That is the post-office car pay of which so much is said. 

The truth regarding this feature of the subject is clearly stated in the following 
recent letter from the Postmaster General: 



RAILWAY MAIL PAY. 771 

[Congressional Record, March 5, 1910, 61st Cong., 2d sess., vol. 45, No. 61, p. 2852.] 

letter of the postmaster general relative to the cost of furnishing and 
operating railway post-office cars. 

Office of the Postmaster General, 

Washington, D. C, March 2, 1910. 
Hon. John W. Weeks, 

Chairman Committee on Post Offices and Post Roads, 

House of Representatives. 

My Dear Sir: In response to your inquiry made of the Second Assistant Postmaster 
General in regard to the cost of maintaining and operating railway post-office cars 
and its relation to the compensation received by railroad companies for the same 
and your reference to the speech delivered by Senator Vilas on the subject in the 
United States Senate, February 13, 1895, I have the honor to advise you as follows: 

The department has not at this time sufficient information upon this point to give 
from its own records a reliable estimate. As you are aware, we have recently asked 
railroad companies to submit answers to inquiries with reference to the cost of operat- 
ing the mail service, and it is believed that when these shall have been received we will 
be in a position to furnish such information. Inasmuch, however, as it may be of 
importance to you to have estimates made from time to time by others and such 
iucomplete information as we have at present, I submit the following: 

The cost of operating a railway post-office car has been variously estimated (but 
not officially by the department) as from 15 to 30 cents a car mile. The average run 
per day of such a car is about 300 miles. Estimating the cost at 18 cents a car mile, 
the total cost of operating such car for one year would be 119,710. 

The specific items which constitute this total cost are not definitely known to the 
department. However, as to the cost of lighting, cleaning, repairs, etc., the General 
Superintendent of Railway Mail Service furnished the following estimates before 
the commission to investigate the postal service in 1899, viz: Lighting, $276; heating, 
$365; cleaning, water, ice, oil, etc., $365; repairs, $350; proportion of original cost 
of car (estimating the life of a car at 15 years and the original cost at $6,000), $400; 
total, $1,756. Recent inquiry gives the following as the approximate cost of main- 
taining a car at the present time: Lighting (electric), $444; heating, $150; cleaning, 
$360; repairs, $300; oil and brasses, $120; interest on cost of car (at $7,500), $300; 
annual deterioration (estimating the life of a car at 20 years), $375; total, $2,049. 
These figures give the cost of a car built according to the department's standard 
specifications. The cost of modern steel cars being built by some of the railroad 
companies is from $14,000 to $15,000. 

The compensation received by a railroad company for operating a car and carrying 
the mails in it would be approximately as follows: 

The pay for a 60-foot car at $40 a track mile per annum, for a track mileage of 150 
miles, would be $6,000. The average load of a 60-foot car, according to statistics 
obtained recently, is 2.83 tons. The rate per ton of an average daily weight of 50,000 
pounds carried over the route is $25.06. At this rate the company would receive 
$10,637.97 per annum for the average load of mail hauled in the car. This sum , added 
to the specific rate for the railway post office car ($6,000), makes the total pay for the 
car and its average load $16,637.97 per annum. 

Senator Vilas's argument was based upon the theory that the rates fixed for railroad 
transportation alone, based on the weights of the mails carried, are adequate compen- 
sation for all sendees rendered, including the operation of railway post-office cars, 
and that therefore the railroad companies would be required to operate postal cars 
owned by the Post Office Department for the compensation allowed by law for the 
weight of mails alone, including apartment-car space and facilities. Such theory is 
not justified by the facts, as will appear from the following: 

A careful perusal of the debates in both Houses of Congress which led to the enact- 
ment of the present law fixing the rate of pay for railroad transportation of the mails 
and for railway post-office cars clearly indicates that the additional compensation for 
railway post-office cars was intended to cover the additional expense imposed upon 
the railroad companies for building, maintaining, and hauling such cars. The com- 
panies at that time insisted that these cars,' which were practically traveling post 
offices, did not carry a remunerative load, and that therefore the amount of pay, 
based on weight, did not compensate them for their operation. This led to the specific 
appropriation for railway post-office cars. In this connection it should be borne in 
mind that the purpose of the railway post-office car is to furnish ample space and 
facilities for the handling and distribution of mails en route. Therefore the space 
required is much greater than would be required for merely hauling the same weight 
of mails. 



772 RAILWAY MAIL PAY. 

In regard to any proposal for Government ownership of postal cars, other facts 
as well as the above should be given consideration. Such cars must be overhauled, 
cleaned, and inspected daily. It would be necessary to either arrange with the 
railway companies for this service or for the department to employ its own inspectors, 
repair men, and car cleaners at a large number of places throughout the country, 
which would probably be more expensive than the cost to the railway companies 
in that respect at present. It would hardly be feasible to establish a Government 
repair shop. Therefore the department would be compelled to use the shops of the 
several railway companies throughout the country. Without the closest super- 
vision and attention of the Government's inspectors it could scarcely be expected 
that our cars would receive the same consideration in railroad shops as those owned 
by the railway companies. These shops are frequently congested, and it is probable 
that the railroad work would be given the preference. 
Yours very truly, 

Frank H. Hitchcock, 

Postmaster General. 

The Wolcott Commission carefully investigated the whole subject of postal-car 
pay and their conclusions regarding this form of compensation and its reasonable- 
ness are set forth in their report in the following language: 

"Until a comparatively short time prior to 1873 the distribution of the mails 
in transitu was unknown. Prior to the late sixties the railroads simply transported 
the mails, which were delivered at the post offices and there distributed. Accord- 
ingly, 'weight' as the basis of compensation was at the time of its adoption and long 
thereafter entirely adequate. 

"For a few years, however, prior to 1873 the distribution of the mails in transitu 
had been practiced to a sufficient extent to satisfy the Post Office Department and 
Congress that it was a desirable innovation and a branch of the postal service that 
should be very much enlarged. But it was recognized that if the railroads were 
not only to transport the mail itself, but also to supply, equip, and haul post offices 
for the distribution of the mails, the compensation upon weight basis that had ob- 
tained up to that time was not entirely adequate and just, and therefore the law 
of 1873, as already indicated, contained a provision allowing additional compensa- 
tion for railway post-office cars. At first these cars were mostly not exceeding 40 
or 45 feet in length and of light construction, similar to baggage and express cars. 

"From the policy of the department, however, of constantly demanding better and 
better facilities from the railroads and the introduction of every improvement that 
could be discovered, it has come to pass that, to-day, the railroad post-office cars, 
with the exception of a few obsolete ones that are being discontinued as rapidly as 
practicable, are elaborate structures, weighing between 90,000 and 100,000 pounds; 
built as strongly and fitted up, so far as suitable to the purpose for which it is intended, 
as expensively as the best Pullman and parlor cars; costing from $5,200 to $6,500; 
maintained at a cost of $2,000 per year; traveling on an average of 100,000 miles per 
annum; provided with the very best appliances for light, heat, water, and other 
comforts and conveniences; placed in position for the use of the postal authorities 
from two and a half to seven hours before the departure of the train upon which they 
are to be hauled, and owing to the small space allowed in them for the actual trans- 
portation of the mails, accompanied on the denser lines by storage cars for which no 
additional compensation is paid by the Government and on the less dense lines the 
larger bulk of mails is carried in the baggage cars without additional compensation 
for the car. 

"These cars are constructed and fitted up by the railroads in accordance with plans 
and specifications furnished by the department, and the amount of mail transported 
therein is determined exclusively by the postal authorities. From these two facts 
it results that the railroad must haul 100,000 pounds of car when the weight of the 
mail actually carried therein is only from 3,500 to 5,000 pounds — often very much 
less, and occasionally somewhat more. 

"Taking in view all these facts, as disclosed by the testimony filed herewith, we 
are of opinion that the 'prices paid * * * as compensation for the postal-car 
service' are not excessive, and recommend that no reduction be made therein so 
long as the methods, conditions, and requirements of the postal service continue the 
same as at present." 

MAIL RATES AND EXPRESS RATES. 

No feature of this question has been more persistently misrepresented than the rela- 
tive value to the railroads of the mail business and the express business. 

As elsewhere shown, the express business is 52 per cent more valuable to the Bur- 
lington road than the Government mails on the mere basis of space used and facilities 



RAILWAY MAIL PAY. 773 

furnished in passenger trains. There are many other considerations which increase 
this disparity of value in favor of the express, but reference to them is omitted in order 
to direct public attention to the following statements of the Postmaster General in his 
recent letter upon the subject: 

[Congressional Record, March 4, 1910, 61st Cong., 2d sess., vol. 45, No. 60, p. 2802.] 

letter of the postmaster general relative to the service rendered by the 
railroad companies in connection with the mails and with express. 

Office of the Postmaster General, 

Washington, D. C, January 81, 1910. 
Hon. John W. Weeks, 

Chairman Committee on Post Offices and Post Roads, 

House of Representatives . 

My Dear Sir: In response to your inquiry as to the difference between the service 
rendered the Post Office Department by railroad companies in the carriage and han- 
dling of the mails and that rendered express companies, I would state that from such 
information as we have been able to obtain in regard to the service rendered to express 
companies the difference is substantially as follows: 

The Post Office Department requires the railroad company to take the mail from the 
post office wherever the office is within 80 rods of the depot, and the company has 
an agent, and in many cases to perform the terminal service regardless of the distance 
between the post office and the station. Wherever the terminal service is taken up 
by the department, by means of regulation or screen-wagon service, the contractor 
delivers the mail at a specified place at the depot, and from that point the railroad 
employees transport it to the cars, and if the amount is so great that it would impose 
a hardship upon the postal employees to load and store this mail, the railroad com- 
pany is called upon to furnish porters to do the work. Where the mail messenger or 
contractor can drive direct to the cars, he does so. The express companies haul all 
of their matter to the railroad stations and put it in the cars, using their own em- 
ployees and their own trucks. 

The cars furnished the Post Office Department and those furnished the express 
companies differ very materially. The former are built according to specifications 
furnished by the department, and are fully equipped with letter cases, paper racks, 
drawers, and lockers for registered mail and supplies, and all of the equipment neces- 
sary for the distribution of mail en route. The cars furnished the express companies 
have very little, if any, interior furnishings, and are more like the cars used for the 
transportation of baggage. In both cases the cars used are owned by the railroad 
company. 

The number of employees transported for the Post Office Department is very much 
greater than for the express companies. There are frequently 5 or 6 clerks in the 
postal cars, and on fast mail trains, where there are two or three working cars to a 
train, the number runs up as high as 23. The express seldom requires more than 
2 men in a car. 

The Post Office Department claims as much space at depots without specific pay- 
ment therefor as may be required for the storing and handling of mail in transit. 
The express companies are required to pay the railroad companies for all space used 
at depots. 

On smaller lines a separate apartment must be furnished for the mails other than 
baggage mails. The express matter is usually placed in the baggage car. 

Upon arrival at terminals the railroad company may be required to unload a mail 
car, if the quantity is such as to impose a hardship upon the clerks, and to see that 
it is loaded into the contractor's wagons; or, if the terminal service devolves upon the 
railroad company, that it is delivered into the post office. The express company 
unloads and handles its own matter. 

The railroad and express companies frequently use a joint employee to handle 
baggage and express, thereby economizing in cost of help. That can very seldom 
be done in connection with the postal service. 

The railroad company has charge of all baggage mails in transit and receives them 
into and delivers them from the cars. It also handles other mails when necessary 
to transfer them between cars or trains. It is held responsible for reasonable care in 
their transportation. Deductions are made for failures to perform service according 
to contract, and fines are imposed for delinquencies. The company is required to 
keep a record of all pouch mails carried on trains in charge of their employees and han- 
dled at stations where more than one regular exchange pouch is involved and no mail 
transfer clerk is located, and to prepare and forward shortage slips when a pouch is 
due and not received. They are required to make monthly affidavits as to per- 



774 



RAILWAY MAII PAY. 



forrnance of service. It is understood that the company never assumes control of 
express matter. The department is not informed as to the terms of contracts between 
railroad and express companies, and therefore can not state what responsibility is 
imposed as to transportation. 

Mail cranes for the exchange of mail at points where trains do not stop are erected 
and kept in repair by and at the expense of the railroad company, whose employees 
must hang the mail bag on the crane and adjust it for catching at points where the 
company provides side service. The mail catchers are also furnished by them. No 
service of this character is rendered express companies. 

A railroad company is required by law to carry the mails upon any train that may be 
run, when so ordered by the Postmaster General, without extra charge therefor, and 
as a result the mails are carried on the fastest trains and with great frequency. Ex- 
press matter is not as a rule carried on the fast limited passenger trains, nor with the 
frequency with which mails are carried. 

In this connection your attention is invited to pages 84 to 94, 516-517, 860 to 863, 
part 1, and pages 687 to 696, part 2, of the testimony before the congressional commis- 
sion which investigated the postal service in 1900 — Wolcott-Loud Commission. 
Yours very truly, 

F. H. Hitchcock, Postmaster General. 

The Government does not own any railroad, but, under the present system, the 
Post Office Department dictates to the railroad companies upon what passenger trains 
and in what kind of cars the mails shall be carried. It insists on such space and facili- 
ties as it deems necessary for the mails being furnished on the fastest and most expen- 
sive trains and demands that these trains keep their fast schedules; this means that all 
other trains on the road are side-tracked and delayed whenever that is necessary in 
order to expedite the mails. 

There are no such features in the express business. 

Demanding a preference traffic, the Government ought to be willing to pay for it 
more than express rates. In fact, it pays much less than express rates. 

The ablest and most competent witness who appeared before the Wolcott Commission 
on this subject was Henry S. Julier, vice president and general manager of the Amer- 
ican Express Co., who said: "Without question, the Government has the cheaper 
service by far." 

Mr. Juiier further stated that 7 pounds is the average weight of packages sent by 
express, and the 7-pound package is the typical express package, and therefore the 
earnings from carrying such packages are the true index of the rates actually received. 
Some railroads receive as their compensation 50 per cent of the express company's 
earnings; the Chicago, Burlington & Quincy receives 57^ per cent. 

Mr. Julier was asked by the commission to file statements showing from the rates in 
force exactly the revenue received per hundredweight by the railroad company from 
the express in comparison with the mail rates. He filed the following: 



Rates received by rai 



per hundredweight for mails and rates received for express between 
points named. 





Distance. 


Mail.i 


Express. 2 


New York to — 

B uff alo 


Miles. 
440 
980 

1,480 
906 
761 

1,171 
347 

85 
421 
922 

284 
306 

374 
306 
263 


$1.58 
3.57 
5.38 
3.27 
2.49 
4.38 
1.33 

.34 
1.83 
5.27 
1.34 
1.20 

1.61 
1.20 
1.26 


$2.80 




4.55 


Omaha 


5.95 


Indianapolis 


4.55 


Columbus 


3.85 


East St. Louis 


4.90 


Portland, Me ... 


2.80 


Chicago to— 


2.10 


Minneapolis , 


3.85 


New Orleans ■ 


5.95 


Detroit - 


2.80 


Cincinnati 


3.15 


Cincinnati to— 


3.15 




3.15 


Cleveland 


2.80 







1 Rate per 100 pounds allowed railroad companies under last weighing, including the pay for post-office 
cars. 

2 Fifty per cent of express companies' earnings on fourteen 7-pound packages weighing in the aggregate 
100 pounds, yields the railroad companies the rate per 100 pounds noted in this column. 



RAILWAY MAIL PAY. 



775 



Since the filing of these statistics, the rates paid to railroads for carrying the mails 
have been reduced almost a fifth. 

The statements of the Postmaster General and the statistics confirm the evidence 
of these returns that the express business is much more valuable to railroad companies 
than the Government mail business. 

W. W. Baldwin, 

Vice President. 
John DeWitt, 
General Mail Agent, Chicago, Burlington & Quincy Railroad Co. 



[Appendix.] 
Exhibit A. 

[Form 2601.] 

There are on file in the Post Office Department 102 separate statements showing, for 
the month of November as to each mail route on the Burlington system, the space 
occupied and used for mail and for express and for passengers. 

In order to make a comparison it was, of course, necessary to reduce each item of 
space used in each car to a common basis of feet, and the following table shows what 
are the actual facilities furnished in passenger trains for the three classes of traffic re- 
duced to linear car-foot space: 

Car-foot mileage. 



Mail. 


Passengers. 


Express. 


62,246,130 
(11. 75%) 


428, 164, 920 
(80.8%) 


39,525,540 
(7. 45%) 



Exhibit B. 

[Form 2602.J 



STATION FACILITIES FURNISHED FOR THE MAILS AND EXPRESS AND THE VALUE OF 
OTHER ITEMS OF SERVICE RENDERED. 

Mail expense. 

Monthly cost of handling mail at stations, labor, etc $14, 241. 67 

Monthly rental value of mail rooms in stations 1, 008. 61 

Monthly rental value of tracks occupied by mail cars for advance dis- 
tribution 157. 69 

Cost of lighting and heating mail cars for advance distribution 114. 25 

Value of 309,827 miles of free transportation to post-office employees, not 

including postal clerks in charge of mail 6, 196. 54 

Switching mail cars for advance distribution 2, 795. 80 

Total for November 24, 514. 56 

The foregoing does not include the rental value of space furnished by the railroad 
company to the Government for handling mails and mail trucks on station platforms, 
and for storing the mails on platforms at large terminals. This is a large item, but 
statistics of such space used were not called for. At Chicago station platform space 
to the amount of over 6,500 square feet is devoted exclusively to mails handled by 
the Burlington and Pennsylvania. 

In addition to the foregoing, the Burlington Co. transported on its trains during 
November postal clerks in charge of mail for the Government a distance of 3,109,747 
miles in the aggregate. 

If the Government had paid their fare at 2 cents per mile the amount paid would 
have been $62,174.94. 

These items of station facilities and other service rendered to the Government for 
the mails amounted to $86,689 for November, or at the rate of more than $1,000,000 
annually. 



*776 BAILWAY MAIL PAY. 

Express expense. 

Rental value of space in station buildings used for express, for which no 

rent is paid $488. 68 

Rental value of tracks used for advance loading of express 191. 11 

Value of 42,298 miles of free transportation to express company officials and 

employees at 2 cents per mile 885. 96 

Total 1, 565. 75 

In addition to the foregoing, the agents and employees of the railroad company in 
the month of November rendered service at stations in handling express and in other 
ways for the express company to the amount of $10,274, but the express company paid 
to the same persons $14,538 in commissions. 

The express company also shared in the salaries paid to certain baggagemen and 
other joint train employees in November to the amount of $7,480, in addition to the 
payment of commissions, as aforesaid. 

All the items of expense to the railroad company on account of the express in the 
way of space furnished and free transportation to employees, and services of station 
agents, amount to $11,840, while the cash payments by the express company to the 
railroad company indirectly, through payments in commissions to station agents and 
the salaries of baggagemen amounts to $22,018, a pecuniary gain or income from 
express of $10,178 per month, or at the rate of $124,136 annually, compared with a 
large outgo annually on account of the mails as shown in the foregoing items. 



Exhibit C. 

[Form 2603.] 

Revenues and expenses and train and car mileage. 
Revenues: 

Receipts in November from all passenger traffic (not including mail 

and express) $1, 859, 839 

Receipts from express 187, 825 

Receipts from mails 194, 435 

Total 2, 242, 099 

Expenses: 

Total operating expenses of the road for November 5, 452, 830 

Passenger operating expenses, and one-twelfth of the taxes and one- 
twelfth of the interest on the funded debt 2, 365, 521 

The passenger operating expenses are distributed as follows: 

ASSIGNABLE EXPENSES. 

Transportation expense : 

Fuel, passenger engines $132, 709 

Salaries, passenger engineers 100, 511 

Salaries, passenger trainmen 87, 557 

Train supplies, etc 55, 664 

Injuries to persons 19, 904 

Station employees 17, 160 

Joint yards and terminals 15, 610 

Miscellaneous 25, 093 

Maintenance of equipment: 

Repairs, passenger cars 67, 650 

Depreciation, passenger cars 39, 639 

Miscellaneous 337 

Traffic expense: ' 

Advertising 17, 249 

Outside agencies 16, 673 

Superintendence 10, 272 

Miscellaneous 4, 777 

4g 97^. 

Maintenance of way, etc. : 

Buildings and grounds ' 7, 053 

Joint tracks, etc 4, 440 

Miscellaneous 1, 477 

12, 970 



RAILWAY MAIL PAY 



777 



General expense: 

Salaries, clerks, etc $8, 994 

Insurance 2, 478 

Legal expense 1, 153 

Miscellaneous 955 

$13,580 

Total 637, 355 

PROPORTION OF NONASSIGNABLE EXPENSES. 

Operating expenses $1, 278, 016 

Taxes and interest 450, 150 

Total operating expenses, taxes, and interest 2, 365, 521 

Exhibit A shows that the entire space in all cars run on passenger trains on the 
Burlington in November was divided as follows: 

Per cent 
of the space. 

Passengers occupied 80. 8 

Mail 11.75 

Express 7. 45 

If each of these three classes of traffic had contributed earnings and paid expenses 
in proportion to the space occupied by it, the result in comparative profit or loss to 
the company would have been as follows: 

Comparative profit and loss. 





Earnings. 


Expenses. 


Profit. 


Loss. 


Passenger 


$1, 859, 839 
194,435 
187, 825 


$1,911,341 
277,949 
176,231 




$51, 502 


Mail 




83,514 


Express 


$11, 594 










2, 242, 099 


2,365,521 













If the Government had paid to the Burlington Co. for carrying the mails 11.75 per 
cent of the actual cost of doing the work, and a proportion of the taxes and interest 
on the funded debt, it would, for November, have paid $83,514 more than was paid, 
indicating that for the year the Government is paying $1,002,168 less than the actual 
fair cost of the service it is receiving. 

Exhibit D. 

[Form 2605.) 

Statement of mail cars and apartment cars. 

POSTAL CARS. 



Kind of car. 



Number 
owned. 



Original 

average 

cost. 



Present 
average 
value. 



60 feet or more in length 

50 to 59 feet in length 

Less than 50 feet in length 

Total , 

APARTMENT CARS 

Cars with mail apartments 30 feet or more in length 

Cars with mail apartments 25 to 29 feet in length 

Cars with mail apartments 20 to 24 feet in length 

Cars with mail apartments less than 20 feet in length 

Total 



$5,176.00 
4, 116. 00 
2,555.00 



$4,669.84 
2,595.70 
2,094.41 



4,451.00 3,820.84 



27 I 
21 

22 
31 



$3,888.00 
3,660.00 
3,292.00 
3,106.00 



104 3,460.00 



$2,112.78 
2,004.95 
1,810.50 
1,729.35 



1,901.71 



ELECTRIC AND CABLE CAR ROUTES. 

PROPOSED BILL TO EQUALIZE PAY FOR MAIL SERVICE ON. 

The following correspondence is submitted relative to the above 
heading: 

Boston Elevated Railway Co., 

Secretary's Office, 
101 Milk Street, Boston, Mass., February 19, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-class Mail Matter and Compensa- 
tion/or Transportation of Mail, Washington, D. C. 
Dear Senator: In compliance with my promise to you of March 3d, I am inclosing 
a copy of a bill which I have drafted and which has been submitted to the committee 
appointed by the American Electric Railway Association and which they have ap- 
proved. This bill covers our needs and is drawn in accordance with the testimony 
that was given before jour committee by the special committee of the American 
Electric Railway Association at the meeting held February 7, 1913. 

This bill is drawn from the viewpoint that if such a bill should become incorporated 
in the post office appropriation bill or in the general law, the electric railway mail 
service would be paid about what it costs to carry on the service and would not be 
paid any profit thereon. 
Thanking you for your courtesies to the committee and to myself, I am, 
Yours respectfully, 

Henry S. Lyons, Secretary. 



A BILL To equalize pay for mail service on electric and cable car routes. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled: The Postmaster General is authorized and directed to readjust 
the compensation to be paid from and after July first, nineteen hundred and fourteen, 
for the transportation of mails on electric and cable car routes upon the conditions 
and at the rates hereinafter mentioned . 

First. For space the full width and height of inside of car and not exceeding thirty 
feet in length, authorized to be used in independent or trailer cars or in apartments 
in independent or trailer cars (except on interurban routes as hereinafter defined) 1^ 
cents per linear foot for each mile run in the performance of service. 

Second. For closed-pouch service not performed in independent or trailer cars or 
apartments thereof entirely devoted to mail service, $150 per annum for the carriage 
of consignments of not more than three pouches two thousand miles or less in a year, 
$175 per annum for the carriage of such consignments more than two thousand and 
not more than three thousand five hundred miles in a year, and for additional mileage 
in excess of three thousand five hundred miles in a year at the rate of 5 cents per 
mile for the carriage of each such consignment five miles or less, and 3 cents per mile 
for each mile in excess of five miles, and for all pouches in a consignment in excess of 
three, 1 cent per mile additional. 

Third . For all service on routes over twenty miles in length outside of cities (herein 
designated as interurban routes), the same rates provided by law to be paid for like 
service on steam railroads. 

Fourth. A minimum annual rate on the basis of thirty thousand miles run shall be 
paid for all independent cars or apartments in independent cars required in the service. 

Sec. 2. The Postmaster General is authorized and directed to provide for the car- 
riage of the mails to and from electric and cable cars by the Post Office Department. 

778 



RAILWAY MAIL PAY. 779 

March 27, 1913. 
Mr. Henry S. Lyons, 

Secretary Boston Elevated Railway Co., 

101 Milk Street, Boston, Mass. 
My Dear Mr. Lyons: Referring to correspondence had with you relative to the 
proposed bill submitted by you and indorsed by the committee of the American 
Electric Railway Association to equalize pay for mail service on electric and cable 
car routes: 

The statement I desired was one applicable to your own line, showing your receipts 
and expenditures in connection with the mail service rendered by your company to 
the Post Office Department under the present law and also under the proposed bill 
submitted by you. My idea was to secure an apportionment of the expenditures in 
connection with your mail service under the present law and to see how same would 
be affected if the bill were enacted into law. My request was not for a comparative 
statement of the receipts and expenditures of your company based on the total electric 
railway mileage of the United States. 

Trusting that I have made myself clear, I am, 

Yours very truly, Jonathan Bourne, Jr., 

Chairman. 



Boston Elevated Railway Co., 

Secretary's Office, 
101 Milk Street, Boston, Mass., April 7, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second Class Mail 

Matter and Compensation for Carrying the Mail, Washington, D. C. 
Dear Senator: Our general auditor, Mr. J. H. Neal, has submitted to me a letter 
in reply to your inquiry as to what extra compensation the Boston Elevated Railway 
Co. would receive if the proposed bill to equalize the pay for mail service on electric 
and cable car routes were adopted. I inclose you a copy of his letter. The figures 
that he has worked out in reference to the increased compensation, should the rate 
for compartment cars be increased from 1 cent to 1^ cents per linear foot per car mile, 
will amount to $19,506.86, which would make the company whole. The figures that 
he has worked out, if we were guaranteed a minimum of 30,000 miles per car per year, 
are higher than we expected ($12,076.63), so that for that guaranty the cost to the 
Government would be more than we anticipated. This would practically be our 
profit for doing the mail business. 

From Mr. Neal's statement some conclusion can be reached (by comparison of our 
mileage with the mileage of other roads) as to what the extra cost would be for carrying 
the mail on the electric car service of the United States if the proposed bill went into 
effect. 

• Very truly, Henry S. Lyons. 

General Auditor's Office, 
101 Milk Street, Boston, Mass., April 7, 1913. 
Mr. Henry S. Lyons, 
Secretary, Boston Elevated Railway Co. 

Dear Sir: Answering Senator Bourne's inquiry as to what extra compensation the 
Boston Elevated Railway Co. would receive if the proposed bill "to equalize the pay 
for mail service on electric and cable car routes" was adopted, I submit the following: 

We were paid last year for independent car service, 195,291.37 

miles, at 15.85 cents (being 1 cent per linear foot) $30, 426. 40 

25,575.55 miles, at 20 cents 5, 115. 11 

35, 541. 51 
Under the proposed bill this would amount to — 

195,291.37 miles, at 23.375 cents (being 1£ Cents per linear 

foot) 45,649.36 

25,575.55 miles, at 36.75 cents 9, 399. 01 

55, 048. 37 

Difference $19, 506. 86 



780 RAILWAY MAIL PAY. 

In addition to the above, if we were guaranteed 30,000 miles 
per car, as we should be, we would be paid additional as fol- 
lows: 

Eight 16-foot cars $10,450.64 

One 16-foot car out of commission most of the time, no charge. 

One 20-foot car 1, 625. 99 

$12, 076. 63 

If we were paid 5 cents per mile (as this bill provides for) for 

pouch service, instead of 3 cents, we should have received 

additional 384. 78 



31, 968. 27 
Yours truly,. 

J. H. Neal, General Auditor. 



Hop. Jonathan Bourne, jr. 



Office of the Postmaster General, 

Washington, B.C., July 25, 1913. 



Chairman of Committee on Postage on Second-Class Mail Matter and Compensation 

for the Transportation of Mail, Congress of the United States. 
My Dear Mr. Chairman: Transmitted herewith is a memorandum prepared by the 
Second Assistant Postmaster General with respect to the proposed bill drawn by 
Mr. Henry S. Lyons, secretary of the Boston Elevated Railroad Co., to equalize 
pay for mail service on electric and cable car routes. 

Yours very truly, A. S. Burleson, 

Postmaster General. 



Post Office Department, 
Second Assistant Postmaster General, 

Washington, July 25, 1913. 

Memorandum for the Postmaster General. 

Referring to the proposed bill, prepared by Henry S. Lyons, secretary of the Boston 
Elevated Railway Co., to equalize pay for mail service on electric and cable car 
routes, I have the honor to inform you as follows: 

Paragraph 1, section 1, of the bill provides for an increase in the compensation 
allowed electric car lines for the performance of service in independent or trailer 
cars or in apartments in independent or trailer cars (except on interurban routes 
20 miles in length outside of cities) over the existing maximum rate of 1 cent a linear 
foot for each mile run to 1£ cents per linear foot for each mile run. Should the bill 
become law it would result in an increase in the cost of this particular class of service 
of approximately $198,331.43 per annum. 

The present authorized rate of compensation allowed electric car lines for space 
not exceeding 16 feet in length the full width and height of inside of independent 
or apartments in independent cars is 0.75 of 1 cent per linear foot for each mile run 
in the performance of service. For additional space not exceeding 4 feet in length 
the rate is 0.375 of 1 cent per additional linear foot for each mile run in the perform- 
ance of service; and for additional space thereto 0.1875 of 1 cent per linear foot for each 
mile run. The act of Congress approved March 4, 1913, making appropriations for 
the service of the Post Office Department for the fiscal year ending June 30, 1914, 
contains a special provision in connection with the appropriation for electric and 
cable car service, under which the Postmaster General may, in cases where the quan- 
tity of mail is large and the number of exchange points numerous, authorize payment 
for service in mail cars or apartments carrying the mails at a rate per mile not to exceed 
the rate of 1 cent per linear foot per car mile of travel. 

It will be seen, therefore, that it is proposed by the bill to allow electric car com- 
panies compensation for the performance of mail service at a rate 50 per cent above 
the present authorized maximum rate of 1 cent per linear foot for the performance 
of service under special conditions, while the increase in compensation for the per- 
formance of service under normal conditions is from 200 to 500 per cent. It is not 
believed that the conditions affecting electric car companies performing this particular 
class of service warrant such a large increase in their compensation. 

Paragraph 2, section 1, of the bill provides for a rate for closed-pouch service not 
performed in independent or trailer cars or apartments thereof entirely devoted to 



RAILWAY MAIL PAY. 781 

mail service of $150 per annum for the carriage of consignments of not more than 
three pouches 2,000 miles or less in a year, $175 per annum for the carriage of such 
consignments more than 2,000 and not more than 3,500 miles in a year, and for addi- 
tional mileage in excess of 3,500 miles in a year at the rate of 5 cents per mile for the 
carriage of each such consignment 5 miles or less, and 3 cents per mile for each mile in 
excess of 5 miles, and for all pouches in a consignment in excess of three, 1 cent per 
mile additional. 

The present authorized rates for closed-pouch service not performed in independent 
or trailer cars or apartments thereof are $150 per annum for an annual travel of 2,000 
miles or less, $175 per annum for an annual travel of more than 2,000 miles and not 
more than 3,500 miles, $200 per annum for an annual travel of more than 3,500 miles 
and not more than 5,000 miles, $250 per annum for an annual travel of more than 
5,000 miles and not more than 8,333 miles, and for more than 8,333 miles of annual 
travel 3 cents per mile run. 

The act of Congress approved March 4, 1913, making appropriations for the service 
of the Post Office Department for the fiscal year ending June 30, 1914, contains a 
special provision in connection with the appropriation for electric-car service, under 
which the Postmaster General may, in cases where the quantity of mail is large and 
the number of exchange points numerous, authorize payment for closed-pouch serv- 
ice at a rate per mile not to exceed one-third above the rate per mile now paid for 
closed-pouch service. Under this special authority the department is permitted to 
allow electric-car companies, where the conditions are unusual, compensation at the 
rate of 4 cents a mile of travel. 

From the foregoing it will be noticed that the proposed bill limits the number of 
pouches to three" that can be dispatched by a single trip without extra compensation, 
while there is no limitation placed on the number of pouches that can be dispatched 
by a single trip under the present law. 

This section as drawn is impracticable and ambiguous. The impracticability con- 
sists in the limitation placed upon the number of pouches that could, under such a 
law, be dispatched by a single trip without the allowance of extra compensation to 
the carrying company. Under the present authority of law for the authorization of 
this class of electric-car service, the department is enabled to authorize a specific 
service at a specific annual rate of compensation. Under such conditions it is in posi- 
tion to tell at any time the actual annual rate of expenditure for electric-car service 
and to make close estimates to Congress of the amount of appropriation that will be 
required for the service for the next fiscal year. Should the proposed bill become 
law the department would not be in position to authorize closed-pouch service at 
specific annual rate, as it would be impossible to ascertain the exact number of pouches 
that might be available for dispatch by each and every trip of authorized service. 
Under such a condition it would be necessary either to authorize a specific service for 
the handling of a certain number of pouches and to require postmasters to obtain 
special authority for the dispatch of extra pouches when necessary, or to authorize 
service at an indefinite annual rate and to require the dispatch of all pouches. Under 
the former plan mail would be subjected to delay pending receipt of authority from 
the department for its dispatch, while under the latter plan the department would 
not at all times be in possession of information with respect to the actual rate of annual 
expenditure and would be handicapped in making estimates to Congress for appro- 
priations. 

This section of the bill is ambiguous with respect to the use of the words "con- 
signments" and "all." The word "consignment" usually refers to a shipment of 
goods or commodities sent or addressed to a consignee at one time or by one conveyance. 
The ambiguity is demonstrated by the following example: A route is authorized from 
A by B and C to D. A has for dispatch by a single trip three pouches to B, three to C, 
and three to D. It is not clear from the wording of the bill whether such a dispatch 
of mail is to be considered as a single dispatch of nine pouches for which the company 
would receive compensation at the stated annual rate allowed for the transportation 
of not exceeding three pouches and additional compensation for the excess of six 
pouches, or whether such a dispatch would be considered as three "consignments" 
and the carrying company allowed compensation at the stated annual rate of $150, 
$175, etc., as the case may be, for each consignment. Under the usual meaning of 
the word "consignment" such a dispatch of mail would clearly be three consignments 
leaving a single point for delivery at three different points. The question becomes 
further involved, as the postmaster at B would have dispatcher for C and D, which 
would make additional consignments; and the "consignments" on each trip would 
continue to increase at every post office on the route in both directions. 

The meaning of the word "all " is ambiguous in that it is not known whether it is 
intended to be used in an individual or collective sense. For example, in the case 

49396—14—57 



782 BAIL WAY MAIL PAY. 

mentioned above, there were nine pouches dispatched by A for B, C, and D. If the 
dispatch is to be considered as a single consignment, the carrying company would be 
entitled under the terms of the proposed bill to extra compensation for the additional 
six pouches. It is not clear, however, whether the extra compensation would be 1 
cent a mile for the six pouches, or 1 cent a mile for each pouch or 6 cents a mile for the 
six "pouches. 

Owing to the ambiguity of the paragraph the department is unable to state what the 
approximate increase in the cost of this particular class of service would be, but it is 
apparent that the increase would be large under any construction placed upon the 
wording of the paragraph. 

Paragraph 3 of section 1 provides that all electric lines over 20 miles in length 
outside of cities shall be paid at the same rate provided by law for like service on steam 
railroads. The present law governing this particular class of service provides that 
the rates for electric car service on routes over 20 miles in length outside of cities 
shall not exceed the rates paid for service on steam railroads. The practice of the 
department under this provision of law is, that companies performing the service on 
routes over 20 miles in length outside of cities are paid at the electric car rate where 
the annual rate of compensation at the fixed mileage rates for electric car service 
does not exceed the pay that could be allowed a steam railroad company performing 
the same service. In cases where the annual compensation of an electric car company 
at the fixed mileage rates for electric car service would exceed the rate of compensa- 
tion that could be allowed for steam service over the same line, the pay of the company 
is stated at the steam railroad rate of compensation. 

If it is deemed advisable to have a provision of this kind in the bill it should be 
specificially provided that steam railroad compensation can be allowed electric car 
companies only where substantially the same degree of service is rendered. 

Should the bill become law the additional cost to the department for this particular 
class of service would be approximately $18,000 per annum. 

Section 4 of paragraph 1 provides that a minimum annual rate on the basis of 30,000 
miles run shall be paid for all independent cars or apartments in independent cars 
required in the service. This provision is ambiguous with respect to the use of the 
word "all " in the same sense that the word is used in connection with paragraph 2 of 
section 1; that is, it is not understood whether it proposes to allow the electric com- 
pany performing the service compensation on the basis of 30,000 miles of annual travel 
for each car, or compensation on the basis of 30,000 miles of annual travel regardless 
of the number of cars used in performing the service. Should the bill become law it 
would result in a material increase in the cost of this class of service in addition to the 
increase that would result from increasing the maximum rate per linear foot per mile 
run from 1 to 1| cents. 

Section 2 of the bill proposes that the department shall provide for the carriage of the 
mails to and from electric and cable cars. Under the present practice electric car com- 
panies are required to perform the terminal service except in cases where such service 
imposes an unusual hardship upon them, the terminal mileage being figured in and paid 
for as part of the route. At intermediate points the electric car companies are required 
to perform the service between their cars and the post offices at those points where the 
post offices are located directly on the street along which the cars pass, or at points 
where they have agents and the post offices are located within 80 rods of the depot. 
At points where the post offices are not located directly on the street along which the 
cars pass and at which the company has no agent the department provides for the 
service. It is estimated that the cost to the department of providing the side and 
terminal service between electric car lines and post offices would be approximately 
1232,000 per annum. 

This service is similar to that which steam railroads are required to provide in 
connection with the performance of mail service, and there appears to be no good 
reason for relieving electric car companies of the performance of such service and 
requiring steam railroads to perform it, especially m view of the fact that the bill 
seeks to place the compensation of electric lines over 20 miles in length outside of 
cities on a par with the compensation allowed steam railroads for the performance of 
similar service. 

The tentative draft of the proposed law for regulation of compensation allowed 
electric and steam railroads for the transportation of the mails, contained in House 
Document No. 105, as modified by letter of the Postmaster General dated January 
20, 1913, is believed^to provide a scientific and equitable plan for the fixing of com- 
pensation for the carriage of mails by railroads, both steam and electric. 

Joseph Stewart, 
Second Assistant Postmaster General. 



MEMORANDA ON RELATIVE PER TON RATE RECEIVED BY THE 
RAILROAD COMPANIES FOR THE TRANSPORTATION OF 
FREIGHT, MAIL, AND EXPRESS. 

On February 26, 1913, when the Post Office appropriation bill for 
the fiscal year ending June 30, 1914, was pending in the Senate, 
Senator Ashurst made certain observations bearing upon the fore- 
going heading, which are quoted 'from the Congressional Record of 
that date, pages 4187 and 4188, as follows: 

STATEMENT OF SENATOR ASHURST, OF ARIZONA. 

Mr. Ashurst. Mr. President, recurring to page 20, paragraph 76, I find to my 
astonishment that there is an increase from $49,000,000 to $51,500,000 to pay for 
inland transportation on railroad routes. I have received much literature from the 
"down -trod den" railroads of the country stating that they are insufficiently paid for 
the transportation of the mail. I believe, however, that I can demonstrate in a 
moment to the satisfaction of the Senate that the railroad companies instead of being 
underpaid for the transportation of the mails are overpaid. These railroad companies 
while pretending to be underpaid are overpaid for transporting the mails. The 
table which I hold in my hand gives a comparison of the railroad rates for carrying 
mail, freight, and express. I request the Secretary to read the table of figures which 
I send to the desk. 

The President pro tempore. In the absence of objection, the Secretary will read 
as requested. 

The Secretary read as follows: 

THE RAILWAY POSTAL GRAFT. 

The following table, giving a comparison of the railroad rates for carrying mail, 
freight, and express, was prepared by Prof. Henry C. Adams, statistician of the United 
States Postal Commission (generally known as the Wolcott Commission). Some 
revisions have since been made (1907), but they are too slight to affect the disparity 
in charges here shown: 

New York City to Buffalo, 440 miles: 

1 ton mail $31. 65 

1 ton freight 7. 80 

1 ton express 12. 50 

100 pounds mail 1. 58 

100 pounds freight 39 

100 pounds express 63 

New York City to Chicago, 1,000 miles: 

1 ton mail 71. 39 

1 ton freight 15. 00 

1 ton express 25. 00 

New York City to San Francisco, via New York Central, Lake Shore, Chicago, 
Burlington & Quincy, Union Pacific, and the Southern Pacific: 

1 ton mail 265. 53 

1 ton freight 60. 00 

1 ton express 135. 00 

100 pounds mail 15. 28 

100 pounds freight .' 3. 00 

100 pounds express 6. 75 

The railroad rate for mail, however, is much higher than shown in the foregoing 
table.. The Government is cheated in the weighing of the mails, and is charged 
exorbitant rent for the use of the mail cars. In 1911 the Government paid an average 
rental of $3,575.10 for each postal car. The average original cost of a wooden mail 

783 



784 KAILWAY MAIL PAY. 

car is between $6,500 and $7,000. Taking all this into consideration, the cost of 
carrying mail is probably eight or nine times the cost of carrying express matter. 

Mr. Ashurst. Mr. President, being impressed with the injustice perpretrated by 
some mail-carrying railroads, I made an investigation. I do not know that I could 
more succinctly state my conclusions and findings with respect to that investigation 
than by reading what I said, upon the occasion of my election to the Senate, in my 
address to both houses of the legislature of the State of Arizona. I read from that 
address as follows : 

"the government could save millions by using its own postal cars. 

"The United States pays each year to the railroads $4,800,000 for rent of postal cars 
with which to carry the mails, and the railroads usually furnish wooden cars that 
1 telescope' during wrecks and kill or maim the underpaid and overworked postal 
clerks. Remember that this $4,800,000 paid to the railroad companies each year as 
rental for the post-office cars is in addition to the $46,000,000 paid each year to the 
railroad companies for carrying the mails. Consider for a moment what an enormous 
sum of money could be saved to the Government if it would build its own cars. 

"The most expensive car, all steel, costs $12,000 and its average life is 25 years, so that 
with this $4,800,000 which the Government pays the railroads each year for the rent of 
cars we could build 400 steel cars annually. 

"The sum of money, aggregating $46,000,000 annually" — 

That was the amount when these figures were prepared by me. Now it is proposed 
to increase the amount to the sum of $51,500,000 — 

"for carrying mail, is reached because railroads charge the United States 4| cents per 
pound for carrying mail matter, but the railroads carry the express matter for express 
companies at three-fourths of a cent per pound. Such robbery of the Government must 
not be permitted to continue." 

Therefore, Mr. President, I am prompted, in view of my knowledge of these facts, 
to inquire the reason for the increase, as indicated on page 20 of this bill, from $49,000,- 
000 to $51,500,000 for the transportation of the mails, when the pay received by the 
railroad companies for transporting the mails is about two and one-half times greater 
than the compensation they receive for transporting express matter; and, in addition, 
the Government pays for the rent of the postal cars? 

Mr. Bourne. Has the Senator completed his inquiry? 

Mr. Ashurst. I have. 

Mr. Bourne. The average increase in postal receipts and postal expenses is about 
7 per cent per annum, according to the tables of the last 10 years. That is the normal 
growth of our postal service. The appropriations for railway mail pay are based upon 
estimates to comply with existing law. The estimate of the department is much 
higher than the appropriation recommended by the Senate committee. The House 
bill proposes to appropriate $49,000,000. Last year Congress appropriated $47,647,000. 

Mr. Ashurst. May I interrupt the Senator just long enough to ask a question? 

Mr. Bourne. Certainly. 

Mr. Ashurst. Is it not true that the railroad companies receive two or three times 
more from the Government for carrying the mails than they do from the express com- 
panies for carrying express matter? 

Mr, Bourne. In my opinion, most certainly not. In my opinion, and I am simply 
stating my own personal opinion 

Mr. Ashurst. I have a high regard for the Senator's opinion. 

Mr. Bourne. There exists a gross misapprehension on the question of overpayment 
to the railroads in the way of railway-mail pay. In my opinion — not yet a conviction, 
but an opinion — a misapprehension also exists in reference to the desirability of 
Government ownership and operation of railway post-office cars. Postmaster General 
Vilas, in 1887, made a statement in his report which, I assume, led the American people 
to the conviction that it would be cheaper for the Government to own and operate 
the railway post-office cars, and that they would save inferentially, according to his 
presentation, a million dollars and a half over the annual appropriations made for the 
railway post-office car service. Under the last Post Office appropriation bill a joint 
committee was created to investigate and report to Congress in reference to railway- 
mail pay and second-class postage. That committee, of which I am a member, has 
held a number of hearings, and in the testimony before the committee, under oath, a 
number of railroad representatives have stated that they receive less pay for carrying 
the mail than they receive for passenger service or express service. The committee 
has not yet concluded its investigations or formed its conclusions. I am satisfied, 
however, that the problem can be solved, and that the facts can be demonstrated clearly 
to the satisfaction of every Member of Congress and to the edification and education of 
the American people on those points. 



RAILWAY MAIL PAY. 785 

Mr. Ashurst. Mr. President, do I understand the Senator to say that some gentle- 
men appearing before the commission testified that they receive no larger sum of money 
for carrying the mails than they receive for carrying express matter? 

Mr. Bourne. That they received less. 

Mr. Ashurst. For carrying the mail? 

Mr. Bourne. For carrying the mail than they received for passenger service or ex- 
press service, and, as I have said, they made mat statement under oath. That is their 
testimony. 

I will say, for the information of the Senator from Arizona, that I believe the problem 
will be solved and the facts will be clearly demonstrated. My own opinion is that the 
public are greatly mistaken in their judgment, based on the report of Postmaster Gen- 
eral Vilas, in 1887, and on what is known as Document 105, in which the Postmaster 
General, in his suggestion of the plan of the department of the substitution of space for 
weight as the measure of the service rendered, leaves the reader to infer that we are 
overpaying the railroads $9,000,000. 

Mr. Ashurst. Mr. President, I am glad I asked the question, because the Senator 
has courteously and very clearly stated his opinion. In asking the question I am not 
in any manner criticizing the committee nor the honorable Senator from Oregon, whose 
services to the public, in my judgment, are probably not appreciated as much as they 
should be. I am glad to have him give me this explanation, but if some gentlemen 
have testified before his committee or before any committee that the railroads do not 
receive more for carrying the mails than they do for carrying express matter, I am 
shocked. I will not characterize such testimony further, but I believe it is common 
knowledge 

Mr. Bourne. Common opinion, I think. 

Mr. Ashurst. Common opinion — I beg the Senator's pardon — common opinion 
based on fact — that the railroad companies do receive much more money for carrying 
the mails than they do for carrying express matter. 

The foregoing statement prompted a response in the form of a 
memorandum, dated June 18, 1913, prepared by Mr. V. J. Bradley, 
general supervisor of mail traffic, Pennsylvania Railroad Co., and 
submitted to the joint committee by Mr. Ralph Peters, chairman 
committee on railway-mail pay, which memorandum reads as 
follows : 

Comments on the Speech or United States Senator Ashurst, op Arizona, in 
the Debate in the United States Senate on the Post Office Appropriation 
Bill, February 26, 1913. — (Congressional Record, pp. 4187^188.) 

Senator Ashurst quoted comparative figures prepared by Prof. Henry C. Adams 
and submitted to the Wolcott Commission, in his report of February 1, 1900 (pt. 2, 
p. 237). These purport to show the relative earnings from freight, express, and mail 
traffic between New York and Buffalo, New York and Chicago, and New York and 
San Francisco per 100 pounds or per ton. The rates given, for example, from New 
York to Chicago per ton were — freight, $15; express, $25; mail, $71.39. 

The association of these figures in close comparison invariably suggests the thought 
that if the rates were fair the respective amounts should be substantially equaled. 
Evidently this was the thought entertained by Senator Ashurst; yet the comparison 
is like assuming a substantial equality between an elephant, a horse, and a dog because 
they are all quadrupeds. 

If one seeks a dissimilarity in rates for an apparently similar service, he could obtain 
an illustration in the passenger traffic alone. A passenger traveling on immigrant 
rates would pay for the trip from New York to Chicago $15; another passenger travel- 
ing from New York to Chicago on a 20-hour limited train would pay (including $5 
Pullman car fare) $31; yet both of these passengers would obtain transportation for 
the same number of miles, although the rate for one of them is over 100 per cent greater 
than for the other. There is a difference, however, in the speed of the journey and 
in the accommodations furnished en route. 

Of course, a comparison can be made between freight, express, and mail traffic 
rates: but the process requires that so many allowances and modifications be made 
for dissimilarities that develop requiring personal estimates and judgment as to the 
value of these modifications that the result could not be considered mathematically 
accurate. 

In the illustration given by Prof. Adams it is first necessary to point out that the 
figures quoted by him for express earnings for the railroad company are not correct. 



786 BAILWAY MAIL PAY. 

The hearings (vol. 2, pp. 516 and 527) show this to be a fact. He calculated the 
railway earnings from express traffic by taking 50 per cent of the American Express 
Co.'s rate on packages each weighing 100 pounds. He thus ignored all the small 
packages less than 100 pounds in weight, on which the proportion of earnings is much 
greater. He made his calculation regardless of the fact that the average weight of 
express packages, including the heaviest as well as the lightest, was testified to as 
being 30 pounds (p. 518). He gives the railway earnings from 100 pounds of express 
traffic New York to Chicago as $1.25; but the actual earnings, as testified to under 
oath (p. 516), was $2.59. 

Therefore, if the comparison is made, the figures to be used at that time were New 
York to Chicago per ton — freight, $15; express, $51.80; mail, $71.39. It would be 
interesting to compare similar earnings of to-day, but it is learned that the American 
Express 'Co. has no data. The freight earning is the same, $15. The earning from 
United States mail has been reduced to $56.91 per ton instead of $71.39. 

Each of these shipments, whether by freight, by express, or by mail, get the same 
length of haul, but the question at once presents itself (as in the illustration just given 
regarding passenger rates) whether greater speed, superior accommodations, and extra 
services do not fully account for the difference in the rates. 

The freight service easily separates itself from the comparison because it is a carload 
traffic at a slow speed, only about one-third or one-fourth as fast as the passenger- train 
schedules upon which the mail and express services are performed. Being moved 
almost at the convenience of the railroads, it can be assembled into economical car- 
loads and trainloads, and can be transported at a rate that is very low either per ton 
or per 100 pounds. 

The comparison is thus reduced to the express and the mail traffic, both of which 
are carried on passenger-train schedules, but with the difference that the railroad 
company performs a great many services for the United States mail that the express 
company performs for itself, and the railroad company assumes a much greater respon- 
sibility for the mail than it does for the express traffic. These differences are quite 
fully set forth in the testimony before the joint congressional committee, March 28, 
1913, pages 437 and 438. It is difficult to ascribe a definite cash value for all of these 
enumerated differences. However, the greater frequency of mail dispatches, coupled 
with the light quality of the mail traffic, causes a much smaller loading per car. It 
is estimated that the mail load per car is about 3 tons, whereas in the express service 
it is 6 or 7 tons per car. This fact, together with the high character of the postal-car 
equipment requiring greater cost of construction and maintenance, would account 
for a considerable difference in the rates. Further debits against the mail traffic 
would have to be made for other differences, such as the free transportation of large 
numbers of postal officers and employees, the expense of loading and unloading trains, 
and the station and terminal facilities for which the express companies make special 
payments while the United States mail does not; performance of side and terminal 
messenger service to and from post offices for which there is no similar service per- 
formed by the railroad company for the express company; the construction and main- 
tenance of mail cranes and receivers; the advance placing of postal cars; the responsi- 
bility for loss and damage, etc. (the express company assumes entire responsibility 
for its own traffic and its own employees). These are all subjects for consideration 
as justifying a much higher rate of pay to the railroad company from the mail service 
than from the express service. 

V. J. Bradley. 



Desirous of securing intelligent and impartial consideration of the 
conclusions reached in the foregoing statement and memorandum, 
the chairman of the joint committee, on June 27, 1913, submitted 
same to Dr. M. O. Lorenz, associate statistician of the Interstate Com- 
merce Commission, and in response he submitted a memorandum, 
dated July 8, reading as follows : 



RAILWAY MAIL PAY. 787 

Memorandum Regarding a Comparison or Rates per Ton for Mail, Express, 
and Freight Used by Senator Ashurst (Congressional Record, Feb. 26, 
1913, P. 4187). 

In a report on railway-mail pay by Mr. H. C. Adams submitted to the Wolcott 
Commission (Rept., Vol. II, p. 237, 1900) appears a table containing the figures used 
by Senator Ashurst. Mr. Adams introduced the table with the following observations : 

"As corroborative evidence of the impression that railway-mail compensation 
upon dense routes constitutes overpayment to the railways, the following statement 
is introduced, showing the rates received by railways per ton and per hundredweight 
for the transportation of mail, of first-class freight, and of express over certain selected 
lines. The theory of selection was to include in this statement all routes which 
received 7 to 8 cents, 8 to 9 cents, and 9 to 10 cents per ton per mile for carrying the 
mail. These routes take the cities of New York, Chicago, Cincinnati, and Atlanta 
as centers, and proceed from these centers to selected points. " 

After giving the table, Mr. Adams continues as follows: "In view of what has gone 
before, comment is unnecessary upon the above statement. It bears its own lesson. 
A word of explanation, however, appears necessary. The rates selected for compari- 
son are the 100 pounds commodity rates for freight and express, the commodities 
selected for the freight rates being those included in first-class freight. This is believed 
to be a fairer basis of comparison [compensation] than average rates, which for freight 
traffic would result in depressing the rates and for express traffic would result in rais- 
ing the rates as compared with those expressed in the table. It should also be stated 
that the rate per 100 pounds for express matter stated in the table is one-half the charge 
which express companies make to the shipper, this being accepted as the portion of 
the express charges which comes to the railways as compensation for transporting 
express matter. The reason for accepting one-half of the amount charged the public 
as the railway earning from express matter is that this is in general conformity with 
the contracts upon which this business is carried on. Strictly speaking, the rates 
on first-class freight should also have been reduced to make allowance for the fact 
that these rates cover many expenses from which the railways are excused in cases 
of both mail traffic and express traffic, but so difficult is it to determine the allowance 
that should be made on this account that it seems better to insert the schedule rate. " 

It will be seen from these comments that, while Mr. Adams is treating here especially 
of the dense routes, the impression produced by the remarks of Senator Ashurst is the 
impression which Mr. Adams intended that his figures should produce. In short, the 
fact that the Government paid more per ton for the transportation of the mails between 
certain cities than the first-class freight rate between those cities was regarded as an 
indication that the Government paid too much. Mr. Adams's report was prepared 
more than a decade ago; but if we should substitute the figures of to-day for those 
which he used the impression would be essentially the same. Take the rates from 
New York City to Buffalo: The first-class freight rate to-day is 39 cents per 100 pounds, 
which is $7.80 per ton, which is exactly the same as given by Senator Ashurst. The 
express rate is $1.25 per 100 pounds, or $25 per ton. One-half of this is $12.50, which, 
again, is the same as given in the statement of Senator Ashurst. The mail route 
from New York to Buffalo is reported as having an average daily weight of 389,441 
pounds. (Doc. 105, p. 190; this is the weighing of 1909; the weighing of 1913 has not 
yet been tabulated.) This weight is equivalent to 71,073 tons for 365 days. The 
annual compensation was $1,904,480, or $26.80 per ton. The corresponding figure 
from the Adams report is $31.65. 

The criticism has been made by Mr. V. J. Bradley, general supervisor of mail 
traffic, Pennsylvania Railroad Co., that the express rate given is not representative, 
because the smaller packages take a higher rate. It is true that the average weight 
per package of express matter is less than 100 pounds. The average given in the 
Interstate Commerce Commission's first annual report of the Statistics of Express 
Companies, covering a period of three months, was 32.80 pounds per piece. The 
rate for a 30-pound package between New York and Buffalo is 70 cents, which is 
equivalent to $46.66§ per ton. One-half of this is $23.33, which is nearer to, but still 
less than, the mail rate. 

It is undoubtedly true that the railways get more from the Government for the 
transportation of mails per ton-mile than they do from shippers of freight per ton-mile, 
and probably more than they get from express companies per ton-mile. But whether 
this indicates overpayment for carrying the mails depends on whether the ton-mile 
unit is the proper basis of comparison between these services. That there are impor- 
tant differences between the carrying of the mails and the carrying of even first-class 
freight is obvious. If the experiment should be tried of carrying all mail by first-class 
freight, we probably should be impressed with the fact that these differences are real. 
How can we measure these differences in terms of money? To my mind the only 



788 



RAILWAY MAIL PAY. 



convincing way is to make a study of the operating expenses attributable to each 
service. The difficulties of making an accurate estimate of such expenses need not 
be discussed here, as they have been set forth fully in the hearings recently before the 
committee on railway-mail pay. 

It will be sufficient to say here that it can be demonstrated beyond question that 
it costs considerably more to haul a mail car a mile than it does to haul a freight car a 
mile, and the number of tons of mail in a mail car on an average will be less than the 
number of tons of less-than-carload freight in a car even on the denser routes. It 
follows that the cost of hauling a ton of freight a mile, and probably even a ton of 
first-class freight, will be considerably less than the cost of hauling a ton of mail for a 
given distance. For these reasons it seems to me misleading to present a table giving 
freight rates and mail rates per ton-mile, or per ton for a given distance, with the idea 
of showing that the latter are higher for a similar service. 

With regard to the comparison of mail and express rates: I have no special data 
regarding the dense routes in question. Considerable information regarding the 
relative earnings from the mail and other passenger train services will be found in 
the record of the recent hearings before the committee on railway mail pay on the 
following pages: No. 2, pages 324, 325, 327-328, 333, 335, 362, 427, 437; No. 3, page 
526. This testimony seems to indicate that the earnings per car-foot mile are less in 
the mail service than for the other passenger train services taken together, it being 
difficult to segregate the express. This segregation, however, is made by two systems, 
the Pennsylvania lines and the Santa Fe, the former showing a greater earning from 
express on this basis, and the latter a smaller earning than from the mail. The 
comparisons are not made per ton-mile, and to my mind this would have less signifi- 
cance, because any difference existing between the mail and express service in the 
net load per car would affect not only the earnings per ton-mile but also the expenses 
per ton-mile. 

In general, it may not be inopportune to remark that the quotations made by 
Senator Ashurst from the report of Mr. Adams suggest the importance of clearly dis- 
tinguishing between two problems: (1) Is the total appropriation made for railway 
mail transportation too large or too small; and (2) Is the total amount fairly distrib- 
uted among the various classes of railway systems? In this connection the following 
table may be of interest. It shows the earnings from the mails per car-mile for the 
various routes grouped according to density of mail traffic. 

Railway mail pay and mail-car mileage. 



Average daily weight. 



211 pounds or less 

212 to 519 pounds 

520 to 1,019 pounds 

1,020 to 1,519 pounds... 
1,520 to 2,059 pounds... 
2,060 to 3,559 pounds... 
3,560 to 5,079 pounds... 
5,080 to 48,103 pounds.. 
48,104 pounds and over 

All reporting 



Length of 
routes report- 
ing. 



Miles. 
20,739 
20,810 
27,377 
17,499 

8,357 
18,486 
12,671 
59,084 

9,564 



194,587 



Total pay per 
month. 



$70,936 

92,419 

168,047 

138,004 

80,206 

200,191 

168,801 

1,522,783 

1,422,550 



3,863,939 



Car miles in 
November, 1909. 



348,319 
726,664 
672,315 
368,525 
984,463 
870,197 
8,271,706 
6,550,379 



19,062,193 



Total mail pay 
per car mile. 



Cents. 



26.3 
26.5 
27.7 
20.5 
21.8 
20.3 
19.4 
18.4 
21.7 



20.3 



This table was prepared from data in Document No. 105, the animal pay being 
divided by 12 to get the pay for one month, and the car-foot miles being divided by 
60 to get the car miles. With these results it is of interest to compare the average 
earnings per passenger-train car mile as given by the secretary of the Interstate Com- 
merce Commission (hearings, No. 2, p. 362): 

Cents. 

For small roads 27. 45 

Class 2 roads 28.59 

For large roads 25. 35 

All roads 25. 43 

No exact comparison can be made between these two sets of figures because the table 
is arranged by routes, whereas the earnings last quoted are by roads, but the impres- 
sion which they give is decidedly different from that derived from the table under 
discussion in the report of Mr. Adams. 

M. O. Lorenz. 



NEW YORK, NEW HAVEN & HARTFORD RAILROAD CO. 

Would this Company be the Gainer if Relieved from the 
Carriage of United States Mail? 

Referring to testimony of Mr. John Hall Bowman, special account- 
ant of the above-named railroad (pp. 277 to 298, inclusive, hearings 
Feb. 17, 1913, vol. 1) and to brief discussed therein entitled "A 
brief memorandum of the results of an investigation made by Price, 
Waterhouse & Co., chartered accountants, which are described fully 
in the report to C. S. Mellen, president, under date of October 31, 
1912/' the following memorandum by t>r. M. O. Lorenz, associate 
statistician, Interstate Commerce Commission, is submitted to 
remove what he regards as an erroneous impression of the testimony 
and report referred to : 

Washington, May 2, 1913. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 

Dear Senator Bourne: It may be of interest to you to have a statement of just 
what Mr. Bowman's original report shows. While it is undoubtedly true that the 
present law works out unjustly in the case of the New Haven, nevertheless Mr. 
Bowman's figures hardly warrant the impression which Mr. Lloyd and yourself 
obtained from his testimony, namely, that this road would have been the gainer if it 
had not carried the mails in recent years' at all. We must recognize a distinction 
between what have been called "out-of-pocket" costs and total operating expenses, 
both of these being distinguished from "total operating expenses, taxes, and fair 
return on investment." The carrying of the mails occasions out-of-pocket costs for 
the maintenance of mail cars, certain extra wages, lubricants, fuel, etc. If the mail 
revenue did not cover such expenses this traffic would be a drain on surplus, but 
there are other operating expenses which are no more directly connected with the 
mail traffic than are interest charges. Thus, the rotting of the ties would go on whether 
there were mail cars in the train or not; bridges would have to be painted, washouts 
repaired, and so forth, even if the mail traffic were discontinued. Concerning this 
the Interstate Commerce Commission has recently said : 

"However, it should be borne in mind that the costs as here figured include prac- 
tically all of the costs except return upon capital account. It has been roughly 
estimated that of the total costs only about 50 per cent are what may be termed 
out-of-pocket costs— that is, the cost of fuel, wages of crews, and repairs of locomo- 
tives and cars. The other 50 per cent is made up of salaries of general officers, way 
and structure account, etc., to which the carrier would be subject, whether or not 
the particular commodity moves. In other words, when the carrier claims that 
the cost of moving the coal is 4 mills the actual outlay on the part of the carrier for 
the particular business is not much in excess of 2 mills. 

"Anything above the out-of-pocket cost of handling is a contribution to general 
expenses, and to that extent tends to relieve rather than burden other traffic." 
(Opinion No. 2141, Louisville & Nashville Railroad Coal and Coke Rates, decided 
January 7, 1913.) 

While I think there is danger of carrying this out-of-pocket cost theory too far, 
it should be kept in mind in considering the, figures submitted concerning the 'New 
Haven. The danger of carrying the theory too far lies in this, that even an expense 
apparently so remotely connected with the amount of traffic as the replacing of ties 
or painting of bridges may in the long run grow with the traffic. Thus, the growth 
in the number of cars hauled may eventually be so great as to require new terminal 
facilities and perhaps a second or third track. Then there will be additional ties to re- 
place and additional or larger bridges to maintain — all on account of the increased 
number of cars handled. In short, the proportion of costs which may be considered 

789 



790 KAIL WAY MAIL PAY. 

"out of pocket" depends on the length of time under consideration. From the 
following table, giving Mr. Bowman's figures as he prepared them, it will be seen 
that the mail revenue was considerably more than half the operating expenses 
(including taxes) : 

Costs assignable to mail traffic, 1911. 

Operating expenses and taxes $944, 217 

"Fair return" on investment 531, 002 

1, 475, 219 
Less "secondary revenues" regarded as a credit to operating expenses.. 99,430 



Amount "legitimately " expected of mail traffic equals 1, 375, 789 

This $1,375,789 he then compares with the actual revenue from mails in that year 
of $646,846. It may be noted incidentally that this actual revenue amounts to about 
3 mills per car foot-mile, or about 18 cents per mail car hauled a mile. The adoption 
of the space basis with a rate per car mile or per car foot-mile based on the average 
passenger-car mile earnings in the United States would thus radically increase the 
pay to this road, even though it would still fall short of the pay they would regard 
as " legitimate." 

Yours very truly, M. 0. Lorenz. 



PENNSYLVANIA RAILROAD SYSTEM— UNITED STATES MAIL 
SERVICE, NOVEMBER, 1909. (REDUCED TO ONE DAY'S WORK 
ON 1 MILE OF ROUTE.) 

The following statement, prepared by Mr. V. J. Bradley, general 
supervisor of mail traffic, the Pennsylvania Railroad System, is 
submitted explanatory of the above heading: 



Per annum. 


Per month. i 


Per day. 


9, 726. 42 


9, 726. 42 


9, 726. 42 


9,834.62 
79, 613, 096 


9,834-62 
6, 643, 540 


9,834.62 
218,118 


1, 854, 620, 480 


152,434,570 


5,081,152 


1,536,396,690 


126,279,179 


4,209,306 


$5,868,870.84 


$488, 709. 67 


$16,290.32 


$5,864,516.04 


$489,072.57 


$16,302.42 



Per mile 
of route 
per day. 



Length of routes, miles, railroad company's figures. . 

Length of routes, miles, Post Office Department's 
figures 

Number of tons of mail carried 1 mile 

Number of mail-car foot-miles, railroad company's 
figures 

Number of mail-car foot-miles, Post Office Depart- 
ment's figures 

Mail pay (including P. P. O. car pay), railroad com- 
pany's figures 

Mail pay (including R. P. O. car pay), Post Office 
Department's figures 



22.4 22.2 

522 

428 

$1.67 

$1.65 



i Month of November, 1909. 

The last column shows (on the basis of 60-foot cars) that the company moved 22 tons of mail 1 mile for 
$1.67 and used 8.7 cars in the operation. (The Post Office Department would only admit needing 7 oars 
for the operation.) 



791 



RAILWAY MAIL PAY. 

[Literature submitted by Mr. J. Kruttschnitt, chairman executive committee, Southern Pacific Co.] 

The following letter from Mr. Kruttschnitt to the chairman of the 
joint committee on the foregoing subject, together with the liter- 
ature indicated therein, is by direction of the chairman submitted 
in the order stated : 1 

New York, May 6, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail 

Matter and Compensation for Transportation of Mail, 

United States Senate, Washington, D. C. 
My Dear Senator: Referring to our recent conversation, I inclose the following 
literature on railway mail pay, to which I had reference when speaking to you: 

1. Copy of a pamphlet which I used on March 1, 1909, in dealing with the question 
of inadequacy of railway mail compensation. On pages 28 and 31 you will find a ref- 
erence to pay for railway postal cars and on the lower part of page 30 the statement to 
which I referred, that in one instance the pay was equal to the fare of a single passenger. 

2. 'A small pamphlet entitled "Railway Mail Pay Primer." which was given wide 
distribution throughout the country, being written in a form that we thought would 
be most readily understood by the average individual not familiar with the details 
of railway mail transportation. 

3. Circular No. 6, of February 10, 1910, issued by the committee on railway mail 
pay, in which comparisons are made between mail and express rates, statements also 
being given of the inadequate compensation for postal cars, this circular being accom- 
panied by three graphic charts, Exhibit C being of especial interest as showing the 
payment for postal cars compared with revenue from empty passenger cars, and 
loaded and empty freight cars. 

Should you desire to refer to my testimony before the commission to investigate 
the postal service in 1898 and 1899, you will find it in the report of the proceedings 
of that commission, part 1, page 75, giving evidence for the Southern Pacific Co., 
there being contained on pages 132 and 133 a comparison that I think you will 
find interesting between services performed for mail arjd express. In part 2 of the 
proceedings, on page 48, you will find my testimony before the commission, showing 
results for all railroads of the United States. 

The comparison of mail and express referred to is similar to that recently presented 
by Mr. Bradley, on pages 437 and 438, at the hearing of March 28, 1913. Perhaps 
the greatest element of difference of cost between mail and express is one that is not 
usually considered; this is the difference in ratio of dead to paying weight when mail 
is hauled in postal cars as compared with express in express cars. Our standard 
60-foot mail car weighs 58 tons, yet on account of the presence of the post-office fix- 
tures and the clerks an average of only 2J tons of mail is hauled and paid for, or a 
ratio of 23 tons of dead weight to 1 ton of paying weight. Our standard 60-foot car 
built of steel in which baggage or express is handled weighs only 46 tons, the average 
load of express per car being 5 tons, or only a little over 9 tons of dead weight per 
ton of paying weight. As the hauling capacity of the locomotive is limited by total 
gross weight, you can appreciate that the cost of transporting mail in postal cars, as 
compared with express, is excessive. 

Looking over the printed proceedings before the present commission, I think 
almost every possible argument has been presented in support of the claim that present 
compensation to the railroads is wholly inadequate to cover a proper assignment of 
expenses and fixed charges and that mail revenues per unit are below those received 
from other classes of passenger- train service, although all classes of passenger traffic 
fail to bear their fair burden of the fixed charges. As the railroads must look to the 

i Since this literature more particularly applies to conditions existing in the years 1909 and 1910, it is 
suggested that same be read in connection with the testimony of Mr. W. A. Worthington, assistant direc- 
tor of maintenance and operation, Southern Pacific Co. (vol. 2, p. 325 et seq., of the hearings), who makes 
in part a similar presentation brought up to date and applicable to present conditions. 

792 



RAILWAY MAIL PAY. 793 

public for the revenue to pay expenses, naturally if any class of traffic does not pay 
its share the burden must be borne by other classes, and the failure of the Govern- 
ment to adequately compensate the roads for mail transportation means a shifting of 
its burden to the shoulders of a part of the public if the railways are to receive from 
other traffic as a whole sufficient to properly reimburse them. 

Keferring especially to the compensation for railway post-office cars, it appears from 
the testimony taken before the commission that this has been admitted by the several 
witnesses, and I understand a subcommittee of the mail pay committee, composed of 
Messrs. Bradley, Mack, and Worthington, is preparing for you a compilation of the 
cost of ownership of postal cars obtained from the principal railroads of the country. 
This compilation will indicate that the cost of annual maintenance per car is in excess 
of $2,500, without allowing for return on investment, a modern postal car costing at 
least $10,000. When the subject of pay for railway postal cars comes up it is common 
to assume that the rate paid is entirely a charge for rental of the car, whereas the 
greater part of the extra expense to the railroad in handling mail in R. P. O. cars as 
compared with ordinary cars is the cost of hauling the extra dead weight represented 
by the post-office fixtures and the construction requirements of the Post Office De- 
partment and the losses imposed on the railroads through the reduced carrying capacity 
of the cars through the presence of the post-office facilities and space for clerks. 

As shown by Mr. Worthington in his testimony, the difference in dead weight 
between our standard mail and baggage cars is as 116,000 pounds to 92,000 pounds, 
or an extra dead weight hauled per car-mile of 12 tons. Coupled with this there is 
a reduction in the carrying capacity from the baggage car which will hold 25 or 30 
tons to the mail car in which not much more than 3 tons can be placed, due to the 
presence of the post-office racks and space for clerks distributing en route. The 
compensation for railway post office cars does not begin to reimburse the railroads 
for the reduction in carrying capacity per ton of dead weight, leaving, if we consider 
this feature, nothing whatever applicable as rental on account of the ownership and 
maintenance cost of the cars themselves. 

Referring to the question of personal casualty liabilities incurred by the railways 
in transporting free the employees of the Railway Mail Service, I inclose copy of a 
memorandum from our general counsel of a case decided by the Supreme Court of 
the United States where a mail clerk named Schuyler was killed while riding in a 
mail car on the pass used for private business. 

As before stated, the commission has been furnished with a comparison in parallel 
columns of relative requirements upon the railroads in performing postal and express 
service. I give you below a similar comparison of some differences which occur to 
me between the obligations imposed on the railroads in handling mail traffic and in 
handling passenger traffic : 

MAIL TRAFFIC. PASSENGER TRAFFIC. 

1. Cars must be built according to Post No such requirements, and railroads 
Office Department specifications, includ- can utilize entire floor space of coaches 
ing post-office features, which diminish for seats with necessary aisles. There is 
the paying carrying capacity and are sub- also nothing to limit loading of baggage 
ject to alteration on demand of the Post car to space capacity. 

Office Department. 

2. As a consequence, loaded postal car On Southern Pacific average coach load 
averages about 2\ tons and is rarely above is 22 passengers, or 40 per cent of carrying 
3 tons, whilst carrying capacity without capacity, sleeping cars being likewise 
the postal facilities, clerks, etc., would loaded to 40 per cent capacity. For all 
be 25 to 30 tons, showing only 10 per cent railroads of the United States average load 
of capacity utilized. in coaches and sleepers is 16 passengers, 

or one-third cf carrying capacity. 

3. For all classes of mail service rail- Average revenue per car-foot mile from 
road earnings per car-foot mile are 3.37 passengers 4.42 mills (report Jan. 6, 1911, 
mills (page 324, proceedings before your of committee on railway-mail pay), 
commission March 27) average revenue Therefore, for 1.974 cents, average passen- 
per passenger carried 1 mile in 1911 (I. ger fare per mile, the railroads furnish 
C. C. statistics) was 1.974 cents, the rail- 4.46 feet of space, which is divided as 
roads thus furnishing 5.86 feet of space in follows: 

handling mails for the equivalent pay for Space in passenger coach, 2.63 feet; 

one passenger carried 1 mile. space in baggage car, 0.67 feet; space in 

sleeping, parlor, and observation cars, 
most of this being furnished and main- 
tained by sleeping car company without 
cost to the railroads, 1.16 feet. 



794 



EAILWAY MAIL PAY. 



4. Entire space on which revenue per 
car-foot mile is based is furnished and 
maintained by railroad company. 



5. Our standard 60-foot mail car costs 
more than $10,000 to construct and is very 
expensive to maintain. The weight of 
standard 60-foot mail car is generally in 
excess of 116,000 pounds. 



6. The railroads incur extra expense for 
extra switching of mail cars for loading, 
unloading, and advance distribution, in- 
cluding placing and lighting at station a 
considerable time before departure of 
trains. 

7. Railroads are held liable for personal 
casualties to railway-mail employees car- 
ried free, and must also transport agents 
and inspectors of Post Office Department 
without charge. 

8. Mail must be carried on fastest pas- 
senger trains, mail trains making a higher 
speed than the average for passenger traf- 
fic. Railroads subject to fine for delays. 

9. Railroads perform special side and 
terminal deliveries for mails not incident 
to ordinary transportation, must erect and 
maintain mail cranes, etc. 

10. Railroads transport considerable 
tonnage of mail without charge due to 
natural growth between quadrennial 
weighings. 

11. Railroads pay for loading and un- 
loading cars and must provide room for 
mail at stations. 

Yours, very truly, 



As above shown, a large part of the 
space on which passenger earnings per car- 
foot mile are based is furnished and main- 
tained by the sleeping-car company with- 
out cost to railroad companies. Carrying 
capacity of sleeping cars is less than one- 
half that of coaches and at least a partial 
deduction of such space i s only fair when 
comparing returns per car-foot mile with 
mail, as the railroads are relieved of 
ownership and maintenance expenses, in- 
cluding depreciation and taxes, on these 
cars, and for the further reason that the 
passenger has to pay an additional charge 
to the sleeping-car company for the privi- 
lege of occupying these cars. For passen- 
gers in coaches only, the revenue per car- 
foot mile is much in excess of that for mail 
service. 

Our 60-foot steel baggage car costs only 
70 per cent as much as mail car, and 
weighs only about 90,000 pounds, main- 
tenance being much less than mail car. 
Passenger coaches cost about 10 per cent 
more than postal cars, whilst sleeping cars 
cost twice as much. The latter cars, how- 
ever, are furnished without cost to the 
railroads and the cost to the railroads for 
the average passenger car, including the 
sleepers, which cost them nothing, would 
be 20 per cent less than the cost of the 60- 
foot mail car. Coaches weigh somewhat 
less than mail cars, but sleepers weigh 
more, the average weight of all cars in 
passenger service being about the same as 
the average for mail service. 

No such expense for passenger service, 
as trains are switched in stations only a 
short time before departure. 



Similar liability is incurred for passen- 
gers, with the important distinction that 
the fares paid reimburse the railroads for 
liability assumed. 

No such liability, and average speed in 
passenger service slower than mail trains. 



No such liability. Railroads incur ex- 
pense for advertising and soliciting, not 
found with mails, but these items are only 
1 per cent of the operating revenues. 

Railroads are paid for all passengers 
transported. 



Passengers load and unload themselves, 
although accommodations must be pro- 
vided in stations. 

J. Kruttschnitt. 



RAILWAY MAIL PAY. 795 

An Argument on Railway Mail Pay. 

[By Julius Kruttsclinitt, director of maintenance and operation of the Union Pacific System and 

Southern Pacific Co.] 

The question of compensation to the railroads of the United States for carrying the 
mails has been under review before Congress at different times during the past 10 
years. The subject was exhaustively investigated by a joint commission of the Senate 
and House of Representatives in 1898 and 1899, which reached the following conclu- 
sion after full consideration and taking of a mass of testimony on all sides of the 
question: 

"Upon a careful consideration of all the evidence and the statements and argu- 
ments submitted, and in view of all the services rendered by the railroads, we are of 
the opinion that the prices now paid to the railroad companies for the transportation 
of the mails are not excessive, and recommend that no reduction thereof be made at 
this time." (See H. Rept. 2284, 56th Cong., 2d seas.). 

This commission also concluded as to the pay for railway post-office cars: 

"Taking in view all these facts as disclosed by the testimony filed herewith, we are 
of the opinion that the prices paid as compensation for the postal-car service are not 
excessive, and recommend that no reduction be made therein so long as the methods, 
conditions, and requirements of the postal service continue the same as at present." 

Since the above recommendations were made the operating costs on railroads, and, 
consequently, the cost of handling the mail, have been largely increased, as hereafter 
shown, through higher prices for both material and labor, so that if the railways were 
not overpaid 10 years ago, the present rates, being lower than those paid at that time, 
would be too low and should really be increased to give the railroads a reasonable 
return. Far from doing this, legislation enacted in the past few years has had the effect 
of cutting down the mail pay of the railroads, whilst the special requirements as to 
service and equipment have been made more severe and exacting. 

Recent acts of Congress or orders of the Post Office Department, which have the 
force of law, that have caused reduction of railroad revenues, are the following: 

1. Act of Congress of March 2, 1907, reduced pay on all routes moving in excess of 
5,0Q0 pounds per day. This reduced the pay for handling mails $1,740,494.63, or 3^ per 
cent of the total earnings. The same act reduced the rental rates for railway postal cars 
$935,974.09 per annum, or 16 per cent. The total reduction in pay to the railroads 
under this act was $2,676,468.72, or 6 per cent of the total compensation for both classes 
of service. 

2. Act of Congress of June 26, 1906, effective July 1, 1906, withdrew from the mails 
empty mail bags and certain supplies, to be thereafter shipped as freight or express. 
It may be conservatively estimated that the annual loss in mail revenue to the rail- 
roads by withdrawing these shipments from the mails is at least $1,000,000, with 
practically no reduction in space furnished because of this change. 

3. Order of Postmaster General of June 7, 1907, changing with each mail weighing 
thereafter the method of computing average weights on which pay is based from that 
always previously used and theretofore regarded as the proper interpretation of the 
law. The effect of this on the mail weighings of 1907 and 1908 was to reduce railway 
mail pay in two sections of the country $2,222,108.92, or 9£ per cent, or at the rate of 
$4,500,000 per annum for all roads of the country. 

4. Orders of Postmaster General reducing railway postal car pay by allowing ' ' shorter 
car" pay on certain lines than heretofore authorized and changing certain full lines 
to half lines, that is, reducing pay for return movement; thus causing an annual loss 
to the railroads of $345,287.06. (Second Assistant Postmaster General's Annual Report, 
1908, p. 13.) 

The effect of all of these reductions on the mail revenue of the railroads aggregate 
$8,500,000 per annum, or 17 per cent of the total pay received by them in the year 
ending June 30, 1908, for handling the mail and furnishing railway postal cars. 

These reductions were made without justification and for the purpose of reducing 
railroad revenues, and, incidentally, the expenses of the Post Office Department at a 
time when the net earnings of the carriers seemed large to the public mind, although 
under these favorable conditions the returns to the shareholders approximated but 4 
per cent, whilst farmers were receiving 10 per -cent, manufacturers 15 per cent, and 
national banks 18 to 20 per cent. 

It is true that there has been a large increase in the gross revenue of the railroads in 
the last 10 years, but this has accrued from traffic other than carriage of the mails and 
has been accompanied by great increase in operating expenses. In fact, were it not 
for the economies of the carriers, effected by the use of more powerful locomotives and 
larger freight cars, the increase in operating expenses would, without doubt, have 
fully neutralized the growth in revenue. In the months preceding the panic of 



796 



KAILWAY MAIL PAY. 



October, 1907, the railroads were quite generally showing decreases in net earnings 
in face of the largest gross earnings in their history. It was costing them much more 
than a dollar to handle every dollar increase in gross earnings. 

Since the hasty enactment of ill-considered legislation reducing mail pay the reve- 
nues of the roads have been seriously affected by a change in business conditions which 
has reduced traffic without reducing prices of materials and labor. At the same time 
legislation has increased labor costs bv reducing hours of service. 

In 1898 rates for transporting the mails were too low to cover the cost of service; they 
are much too low now, and the losses on the mail service as a whole — there are some 
routes that pay — are borne by freight traffic entirely. 

RECEIPTS FROM MAIL AND OTHER RAILROAD TRAFFIC 

The latest statistics of operations of all railroads of the United States are for the year 
ending June 30, 1907, issued by the Interstate Commerce Commission July 9, 1908. 
From them we compile the following exhibit comparing results of 1907 with 1898, 
when a commission of Congress, after complete investigation of the subject, recom- 
mended that mail rates be not reduced. 

All railroads of United States. 



Year ending June 30 — 



1907 



Per cent 
increase. 



Per cent 
decrease. 



Earnings from passengers 

Earnings from express 

Earnings from mails 

Earnings from freight 

Operating expenses 

Passenger-train mileage 

Freight-train mileage 

Earnings per passenger-train mile (cents): 

From passengers 

From express 

From mails , 

Total 

Number passengers carried per train 

Tons of mail carried per train 

Earnings per freight-train mile (cents): 

Earned from freight 

Tons of freight carried per train 

Operating expenses per total train-mile (cents) 

Net earnings per train-mile (cents): 

Passenger trains 

Freight , 

Passenger earnings per passenger mile (cents). . 

Mail earnings per mail ton-mile (cents) , 

Freight earnings per freight ton-mile (cents) 



$564,606,343 

$57,332,931 

$50,378,964 

$1,823,651,998 

$1,748,515,814 

1541,439,176 

1662,106,857 



$266,970,490 
$25,908,075 
$34,608,352 
$876,727,719 
$817,973,276 
341,526,769 
503,766,258 



111 
121 

46 
108 
114 
58 
31 



105.7 
10.7 
9.4 



79.4 
7.7 
10.3 



10 



125. 



97.4 



29 



51 

0.86 



39 
0.80 



274.0 
357.35 
147.0 



173.1 
226.45 
95.6 



2 21.2 
127.0 

2.014 
10.66 

0.759 



1.8 
77.5 

1.973 
12.57 

0.753 



15 



Including mixed trains. 



2 Loss. 



Note. — Bear in mind these figures do not, of course, show effect of cut of $8,500,000 in mail pay effective 
July 1, 1907, or losses in net revenue through depression in business conditions commencing in latter part of 
1907. As an index of the latter, the Commercial and Financial Chronicle of September 5, 1908, showed that 
141 roads, aggregating 168,839 miles, or 70 per cent of all roads in the country, had suffered a loss of $63,484,902, 
or 24.97 per cent, in net earnings in the first half of the calendar year 1908 as compared with same period 
of previous year. 

The foregoing statement clearly shows the difference between the revenue obtained 
from passenger trains as compared with freight trains. The control of the former is 
largely out of the hands of railroad operating officers, as to meet competitive and traffic 
conditions heavier and more luxurious passenger cars must constantly be furnished, 
which, of course, means largely increased expense with very little increase in the 
paying train load. In fact, as to the mails, notwithstanding an increase in tonnage 
carried on the average train, the mail earnings per passenger train-mile were actually 
less in 1907 than in 1908, due largely to the automatic reduction of railway mail pay 
per ton-mile. Considering the freight train-mile, the composition, of which is almost 
entirely within the control of the railroads, which institute methods for reducing cost 



RAILWAY MAIL PAT. 



797 



of transportation, it will be observed that by such methods the railroads have been 
enabled to place 58 per cent more tonnage in a train, bringing them 58 per cent more 
earnings, which can be applied as an offset to the increase of 54 per cent in the cost 
of running a train 1 mile. 
This increase in operating expenses per train-mile last referred to has been brought 



Exhibit A 

All Railroads in United States 

Relative Results from Mail and Freight Traffic. R-ices of Labor and Commodities 
Year leae taken as Unity 




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about largely because of the increased cost of labor and materials, which, as is well 
known, has been general throughout the country. 

Chart marked "Exhibit A" shows, using year 1898 as unity, or 100, the increase in 
cost of railroad operating expenses per train -mile as reported to the Interstate Commerce 
Commission, the rise in prices of labor and commodities from statistics collected by 

49390— 14 58 



798 



KAIL WAY MAIL PAY. 



the United States Department of Labor, Bulletins No. 75 of March, 1908, and No. 77 of 
July, 1908, the average rate per ton of freight handled 1 mile as reported by the 
Interstate Commerce Commission, and the average rate of railway mail pay, including 
pay for postal cars, received by the railroads per ton-mile, computed from Annual 
Reports of the Post Office Department. 



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Note the close parallelism of the curves of earnings, expenses, prices of commodities 
and labor. Note that freight rates in 1907 were slightly higher than in 1898, and in 
the whole period were never more than 4 per cent below or above 1898, and note 
particularly that the rate of mail pay was reduced automatically 15 per cent. 

To further illustrate the difference in compensation to the railroads from freight and 
passenger service, see Exhibit B, showing for each of the years ending June 30, 



RAILWAY MAIL PAY. 799 

1898 to 1907, inclusive, the actual earnings per train-mile received from freight and 
passengers and the actual operating expenses per train-mile. This chart shows that 
whilst in 1898 passenger-train earnings were slightly more than the cost of running a 
train, in 1907 it cost considerably in excess of the earnings received from a passenger 
train to run it, showing that passenger traffic as a whole, including the mails, does not 
pay its fair share of operating expenses, regardless of taxes, interest on bonds, or divi- 
dends, and this it should do, as pointed out by Judge Cooley, the first chairman of the 
Interstate Commerce Commission. 

Comparing results of operations of all railroads of the United States for the year 
ending June 30, 1907, with 1898, when this question was last up, it is shown by reports 
of the Interstate Commerce Commission that gross revenue from operations, as well as 
income from investments, increased $1,380,000,000. This is a very large sum, but 
let us see what becomes of it. Increased wages paid to employees consumed 
$577,000,000, or 42 per cent; purchase of material included in operating expenses, 
$354,000,000, or 26 per cent of the increased income; and these material purchases 
represented largely labor involved in their production. Increases in betterments and 
miscellaneous deductions consumed $77,000,000, or 6 per cent of the increased income. 
Larger payments for interest on funded debt and current liabilities consumed 
$96,000,000, or 7 per cent, and larger taxes 2.5 per cent, leaving $240,000,000, or 16.5 
per cent of the increased income for the owners of the properties, the stockholders. 
In 1898 dividends were less than 2 per cent of the capital stock, and in 1907, even 
with the large increase noted, they were only 4 per cent. Contrast this with the 
manufacturers' returns of 15 per cent, the farmers' of 10 per cent, and the national 
banks' of 18 to 20 per cent on their capitalization. 

Chart, Exhibit D, illustrates the rise in prices of commodities and labor which have 
so largely affected cost of railway operating in the past 10 years. Averages for the 10 
years, 1890 to 1899, inclusive, are considered as unity, or 100, in all cases. The heavy 
line running from 100 in 1890 to 143 in 1907 shows the purchasing power of commodi- 
ties in ton-miles, computed from Department of Labor Bulletin No. 75 of March, 1908. 
The dashed line running from 89 in 1890 to 142 in 1907 shows the purchasing power of 
labor, computed from Department of Labor Bulletin No. 77 of July, 1908. The other 
two lines show the reverse of these ; the broken line running from 100 in 1890 to 70 in 
1907 shows the commodities purchasable with the price of a ton-mile, and the dotted 
line running from 112 in 1890 to 70 in 1907 , the labor purchasable for a ton-mile . These 
curves show very clearly the trend of exchange values during the period in question. 
From 1890 to 1897 changes were not marked, but beginning with 1898, when the mail 
pay was last investigated by the congressional commission, the divergence of the lines 
showing relative purchasing powers of labor and commodities and ton-miles is great. 
The purchasing power of ton-miles, the commodity offered for sale by railroads, fell 
steadily, whilst everything the railroads had to buy rose steadily. 

Reduction in railway mail pay was not justified in 1898; it was far less justified in 
1907. On the contrary, there has been a large fall in mail pay per ton-mile, and condi- 
tions under which mails are transported are becoming more and more onerous. The 
cost of building a railway post-office car to the present plans and specifications of the 
Post Office Department is at least 50 per cent more than it was in 1898, although pay 
received for handling these cars that weigh from 25 to 30 per cent more than formerly 
has been arbitrarily cut over 16 per cent by the act of Congress of 1907 and has since 
been further cut through readjustment of routes. For the year ending June 30, 1908, 
the railroads received gross $48,155,379, including railway post-office pay, for carrying 
80 per cent greater tonnage of mails than in 1898, a sum $12,747,629 less than it would 
have been but for the reduction of rate from 12.59 cents in 1898 to 9.94 cents in 1908. 
In face of this, as we have shown, arbitrary cuts of $8,500,000 more have been made, 
a grand total of over $21,000,000 less paid now than 10 years ago. 

This increase in weight * of a postal car might not be thought of much moment, 
but it means to the railroads the movement of 1,000,000 additional gross ton-miles 

1 About 18 months ago the conclusion was reached that heavier and stronger cars were demanded by 
changed conditions resulting in heavier trains, greater speed and increased frequency and consequent risk 
of accident to clerks and mail in collisions and wrecks. After careful investigation and expert testimony, 
the specifications were revised so that full 60-foot cars would weigh about 100,000 pounds instead of 80,000 
pounds and be greatly strengthened by the free use of steel plates and oak timbers. To meet the views of 
car builders, East and West, two plans and specifications, slightly differing, were adopted as standard, and 
railroads were given the option of conforming to one or the other. * The best known antitelescoping features 
were adopted in both plans, producing in the judgment of responsible car builders a car of exceptional 
resisting and carrying power. When new lines of cars are authorized by the department, or new cars are 
ordered to take the place of old cars in service, companies operating the routes are furnished copies of these 
specifications and the superintendent of division is instructed to see that cars are built in conformity there- 
with. Inspections are made while the car is in the shop, and when it is completed a full report is made 
and forwarded to the department. A decision is then reached as to whether the car is satisfactory and can 
be accepted. (Annual Report Postmaster General for 1905.) 



800 



BAILWAY MAIL PAY. 



per car per year, costing them $10,000 per annum in operating expenses, whilst, as 
shown, they receive 16 per cent less railway-post-office pay now than formerly. 

United States Postal Laws and Regulations, section 1164, provide that the average 
weight of the mails used in fixing rates shall be established by the actual weighing 



Exhibit C 



Distribution of the increase of si 38o oqo pop in Gross Revenue 
of All Railroads in United States jn 

I9Q7 COMPARED WITH 1898 




of the mails for a period of not less than 30 days and "not less frequently than 
once in every four years." The construction placed upon this by the department 
has been the one which reduced to the minimum the pay which the railroads receive 
for services rendered. If mail traffic were stationary, weighing every four years 



RAILWAY MAIL PAY. 



801 



would not matter much, but the increase of mail matter throughout the United States 
has been very great, and, because of the policy of the department to weigh the mails 
not more frequently than every four years, heavy losses have resulted through the 
railroads having to haul tonnage for three successive years following each weighing 
for which they receive no pay. 



q All Railroads in United States 

3j Relative Powers of Wages and Commodities to Purchase Ton Mileage 

^ and 

tf Power of Ton Mileage to Purchase Commodities and Wages 

^ IB90t0l9O7 






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Exhibit E shows, for roads in Interstate Commerce groups 7, 8, 9, and 10, by heavy 
lines the mail pay actually received as determined by the quadrennial weighings, 
and by dotted lines the natural increase in railway mail pay the roads should have 
received if the mails were weighed annually. Opposite each triangle is placed the 
amount of money loss to the railroads through the existing policy, this loss aggregating 



802 



EAILWAY MAIL PAY. 



in the periods given for roads in groups 7, 8, 9, and 10, $19,200,000, or 12 per cent of 
the aggregate railway mail pay. In other words, this loss is equivalent to a reduction 
in the rate received per ton-mile in these groups of States of 12 per cent. The loss to 



Exhibit E. 
Diagram Showing Loss in Mail Revenue to Railroads 

by Weighing Mail Quadrennially Instead or Annually 

i.c c.group*- 7 Jw?£ : I|S|; L* lo k^- 

lS.DAK JARK. *|N.N1EX |ttlv 


MAIL 

PAY 

(DOLLARS) 


Year 




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Total loss to Railroads 819,200,000 or 12 % 



roads in the western part of the United States is most striking, due as it is to the ranid 
growth of that section. The same reduction, though to a slightly less degree, obtains 
in other parts of the United States. 



RAILWAY MAIL PAY. 



803 



COMPARATIVE DECLINE IN MAIL, PASSENGER, AND FREIGHT RATES. 

Exhibit F shows the changes that have taken place since 1898 (statistics for that 
year being taken as 100) in volume of mail, passenger, and freight traffic, and the 
gross earnings therefrom. 

Exhibit G shows that during the past 10 years, from 1897 to 1907, when railroad 



exhibit /r 

AllRailroads in United States 

Chart showing Relative Increase in Volume of Passenger, Freight and Mail Traffic 
and Corresponding Gross Earnings therefrom 
Data for 1898 rated at 100 




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operating costs have been increasing, mail rates have been automatically reduced 
16 per cent, with an increase of only 44 per cent in density of traffic. During the 
same time, the freight ratio fell only 5 per cent, with an increase of 103 per cent in 
density of freight traffic. And, remember, that increase in freight traffic density 
means opportunity to lessen cost of transporting through larger car and train loads, 



804 



RAILWAY MAIL PAY. 



whilst increase in mail traffic density affords no such opportunity, as under Post Office 
Department regulations, which govern with the force of law, considerations of con- 
veniences are paramount and no measures of economy are permitted. 

"When the mail in a car reaches the low maximum of about two and three-fourth 



All Railroads in United States 

ges in Rates per Mile during last loYears showing that Automatic Reduction in Mail Rates with 
eight has caused a greater rail in actual Railroad Mail Ravthan in Passenger or Freight Traffic 








































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tons, greater density means additional cars, and, therefore, added operating cost about 
in proportion to traffic carried. The same is to a lesser extent true with handling 
passengers, but Chart G shows that passenger rates have been held up quite uniformly 
while density has increased 84 per cent, or nearly double that of the mails. 



KAILWAY MAIL PAY. 



805 



The actual reduction in rates per traffic unit during the past ten years has been as 
follows, authorities being statistical reports of the Interstate Commerce Commission 
and computations based on annual reports of the Post Office Department: 



Year ending June 30th— 



1908 



1907 



1897 



Mail rate per ton mile (cents) 1 

Freight rate per ton mile (cents) 

Passenger rate per passenger mile (cents) 



9.94 
No data. 
No data. 



10.66 

.759 

2.014 



12.57 
.753 
1.973 



12.67 
.798 
2.022 



1 Including R. P. O. car pay. 

The above is an answer to the argument frequently made that railroad mail pay 
was not changed until the reductions made in 1907. The sliding scale fixing lower 
mail rates with increasing density is the factor that controls the actual lowering of 
rates, with the important difference that railroads are forbidden to bring about 
economies in operating cost with mails that they can when freight density increases, 
and the further important difference that mail rates continue to fall automatically 
despite changes in industrial conditions which make it much more expensive for the 
railroads to perform the service. 



COMPARATIVE RETURNS TO THE RAILROADS FROM CONDUCTING MAIL, PASSENGER, AND 
FREIGHT SERVICE IN THE UNITED STATES. 

In order to make a fair comparison of operating results from different classes of 
traffic, it is necessary to consider them under substantially similar conditions. The 
best measure of railroad service is work done, or weight multiplied by distance carried; 
in other words, the ton mileage. A comparison of services differing so widely as the 
mail, passenger, and freight on the basis of ton mileage of such business is, however, 
unfair, because in the two former an excessive proportion of dead weight must be 
transported for each ton of paying load, while with freight traffic the proportion of 
dead weight is small. The hauling power of a locomotive is measured not by revenue 
ton miles, but by ton miles of gross weight, it making little difference to the locomotive 
as to what this gross ton mileage is composed of, the gross tonnage and the speed at 
which it must be moved being the factors that consume the energy of the locomotive. 

A computation has been made of ton mileage on each individual mail route by mul- 
tiplying weight carried by length of route; to the sum of these we add the dead weight 
of cars. The report of the Second Assistant Postmaster General for year ending June 
30, 1908, page 32, gives the number of cars engaged in mail service, which we have 
multiplied by the average mileage made by the average car, based on experience of 
the Union Pacific and Southern Pacific systems, to ascertain total car mileage for the 
United States. Multiplying this by the dead weight of a car, gives the ton mileage of 
dead weight, which, added to the ton mileage of mails, gives the gross ton mileage, 
measure of work and cost imposed on the railroads in return for the pay they receive 
for handling the mails. These computations are shown in the following statements, 
the results being conservative, as for want of accurate data it has been necessary to 
omit some work which the railroads do, which, if ascertainable, would increase the 
cost. For example, we have made no charge for the dead weight of that portion of 
baggage cars devoted to the handling of pouch mail, such pouch service, according to 
the Postmaster General's report, covering annually on railroads and express trains 
122,027,597 miles; nor for the dead weight of storage mail cars provided by the railroads. 
Neither has any account been taken of the value of transportation given mail clerks, 
which, based on the Postmaster General's report of 1908, amounted to 629,778,443 
miles, which, at 2 cents a mile, would be $12,500,000; nor for the value of transportation 
or postal commissions of Post Office Department officials; nor does it take into account 
special service rendered by the railroads, such as delivering mail at stations, value of 
space furnished by the railroads and required of them by the Post Office Department 
at important junction and terminal points for mail distribution and accommodation of 
Government transfer clerks. 

The statistics of passenger service in the following statements are based on the 1907 
Annual Report of Statistics of Railways, published by the Interstate Commerce Com- 
mission (1908 figures, which would show higher operating cost, not available), with the 
exception that the average mileage per car per annum run by passenger cars is based 
on the experience of the Union Pacific and Southern Pacific systems. 



806 



RAILWAY MAIL PAY. 



Statistics of freight service are likewise based on the 1907 Keport of Statistics of 
Railways, freight-car mileage being actually reported by the Interstate Commerce 
Commission, dead weight per car being computed from all freight cars handled on 
Union Pacific and Southern Pacific systems. 

Mail service year ending June 30, 1908. 

Paid to the railroads for railway post-office cars $4, 567, 366 

Paid to the railroads for mail transportation .43, 588, 013 

Total 48,155,379 

Ton mileage of mails handled by railroads ." 484, 683, 135 

Pay per revenue ton mile, including railway postal car pay (cents) 9. 94 

Pay per revenue ton mile, excluding railway postal car pay (cents) 8. 99 



Number of cars (Post Office Department report) 

Average length (special mail weighing 1907), feet, of mail apart- 
ment 



Equivalent full R. P. O. cars 

Miles run per car per annum (experience of Union Pacific system 
and Southern Pacific Co.) 

Total equivalent R. P. O. car miles 

Miles traveled by R. P. O. clerks (miles reported as traveled by 
crews multiplied by average number of men per crews) 



R. P. O. 



1,342 



1,342 



100,000 
134,200,000 



Apartment. 



3,568 

27 
1,633 

60,000 
97,980,000 



Total. 



4,910 



2,975 



232,180,000 
629,778,443 



Gross ton mileage: 

Equivalent railway postal cars, 232,180,000 miles, at 45 tons per car 10, 448, 100, 000 

Ton miles of clerks at 160 pounds per man 50, 382, 275 

Revenue ton miles of mail, including pouch mail. . . 484, 683, 135 

Total gross ton miles » 10, 983, 165, 410 

Average weight of mail per equivalent full R. P. O. car (tons) 

Average weight of clerks per equivalent full R. P. O. car (tons) 

Average weight of car per equivalent full R. P. O. car (tons) 

Rate of mail and R. P. O. car pay per gross ton mile (cents) 

Ratio of paying to dead load 1 



2.09 
.22 

45.00 



1 to 21. 7 



Passenger service other than mails. 



Number 
of cars. 2 



Miles run 

per car per 

annum. 3 



Total car 

miles run 

per annum. 



Baggage and express, excluding 2,975 equivalent postal cars. 

Sleepers, diners, and parlor cars 

Coaches, etc 



Total 

Passenger-train miles, including mixed trains. 



7,404 

2,000 

31,594 



60,000 
100,000 
40,000 



444,240,000 

200,000,000 

1,263,760,000 



40,998 



1,908,000,000 
541,439,176 



Cars per train mile: 

Mail 

Others 



Total. 



0.43 
3.52 



3.95 



Gross ton mileage: 

Baggage and express cars, 444,240,000 by 30 tons 13,327,000,000 

Sleepers, diners, and parlor cars, 200,000,000 by 50 tons 10, 000, 000, 000 

Coaches, etc., 1,263,000,000 by 40 tons 50,550,400,000 

Total ton miles dead weight 73, 877, 400, 000 



Ton miles of passengers, 27, 718, 554, 030 2 passenger miles at 150 pounds per passenger. 2, 078, 891, 552 
Ton miles of baggage and express, 444,240,000 car miles estimated at only 3 tons average 
load in a car 1,332,700,000 



Total ton miles revenue load 3, 411, 591, 552 

Total gross tons miles 77,288,991,552 

Total revenue received from passengers and express $621, 939, 274 

Total revenue received per gross ton mile (cents) 0. 805 

Total revenue received per revenue ton mile (cents) 18. 23 

Ratio of paying weight to dead load 1 to 21. 7 



1 No portion of mileage or weight of storage cars or cars handling pouch mail has been considered. 

2 Statistics of Railways of United States, 1907. 

3 Experience of Union Pacific and Southern Pacific systems. 



RAILWAY MAIL PAY. 



807 



Freight service. 

Total miles run by freight cars ! 17,122,259,754 

Total ton miles dead weight, each car estimated at 15 tons 2 256, 833, 896, 310 

Total ton miles revenue freight * 236,601,390,413 

Total gross ton miles 510, 557, 546, 477 

Ratio of paying to dead load 1 to 1. 1 

Total revenue received for transporting freight $1, 823, 651, 998 

Total revenue received per gross ton mile (cents) 0. 369 

Total revenue received per revenue ton mile (cents) * 0.759 

Tons per car revenue freight (loaded and empty) 13. 8 

Revenue per car mile (cents) 10. 5 

i Statistics of Railways of United States, 1907. 

2 Experience of Union Pacific and Southern Pacific Systems. 

RELATIVE COST OF SERVICE. 

To determine the relative costs to the railroads of performing mail, passenger, and 
freight service, we must allocate the expenses to freight and passenger service as a 
whole, afterwards apportioning the latter to mails and other service. Railroad oper- 
ating expenses apply jointly to both passenger and freight trains, so that, with few 
exceptions, it is impossible to determine exactly from any published statistics the 
cost of passenger-train service as distinguished from freight. There are some items 
of train-mile expense directly connected with movement which are less for passenger 
than for freight trains, whilst, on the other hand, many other expenses are greater 
for passenger than for freight, such as danger from casualties, necessity of expensive 
terminals, delays to other traffic through preference given to passenger trains, addi- 
tional main tracks, and, particularly, higher standards of maintenance of roadbed 
required for high speed passenger-train movement. 

On account of the impossibility of separating the expenses, we assume that the 
above factors about balance each other and that the average cost of running all trains 
can be taken as either passenger or freight train mile cost, respectively, without serious 
error. 

We allocate a proportion of the passenger train cost to the mails on the basis of the 
gross ton miles handled in each class of passenger traffic . 

The relative revenues and expenses are shown below, mail revenues being as shown 
by the 1908 Report of the Post Office Department, and other statistics as given in 
the 1907 Statistics of Railways of the United States, published by the Interstate 
Commerce Commission or are computed therefrom. 

All railroads in the United States — Summary of mail, passenger, and freight service. 



Gross revenue 

Operating expenses 

Taxes and interest on bonds. 

Total expenses 

Surplus 

Deficit 



Ton mileage (thousands): 

Revenue weight , 

Dead weight 



Total gross. 






Tons dead weight per ton revenue 

Per gross ton mile (cents): 

Gross earnings 

Operating expenses 

Earnings over operating expenses 

Operating expenses over earnings 

Taxes and interest on bonds 

Surplus 

Deficit 

Per cent of operating expenses to earnings 

Gross expenses to earnings 



Mails. 



$48,155,379 
96,322,357 
23,503,973 

119,826,330 



71,670,951 



484, 683 
10, 498, 482 



Other pas- 
senger. 



$621,939,274 
677, 614, 637 
165, 582. 552 
843, 197, 189 



221,257,915 



3,411,592 
73, 877, 400 



10,983,165 77,288,992 



21.7 



21.7 



438 
.877 



.439 
-.214 



200 
249 



653 



,805 
.877 



,072 
.214 



109 
135 



Total pas- 
senger. 



Freight. 



$670,094,653 
773,936,994 
189,086,525 
963,023,519 



292, 928, 866 



3,896,275 
84,375,882 



$1,823,651,998 

974, 577, 820 

235,468,467 

1,210,046,281 

613, 605, 711 



236,601,390 
256, 833, 896 



88, 272, 157 



21.7 



.759 

.877 



.118 
.214 



.332 



493.435,286 



1.1 



.197 
.172 



.048 
.124 



115 
144 



53 



Figures exclude dividends, betterments, and additions, etc. 



808 RAILWAY MAIL PAY. 

The above shows that whilst passenger service as a whole is unremunerative, the 
mail earnings are hardly half what they should be to pay a fair share of the railroad 
operating expenses only, regardless of taxes and interest. 

Or put in another way; our computations have shown that in each passenger train 
run the railroads haul an average of 43/100 of a mail car, and the contents of this car 
yielded average earnings of 9.4 cents for each mile run. The computation just made 
shows that each freight car run, loaded or empty, yields a revenue to the carrier of 
10.5 cents per mile. Incredible as this may seem, it is understandable when we 
reflect that the railroads transport 1.1 tons of dead weight for each ton of freight for 
which they are paid; with mail they transport 21.7 tons, or twenty times as much. 
The freight rate is 0.759 cents per ton mile, the mail rate 9.94 cents, or only 13 times 
as much. 

Arguing in still another way: Average number of cars in each passenger train 
handled in United States is 3.95, of which mail cars amount to 0.43, or 11 per cent. 
Eleven per cent of the average earnings of a passenger train is 13.8 cents, but mail 
contributed only 9.4 cents. That is, it should pay 47 per cent more than it does to 
be made to contribute a fair share to the insufficient earnings of a passenger train. 
Mails are fairly responsible on basis of space used for 11 per cent of the cost of running 
a passenger train, or 16.17 cents, and as dead weight per foot of space is greater with 
mails, their proportion of train-mile cost is even larger. They pay little more than 
one-half this cost. 

By building larger capacity cars and larger engines the cost of handling freight 
traffic, entirely in the control of the carrier, has been reduced to follow rate reductions 
and increased expenses. 

On the other hand, because methods of conducting passenger traffic are largely — 
and mail traffic entirely — beyond their control, the cost of handling mail and passen- 
gers has been steadily increasing, and, as revenue has not increased, the net revenue 
or margin of profit has been cut to a point where it is unremunerative, 

The argument advanced by advocates of reduced mail pay, that increasing density 
permitted economies and that lower rates would yield more net, is not applicable 
when the carriers' hands are tied and measures of economy so successfully applied 
to handling freight are prohibited. The following will illustrate this: 

On routes where pouch service is used mail is handled with express and baggage 
without much increase of cost over other passenger traffic. A somewhat greater mail 
traffic obliges the railroads to furnish apartment cars, at increased expense and dead 
weight for the post-office feature, but still permitting the railroads to carry other 
traffic in the same car. A still further increase in weight means the establishment 
of full R. P. O. lines for which the railroads receive extra, but inadequate, compensa- 
tion, these cars being used for no other class of traffic and adding largely to the weight 
and cost of train service. Even after the route has been made an R. P. O route, the 
railroads are not permitted to economize by carrying more mail in the car, and as 
traffic density grows the roads must under the requirements of the department add 
more cars, almost in proportion to the business, as the loads carried in R. P. O. cars, 
as shown by recent special weighing, average only 2f tons, and many of them return 
empty — for which empty haul the railroads often receive no pay. When the mail 
business has assumed very large proportions and the R. P. O. cars have multiplied 
in ratio therewith, special trains are then added to carry the bulk of the mail, being 
run at very high speed and adding to the railroad expense account in a far higher 
degree per unit of business than any other class of traffic. 

In contrast to the above, baggage and express are very generally hauled in the same 
and a much lighter and less costly car than the mail car, and increase in tonnage is 
accommodated by hauling greater loads per car. In the case of freight, increased 
density means larger car and train loads and greatly reduced costs of operating per 
ton-mile. 

Despite these differences in conditions, the automatic scale has secured to the 
Government a larger reduction in mail rates per ton-mile in the last 10 years than the 
percentage of fall in freight rates, despite higher labor and material costs of railroad 
operating. As a result, the mail business, which, according to evidence introduced 
before the congressional committee of 1899, was unprofitable at that time, has been 
made more unprofitable at the present time by the heavy rate reductions of 190(3-7. 

As the greatest reduction made deals with mail routes on which traffic is heaviest, 
a consideration should be given to the following conditions of handling mail on such 
routes: 



KAILWAY MAIL PAY. 



809 



HEAVY TRAFFIC MAIL ROUTES. 

On very many of the heavy traffic routes where the principal reduction in pay 
occurred a large part of the mail is now handled in special mail trains run at exces- 
sively high rates of speed. Such trains introduce the following conditions: 

1. A very much greater liability to accident. A large proportion of the deplorable 
accidents that have occurred on the American railroads in recent years have occurred 
to excessively high-speed trains, accidents to such trains being almost invariably 
destructive to life and property. An examination of serious accidents on the Union 
Pacific system and Southern Pacific Co. for the calendar year 1906 shows that 36 per 
cent of the property damage from all causes, including negligence, was traceable to 
trains not under control and excessive speed, whilst 30 per cent additional damage 
was due to causes that might prevent inferior trains getting out of their way, such as 
keeping main line on time of superior trains, failure to observe signals or orders, etc. 

2. Mail trains run at excessive high speed are much more expensive to operate 
than other trains, for the following reasons: 

(a) Fuel consumption per traffic unit is very much greater at high speed because 
of diminished tractive power of locomotives. 

(6) A relative greater hauling capacity of locomotives must be consumed in moving 
trains at higher speeds. 

(c) Excessive speed requires higher standards of track maintenance, double 
tracking, block signals, heavy rail, better ballasted roadbed, etc. 

(d) High speed means increased wear and tear on equipment and track. 

(e) High-speed trains are expensive, delaying and adding to the cost of other traffic. 

3. Speed of trains carrying mails has been constantly increased, a study made of 
the speed per hour made on fastest trains on which R. P. 0. cars are handled on 17 
of the principal mail routes, giving the following results: 

Average of fastest train on 17 mail routes: 



Year. 


Speed 

(miles per 

hour). 


Relative. 


1905 




42.21 
39.23 
34.35 
31.14 


136 


1899 


126 


1890 


110 


1885 




100 








Average increase per year. . . 


.55 









With the above increase in speed, rates paid the railroads have automatically 
decreased, whilst expenses have largely increased to provide for the above greater 
speed and because of increase in prices of labor and materials of all kinds in the past 
five or six years. This increase in speed has been made coincident with growth of 
freight traffic, which is the railroads' profitable business, the nonprofitable high-speed 
trains delaying the profitable ones, increasing their cost and incurring liability to 
accident. 

4. Earnings of mail trains supposedly high are not higher than other passenger 
trains, which, as a whole, earn very much less per mile run than freight, relative 
figures being, as shown by last report of the Interstate Commerce Commission, as 
100 is to 218, whilst the cost of running passenger trains is as much, if not more. This 
is particularly the case with high-speed passenger trains, which is the most unprofit- 
able business in which railroads are engaged. (On Union Pacific system last year 
earnings per passenger-train mile were $1.71, per freight-train mile $4.31.) 

5. Passenger engines in hauling fast passenger trains on principal main lines at the 
present time have assumed, on account of increased weight of equipment and exces- 
sive speed required, enormous proportions. We now have in such service on our 
lines engines weighing exclusive of tender 222,000 pounds, this power being 60 per 
cent heavier and twice as costly as locomotives used in the same class of service 10 
years ago, burning double the amount of fuel. Engineers running these locomotives 
receive higher pay because of the greater size of these engines, to say nothing of 
recent increases made in their schedules. Such heavy power moving at fast speed 
is extremely destructive to the roadbed, requiring a much higher standard of main- 
tenance than formerly, maintenance of way cost in the past few years having gone 
up 50 per cent. Engine failures aie largely confined to fast passenger trains, and, 
in general, expenses are increased all along the line because of their introduction. 

6. As illustrating the additions to expenses because of increased track maintenance 
on account of fast passenger and mail trains, we have made a study of statistics, using 



810 KAILWAY MAIL PAY. 

the Interstate Commerce report of 1906 as a basis, of seven roads having a large propor- 
tion of fast passenger service and seven roads having a moderate-speed passenger service, 
but with a large proportion of freight service . On the roads first named the average cost 
of maintenance of way per mile was $2,951, and on roads in the latter class $1,565. The 
operating expenses per train-mile in the former class were $1.47, and in the latter $1.33. 
The roads in the former class, on account of large number of excessively high-speed 
trains, were obliged to double-track their lines, which directly increased maintenance 
expenses. 

PAY FOR RAILWAY POSTAL CARS. 

The large reduction made by act of March 2, 1907, in pay for railway postal cars was 
made in face of large increase in the cost of constructing such cars, due to higher prices 
of labor and material and greater cost of meeting the more exacting specifications of the 
Post Office Department. Changing to steel construction, increases in weight, and 
generally heavier operating expenses, have created an extremely large increase in cost 
of moving these cars. The standard railway postal car of only a few years ago, 60 feet 
long, weighed 80,000 pounds and cost about $5,500. The standard railway post-office 
cars, 60 feet long, of wooden construction, used on the railroads with which I am con- 
nected, weigh over 100,000 pounds each, or one-fourth more weight, and cost 40 per 
cent more, whilst our new standard postal cars of steel construction weigh 108,000 
pounds and cost over $9,000, or 60 per cent more than the car of a few years ago. 

An argument sometimes made in favor of a lowering of R. P. O. car pay is that for 
apartment cars used in runs where mail density does not require a full car, no addi- 
tional compensation is allowed. But we feel that a fair consideration of the circum- 
stances under which mail is handled, as compared with other traffic, will justify the con- 
clusion that this is not an argument in favor of reducing R. P. O. pay, but rather for 
allowing the railroad additional compensation for the apartment cars as well. Both 
services require the furnishing of special features in the way of traveling post offices 
not required except for the convenience of the Post Office Department to enable it to 
do work while mail is in transit, such as ordinarily performed in office buildings. The 
full postal car is more expensive to the roads, as it always means additional car service, 
whilst in some cases of apartment cars the space not occupied by the traveling post 
office is adequate to take care of baggage and express, though very frequently this 
service also means additional car movement that would not be necessary but for the 
post-office feature. 

The saving to the railroads from reduction in car mileage that would be possible if it 
were not obliged to furnish traveling post offices, but could use the space occupied by 
racks and other post-office features by loading additional mail in cars, would be many 
times the revenue allowed for the railway postal cars. 

To illustrate : The car mileage of postal cars (changing apartment cars to full cars on 
basis of length) is 232,180,000 per annum; the ton-mileage of mail 484,683,135, or 2.09 
tons per car. From figures obtained from the Post Office Department, average car 
weights shown on page 59, Table EE, special mail weighing of 1907, it is ascertained 
that storage mail cars, which, of course, contain no post-office features, carry an average 
of 7.04 tons of mail. At this rate the whole mail business could be carried by the 
movement of 68,844,000 car miles, or 163,336,000 less than actually employed, due to 
the post-office features. The total railway postal-car pay is only $4,567,366, or only 2.8 
cents per additional car mile, whilst the operating expenses chargeable to running these 
163,336,000 car miles, or 70 per cent of the total movement, amount to $67,000,000. 

But for the post-office feature, the combined weight of an entire route could many 
times be handled in a single car such as is used for express instead of several heavy 
and expensive post-office cars, whilst often extra cars for storage mail must be added, 
for which no extra pay is allowed, the cost of running these storage cars also not being 
included in the computation of cost of service, as no accurate statistics of their number 
or car mileage are available. 

In addition to the furnishing of storage cars, although many R. P. O. routes are 
paid for on a basis of 40-foot cars, it is not economical for the railroads to construct 
such cars which are not interchangeable with other equipment and which would have 
to be thrown aside if through growth of traffic larger cars are afterwards required. As 
a result, full 60-foot R. P. O. cars have for years been furnished on many 40 and 50 
foot routes, the railroad getting no credit for this, whilst on many other routes R. P. O. 
cars have been run in advance of the fixing of R. P. O. pay for them. 

On a number of routes postal car pay has been allowed for running full cars in one 
direction only, classing such routes as half-lines. This obliges the railroads to move 
the car in the opposite direction without pay, the small additional compensation of 
less than 4 cents per mile run received in one direction being entirely inadequate to 
compensate the road for the empty haul — to say nothing of allowing anything for 



RAILWAY MAIL PAY. 



811 



moving it in direction for which pay is received. To illustrate: The Union Pacific 
Railroad in one case between Council Bluffs, Iowa, and Ogden, Utah, 1,003 miles, 
receives no pay for handling east-bound a 60-foot mail car, which is paid for west- 
bound only, six mail cars being required on this line. The R. P. 0. pay per car mile, 
including movement in both directions, is only 2.24 cents, or about what would be 
received for transporting a single passenger, although a standard passenger coach has a 
capacity for 70 passengers. 

In connection with the railway post office, an item not often considered is the value 
of transportation furnished clerks in the railway mail and compartment cars. Fig- 
uring this at 2 cents permile, which is about the lowest passenger fare, the total value of 
this transportation for clerks in railway post-office cars would be $8,600,000 per annum, 
or $4,000,000 more than the railroads receive for the handling of these cars, and 
the value of transportation in the case of apartment cars would be $4,000,000 per annum 
additional. In addition to this, a large amount of free transportation is required 
annually by the Post Office Department for inspectors and other officers of the Depart- 
ment. 

The Post Office Department issues annually about 600 traveling commissions 
to post-office inspectors and other postal officials, and requires railroad companies 
to honor such commissions for free transportation on all trains on all lines on 
which mails are carried . In some cases these commissions are issued to Government 
officials whose official duties are in no way connected with the transportation of mails 
on railroads. The railroads have no control whatever over the issuance of these com- 
missions and can not even secure from the Post Office Department a list of them, the 
department holding that the list is confidential. These commissions are frequently 
used for personal travel in violation of the rulings of the Interstate Commerce Com- 
mission. In brief, the Post Office Department in effect arbitrarily issued about 600 
annual passes over every mail carrying railroad in the United States, which is equiv- 
alent to about 200,000 annual passes. 



POSTAL DEFICIT. 

In investigating the subject of railway mail pay, we have been struck very forcibly 
with changes which have taken place in the revenues and expenditures of the Post 
Office Department since 1899, when this subject was last reviewed. Although postal 
operations still show a deficit, it is a fact that its revenues have increased in a remark- 
able degree, and the deficit is certainly not due to the amounts paid to the railroads 
for hauling mail, as these payments are relatively far less now than formerly. Reve- 
nues of the Pest Office Department have grown from $102,000,000 in 1900 to over 
$191,000,000 in 1908, or 87 per cent, this increase in revenue in eight years being as 
great as the entire increase in the previous 35 years. 

But in this same period of eight years there was an increase of $100,600,000, or 93 
per cent, in Post Office Department expenditures, of which only $10,900,000, or 11 
per cent, was paid to the railroads, $33,935,000, or 34 per cent, going to rural free 
delivery, $25*,000,000, or 25 per cent, to postmasters and their clerks, and the balance 
to other items, as shown by chart marked "H " herewith. 

The following statement shows for the year 1895 and for the years 1899 to 1908, 
inclusive, postal revenue and postal expenditures divided between amounts paid 
the railroads, cost of rural delivery, and other expenditures: 





Revenue. 


Expenditures. 


Year. 


Paid 
railroads. 


Rural 
delivery. 


Other. 


Total. 


1895 


$76,983,000 
95,021,000 
102,355,000 
111,631,000 
121, 848, 000 
134,224,000 
143,583,000 
152,827,000 
167,933,000 
183,585,000 
191,479,000 


i $31,189,000 
35,775,000 
37,315,000 
38,161,000 
39,519,000 
41,377,000 
43,971,000 
45,482,000 
46,953,000 
49,831,000 
48,155,000 




$57,637,000 
65,607,000 
70,005,000 
75,616,000 
81,269,000 
89,305,000 
95,709,000 
101,093,000 
106,543,000 
113,754,000 
125,842,000 


i $88, 826, 000 
101,632,000 
107,740,000 
115,555,000 
124,786,000 
138,784,000 
152,362,000 
167,399,000 
178,270,000 
190,238,000 
208,352,000 


1899 


$150,000 

420,000 

1,778,000 

3,998,000 

8,102,000 

12,682,000 

20,824,000 

24,774,000 

26,643,000 

34,355,000 


1900 


1901 


1902 


1903 


1904 


1905 


1906 


1907 


1908 





1 Includes $1,646,741 accrued in favor of Pacific railroads in 1895, but not charged to postal expenditures 



812 



EAILWAY MAIL PAY. 



Chart marked "Exhibit I " shows clearly that the ratio of expenses to receipts of the 
Post Office Department would in 1908 have been but 91 per cent and no deficit but for 
the expenditures made for Rural Free Delivery, the amount paid the railroads being 
now only 25 per cent of the total revenue as compared with 41 per cent in 1895. 

Note.— The railroads are themselves large contributors to the revenues of the Post Office Department. 
It is ascertained that nine roads, covering 27,500 miles, pay annually $261,000 for postage stamps, or at the 
rate of $2,000,000 for the entire railroad mileage of the country. 



£x/>t'&# H 



(Distribution of Increase or 8ioo.60o.ooo 
in Post-office Department Expenditures 

YEAR 1908 OVER 1900 




In order to avoid a deficit, attention has been concentrated on this 25 per cent of 
the postal expenditure, which we contend is at least not an unfair compensation to the 
railroads for services rendered. Though the proportion of the total revenue going to 



RAILWAY MAIL PAY. 



813 



the railroads has fallen one-third in 10 years, the deficit still remains, and is it reason- 
able to suppose that any reduction in railway mail pay would not be speedily absorbed 
in other directions? On the contrary, ought not efforts be concentrated to bring 
within reasonable figures the other expenses of the department, which now absorb 84 




per cent of its revenue as compared with only 69 per cent in 1900— despite an actual 
growth in postal revenue in the same time of $89,000,000, or 87 per cent? 

It will be noted from these charts that a reduction of 10 per cent in the ratio of rail- 
way mail pay to total revenue can be entirely wiped out by an increase of only 3 per 

49396—14 59 



814 



EAILWAY MAIL PAY. 



cent in other postal expenses, whilst a retrenchment of 10 per cent in the latter would 
have put the department almost on a paying basis, notwithstanding the heavy cost 
of Rural Free Delivery. From 1895 to 1908 actual totals show that the railroads' pay 
has increased 54 per cent for handling 114 per cent more mail tonnage, whilst in the 





















































Exhibit J 


Ton Mileage of Mail Hauled by All Railroads 
of United States, Amounts Paidtothe Railroads 
forHauling it, and All other Expenditures of 
the Post Office Department' 


MILLION . 

Ton Miles 

OF 

_JdAIL, 


Million 
Dollars 

Expended 




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same period other expenses of the Post Office Department have grown 178 per cent, 
revenues increasing 149 per cent. 

Increased mail business means a direct increase in postal revenue, as postage remains 
the same regardless of tonnage, but carrying this increased business on the part of the 
railroad means less proportionate revenue to them according to volume of tonnage, 



RAILWAY MAIL PAY. 



815 



bo that the proportion of the postal revenue they now receive is very much less than 
formerly. Labor, material, and the price of everything sold in commerce have 
advanced materially, as we all know, in the past seven or eight years, railway mail 
pay being practically the only thing that has decreased in the face of conditions that 
should have raised it. 

As a large increase in mail tonnage means to the Post Office Department about an 
equal increase in revenue with a decreased payment per ton to the railroads through 
lower rates, the avoidance of a deficit would seem not a difficult matter if other postal 
expenses were kept at least within sufficient control, so they would not increase faster 
than the increase in volume of mail handled. 

The Post Office Department enjoys this peculiar advantage of receiving with the 
growth of the country an increase in revenue directly in proportion to the increase 
in business handled. In disbursing this revenue, it must pay less to the railroads in 
proportion to the density of business, thus retaining to apply on other expenses a larger 
net revenue year by year. It is reasonable to suppose that the cost of many branches 
of the department should not increase in the same ratio as tonnage of mail (for example, 
that expenses of individual post offices and administrative and general expenses 
should not grow in this proportion). Yet, regardless of these favorable influences, 
expenditures in other directions have absorbed the greater net revenues after paying 
the railroads, and it is in these directions that the cause of the postal deficit must be 
looked for. 

Chart, Exhibit J, illustrates the growth of these expenditures, which since 1900 has 
been much faster than the rise in mail tonnage, comparison of 1908 with 1898 being 
shown on opposite page. 





1908 


1898 


Increase. 


Per cent. 


Ton mileage of mails handled by railroads 


484, 683, 135 


272,714,017 


211,969,118 


78 




$191,478,663 

48,155.379 

143,323,284 

160,196.507 

16,873,223 


$89. 012. 619 

34; 379, 227 

54,633,392 

63,654,297 

9, 020, 905 


5102, 466. 044 

13. 776, 152 

88,689,892 

96. 542, 210 

7^852,318 


115 




40 




162 




152 


D efic i t 


87 









1908 


1898 


Per cent. 


Per ton of mail handled by railroads (cents): 


39.5 

9.9 


32.6 
12.6 


+6.9 




—2.7 






Net applicable to other items 


29.6 
33.1 


20.0 
23.3 


+9.6 


Other expenditures 


+9.4 






Deficit 


3.5 


3.3 


+ .2 







Note.— The increase in gross postal revenue per unit of mail handled by railroads is no doubt due to 
increase in city mail not. handled by railroads. 

Julius Kruttschnitt. 
Chicago, III., March 1, 1909. 



Railway Mail Pay Primer — Issued by Committee on Railway Mail Pay, 
resenting 139 railroads with 192,808 mlles of road. 



Rep- 



railway MAIL PAY. 

What is the measure of service rendered by the railroads in handling United States 
mail?— Four hundred and ninety-two million nine hundred and sixty thousand and 
fifty-nine ton miles new basis (old basis 532,0.96,419 ton miles), year ending June 30, 
1909. 

The mail alone? — Yes. The mail and bags. 

How much did United States pay the railroads? — $49,737,519, out of which they 
have to meet many expenses imposed on them by regulation and law. 

Does United States furnish any facilities? — Only the clerks on the cars. 

What do they do? — Post-office work. 

What's that? — Same as in post offices. Postal cars are post offices on wheels. 

Does United States pay clerks' fares? — No. 



816 RAILWAY MAIL PAY. 

How much does their travel foot up?— In 1908, the equal of one man riding 
629,778,443 miles. 

At 2 cents per mile that would be how much? — $12,595,568.66. 

These men must weigh something? — At 160 pounds average, their haul would be 
equal to 50,382,275 tons one mile. 

Does United States require the railroads to furnish anything else free of charge? — 
Yes; office facilities at railroad junctions and terminals; delivery of mail to post 
offices which are within a quarter of a mile of station; and free annual passes for 
about 600 postal officials on all railways carrying mail. 

What revenue does the United States receive per pound for mail? — An average of 
about 12.88 cents per pound tendered by the public. 

What does United States pay the railways? — About 3 cents per pound for every 
pound of matter tendered the railroad. 

That is, out of every dollar received the Government pays the railroads 20 cents? — 
Yes. 

Does the rural free delivery cost much as yet? — United States spent 72 cents for 
rural free delivery in the limited territory thus served for every $1 paid the railroads 
for their entire hauling in the year 1909. 

How is the service rendered by the railroads ascertained? — By actually weighing 
the mail matter carried. 

Weighing every parcel carried for a year? — Oh, no; weighing for 105 consecutive 
days only once every four years and finding the average for one day over the whole 
length of route. 

Is this the weight United States pays for during the entire four years following a 
weighing? — Yes. 

Why only every four years? — A law requires weighing not less often than once in 
four years. 

Then weighing oftener is not prohibited? — No. 

Would the railways prefer weighing, say, once a year? — Yes. 

Why? — Mail increases regularly with growth of country. Each four years means 
a large increase in weight, and as the pay is based on the smallest weight carried at 
the beginning of the period, the increases each year are carried with no pay whatever. 

Why are yearly weighings not made? — The Post Office officials interpret the law 
to mean they don't have to, and they don't do it, as it is not to their interest. 

Is that fair to the railways? — It is not, as they are deprived of amounts to about 
10 per cent of the total revenue received for mail transportation. During last 10 
years the weight increased 80 per cent, an average of 32 per cent each four years. 

Has the pay increased 80 per cent? — No. Only about 40 per cent. 

Why? — Because of acts of Congress and orders of Postmaster General arbitrarily 
cutting rates of pay; automatic reductions of rates prescribed by law with increased 
tonnage. 

Can you name some? — Yes. March 2, 1907, United States reduced the pound 
rate 3£ per cent and the rental rates of post cars 16 per cent. Total, $2,676,468 
per year. 

Was this because it cost the railways less to do the work? — No. It cost the railways 
more. 

What other acts? — June 26, 1907, it decreed empty mail bags shall be returned, 
and certain supplies forwarded by freight or express. Formerly they were handled 
with and as part of the mail. The estimated loss to the railroads by this change is 
$1,000,000 a year. 

Does this withdrawal return space in cars of value to the railroads that they can sell 
to other patrons? — No. 

What "orders" can you name? — June 7, 1907, changing methods of computing 
weights. 

What does that mean in money? — About $4,500,000 per year loss to the railways. 

Any other recent one? — Yes. Requires railways to furnish post-office cars to run 
one way, and refuses to pay for hauling them back, though the cars are of no use what- 
ever to the railways, being fitted up as post offices and unfit for baggage or express. 

Where is such a service in effect? — Omaha to Ogden line requires six postal cars to 
do the business. Each car weighs over 100,000 pounds and costs about $9,000. The 
railway buys the cars, supplies light, heat, and maintenance. 

. How much does the United States pay the railway for the use of these traveling 
post offices in such cases as just referred to? — The equivalent of one passenger fare per 
round trip. 

Can you explain it in figures? — Yes. The United States pays 5.5 cents per mile for 
the going trip, with two to six passengers in it — nothing for return trip, which is the 
equal of 2.75 cents for the whole distance the car travels. 



EAILWAY MAIL PAY. 817 

Why do you call the clerks passengers, and think the Government should pay for 
their carriage? — Because the Government demands of the railroads the same care and 
responsibilities as accorded passengers. The men are furnished heat and ice-water, 
and in case of accident the railroads are liable to the same extent as to passengers. 

Is it possible you mean that the railroads get 5.5 cents for hauling a full car and in 
addition are obliged to furnish the Post Office Department with free tickets for say 4 
men, worth 2.5 cents a mile each at tariff rate? — That is just what I mean. The rail- 
roads haul the car free and pay 4.5 cents a mile for the privilege in such a case. 

Why on earth do the railroads do this? — Perhaps they have never stopped to think 
how very foolish such a practice is. Maybe this will start them thinking. 

How much do railways receive per mile for hauling empty cars? — Diners, parlor, 
and sleeping cars on their own wheels, 12 to 20 cents per mile; passenger coaches, 10 to 
18 cents; baggage and express cars, 8 to 15 cents; freight cars, 6 to 10 cents per mile. 

Then the railways receive on the average, for hauling various classes of cars on freight 
trains, from three to eight times as much as United States pays on these one-way runs 
for post-office cars on passenger trains? — Correct. 

Are post-office cars any real value or service to railways? — They are not, as their 
design is fixed by the department, and being post offices, are unfit to carry ordinary 
freight or baggage. 

How much mail does each of these cars carry? — About what would take up one- 
eighth of an ordinary baggage car, or 2 tons. 

How much more can one of these cars carry? — About 15 tons, if stripped of post-office 
fittings. 

What do express companies pay railways for their privileges? — Fifty to 55 per cent 
o f their gross receipts. 

Do express companies assume all responsibility to their patrons? — Yes. 

Do express companies get any extra facilities, such as enjoyed by post office, 
free? — No. On the contrary they contribute toward salaries of station men and train 
baggage men; release the railways from claims for personal injuries to employees; 
handle free to the railways remittances and railway express packages. The number 
of express employees carried on trains is much less than on post-office cars. 

Do express companies make money on the 45 to 50 per cent which is all they get 
out of their receipts? — They do. 

It is stated above that the United States pays only 20 per cent of gross receipts for 
railway transportation of mails, and yet the department is operated at a loss? — That's 
what the report of Postmaster General shows. 

What is the difference in the method of charging by the express companies and the 
Post Office Department? — The former charge according to distance; the latter as you 
know carries letters or other mail matter under postage without regard to distance. 

How does the dead weight of cars carrying United States mail compare with the 
weight of the mail hauled? — 21.7 tons dead weight to 1 ton of mail. 

How is it with passengers? — About the same. 

And freight? — 1.1 tons of dead weight to 1 ton of freight hauled. 

Does the United States pay rent for post-office facilities in cars used partly for bag- 
gage or express? — No. United States pays only when United States has the entire car, 
and as it then pays less than the fare of the clerks in it, and if empty only one-third to 
one-eighth of what the railroads secure from the public for haul alone, it is hard to 
find the rent. 

Who decides when cars shall be exclusively post office? — The United States. 

Who specifies the construction of post-office cars? — The United States. 

Who pays for them? — The railways. 

Do cars, now specified by the United States, cost more than a few years ago? — 
Standard steel, weighing 108,000 pounds, cost about 60 per cent more. 

Are post-office facilities in apartment cars and full cars provided for the convenience 
of the railways? — No, indeed. Entirely for post office. 

Over how many miles were these full and apartment cars hauled in 1908? — Two 
hundred and thirty-two millions of miles. 

What is average weight of mail per car? — Two and nine-hundredths tons. 

How much mail can storage cars without post-office features carry? — Ten to fifteen 
tons. 

If all mail were carried in storage cars, how much would it reduce the car miles? — 
About 163,000,000 a year. 
. And this 163,000,000 is due to the post-office features? — Yes. 

What's the average number of cars in passenger trains in the United States? — Three 
and ninety-five hundredths. 

What proportion of that is mail cars? — About 11 per cent. 

What's the average earnings of passenger trains? — $1.26 per train mile. 



818 KAIL WAY MAIL PAY. 

Does that include all mail and express earnings? — It does. 

Does mail pay 11 per cent of average earnings? — No; it contributes only 9.4 cents 
per train mile, or 7.5 per cent. To pay 11 per cent of average earnings mail would 
have to pay 47 per cent more than it does. 

What's the average cost of running passenger trains? — $1.47 per mile. 

If the United States mail paid its fair share of this cost (or 11 per cent), what would 
it be? — Sixteen and seventeen-hundredths cents per train mile. 

Then it is costing the railroads 16.17 cents to furnish space for which they receive 
9.4 cents, or 72 per cent more than they get for it? — More nearly 100 per cent when to 
operating expenses are added taxes, interest on bonds, etc. 

As population grows denser does amount of mail increase? — Certainly. 

Then in time the increase in weight brings proportionately increased pay? — It does 
to the United States — it's same postage rate for letters if there are 2 or 2,000,000. 

The railways, of course, receive pay in proportion to the increase weight? — They do 
not. 

Why? — The rate is decreased as the weight increases. 

Give example. — Two hundred pounds or less average over length of route is, on non- 
land-grant roads, $42.74 per mile per year. On land-grant roads it is $34.20. When it 
is an average of 5,000 pounds, or 25 times as great, the rates are $171 and $136.80, only 
four times as great. Intermediate weights are proportional. 

Is this reduction a voluntary one on the part of the railways? — It is not. 

Who makes it? — Congress and Post Office Department. 

What is the alleged reason for their action? — To make post-office expenses less than 
the income. 

Does the United States make similar rate reductions in rents, teaming, light, heat, 
etc., charged for by individuals and companies? — No. 

Why? — Everyone knows. 

Are other post-office expenses less in same proportion as is the railway pay? — No. 
In eight years previous to 1908 total expenses grew 93 per cent ($1,000,600,000). The 
income grew 87 per cent ($89,000,000). 

What portion of the expense increase was for railway service? — Only 11 per cent. 

What went for rural free delivery in 1908?— $33,935,000, or 34 per cent. 

How much for postmasters? — 25 per cent, or $25,000,000 of the increase. 

Have the post-office expenses always exceeded the income? — No. 

What years has this excess been greatest? — Since the adoption of rural free delivery. 
In 1900 this service cost $420,000, and the year's post-office surplus over all the expenses 
was $5,385,000. 

In 1908 rural free delivery expenses had grown to $35,462,000. Other expenses (not 
including pay to railroads) had grown to $135,804,583, and the post-office deficit was 
$17,441,719. 

That is to say, the increase in income of post office has been all absorbed by increase 
in rural free delivery and other expenses (not including pay to railroads)? — Yes. 

How much have the "Acts" and "Orders" referred to herein taken from the rail- 
roads? — About $8,500,000, or 17 per cent of the total received by them in year ending 
June 30, 1908, for handling the mail and furnishing postal cars. 

Is there any justification in such "Acts" and "Orders"? — Not from any point of 
view. Labor, material, and the price of everything have advanced materially. Yet 
in the face of conditions that, in all fairness should have raised it, railway mail pay is 
practically the only thing that has been decreased. 



Circular No. 6. — Committee on Railway Mail Pay. 

[Grand Central Station, Chicago, February 10, 1910.] 

RAILWAY MAIL PAY AND THE POSTAL DEFICIT. 

The committee on railway mail pay, on behalf of 139 railroads operating 192,808 
miles, herein appealing to the spirit of fairness of the American public, respectfully 
presents some facts and figures bearing on the compensation paid the railroads for 
carrying the mails which has been under discussion for the past 12 years, although 
congressional committees after exhaustive study have reached the conclusion more 
than once that the pay of the railroad companies for transporting the mails and for 
furnishing and hauling railway post-office cars was not excessive. 

Recent acts of Congress and orders of the department with the force of the law, 
have reduced the revenues of the railroad companies, though pronounced not excessive 
by Congressional committees, by the following amounts: 



RE i ATION OF POSTAL DEFICIT TO SECOND CLASS MATTER, MAIL SERV,CE PERFORMED BY R, 
AND POSTAL REVENUES AND EXPENDITURES FOR YEARS ENDING JUNE 30, 1 9Q7-8-3. 



**», 




KEY 

Payments to Railroads 

Revenue applied to other expenses 



49390—34 (To face page 819.) No. 



RAILWAY MAIL PAY. 819 

First. The act of Congress March 2, 1907, reduced pay on all routes moving more 
than 5,000 pounds per day and also reduced the rates for furnishing and hauling 
railway post-office cars. The effect of this act was a loss of $2,676,468 annually, or 6 
per cent of the total received for both classes of service. 

Second. The act of Congress June 26, 1906, withdrew from the tonnage of mails on 
which pay was allowed, empty mail bags and certain supplies thereafter to be shipped 
by freight or express. The effect was to cut a million dollars annually from the pay 
of the railroads, with no reduction of space or facilities required to be furnished. 

Third. The Postmaster General's order of June 3, 1907, changed the methods of 
computing average weights, resulting in reduction of $4,500,000 per annum, or nearly 
10 per cent. 

Fourth. The Postmaster General's orders further reduced railway postal-car pay, 
causing reduction in annual pay to the railroads of $345,287. 

All of these reductions, aggregating $8,500,000 per annum, or 17 per cent of the 
total railway mail pay for the year ending June 30, 1909, were made in the face of 
large increases in the cost of labor and materials used in railroad operation. 

The message of the President of December 7, 1909, on second-class mail matter has 
inspired those enjoying these very low rates to try to show that the deficit is due to 
improvident railway mail pay contracts, rental and haul of railway post-office cars, 
and to grossly discriminatory rates in comparison with those paid by express companies. 

HANDLING SECOND-CLASS MAIL MATTER. 

Exhibit A shows that in 1907 the postal deficit was $6,653,283. In 1909 it was $17,441,- 
719, an increase of 162 per cent. During the same period the postal revenues increased 
$19,977,378, from $183,585,005 to $203,562,383, or 11 per cent, and as tonnage of second- 
class mail was practically the same (only 2 per cent more) it shows at once the deficit 
was due to other causes than increase in second-class mail. The pay to the railroads 
was the same in both years, although the ton -miles of service increased 14 per cent. 
The entire shaded area at bottom of Exhibit A shows the total increase of expenses of 
$30,765,814. The small black square in the upper left hand corner shows the extent 
($79,558, or about one-fourth of 1 per cent) to which payments to railroads were in- 
creased. As neither tonnage of second-class mail nor railway mail pay increased, we 
must search elsewhere for the causes of the increased deficit from $6,600,000 to 
$17,400,000; or, put in another way, why it cost the department $30,765,814 in in- 
creased expenses to earn $19,977,378 more revenue. 

Exhibit B shows the revenues and expenditures of the Post Office Department, per 
pound, by classes of mail handled (Postmaster General's 1909 report), itemized as to 
payments to railroads and other expenses. On first-class mail the Government received 
a revenue of 84 cents per pound. The total expense of handling was 49.92 cents, of 
which 5.56 cents or only 11 per cent was paid to the railroads and 89 per cent for other 
expenses. On second-class mail the total expense was 9.23 cents, of which 3.19 cents, 
or 34 per cent, was paid to the railroads, and 66 per cent for all other expenses. In the 
case of the first-class mail matter the Government pays the railroads 6.6 per cent of the 
gross earnings for handling; in the case of the second-class mail, 290 per cent of the gross 
earnings. Newspapers and magazines have claimed with much force and justice that, 
whilst the Government may distribute them at a loss, they stimulate so much letter 
writing that the carriage of the first and second class matter should be considered as 
joint and a separate traffic. Consolidating the first and second classes, the total revenue 
becomes 14.88 cents per pound and total expenditures 15.98 cents per pound, of which 
3.22 cents is paid the railroads and 12.76 cents for other expenses. The railroad pay 
is 20 per cent of the total cost, and rural delivery 19 per cent. The free departmental 
and congressional mail, if charged for at the same rate as the combined first and second 
class matter, would add $7,086,385 to the revenue of the department, with which it 
should justly be credited. 

The figures of the Postmaster General's Report of 1909, pages 29 and 58, show that the 
actual amount paid for transporting second-class matter by railroads (including post- 
office car pay) is only 3.19 cents per pound of mail matter, excluding weight of mail 
equipment also carried by railroads under the same preferential and discriminatory 
service accorded the mail itself. The universally misquoted rate of 9.23 cents per 
pound covers all of the cost of handling mail, including rural delivery, administration 
expenses, etc. (Postmaster General's Report of 1909, p. 32) . As the Government requires 
the railroads to carry three-fourths of a pound of equipment with every pound of mail, 

3 19 
the real rate of 3.19 cents computed on mail alone becomes or 1.9 cents per pound 

1.75 
of weight carried. 



txhibit "fl" 

REVENUES AND EXPENDITURES OF POST OFFICE DEPARTMENT PER POUND OF MAIL HANDLED 


CULKOPMA.LM.™ 




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™ 


"E 


14.64 
16.29 




















































































IHlIii^illlP 




1.44. 


fllllll 













49396—14 (To face page 819.) No. 



820 



KAILWAY MAIL PAY. 



The apportionment of expenses to second-class matter by the department is open 
to criticism as of the total less claimed from this matter nearly $14, 000, 000 is attributed 
to rural delivery, which the magazines claim is not required by them, and $7,000,000 
for salaries of railway postal clerks and car pay, whilst the amount charged for trans- 
portation is too high, for if this matter were removed from the mails the railway pay 
per ton-mile would become higher whilst postal-car service could be only slightly 
reduced. Again, the cost of ' ' free in county " delivery of a large tonnage of newspapers 
is charged against the paying tonnage, whilst if the expenses were apportioned on basis 
of weight of mail and equipment instead of mail only, the charge against second-class 
matter would be largely reduced. 

IMPROVIDENT RAILWAY MAIL CONTRACTS — RAILWAY POST OFFICE PAY. 

(A) It is the popular impression that the compensation paid the railroads for 
railway post office cars is a rental simply. Nothing could be more erroneous. The 
pay covers not only the exclusive use — a very small part indeed of the expense to 
the carrier — but the very burdensome and expensive duty of hauling the car — a fully 
equipped post office on wheels — in fast passenger trains in which mail is assorted and 
distributed en route by a corps of clerks to expedite its delivery at intermediate 
points and terminals. These cars are hauled in trains, next to baggage cars with 
ample cubic capacity to carry all mail tendered, and to earn all transportation charges 
prescribed by law, but for public convenience the department provides these moving 
post offices, weighing 12.4 per cent of the average passenger train. For the use and 
cost of hauling this car, ridiculously inadequate railway post office pay is allowed. 

Exhibit C shows that for a 60-foot railway postal car the carriers receive 5.5 cents 
per mile hauled, according to the scheduled railway post office car rates. These cars 
weigh about 50 tons, so the average earning per gross ton-mile hauled is 1.1 mills. 
The department on many lines uses the car one way only forcing the carriers to haul 
it back empty, so that on such lines the car-mile earning would be reduced to 2.8 
cents or about the same earnings per mile as from 1J first-class passengers, and the 
ton-mile earning to -^ of a mill. From published railway tariffs we find that for haul- 
ing empty passenger cars, which weigh much less, the railroads receive 11 cents a car- 
mile, or 2.4 mills a ton-mile; that to haul empty baggage, express, and mail cars in 
passenger trains they receive 8 cents to 15 cents a car-mile or from 2.2 mills to 4.2 mills 
per ton-mile— twice to four times as much as they receive from the Government. 
To move empty freight cars in freight trains carriers receive more than they receive 
for moving postal cars in passenger trains, and when the revenue accruing from mov- 
ing loaded freight cars in freight trains is considered, the disparity becomes almost 
incredible. 

HIGH COMPENSATION IN COMPARISON WITH EXPRESS SERVICE. 

(B) The average haul of second-class mail matter (Report of 1907 Special Weighing 
of the Mails, p. 58) is 610 miles, the average rate paid the railroads for transporting 
a pound of this matter, including railway postal car pay 3.19 cents, and for transporta- 
tion of mail and packages (to make it comparable with express) containing it, 1.83 
cents per pound, or 6 cents per ton-mile. The merchandise express rates from Chicago 
to points named below are as follows for contents and packages: 



Chicago to — 


Distance. 


Rate per 

110 
pounds. 


Eate per 

ton-miles. 


55 per cent 

paid 
railroads. 


Marshalltown, Iowa 


280 
285 
491 
645 
907 
2,267 


$1.75 
1.50 
2.00 
3.25 
2.50 

11.50 


Cents. 
12.5 
10.5 

8.1 
10.1 

5.5 
10.1 


Cents. 
6.87 


Cincinnati, Ohio 


5.77 


Omaha, Nebr 


4.45 


Grand Island, Nebr 


5.55 


New York, N. Y 


3.02 




5.55 







On short hauls express rates are lower than second-class postal rates because postal 
rates are made regardless of distance, whilst express rates take account of distance 
carried. Therefore, for long distances express rates are much higher, and the only 
fair comparison that can be made is one based on average hauls. 

Considering the conditions and reciprocal obligations, express is far more attractive 
and remunerative than mail traffic and would be so though the ton-mile earnings 



Exhibit "C" 
RAILROAD EARNINGS FROM RAILWAY POSTAL CAR PAY COMPARED WITH EARNINGS FOR MOVING Ety)PTY PASSENGER CARS 
AND EARNfNGS FROM FREIGHT TRAFFIC 



Railway postal car pay for 6oft mail car 
Ry PO pay oh half lines" (pay one may only) 

Empty Passenger Cars . 

Passenger cars, Chicago to Missouri River 
Sleeping B. Dining cars - east of Chicago 
Sleeping & Dining cars - west of Chicago 
Passenger coaches - east of Chicago 
Passenger coaches - west of Chicago 
Ba99aa.fi Express&Mail cars -east of Chicago 
Baggage, ExpressfiMailcars -west of Chicago 

Empty Freight Cars in Freight Trains 
Box, Refrigerator G-Stpck cars-east of Chicago 
Freight cars -west of Chicago 

Loaded Freight Cars in Freight Trains 
40 ton carload of wheat St Paul - Chicago 
50 fon carload of hard coal Chicago -St Paul 
to ton carload of pig iron Chicago - St Paul 
30 ton carload of pianos NcwYork-SanFrancis 
30 ton carload of carpets New York -San Francis 

AR freight handled in United States, 

(last statistics of Railways of I.C C ) averagin, 
Zotons per loaded c&^including underloaded 







i » " 



^£SS2Z!2S.72Zh 



77Zfon28Z-:- 



49396—14 (To face page 820.) 



RAILWAY MAIL PAY. 821 

from express are far less. Bearing in mind that economical train operation means 
good car loading and good train loading, express is handled with baggage in cars 
loaded to full capacity; mail requires a post office on wheels with space for mail racks 
and postal clerks working en route, loaded with an average of but 2 tons, or one- 
seventh full weight capacity. The design and specifications of the post-office car 
are made by the department regardless of expense, as the carrier pays, and, therefore, 
because of its special fittings for post-office use is much more costly to build, equip, 
maintain, and haul in trains, as its dead weight is 50 per cent greater than baggage and 
express cars. On the other hand, it brings in less revenue, as its net carrying capacity 
for mail is not more than 2\ tons, whilst express cars, having no space taken up with 
special fittings and equipment, can be loaded to 15 or 20 tons. Mails are handled 
on the fastest trains, often compromising their schedules, and special expenses are 
imposed on the carriers to transfer at junctions, handle free at terminals and into 
intermediate stations, fines and deductions are made for delay, etc., all of which 
are charges against gross mail revenue. In the case of express, the carriers' com- 
pensation is increased by services rendered by express companies, such as free 
carriage of remittances and packages, express messengers acting as baggagemen, 
joint station agents and employees, etc. 

Under existing contracts the carriers are paid from 50 per cent to 55 per cent of the 
gross earnings of express companies for the transportation service rendered by the 
carriers. If the railroads were to offer the Post Office Department the more favorable 
contracts which it is thought the express companies enjoy, the railroads would expect 
say 50 per cent of the gross earnings of the department, and their pay from all sources 
for the carriage of mail would be raised from $49,700,000 to over $102,000,000. Express 
companies pay the railroads 50 per cent to 55 per cent of their gross earnings for trans- 
portation; the department pays only 24 per cent. The department retains 76 per cent 
of its gross earnings and shows a large deficit yearly; the express companies retain 
45 per cent of theirs and after paying all expenses of collecting, delivering, messenger 
hire, etc., pay handsome dividends to their stockholders. The Post Office Depart- 
ment conducts its traffic regardless of all well-founded principles of economy — and 
very properly so — solely for public convenience, and the beneficiary should expect 
to foot reasonable bills for the service. The express companies are required by the 
carriers to handle their traffic with strict regard to economy. 

Any comparison of mail with express or freight rates is valueless unless all conditions 
are considered and valued, such as average haul, character and flexibility of contracts 
and of service rendered. The higher ton-mile rate may, when modified by conditions, 
be the less remunerative to the carrier. On the average passenger train carrying 
mail, express, and passengers 12.4 per cent of the weight of the train is devoted to 
post-office features not needed by the carrier to accommodate mail tonnage, and is 
therefore a special charge demanding a much higher ton-mile rate for mail alone to 
yield the same net return as express and passengers. In 1908 passenger-train earnings 
from all sources were $674,042,400; 12.4 per cent of the weight of trains should have 
yielded the railroads $83,581,258, whereas the total pavment for handling mail was 
but $49,737,519. 

Mail traffic is of a class distinctly higher than express, and on account of light 
loading, only 2 tons average per car, must be classed as less than carload business, 
whilst express traffic in full carloads, with no special additional equipment, approxi- 
mates carload business. Wide differences in ton-mile rates are sanctioned by law 
because of classification and size of load. 

A greater disparity in rates is found in freight trains. Coal or ore is moved in the 
same train with silk, hops, automobiles, willow- ware; yet the carriage of the low- 
grade commodity might yield a larger net return to the carrier because of the much 
heavier load in the car, less exactions of the shipper, less risk of damage, etc. The 
following illustrates the wide range of ton-mile rates in freight service: 

Freight rales per 100 pounds, Chicago to St. Paul. 

Passenger vehicles (less than carload) $2. 10 

Motor cycles (less than carload) % 1. 50 

Chairs (less than carload) .' 1. 20 

Dry goods (less than carload) 60 

Sugar, coffee (less than carload) 25 

Agricultural implements (less than carload) 40 

Agricultural implements (carload) ' 20 

Bar iron (less than carload) 25 

Bar iron (carload) 14 

Pig iron (carload J 14 

Hard coal (carload) 10 



822 



EAILWAY MAIL PAY. 



The range in rates for freight carried in the same train is from unity to 20 times as 
much, due to difference in classification and size of load, other conditions of trans- 
portation being identical. In the case of second-class mail and express the range 
is extremely small. In the case of freight rates a disparity is also noted of 80 per 
cent to 100 per cent between carload and less-than-carload rates on the same material. 

Rates per ton-mile for transporting freight on freight trains are often higher than 
rates charged for hauling and furnishing post office car facilities on passenger trains 
for carriage of mail, as the following indicates: 

Freight rates Omaha and Kansas City to Denver. 





Rates per 
100 pounds. 


Rates per 
ton mile. 




$4,375 
3.125 
2.50 
1.80 


Cents. 
14.6 




10.4 




8.3 


Railroad earnings on second-class mail matter on passenger trains 


6.0 







As shown by exhibit A, the postal deficit and its great increase in the last two years 
in the face of an increase of $20,000,000 in postal revenue can not be allocated to either 
increases in payments to the railroads or losses on increased tonnage of second-class 
mail matter, both of which remained stationary. Other expenses, however, of the 
Post Office Department absorbed the larger revenue by increasing over $30,000,000. 
This was in part due to extending the rural delivery (which increased $9,000,000) 
and for increased forces and salaries due to higher cost of living (increase $20,000,000). 

Postal revenue has been increasing at the rate of $10,000,000 annually, and if postal 
expenses are controlled they should increase much more slowly; and in two or three 
years the deficit should disappear unless the greater revenue is used for further im- 
provements in service; and, if it is, the public should be willing to foot the bill. The 
railroads are now underpaid and are receiving less and less of the postal revenue for 
greater measures of service rendered. Ten years ago, in 1899, of each dollar of postal 
revenue, 38 cents was paid to the railroads; in 1909 only 24 cents, a decrease of 14 cents, 
or 37 per cent. The 1909 postal deficit was 8 cents per dollar of revenue, so that had 
the 14 cents saved from the railroad proportion (or the equivalent of $29,000,000 on 
basis of 1909 revenue) been used to reduce expenses instead of further serving the 
public, it would have wiped out the deficit and left a surplus of 6 cents per dollar, or 
$12,000,000. Instead, however, the $29,000,000 wrung from the railroads was applied 
to various purposes with the resulting deficit. 

Whether the service shall be improved with an annual deficit or remain stationary 
with no deficit, or with a surplus, depends on whether further improvement of the 
service or a favorable financial showing is to be the paramount consideration. The 
able men in charge of our postal service can easily bring about either result. It is for 
the public to decide which they want, but in deciding, we appeal for justice and a 
square deal for the railroads. 

The Committee on Railway Mail Pay. 



RAILWAY POST-OFFICE CAR SERVICE ON ATLANTIC COAST 
LINE RAILROAD. (SUBSTITUTION OF 30-FOOT FOR 60-FOOT 
R. P. 0. CARS.) 

The following correspondence in relation to the above heading, and 
referred to the joint committee, is submitted: 

April 24, 1913. 
Hon. F. M. Simmons, 

United States Senate, Washington, D. C. 
My Dear Senator: Your letter of April 7 to Senator Bankhead, inclosing com- 
munications addressed to you from Mr. W. N. Royall, general manager Atlantic Coast 
Line Railroad Co., relative to the removal of 60-foot cars and substitution of 30-foot 
R. P. 0. cars on certain Atlantic Coast Line trains, has been referred to the joint 
committee on postage on second-class mail matter and compensation for the transpor- 
tation of mail. 

As you are aware, the subject of compensation to railways for the carriage of mails, 
including that for the R. P. 0. service, is now under consideration by the joint 
committee. The editorial attached to Mr. Royall's letter from the News and Courier 
of March 24 is one suggesting food for thought. 
Yours very truly, 

Jonathan Bourne, Jr., Chairman. 



United States Senate, 

April 2, 1913. 
Hon. John H. Bankhead, 

United States Senate. 
Dear Senator: I inclose you a letter from Mr. W. N. Royall, general manager of 
Atlantic Coast Line Railroad, which is self-explanatory. 
Very truly yours, 

F. M. Simmons. 



Atlantic Coast Line Radlroad Co., 

Wilmington, N. C, March 24, 1918. 
Hon. F. M. Simmons, 

United States Senator, Washington, D . C. 

My Dear Sir: I beg your attention to the attached editorial from the Charles- 
ton News and Courier of to-day. I am also iinclosing, for your information, copy 
of order of the Second Assistant Postmaster General, under date of November 22, 
1911, directing the removal of full 60-foot R. P. 0. cars from our trains 80, 82, 85, 
and 89, between Fayetteville, N. C, and Jacksonville, Fla., and calling upon us for 
30-foot apartment cars for the service between those points on all of these trains. 
I also attach copy of letter from Superintendent Railway Mail Service, in which 
he states only 30-foot apartments are needed south of Fayetteville. 

I am merely calling your attention to this in view of the fact there may be some 
misunderstanding on the part of the public. We are at this time trying to comply 
with the original order, as we now have sufficient 30-foot apartment cars to perform 
the service on Nos. 80 and 89. At the time the order went into effect we could not 
supply 30-foot apartments, and while we might have done so at an earlier date, we 
did not do so until we had exhausted every means at our command to secure com- 
pensation such as is commonly allowed all over the country for use of 60-foot post- 
office distributing cars. 

The effect of the department's order in this case unquestionably has resulted in 
inferior service for the past year. This order was one of the " economies" of the 
Hitchcock administration, and in order to accomplish this uncalled-for reduction in 

823 



824 KAILWAY MAIL PAY. 

compensation for rental of our R. P. 0. cars the department removed the clerks who 
formerly lived in Charleston to Fayetteville. Fayetteville is an intermediate point 
on our line, as you know, so far as changing engines, crews, or breaking our through 
trains is concerned, and of course it has been very inconvenient for us to handle the 
matter under the order of the department, as we are required to stop and make 
transfer on account of change in the number of clerks at that point. 

I have been informed, and believe, that in order to demonstrate the alleged prac- 
ticability of this scheme of the department, the clerks are endeavoring to make dis- 
tribution of Georgia, South Carolina, and Florida mails before reaching Fayetteville, 
in order that the mail for those States and beyond may be sacked and concentrated 
in the apartment car, so as to reduce the necessity for distributing space in railway 
post-office car after leaving Fayetteville. The result of this has been that every day 
for months the department has been carrying as far as Fayetteville, Florence, and 
Charleston mails that should have been currently distributed while the train was 
passing through the States of Virginia, North and South Carolina, and we have been 
compelled to haul them back and forth over our line undistributed. For instance, 
No. 89 will put off a great number of pouches of undistributed mail for points north 
of Fayetteville, at Fayetteville; train 80 will carry' these pouches back to Wilson, 
Weldon, and Emporia — sometimes Richmond — and the actual delivery of the mail 
is made to people along our line in certain instances 24 hours late. The mail on our 
line between Richmond and Jacksonville has been handled with greater delay, and 
in the most unsatisfactory manner, during the past few months than at any time 
during our history, and by reason of the department's methods we have suffered 
great expense in transfer and our passenger trains have been delayed unnecessarily. 

The department caused us to construct eight all-steel postal cars by reason of their 
demands in Congress for this equipment, and then within a few months after the cars 
were constructed our railway post-office pay was decreased. These cars cost us about 
$10,000 each. Years ago when we furnished 60-foot wooden railway post-office cars 
for distribution purposes the cost was a little over $4,000 each, and we were paid for 
rental of these cars for the entire run over the line. 

The departmental orders issued during the past four years have so greatly reduced 
our pay as to make the service unprofitable. We are to-day receiving less compensa- 
tion for carriage of the mails, including railway post office, than we did in 1905, and 
our railway post-office compensation — that is, for rental of 60-foot distributing cars — 
has been reduced since 1905, 81 per cent; in other words, we are to-day receiving 
only 19 per cent of the amount for 60-foot car rental that we received in 1905. 

We have been urging the matter of compensation and maintenance of 60-foot cars 
south of Fayetteville before the department, and requesting that they give us relief. 
I have had daily reports covering a period of nearly two months of the service on 
our line, showing the number of pouches carried by and various irregularities in the 
handling of the mails, which, if you care to see, I will be pleased to send you. 

Any steps you feel inclined to take in our behalf for relief in this matter will be 
greatly appreciated. 

Yours very truly, W. N. Royall, General Manager. 



The News and Courier. 
WHY MAIL IS OFTEN LATE. 

From its energetic correspondent at Florence, S. C, The News and Courier has 
received the following, under date of March 22: 

Col. J. A. Metts, of Charleston, chief clerk of the railway mail service in this dis- 
trict, was in the city this morning en route to Fayetteville, N. C, where he went 
to-day to look after the matter of changing the mails on Atlantic Coast Line trains, 
Nos. 80 and 89, the through mails to and from the North and South. 

Beginning to-day, March 22, the Atlantic Coast Line Railway cuts out at Fayette- 
ville, on train No. 89, and cuts in at Fayetteville on train No. 80, the 60-foot elec- 
trically-lighted steel built mail cars that were purchased for the run between Wash- 
ington and Jacksonville, Fla., and only from Washington to Fayetteville, N. C, will 
these mail cars be used. At Fayetteville the mails will be transferred to a 30-foot 
combination mail and baggage car and thereby cause untold delay, not only to train 
service, but to the proper delivery of the mails by the clerks of the railway mail serv- 
ice on the run between Florence and Rocky Mount, N. C, as well as on the entire line 
between the North and South. 



RAILWAY MAIL PAY. 825 

The 60-foot mail cars are now crowded with the heavy mails, and since the parcel 
post was established it is growing in volume daily, so that the large mail cars are even 
packed to the top of the car every morning and night with the heavy mails, and on train 
89 from the north it has been found necessary nearly every day to call into requisi- 
tion one-half of the baggage car next adjoining in the train service. 

This correspondent took a "peep in" on one of the large mail cars a few nights ago 
as the train pulled into the station from the north, and, although Florence is half way 
between Washington and Jacksonville, Fla., yet the car was packed full of mail sacks 
filled with mail and the front end of the baggage car was stacked full also. One of the 
clerks in the car was heard to remark that there were sacks of mail deep down in the 
pile that contained mail for points north of Florence that had not been touched nor 
could they be until after leaving Charleston or Savannah, Ga., for it was simply an 
impossibility to get to them and do the more important work. 

It is almost a nightly occurrence that Florence mail is carried on south or north and 
returned by other trains during the day or as soon as they can be gotten at by the 
clerks on the run. 

It is stated, not officially, however, that the Atlantic Coast Line is cutting out the 
service of the large cars because they are only paid by the Government for a 30-foot 
car service, and the Government has been getting from 60 to 120 feet car space, and 
they do not propose to continue to haul Government mail for less than what they 
are paid. 

It is a very serious problem to the business communities of the various towns and 
cities along the Atlantic Coast Line, and the matter should be promptly called to the 
attention of the post-office officials. If the railroad people are to blame they should 
be made to come across. If the Post Office Department is to blame for not paying 
the railroads what they should, then they should be called down and made to "come 
across" and remedy this intolerable state of affairs. The matter needs investigation, 
and that quickly. 

We have given this article space in our editorial columns because it has seemed to 
us to throw at least a measure of light upon one of the most important problems with 
which the new administration at Washington will have to deal. Postmaster General 
Burleson is making a thorough inquiry into the conditions affecting the postal service, 
we are told. He has announced that it will not be his policy to administer the depart- 
ment with a view to making the service pay for itself, but with the prime purpose of 
making it efficient. It is apparent that it can not be efficient so long as the Govei '- 
ment continues to swell the volume of the matter handled, by reason of the adoption 
of the parcel post and the expansion of the rural free delivery routes, and at the same 
time cuts down the facilities for handling mail matter on the railroads and reduces 
the number of railway mail clerks and their hours of labor. 

When letters and packages and newspapers are delayed or go astray it is not the 
clerks who should be blamed, under present conditions, but those who are responsible 
for the conditions. The Wilson administration can not help matters right away. It 
will take a reasonable amount of time to work an improvement. But the public will 
support no Government which tolerates the inefficiency which now exists in this 
country in the handling of the mails. 



Washington, November 22, 1911. 
Messrs. Thompson & Slater, 

Agents Atlantic Coast Line Railroad Co., 

Washington, D. C. 

Gentlemen: You are advised that on account of a proposed change in the manner 
of both the organization and performance of service in the Fayetteville and Jack- 
sonville R. P. 0., it is reported that the mails in the trains of this R. P. O. (Nos. 80, 
82, 85, and 89) can be provided for by apartment cars. Orders have therefore been 
issued this date in this connection, of which the following are copies: 

From December 31, 1911, the R. P. O. car service and pay therefor on route No. 
120030 between State Line (n. o.) and Peedee Railroad Station (n. o.), S. C, are 
discontinued. 

From December 31, 1911, the R. P. O. car service and pay therefor on route No. 
120002 between Florence and Peedee (n. o.), S. C, are discontinued. 

From December 31, 1911, the R. P. O. car service and pay therefor on route No. 
120005 between Florence and Charleston, S. C, are discontinued. 

From December 31, 1911, the R. P. O. car service and pay therefor on route No. 
120004 between Charleston, S. C, and Savannah, Ga., are discontinued. 






826 KAILWAY MAIL PAY. 

From December 31, 1911, the R. P. 0. car service and pay therefor on route No. 
121009 between Savannah, Ga., and Jacksonville, Fla., are discontinued. 

From December 31, 1911, the one-half line of 60-foot and the three half lines of 
40-foot R. P. O. cars authorized on that part of route No. 118002 between Fayette- 
ville and State Line (n. o.) are discontinued, and there is deducted from R. P. O. 
car pay at the rate of $2,618.55 per annum, being $57.50 per mile for 45.54 miles. 
Very respectfully, 

Joseph Stewart, 
Second Assistant Postmaster General. 



APARTMENT CARS FOR THE WASHINGTON-FAYETTEVILLE-JACKSONVILLE LINE. 

Washington, November 28, 1911. 
Mr. W. N. Royall, 

General Manager Atlantic Coast Line Railroad, 

Wilmington, N. C. 
Sir: I am directed by general superintendent of our service to advise you that 
from and after December 31, 1911, distribution of Florida mail will be transferred 
from the Fayetteville and Jacksonville R. P. O. to the Washington and Fayetteville 
line, and that authorization for full car service in the Fayetteville and Jacksonville 
car will be discontinued, full cars there to be superseded by apartment cars. 

To accomplish this we will need 30-foot apartment cars in train 89; that is, it will 
take three 30-foot apartments, in addition to the line of sixties, between Washing- 
ton and Fayetteville, or it would take five to cover the service all the way through 
to Jacksonville when you cut out the full cars at Fayetteville. 

Train 85 will simply need a line of thirties between Fayetteville and Jackson- 
ville; or, to man the two trains, 85 and 89, with their opposite return trains, will 
take seven 30-foot apartment cars. Please advise if you will be prepared to make 
the desired change on the date named. 
Respectfully, 

Norman Perkins, Superintendent. 



THEORY OF RAILWAY MAIL PAY. 

The following letter from Dr. Max O. Lorenz, associate statistician, 
Interstate Commerce Commission, together with a statement giving 
an outline of his personal views with reference to the above heading, 
is submitted: 

Interstate Commerce Commission, 

Division op Statistics, 
Washington, March 13, 1918. 
Hon. Jonathan Bourne, Jr., 

Washington, D. C. 
Dear Sir: In compliance with your request, I have prepared an outline of my ideas 
regarding the theory of railway mail pay, and in close a copy of same herewith. It is 
scarcely necessary to say that these are my personal views and are not in any sense an 
expression of the position which the Interstate Commerce Commission or its members 
might take. » 

Respectfully, Max O. Lorenz, 

Associate Statistician. 

THE THEORY OF RAILWAY MAIL PAY. 

In the matter under consideration, the Government is a purchaser of transportation 
from the railway companies. The problem before us is to ascertain a fair or just price 
to be paid for that transportation. For some of the things which the Government 
buys, the competitive bidding of various sellers may indicate what is a fair price. 
Here we have something different. It is obvious that there could be no automatic 
determination of the price by competition of the railways. This is merely the same 
conclusion which has been reached with respect to railway rates generally. The truth 
is that the question of railway mail pay presents a special case of railroad-rate making, 
and in settling this question, use should be made of the conclusions that have been 
established with respect to the making of railroad rates. 

Among the things which the courts have told us must be considered in determining 
a reasonable rate, two things stand out prominently: The value of the service to the 
purchaser of the transportation and the cost of the service to the railway company. 
In the case of a private shipper who is trying to sell a commodity in a particular market, 
it is conceivable that we could approximate .the value of the service to him by finding 
how high the rate could be without putting him out of business. But who will say 
what is the value of the mail-carrying service to the United States Government? The 
Government could pay one hundred millions instead of fifty and make up the deficit 
from taxation. Value of service as a basis for determining railway mail pay leaves us 
completely in the air. 

On the other hand, in the cost of service principle we have something much more 
tangible, something that can be statistically measured, if not with accuracy at least 
with sufficient approach to accuracy to serve as a guide in the search for a reasonable 
compensation. Cost is the one well-approved and at the same time practicable basis 
upon which a determination of railway mail pay must chiefly rest. 

Before considering the objections to this position, let us understand clearly what 
we mean by cost. We may have in mind a restricted meaning or a complete meaning. 
A restricted meanyag would include merely the wages paid, the repair of equipment, 
the cost of fuel, the maintenance of the rails, ties, etc.; in short, the current expenses 
of operation and upkeep or what is known in the official reports as the operating 
expenses. If a railroad collected only this amount from its patrons it would go into 
bankruptcy. It needs additional money for the following purposes: It must pay 
taxes, it must pay interest, and, if it is not to discourage new investment, it must pay 
dividends, and, furthermore, it must have a surplus to carry it through the lean years. 
When all these items have been added to operating expenses, we have cost in the 
complete sense; in short, operating expense plus taxes and return on investment. 

827 



828 EAILWAY MAIL PAY. 

We may proceed now to consider the main objections to the cost basis. It is urged 
that the cost basis would offer a premium for inefficiency and it would reduce the pay- 
ment to that company which by efficient management reduced its costs. While the 
mail revenue is relatively small as compared with the total operating revenues, still, 
as a matter of principle, this objection merits consideration, for it contains a sound 
idea. The Government should not discourage efficiency. But this objection is in 
reality not an objection to cost as a fundamental guide, but it is an objection, and a legit- 
imate one, to cost applied to the exclusion of every other consideration. It is a valid 
objection, possibly, to that form of law which would direct an official to apply cost 
and nothing but cost as ascertained for each individual railway. If the cost idea is 
to be appliedstseparately to each railway corporation, there must be given a discretion- 
ary power to some administrative body to take into account, subject to review, all 
pertinent circumstances pertaining to the individual case. 

The second objection to the cost basis is that it can not be ascertained. It is true 
that such ascertainment is not merely a question of accurate statistics and accounts, 
but it involves also a more or less arbitrary apportionment of those expenses which are 
incurred in common for various services. Thus, the hauling of a mail car occasions 
very little expense, outside of car repairs, that can be traced directly to that car. 
The train expenses are incurred to a large extent for all the cars in the train and must 
be apportioned on the basis of some physical unit. It would be for a committee of 
Congress or for some commission to say, after hearing the arguments advanced for each 
possible basis, which one seemed to them the most equitable. A similar decision 
would have to be obtained with respect to the bases for the common expenses as 
between the freight service and the passenger train service. In short, a scheme of 
apportionment for all accounts could be adopted by such committee or commission 
and promulgated as authoritative for this purpose. The amount of work involved in 
this procedure must not be judged solely with reference to the importance of the prob- 
lem of railway mail pay, because the results of such labors would doubtless be used 
in many cases before courts or commissions where a consideration of cost seemed 
important. 

So much for the basic principle involved. Whatever short cut or convenient 
device may be adopted, it must find its justification in some direct or indirect con- 
sideration of cost. There are a variety of ways in which this cost principle could be 
applied. It can be used with greater or less thoroughness, as seems advisable. 

1. One conceivable solution would be to direct the Interstate Commerce Commission 
to alter its annual report form in such a manner that the regular report of the carriers 
each year would give the information necessary to calculate the car-foot-mile cost 
(if that should be the unit prescribed) and to determine the basis for each road on which 
to calculate the mail pay, by considering mainly cost, but taking also into considera- 
tion the conditions peculiar to each case, such as abnormal conditions, inefficiency, 
etc. From such findings the carrier could appeal as it can appeal at present from 
rate decisions. The final result could be transmitted to the Post Office Department, 
which, on the basis found, would determine the actual amount due each carrier. 

2. Another method would be for the committee to classify the roads geographically, 
or by density of traffic, and to make as detailed a cost study of the typical roads in 
each class as seemed necessary to satisfy the committee in a general way whether 
the existing rate of pay is substantially just, or too high or too low, and then to adopt 
a specific rate of pay per car foot mile or per ton or whatever unit seems best, to be 
paid to each of the roads in any particular class, there being a separate rate for each 
class. This would be much simpler than attempting to fix a separate rate for every 
road. It is obvious that this simpler plan of classifying the roads could also be made 
a part of the method suggested in the preceding paragraph. 

3. The method indicated in the preceding case could be modified or supplemented 
as follows. When we consider that passenger earnings have been under consideration 
and scrutiny by State commissions and Federal courts for many years, we may assume 
that passenger earnings are not exorbitantly high or disastrously low in comparison 
with cost. (It is true, railway companies say that their passenger departments do 
not pay, but they do not mean by this that the passenger department is a financial 
drain. Thus the Pennsylvania Railroad Co. states in its report to its stockholders 
in 1911 that the passenger earnings were 1.980 cents per mile, and the operating 
expense, including taxes, was 1.805 cents, or a net operating revenue of 0.175 cents. 
This net revenue may not be sufficient to pay a just proportion of the capital charges, 
which are not included in the 1.805 cents, but still it contributes something to such 
charges.) The committee, then, from a study of passenger train car mile earnings 
might get some indication of what would be a proper payment for hauling a postal 
car a mile. It is not clear that the Government should pay exactly the same per 
postal car as passengers pay for the use of a passenger car, but this seems to be one' 
way of arriving at a judgment. It may be of interest in this connection to consider 



RAILWAY MAIL PAY. 829 

the passenger car mile earnings for different sections of the country as indicated on 
the following table: 

Passenger train car-mile revenue, 1910. 

Cents. 

Group I. — Maine, New Hampshire, Vermont, Massachusetts, Connecticut, 

Rhode Island 32. 7 

Group II. — New York and Pennsylvania 25. 3 

Group III. — Indiana, Ohio, and Michigan 22. 7 

Group IV. — Virginia, West Virginia, North Carolina, South Carolina 23. 6 

Group V. — Kentucky, Tennessee, Mississippi, Alabama, Georgia 24. 1 

Group VI. — Illinois, Iowa, Wisconsin, Minnesota, North Dakota 24. 3 

Group VII . — Montana, Wyoming, Nebraska, South Dakota 25. 1 

Group VIII. — Colorado, Kansas, Oklahoma, Missouri, Arkansas 24. 9 

Group IX. — Texas and New Mexico 26. 6 

Group X. — Washington, Oregon, Idaho, California, Nevada, Utah, Arizona. ... 30.7 
United States, all groups 25. 5 

The figures in this table are not strictly accurate because the car-mileage table and 
the operating revenue table in the annual statistical reports of the commission are not 
entirely comparable as to the totals. Furthermore, these earnings include the present 
postal earnings. But the averages are sufficiently accurate for illustrative purposes. 

4. The suggestion has been made that a very simple solution of the problem would 
be to turn over to the railways as a body a fixed percentage of the postal receipts, 
or some portion of them. Can this be justified from the cost standpoint? Obviously 
cost would have to be drawn into consideration in arriving at a judgment as to what 
is a fair percentage. 

It may be noted that the simplicity of the scheme would exist chiefly from the 
standpoint of the Government. The railways would have to organize a corporation to 
receive the money and to collect statistics on the basis of which the payments would 
be made to each company. From the broad social standpoint there would perhaps 
be as much expenditure of effort in getting the payments in proper amount to each 
company as if the Post Office Department made the payment directly. 

Again, the variation in postal receipts does not necessarily reflect the variation in 
the amount of service rendered by the roads. Should the amount of pay to the roads 
be made to depend on what particular conclusions Congress might reach with respect 
to the price the public should pay? 

49396—14 60 



STATEMENTS OF SHORT LINE RAILROADS IN REGARD TO 
RAILWAY-MAIL PAY. 

The following statement, referred to in volume 5, page — , of the 
hearings as giving a number of illustrations applicable to short line 
roads of the actual earnings received and the actual space used in 
the mail as compared with the express service, as well as the attitude 
of such roads with reference to the general subject of railway-mail 
pay, is submitted by the Short Line Railroad Association through 
its secretary, Mr. John N. Drake : 

Statements op Short Line Railroads in Regard to Railway-Mail Pay. 

short line railroad association. 

[60 Wall Street, New York; 1110-1112 F Street NW., Washington, D. C.J 

Washington, D. C, June 10, 1912. 
To the Committee on Post Office and Post Roads of the House of Representatives, Wash- 
ington, D. C. 

Gentlemen: H. R. bill 4044, "To amend existing laws and equalize pay for mail 
services on railroad lines, ' ' calls for four amendments to the general act, viz : 

First. That routes carrying their whole length an average weight of mail per day 
of not more than 500 pounds should receive $75 per mile per year. 

Second. That the weighing of the mails should not occur less frequently than once 
in each year. 

Third. The discontinuance of the delivery of mails beyond the depot of the railway- 
mail carrier. 

Fourth. That the allowance for space used for railway post-office purposes in apart- 
ment cars should be paid for at pro rata of the rate of compensation allowed for postal 
cars 40 feet in length. 

All of these amendments are fair and equitable and are earnestly advocated by 
this association. Two of them would right gross and inexcusable wrongs which have 
been inflicted for years upon short line mail-carrying routes. We refer, first, to 
delivery of the mails from terminal stations to post offices no matter how far distant 
they may be from the railroad stations, based upon the same rate of compensation as 
that allowed for the railroad route; second, to the use of apartment-car space fitted 
up as post offices at the expense of the road, lighted, heatecl, iced, and kept in order 
by the road and carrying mail messengers free. 

What fair-minded man can view with equanimity the rank injustice sanctioned 
by law of compelling a mail-carrying railroad to deliver mail over the public high- 
way any distance from half a mile to 5 miles or more at the same rate allowed for 
the railroad mileage. As an example take a railroad 10 miles in length, whose station 
is half a mile from the post office. 

If this road carries 200 pounds of mail per day it is entitled under the law to receive 
$42.75 per mile per year. The post-office department therefore allows $42.75 for 10£ 
miles. Ten miles for the railroad carriage amounts to $427.50 per year. At a most 
conservative estimate the service of a messenger from the station to the post office to 
cover the remaining half-mile four times a day would cost 50 cents a day, $3 a week or 
$156 a year, thus in this one particular cutting the pay of the road to $271.50, when 
it is entitled to receive $427.50. In the matter of apartment car space — according to 
the report of the Second Assistant Postmaster General for the year ending June 30, 
1911, there were in use during the year 1,213 whole cars — that is, cars 40 or more feet 
in length entitled to pay, while the same class of cars held in reserve were 251. Dur- 
ing a like period there were 3,204 apartment cars with 615 in reserve, none of which 
received a penny for the services they performed or any return whatever for the 
expenses they incurred in equipping the cars, maintaining and running them. Three 

830 



RAILWAY MAIL PAY. 831 

thousand eight hundred and nineteen apartment cars ranging in length from 10 feet 
to 35 feet, performing a large percentage of all the R. P. O. service in the country under 
conditions imposed by law and post-office regulations, are therefore deprived of the 
pay due them for a most exacting service. If a postalcar is 40 feet in length, under 
the present law it receives $25 per mile per annum; if it is 45 feet in length $27.50 per 
mile per annum; 50 feet, $32.50 per mile per annum; 55 feet or more $40 per mile per 
annum. The increased space from 40 feet to 55 feet is thus shown to receive pro rata 
compensation. Does any reason exist why the short-line railway mail routes should 
not be similarly treated? 

At the request of the Post Office Committee of the Sixty-first Congress, this asso- 
ciation compiled certain information which related to the earnings of the small roads 
from transporting 'mails, compared with their earnings from express and passengers, 
and furnished information of the cost of carrying the mails, compared with the revenue. 
The statements gave a summary of the service on 21 roads in the particulars regarding 
which the committee made special inquiry and were submitted as typical of condi- 
tions on all the small railroad-mail routes of the country at a hearing held before the 
Post Office Committee of the House of February 7, 1911. The association also gave a 
table showing the cost of transporting the mails on 22 of its short lines. This cost 
was $6.08 per thousand foot-miles, excluding interest, while the revenue was $3.26, 
and the revenue from passenger and express traffic was $5.82 per thousand foot-miles, 
or 80 per cent greater than the revenue from the mails. This information we here- 
with append in detail. 

By enacting H. R. bill 4044, thus equalizing pay for mail service on railroad lines, 
the injustice now inflicted upon short line mail-carrying roads would be eliminated 
and these lines would be given fair and conservative compensation proportionate to 
that which they now receive in passenger and express branches of the carrying trade, 
to which class the mail transportation belongs. The roads would also be placed urjon 
the same basis accorded the larger and more prosperous roads for performing like 
service. 

Yours, very truly, Short Line Railroad Association, 

By John N. Drake, Secretary. 



STATEMENTS OF VARIOUS ROADS. 

Mail route 110212— BELLEFONTE CENTRAL RAILROAD, between Bellefonte 
and State College, Pa., 19.51 miles. Closed pouch service, three round trips six days 
a week, with a daily average of 550 pounds of mail, based upon the last weighing. 
As a matter of fact and record the weight was 643 pounds for each day of service and 
would have been credited to the road if the aggregate weight had been divided by 6, 
the number of days in the week the mail was carried, instead of by 7,, the arbitrary 
divisor. 

The total mail compensation received per year $1, 166. 66 

Mail messenger service at terminals on the route costs: 

Bellefonte $120. 00 

State College 100. 00 

Route deliveries 150. 00 

370. 00 

Which, after deducting from the amount received, made the total 

cash receipts 796. 66 

Of the combination car space on the route (50 feet) devoted to passengers, baggage, 
express, and mail, 38 linear feet is apportioned to passengers and baggage, 8 feet to 
express, and 4 feet to mail. 

The express service is performed by the Adams Express Co., and they pay for the 
service $1,738. They also pay 26.66 per cent of the salaries of the joint train, baggage, 
and express men, in addition to paying $540 a year as their proportion of the railroad 
station employees' salaries, making a total of more than $2,500 per year for the express 
service against $796.66 received for the mail. 

The express company make3 no guarantee of a minimum rate to be paid. 

Applying to the total passenger expense of the road the percentage of space in 
passenger trains devoted to the mails, the annual cost of carrying the mails is $2,604. 
With interest and taxes added ($122) the actual cost is $2,726, for which the road 
receives $796.66, less than one-third the estimated cost. 



832 BAIL WAY MAIL PAY. 

The Post Office Department is now paying $600 per annum per star route to deliver 
one mail per day on a route abandoned by the Bellefonte Central because it allowed 
the road only $178.26 per year for two mails per day. This service netted the road 
$125 a year. 

Mail routes — Buffalo, Rochester & Pittsburgh Railway. 

(1) Route 107102—289.21 miles between Rochester, N. Y., and Butler, Pa., 64 
round trips weekly. 

(2) Route 107097 — 1.11 miles between Silver Lake Junction and Silver Springs, 
33 round trips weekly. 

(3) Route 107130^8.22 miles between Buffalo and West, N. Y., 34 round trips 
weekly. 

(4) Route 110178 — 5.10 miles between Lanes Mill and Coal Glen, Pa., 18 round 
trips weekly. 

(5) Route 110135—26.55 miles between C. & M. Junction and Clearfield, Pa., 13 
round trips weekly. 

(6) Route 110261 — 44.69 miles between Butler and Pittsburgh, Pa., 13 round trips 
weekly. 

(7) Route 110252 — 33.93 miles between Indiana Junction and Indiana, Pa., 14 
round trips weekly. 

(8) Route 110255 — 18.89 miles between Ridge Junction and Iselin, Pa., 12 round 
trips weekly. 

The .service is performed in 7 apartment cars, and in addition 14 cars are used in 
part for closed-pouch service. 

The total compensation received for carrying the mail is, gross $50, 330. 21 

Mail messenger service for deliveries costs: 

Silver Springs $36. 00 

Gainesville 96. 00 

Lanes Mills 144. 00 

North Point 27. 00 

Hyde 60. 00 

Butler 480. 00 

Indiana 240. 00 

1, 083. 00 

The cost of side deliveries made by employees, which consumed one- 
twentieth of their time, is charged at 1, 300. 00 

Making the net revenue for carrying the mail 47, 947. 21 

The annual mileage of mail apartment cars is 380,350 miles. This does not include 
baggage cars in which closed pouches are handled . A closed-pouch service is handled 
on all routes except route No. 110252. 

The maximum aggregate is 610 pouches and the minimum 154 pouches. 

The American Express operates on the road and pays in cash $49,500 per annum. 
They also pay, as their share of the salaries of joint train, baggage, and express men, 
$9,701; also $8,444 for salaries to railroad agents, $120 in rentals, and perform service 
for the railroad valued at $4,600, all of which aggregates $72,365, against $47,947.21 
received for carrying the mail . 

The express company guarantees a minimum of $16,500. There is no agreement 
with it not to charge less than 150 per cent of first-class freight. 

In this connection the road wishes to state that its express contract was entered into 
15 years ago and was made at a very low rate. The contract will soon expire, when it 
is expected that a new arrangement will be entered into at a considerable advance over 
that now in force. 

The total operating expenses of the road are $5,590,000 per annum. The amount 
directly assignable to passenger traffic is $275,700 per year. The nonassignable pas- 
senger expense amounts to $1,527,700 per annum on a train mileage basis. 

Applying to the total passenger expense the percentage of space in passenger trains 
devoted to the mails, the estimated cost of carrying the mails is $86,563.20. 

The number of miles traveled by postal clerks in postal cars over this road is 472,320 
per year, which at 2 cents per mile would be $9,446.40. 

Route 163010— BUTTE, ANACONDA & PACIFIC RAILWAY, between Butte 
and Anaconda, Mont. — 25.67 miles, four round trips seven days a week, with a daily 
average of 2,827 pounds. The mail service is performed in two (19-| feet) apartment 
cars on four trains daily, also in closed pouches on four other trains. The closed 
pouches range from 24 to 62 pouches daily, and the average pouch weight handled is 
700 pounds by the road's baggageman. The pouch service on this road, if charged 
at the express company's rate, would yield $1,500 per year. 



RAILWAY MAIL PAY. 833 

The total compensation received for apartment cars and pouch service is, 
gross $3, 187. 28 

Mail messenger service at terminals on the route costs: 

Butte $900. 00 

Anaconda 720. 00 

Side deliveries: 

Silver Bow 39. 96 

Durant 17. 76 

Gregson 13. 32 

1,691.04 

Thus leaving the road, for all the mail service performed during the 

year, net 1, 496. 24 

The eight trains over the road daily have 1,520 linear feet of space; of this, 1,347£ feet 
devoted to passengers, earned for the year ending June 30, 1910, 198,288.10 gross; 14 feet 
devoted to express, earned $7,702.58 net; the 158| feet devoted to mails earned $3,187.2, 
gross and $1,496.24 net. 

(The express matter probably consists chiefly of gold, silver, and copper ore, requiring 
very small space.) 

The Great Northern, Northern, Wells Fargo, and American Express Cos. operate over 
the line. They each pay 20 per cent as their share of the salaries of joint train, baggage, 
and express men. 

The express companies do not guarantee to us a minimum and there is no agreement 
that they will not charge less than 150 per cent of first-class freight. 

The average number of passengers carried over the road during the year ending 
June 30, 1910, was 27 passengers per car, which service, at 3 cents per mile, brings 81 
cents per car-mile. 

The Government mail on car in same number of trains (eight), moving 26 miles a day, 
paid 4.2 cents per car-mile of 19| feet. 

The transportation of the two messengers employed to distribute the mail, traveling 
as they do 37,480 miles a year, at 3 cents per mile, the current legal rate of fare, would 
aggregate for the year $2,248.80, and the mail earnings are $1,496.24 net. 

Mail route 129061— CARROLLTON & WORTHVILLE RAILROAD, between 
Carroll ton, Ky., and Worthville, Ky., 10 miles, 14 round trips per week. The service 
is performed in a mail apartment car 14 feet 7 inches by 7 feet 9 inches, altogether an 
equivalent of 98.44 square feet, carrying postal clerk. This car space is hauled 27,120 
miles a year. 

The gross annual compensation received is $453. 84 

The mail delivery at Carrollton costs 300. 00 

Leaving the road per year for the entire service 153. 84 

When this contract was taken five years ago the Government paid one carrier $300 
and one $450 a year, a total of $750. This without Sunday mail or prompt service as is 
now furnished. 

Mail route 110205— CENTRAL RAILROAD CO. OF PENNSYLVANIA, be- 
tween Bellefonte and Mill Hall, Pa., 26.13 miles. There are 6 round trips with mes- 
senger service in a 15-foot mail compartment car and 15 round trips with closed pouch 
service. The daily average weight of mail is 173 pounds. 

The annual compensation is, gross $1, 198. 28 

The mail messenger service at terminals and side stations, costs as follows: 

Bellefonte $108. 00 

Hublesburg 39. 00 

Clintondale 42. 00 

Mill Hall 108. 00 

297. 00 

Leaving the amount received for the service 901. 28 

The annual mileage of mail apartment cars is 34,430. Of the car-foot miles on pas- 
senger trains, 13,665 car-foot miles per day are devoted to passengers, 2,496 car-foot 
miles to express and baggage, and 1,650 car-foot miles to mail. Of the entire car space 
81 per cent is used for passengers, 6 per cent for baggage, 5 per cent for express, and 
8 per cent for mail. 

Of each 1,000 feet of space in passenger trains, passengers earn 3.47; express 2.24, 
and mail 1.74. 

The express company performing the express service is the American. The total 
cash receipts from express is $700. They pay as their proportion of the salaries of the 



834 KAIL WAY MAIL PAY. 

joint train baggage and expressmen $600 per year; they also pay the station agents for 
their services $232.04 per year and perform work for the railroad amounting to $200 a 
year, making a total of $1,732.04 from express against $901.28 for the mail. 

The express company does not guarantee a minimum rate, nor agree to charge 150 
per cent in excess of first-class freight. 

The road earns, per car mile, for passengers, 14.24 cents. Its earnings from mail, 
per car mile for the apartment car (15 feet), is 2.62 cents, or about the fare of the Gov- 
ernment clerk in charge of the mails. 

Mail route 110144— COUDERSPORT & PORT ALLEGANY RAILROAD, 
between Port Allegany and Ulysses, Pa., 39 miles; 12 round trips weekly with a daily 
average of 534 pounds of mail. 

The mail service is performed in a 12-foot mail apartment car, also pouch mail on 
four trains each week day; two trains Sunday between Port Allegany and Coudersport. 
The average number of mail sacks handled per day is 22, weighing 398 pounds. The 
pouch service on this road, if charged at the express company's rate, would yield 
$1,491.25. 

The total compensation received for apartment car space and pouch mail 

service is $2, 556. 31 

The mail messenger service at terminals on the route costs: 

Port Allegany $180. 00 

Ulysses.-. 162. 00 



Side deliveries: 

Burtville 60. 00 

New Field Junction 120. 00 

Mina 100. 00 



$342. 00 



280. 00 

622. 00 



This leaves the road net, for the entire service 1, 934. 31 

Of all the passenger car space on this road, 119 feet are devoted to passengers, 14 
feet to express, and 17 feet to mail. Of the entire passenger car space, 79J per cent 
is devoted to passengers, 9£ per cent to express, and 11£ per cent to mail. 

The American Express Co. operates over the line. The total cash receipts from 
the express company are $1,887.91. The express company also pays, as its share of 
the salaries of joint trainmen, $780. It also pays a percentage of the station agents' 
salaries ($960) for handling the express, and carries free local packages and remittances 
from the railroad. 

The total value in money to the railroad company from the express company 
amounts to $3,629.91, compared with $1,934.31 received for carrying the mails, while 
the mails require 11£ per cent of the passenger train space compared with 9£ per cent 
devoted to express. 

There is no minimum guarantee from the express company nor any agreement that 
they shall charge more than the first-class freight rates. 

Applying to the total passenger expense the percentage of space in passenger trains 
devoted to the mails (11£ per cent) the cost of mail transportation on this road is 
$6,644.75, while the net earnings from mail were $1,934.31. 

The transportation of the mail messenger for the distance he travels during the year 
(48,828 miles) at 3 cents a mile, the regular rate, if paid for, would net the road $1,468.84. 

Mail route 165068— DENVER, LARAMIE & NORTHWESTERN RAILROAD 
CO., between Milliken and Greeley, Colo., 12.69 miles; daily average of mail 13 weekly 
round trips. 

This service is performed in combination cars devoted to mail, passengers, express, 
and baggage. 

The total compensation received for carrying mail is $542. 59 

Mail messenger service at terminals on the route costs : 

Milliken $96. 00 

Greeley 72. 00 

168.00 



Which, when deducted from the amount received, leaves 374. 59 

The Adams Express Co. operates over this line. The revenue yielded from the 
express service averages $1,680 per year. The express company also performs service 
for the railroad in transporting agents' remittances along the road. A separate service 
for this work on the part of the road would require a bonded messenger. 

The revenue from the express company nets the road $1,680 per year against $374.49 
received for mail transportation. 



KAIL WAY MAIL PAY. 835 

Mail routes— DULUTH, SOUTH SHORE & ATLANTIC RAILWAY, between 
the following points: 

137072. Sault Ste Marie to Soo Junction, Mich., 47.15 miles, seven weekly round 
trips. 

137051. St. Ignace to Houghton, Mich., 246.90 miles, seven weekly round trips. 

137053. Humboldt to Republic, Mich., 8.55 miles, six weekly round trips. 

139087. Nestoria to Duluth, Minn., 214.78 miles, seven weekly round trips. 

Daily average weight on each route is as follows: 137072, 1,764 pounds; 137051, 
4,377 pounds; 137053, 89 pounds; 139087, 1,015 pounds. 

Total annual compensation on all routes, gross ■ $65, 545. 31 

Mail messenger service at terminals on the route costs : 

Sault Ste. Marie $300. 00 

Marquette 420.00 

Champion 30. 00 

$750.00 

The total of side and terminal deliveries, as near as can be ascer- 
tained, based upon the proportion of time consumed by the 

employees of the road, amounts to per annum 5, 609. 28 

6, 359. 28 

This leaves the road for mail service performed during the year. . . 59, 186. 03 

The mail service is performed in apartment cars and by pouch service in baggage 
cars. The mail apartment space used in five mail apartment cars is 25 feet each, 
two cars 27 feet each. 

The annual mileage of mail apartment cars on the road is 318,791. 

In addition to providing and hauling these apartment cars, the road carries approxi- 
mately 120 lock pouches and 150 tie sacks daily. 

Of the entire passenger-car space 89.11 per cent is occupied by passengers, 4.70 
per cent by express, and 6.19 per cent by mail. 

The Western Express Co. operates over this line and pays in cash for the service 
$40,371.51, including rentals. It also pays, as its share of the salaries of joint train, 
baggage, and express men, $5,151.60 per annum, and pays for salaries of railroad station 
employees $6,952.29; for services rendered the railroad company, $4,290, making a 
total of $56,765.40 for express against $59,186.03 for carrying the mail. 

The express occupies 4.70 per cent of the road's passenger space, and the mail 
occupies 6.19 per cent. 

Based on percentage of space occupied in the cars, mail 6.19 per cent, express 4.70 
per cent, the express pays much better than mail and is a much more attractive 
business proposition. 

If the mail was paid for on the same space basis as we receive for express, we would 
be paid about $74,760 for mail instead of $59,186. 

The total operating expense of the road for the year ending June 30, 1910, was 
$2,269,247.84; of this there is assignable to passenger traffic $442,214.19. The non- 
assignable passenger expense on a train-mileage basis amounts to $366,526.13. 

Applying to the total passenger expense the percentage of space in passenger trains 
devoted to the mails and the same proportion including the interest and taxes, the 
estimated cost of carrying the mail is $81,040.75; we get $59,186. 

If the mail passenger service over this road (314,096 miles) was paid for at the rate 
of 2 cents a mile, it would amount to $6,281.92. 

Mail route 123047— FLORIDA RAILWAY, between Live Oak and Perry, Fla., 52 
miles, seven round trips and six round trips on 22 miles of the route. 

The mail is carried between Live Oak, Fla., and Perry, Fla., in an apartment car 
17 feet long with a postal clerk in charge. On the 22-mile route, between Live Oak 
and Mayo, the service is pouch mail. 

The average weight of the mail per day is 200 pounds. 

The compensation received for the service, gross $2, 195. 64 

Deliveries at terminals cost, per year, as follows: 

Live Oak, Fla $84. 00 

Mayo : 84. 00 

Perry 84. 00 

252. 00 

Leaving the road, net, for the service performed 1 943. 6 



836 KAIL WAY MAIL PAY. 

Between Live Oak and Mayo, Fla., 22 miles, six round trips weekly, four pouches 
of mail is carried daily. The road would charge a private shipper 75 cents a pouch 
or $3 a day for this service, which requires delivery to and from the post offices. 

The actual cost to us for lights for this apartment car and for heating the car, clean- 
ing, water and ice, repairs, interest on cost of car and depreciation is 3 cents per mile 
and as the car runs 51,768 miles per year, such actual cost is $1,553.04; our actual 
pay is $1,943.64. 

The road receives from the express company operating over its line $3,000 per year; 
the express also pays $360 per year as its share of joint train, baggage, and express men's 
salaries; also $110 per year for salaries of employees, etc., making a total of $3,470 per 
year for express, against $1,943.64 for carrying the mail. 

There is no minimum guaranty given by the express company, nor is there any 
agreement as to the express charges to be made. 

During the year the average load per car of first-class freight carried over the same 
route as the mail was 5,000 pounds. The rate for this class of freight is 43 cents per 
100 pounds. 

The actual earnings per car mile for this freight during the year was 33 cents per 
mile, while the mail apartment car earns only 5.11 cents per mile. 

The Government oppresses the small roads in not paying for the apartment-car 
space used, also in requiring substantially free delivery of the mail. 

This road believes that the mail should be received and delivered at the car door 
by the Government. 

Mail route 153012— FORT SMITH & WESTERN RAILROAD, between Fort 
Smith, Ark., and Guthrie, Okla., 217 miles. The mail service is performed in an 
apartment car and with a pouch service. Fourteen weekly round trips, including 
pouch service. 

The apartment service averages 244,550 miles annually; the pouch service 72,270 
miles annually. 

The total compensation received, gross $15, 940. 07 

The mail-messenger service costs: 

Guthrie, Okla $144. 00 

At other points 1, 008. 00 

1, 152. 00 

Leaving the net amount received for the mail service 14, 788. 07 

The cost per car mile of handling the mail is 6| cents, this being 7.5 per cent of 
cost of operating passenger trains. The mail takes up 7.5 per cent of passenger space 
of train . 

Of the entire passenger-car space devoted to passengers, mail, express, and baggage, 
passengers occupy 83 per cent; mail, 7.5 per cent; express, 5.5 per cent; and baggage, 
4 per cent. 

The number of miles traveled by postal clerks over the road is 244,550 miles per 
year; at 2 cents per mile fare, this would amount to $4,890. 

The American Express operates over this road and pays in cash $13,000 annually; 
$2,040 annually as its share of salaries of joint train baggage and express man; $3,600 
per year for salaries of station agents; and $60 rental, making a total of $18,700 per 
year, against $14,788.07 received for carrying the mail. 

The express company does not guarantee a minimum sum, nor have they any agree- 
ment with the railroad as to a rate of charge. 

This road considers that the Government discriminates against railroads in arbitrarily 
fixing the compensation for carrying the mail at less than total cost of operation, taxes, 
and a fair return for the capital invested . 

The actual cost of carrying the mails of this road, based on the percentage of space 
occupied, is 6| cents per car mile. 

The miles performed in apartment-car service only were 244,550, and at the estimated 
cost of 6J cents per car mile, this would amount to $15,284, besides a large amount of 
pouch service in addition. 

Mail route 120020— GEORGETOWN & WESTERN RAILROAD, between Lanes 
and Georgetown, S. C, 36 miles, six weekly round trips in one apartment car with a 
mail messenger; one round trip of closed-pouch service on Sunday. 

The average weight of mail handled for which pay is allowed is 595 pounds. 



KAIL WAY MAIL PAY. 837 

The total compensation received, gross $2, 473. 99 

Deliveries at terminals and side stations cost as follows: 

Georgetown $300. 00 

Rosemary. 96. 00 

Lanes 96. 00 

Taft 60.00 

Trio 60. 00 

Employees' extra time 318. 00 

930. 00 

Leaving the road, net 1, 543. 99 

The employees' extra time in handling the mail is based upon the percentage of time 
actually given to the service. 

The cost of fitting up the apartment space in the car for post-office purposes was 
$380, but this does not include any part of the cost of the car. The lighting heating, 
etc., costs, per year, $167.50. 

The cost, per car mile, of handling the apartment car space is 6 cents per car mile. 
The annual mileage the car is hauled is 49,494 miles, and estimating the cost of hauling 
at 6 cents per mile the actual cost is $2,969.64; the pay, less messenger cost, is $1,543.99. 

The number of miles, per year, traveled by postal clerks is 49,494. At a rate of 2 
cents per mile, this would amount to $989.88. 

The Southern Express operates on this road. There is no minimum guarantee nor 
any agreement in regard to their charges. 

The express company paid the last fiscal year $2,303.70. They also paid four-fifths 
of the train baggageman's salary ($480) per year and a commission to station agent at 
Andrews, S. C, about $60 per year, making"a total of $2,843.70 against $1,543.99 paid 
in carrying the mail. 

The mail pays considerable less, as is shown, than the express, besides it is a pre- 
ferred service and equals in cost of equipment and operation that provided by the trunk 
lines with absolutely no through hauls, but limited to such local mail as the territory 
traversed provides. 

Mail route 120013, LANCASTER & CHESTER RAILROAD, between Lancaster 
and Chester, S. C, 29.58 miles, including terminals; six weekly round trips in two 
apartment cars 9 by 9 each, with mail messengers and six weekly round trips with 
closed pouches handled by train baggageman. 

The average weight of mail handled is 245 pounds per day. 

The total compensation received for the service is, gross $1, 341. 62 

Deliveries at terminal and side stations cost as follows: 

Chester $120. 00 

Richburg 48. 00 

Fort Lawn 48. 00 

Lancas ter 120. 00 

— 336. 00 

Leaving the road, for the mail service, net 1, 005. 62 

At Lancaster the mail is delivered by an employee of the road and 10 per cent of his 
salary is charged ($120) to mail delivery. Cash for delivery is paid at the other points. 

There are from four to five closed pouches taken out of Chester and four out of Lan- 
caster, also one out of Fort Lawn and one into Fort Lawn on two trains a day. A 
minimum charge for this service would be $1 per train or $626 per annum. 

Of the three classes of traffic, mail occupies 9 linear feet, express 7\ linear feet, and 
passenger and baggage 77£ linear feet, a total of 94 feet. 

The number of miles traveled by postal clerks is 18,154. The regular legal rate of 
fare is 3 cents per mile, which would make the cost of their transportation $544.62. 

The Southern Express operates on this road. There is no minimum nor any agree- 
ment in regard to their charges. 

The express company pays in cash $771 .56. They also pay one-half of baggageman 's 
salary and a commission to station agents, besides carrying railroad packages free, a 
service worth altogether $1,000 a year. 

Applying to the total passenger expense of $13,065.69, its proportion of the total 
operating expenses of the road ($52,242.76), the percentage of space in passenger trains 
(one-tenth) devoted to mail costs $1,306.56, with no pay for pouch service. 

The average number of passengers per car carried during the year was 13f passen- 
gers. The actual earnings per car-mile from the passenger traffic was 41 cents. The 
mails earned 2J cents per car-mile of 9 feet. If that is treated as one-fifth of a car, the 
mail earnings are 13| cents per full car-mile, or less than one-third the actual passenger 
car-mile earnings of the same train. 



838 KAILWAY MAIL PAY. 

Mail routes, LOUISIANA & ARKANSAS RAILWAY, are run as follows: 

Route 149023, between Hope, Ark., and Minden, La., 78.26 miles, seven round 
trips weekly, Minden, La., to Alexandria, La., 116.87 miles, seven round trips weekly. 

Route 149045, between Packton, La., and Jena, La., 29.07 miles, seven trips per 
week. 

Route 149073, between Minden, La., and Shreveport, La., 30.78 miles, seven round 
trips per week. 

Daily average weight of mail carried on the three routes is 522 pounds. 

The mail service is performed in two apartment cars with postal clerks, the car 
space used in each being 18 feet; also a pouch service on other trains. 

The total compensation received for the mail service is, gross $15, 621. 22 

The messenger service for mail delivery is as follows: 

Per year. 

Hope, Ark $120 

Minden, La 96 

Alberta, La 60 

Alexandria, La 240 



516 

The proportion of the time consumed by railroad employees in 
delivering mail at other points along the routes is estimated at 

$132.25 per month, or, per year 1, 587 

2,103.00 

This leaves the net amount received for carrying the mail 13, 518. 22 

The value of the mail-apartment car space, compared with the total value of the 
car, is about $1,600 each. The cost, however, of fitting up the space for post-office 
purposes is $350 each. ■ 

The annual cost of heating, icing, lighting, and cleaning the mail-apartment space, 
based on its proportion of the entire car expense, is $155. 

The road carries over its three routes 61 pouches daily. To handle these pouches 
at the express rate would cost $5,565.25 a year. 

The Southern Express performs the express service over the road and for the year 
ending June 30, 1910, paid in cash $12,159.29. It also paid seven-eighths of the 
salaries of joint train, baggage, and express men employed by the road, except in the 
case of one man to whom they paid one-half of his salary. To the railroad station 
agents they paid $2,472. 

The service rendered in handling railroad supplies ha3 never been computed on 
a cash basis. It, however, is a valuable service, if for no other reason than that of 
enabling the road to have its baggage handled at a nominal expense. Leaving the 
money consideration for the work performed by baggagemen entirely out of the 
question, the amount received from the express company, $14,631.29, exceeds by 
$1,113.07 the amount paid by the Government for railway-mail transportation, 
although the mail occupied 143.6 feet of space on passenger trains while express 
only occupied 121.4 feet, and the value of the express service is much less than that 
was performed for the Government in carrying the mails. 

Of the entire passenger-car space, 1,033 linear feet is devoted to pasengers, 121.4 
linear feet to express, and 143.6 linear feet to the mail. 

The miles traveled by postal clerks (141,875), if paid for at the rate of 2 cents per mile, 
would net the road $2,837.50. 

Mail route 113024-110126, MARYLAND & PENNSYLVANIA RAILROAD. 

Route 113024, between York, Pa., and Baltimore, Md., 77.1 miles, 12 round trips 
weekly; daily average weight of mail, 818 pounds. 

Route 110126, between Dallastown Junction, Pa., and Dallastown, Pa., 0.8 mile, 
12 round trips weekly; daily average weight of mail, 200 pounds. Mail-apartment 
car service, two, with postal clerks and pouch service as well. 

The total annual compensation for carrying the mail on all routes is, 
gross $5,974.73 

The mail-messenger service for delivering mail costs in cash, as follows: 

Towson, Md $100.00 

Woodbine, Pa 120.00 

Bridgeton, Pa 60.00 

280. 00 



RAILWAY MAIL PAY. 839 

The side deliveries are made by railroad employees and the road 
charges one-tenth of the salaries paid for their services, as follows: 

Loch Raven, Md $54.00 

Glenarm, Md 48.00 

Baldwin, Md 42.00 

Fallston, Md 60. 00 

Felton, Pa 54. 00 

Yoe, Pa 54.00 

Dallastown, Pa 54. 00 

Red Lion, Pa 72. 00 

$718. 00 

Leaving the net compensation for carrying the mail 5, 256. 73 

The two apartment cars provided for the mail are each 15 feet by 9 feet. The cost 
of fitting up these cars as post offices was $170.76 each. The proportionate cost of the 
car is not included in this. 

The cost annually for lighting, heating, icing, and cleaning each car is $74.88. 

Thirty-one pouches of mail are carried daily over the two routes. Of these 21 
pouches would cost a private shipper 25 cents each. Ten would cost 7\ cents each, 
a total of $6 per day, or $1,800 per year. 

The number of miles traveled by postal clerks in the apartment postal cars run over 
the route is 93,600, at 2 cents per mile; this would amount to $1,872. 

The Adams Express Co. operates over the line. They paid in cash for the year 
ending June 30, 1910, $7,868.07; they also paid, as their share of salaries of joint train 
baggage and expressman $120 per year and 10 per cent commission to station agents 
on business handled by them. 

The service performed by the express company for the railroad amounts to $50 per 
month, or $600 per year, making a total of $8,588.07 value to us of express against 
$5,256.73 paid by the Government for mail transportation. 

There is no minimum guarantee made by the express company nor any agreement 
as to charges. 

A similar service to that of the express company is performed by the railroad in 
carrying milk in baggage cars on passenger trains. 

This service paid to this road the year ending June 30, 1910, $40,622.74. 

Assignable expenses, passenger traffic $71, 654. 69 

55 per cent of nonassignable expense $64,383.53, total $136,038.22, or 19-& 
cents per passenger car mile. The apartment car space, which is one- 
third of the car space, costs 0.06^ cent per car mile on apartment car 

mileage, 93,600 by 0.06^ 6, 177. 60 

Compared with net amount received for carrying the mail 5, 256. 73 

(The cost per car mile is based on dividing nonassignable expense of operating on 
car mile basis, which is the basis most favorable to the Post Office Department.) 

The total linear feet of passenger trains is 1,530. This is divided as follows: 1,212 
feet, passengers; 250, baggage, express, and milk; 68 feet, mails, making mail revenue 
per foot $77.60 against express and milk $193.96 per foot. 

Mail routes— OKLAHOMA CENTRAL RAILWAY CO.: 

Route 153047, between Lehigh and Chickasha, Okla., 129.92 miles, seven weekly 
round trips; average daily weight is 224 pounds. 

Route 153048, between Ada and Frisco Crossing, Okla., 3.20 miles, seven weekly 
round trips; average daily weight is 80 pounds. 

The service is performed in two apartment cars, but an extra car is maintained, at 
the road's expense, as a relief car to be used in case of emergency. 

The space used for the mail in these cars is 15 feet each. 

The total compensation received is, gross $5, 913. 04 

The mail messenger service costs: 

Lehigh, Okla $120.00 

Chickasha, Okla 180. 00 

$300. 00 

At Vanoss one-eighth of employees' time is charged 60. 00 

At Stratford, one twenty-fifth 28.80 

At Washington, one-tenth 72. 00 

160.80 

460. 80 



Leaving the net amount received 5, 452. 24 



840 RAILWAY MAIL PAY. 

The annual mileage of mail apartment cars is 109,264. 

The proportion of passenger car space devoted to passengers, express, and mail is as 
follows: 

Passengers 77.5 per cent, express 6.3 per cent, baggage 6.3 per cent, mail 9.9 per cent. 

The number of miles traveled by postal clerks is 94,900 yer year. At 2 cents per 
mile this would be $1,998. 

The American Express operates over the line and paid for the service, in the last 
fiscal year, $3,286.55 in cash; $720 in salaries to joint baggage and expressmen; 
$1,114.23 for station agents' salaries, and performed work for the railroad amounting 
to $1,000, making a total of $6,120.78 from the express service against $5,452.24 for 
carrying the mail. 

Tho express company makes no minimum guaranty, but agrees not to charge less 
than 150 per cent of first-class freight. 

For the nast year the average number of passengers carried per car was 10. The 
actual earnings per car mile for carrying passengers was 29 cents. 

The earnings per car mile for apartment car space was 5 cents. 

Mail route 120034— PICKENS RAILROAD, between Pickens and Easley, S. 0., 
9.3 miles, closed pouch service, three round trips six days a week, with a daily average 
weight of mail of 208 pounds. 

The total mail compensation received, gross $412. 96 

The mail messenger service at terminals cost as follows: 

Easley $75. 00 

Pickens. 95. 00 

170.00 

Leaving the net amount received 242. 96 

This road handles a minimum of 15 pouches of mail daily, except Sunday. This 
service is worth at a fair Agination $3 per day or $93u per year. 

The mail is handled in a combination car devoted to passengers, baggage, express, 
and mail. Of this space 47 feet is devoted to passengers and baggage, 3 feet to mail, 
and 3 feet to express. 

The railroad operates its own express and derives from the service $441.78 net 
against $242.96 for the mail. Both occupy the same amount of space. 

One passenger in the space occupied by the mail, paying the regular fare of 30 cents 
for the trip, would net the road in a year $540. 

The road's contract with the Post Office Department calls for the delivery of the 
mail to Pickens and Easley once a day, or on only one route. The demands of the town 
require the mail three times a day. The result is that the mails are delivered three 
times a day. 

Mail routes— THE PITTSBURG, SHAWMUT & NORTHERN RAILROAD: 

Route 107038, between Wayland and Moraine, N. Y., 11.98 miles, 18 weekly round 
trips pouch service, weight of mail 200 pounds. 

Route 107139, between Hornell and Olean, N. Y., 76.40 miles, weight of mail 282 
pounds per day; 6 weekly round trips over 66.27 miles and 18 weekly round trips over 
10.13 miles pouch service. Six weekly round trips over 76.40 miles with a mail com- 
partment car and postal clerk. 

Route 110282, between St. Marys and Shawmut, Pa., 25.43 miles, weight of mail 
333 pounds per day, 6 weekly round trips pouch service, and six weekly round trips 
compartment car with postal clerk. 

Route 110204, between Brockport and Ramsaytown, Pa., 31.88 miles; weight of 
mail 200 pounds per day ; six weekly round trips pouch service, and six weekly round 
trips compartment car with postal clerk. 

Route 110290, between Norman and Conifer, Pa., 4.23 miles; weight of mail per 
day 38 pounds, six weekly round trips pouch service, six weekly round trips compart- 
ment car. 

Route 110238, between Paine and Force, Pa., 10.87 miles; weight of mail per day 
51 pounds. Twelve weekly round trips, pouch service. 

Route 110221, between Carmen and Hallton, Pa., 10.89 miles; weight of mail per 
day 120 pounds. 



RAILWAY MAIL PAY. 841 

The annual compensation received for carrying the mail over all routes is, 

gross * $8, 144. 40 

The mail messenger service costs as follows: Per year. 

Wayland, N. Y $120.00 

Hornell, N. Y 168. 00 

Olean, N. Y 120. 00 

Garwoods, N. Y 120.00 

St. Marys, Pa 240. 00 

Bolivar, N. Y 96.00 

864. 00 

Leaving the road for the mail service, net 7, 280. 40 

_ The car space occupied by the mail in each apartment car is 15 feet. One addi- 
tional car is provided for an emergency. The average cost of fitting up the cars for 
post-office purposes with metal is $773.51 each. This does not include the propor- 
tionate cost of the full car. 

The annual cost for lighting, icing, heating, and cleaning each car for the space used 
is $97.32. This estimate is based on the average cost per car of the service for all pas- 
senger cars, $317.92 per year. 

Fifty-eight pouches of mail are handled daily on 152 miles of pouch train service, 
making a total of 18,154 pouches per year. At 25 cents per pouch, the minimum 
package freight rate, this would earn $4,538.50 per year. The number of miles trav- 
eled by postal clerks during" the year was 87,640. At 2 cents per mile the value of 
the service would be $1,752.80. 

The United States and the Adams Express Companies perform the express business 
over the line. 

The cash compensation for the service is $5,214. In addition to this, the express 
companies pay in salaries of joint train, baggage, and express men $2,013.38. They 
also pay in salaries to station agents $1,800 and render service to the railroad valued 
at $350 per year, making the total amount derived from express $9,377.38. against 
$7,280.40 received for carrying the mail. 

The minimum rate guaranteed by the express company is $5,000. There is an 
agreement not to charge less than 150 per cent of the first-class freight rate. 

Mail route 150137— ROSCOE, SNYDER & PACIFIC RY., between Roscoe and 
Fluvanna, Tex., 49.76 miles, seven round trips weekly, all pouch mail. Daily weight 
of mail, 359 pounds. 

The total compensation received for the mail sendee is, gross $2, 080. 07 

The cost of mail delivery is as follows: 

Per year. 

Roscoe, Tex $54. 75 

Hermleigh, Tex 96. 00 

Fluvanna, Tex 96. 00 

246. 75 

Leaving, for the mail service, net 2, 133. 32 

The amount charged against mail delivery at the above points is one-tenth of the 
wages of the railroad employees doing the work; they are paid $1.50 a day. The road 
charges out of this at the rate of 15 cents per day to mail delivery. 

The Pacific Express operates over this line and pays in cash $2,300 per year; they 
also pay $360 per year to joint train, baggage, and express men, and in salaries to sta- 
tion employees $900 per year, making a total of $3,560 received for the express service, 
against $2,433.32 for mail. 

There is no agreement with the expreSvS company in regard to a minimum rate nor 
anv agreement as to the charge to be made by them. 

Mail routes— SUSQUEHANNA & NEW YORK RAILROAD, between the follow- 
ing points: 

110069, between Towanda and West Williamsport, Pa., 65.08 miles; 13 round trips 
weekly, ]79 pounds. 

110201, between Grays Run and Ralston, -6 round trips of 5.14 miles and 6 of 24.76 
miles weekly, pouch service, 21 pounds. 

The annual compensation received on all routes is, gross $2, 381. 60 



842 EAILWAY MAIL PAY. 

The mail messenger delivery service is performed by employees of the 
railroad. The proportion of the employees' time occupied is computed 
against the service as follows: 

Per year. 

Towanda $190. 00 

Gravs Run 10. 00 * 

Powell 60. 00 

Laquin 30. 00 

Wheelerville 40. 00 

Ellenton 40. 00 

Ralston 50. 00 

Masten 10. 00 

$430. 00 

Leaving the road for the mail service, net 1, 951. 60 

The closed-pouch service is performed on passenger trains and on mixed trains. 

Hauling combination passenger, mail, baggage, and express car costs, including 
lighting, heating, repairs, and interest on cost of passenger equipment, 17.2 cents per 
car-mile. Closed pouches are carried in baggage cars and average 60 pouches a day. 

The road would charge a shipper 20 cents a pouch, about 5 cents less than the express 
rate. This would amount to $3,756 per year, for which the road receives from the 
Government $1,951.60. 

The express service is performed by the Adams Express Co. They pay in cash 
$1,230 per year; $60 in salaries to baggage and express men, 840 for salaries to station 
agents. The total express compensation is $2,430, against $1,951.60 for mail. 

The mail service costs more than the express because it is a preferred service and 
requires delivery at post offices; also because there are penalties attaching for inter- 
ruption of service. 

Mail route 107153— UN AD ILL A VALLEY RAILWAY, between New Berlin, N. Y., 
and Bridgewater, N. Y., 20 miles, 12 weekly round trips, closed-pouch service. 

The total compensation received, gross $982. 00 

Deliveries at stations cost, per year, as follows: 

New Berlin $96.00 

Leonardsville 36. 00 

Bridgewater 36. 00 

WestEdmeston 36.00 

204.00 

Total net amount received for carrying the mails 778. 00 

This company carries 20 sacks of mail daily. 

The United States Express operates on this line. 

There is no minimum guaranty nor any agreement in regard to their charges. 

The express company pays $2,500 per year for the service; it also pays $120 per year 
as its proportion of the salary of baggage and express man. The free service given the 
railroad amounts to about $100 a year, making a total of $2,720 a year for the express 
against $778 for the mail transportation. 

The cash remuneration received from the express company is nearly four times 
greater than that received from the Government for carrying the mails. 

The mail service is much more exacting and expensive than the express and carries 
with it greater responsibility for prompt and efficient service. 

The exaction, on the part of the Government, to deliver the mail at terminals and 
side stations is most unfair to short-line roads. 

No short line carrying the mail at the minimum rates from $42.75 to $50 per mile 
per year can, under any circumstance, no matter how favorable the conditions, afford 
to deliver the mail at terminal offices at the present rate. 

Mail route 135114— WABASH, CHESTER & WESTERN RAILROAD, between 
Mount Vernon, 111., and Menard, 111., 64.83 miles; apartment car with postal clerk and 
pouch service as well. Six round trips weekly of apartment car service. 

Total mail compensation received, gross $3, 768. 63 



KAILWAY MAIL PAY. 



843 



Mail messenger service, two to four round trips per day, between depot and 
post offices; services performed by railroad employees, the proportion of 
time charged, and the value of the service is based on the salaries paid 
the employees, as follows: 

Waltonville, one-eighteenth $32. 00 

Scheller, one-twentieth 18. 00 

Tamaroa, one-eighteenth 36. 00 

Cutler, one-tenth 30. 00 

Percy, one-tenth 42. 00 

Welge, one-twentieth 6. 00 

Menard, one-twentieth 30. 00 

Mount Vernon special service, $15 per month 180. 00 

$374. 00 

Net amount received for mail service 3, 394. 63 

For the 16 closed pouches carried daily on trains 1 and 4 the express charge would 
be 25 cents per pouch or $4 per day for 313 days, or $1,252. 

The number of miles traveled per year by postal clerk is 40,583.58 miles; this at 
2 cents per mile would amount to $811.67. 

The proportion of car space in passenger trains devoted to passengers is 69.47 per 
cent, baggage 8.42 per cent, express 8.41 per cent, and mail 13.70 per cent. 

The express service is performed by the American Express Co., and they paid in 
cash $3,354.11 for the year ending June 30, 1910. They also paid $2,000 per year for 
services of railroad employees, and the value of the service performed by them for the 
railroad is $96 per year, making a total of $5,450.11 for express against $3,394.63 for 
mail. 

The express company guarantees a minimum of $125 per month; it also agrees not 
to charge less than 150 per cent of the first-class freight rate on local business. 

Applying to the total passenger expense the percentage of space in passenger trains 
devoted to the mails, the cost of carrying the mails is $6,969.46. 

Mail earnings compared with express. 



Roads. 



Bellefonte Central 

Buffalo, Rochester & Pittsburgh 

Butte, Anaconda & Pacific 

Central R. R. Co. of Pennsylvania 

Coudersport & Port Allegany 

Denver, Laramie & North western 

Duluth, South Shore & Northwestern 

Florida Railwav 

Fort Smith & Western 

Georgetown & Western 

Lancaster & Chester 

Louisiana & Arkansas 

Maryland & Pennsylvania 

Oklahoma Central 

Pickens 

Pittsburg, Shawmut & Northern . 

Roscoe, Snyder & Pacific 

Susquehanna & New York 

Unadilla Valley 

Wabash, Chester & Western 

Carrollton & Worthville 

Total , 



Mail 
earnings. 



$1, 166. 66 

50, 320. 21 

3, 187. 28 

1,198.30 

2, 556. 31 

542. 59 

65,545.31 
2, 195. 64 

15,940.07 
2,473.99 
1,340.27 

15, 621. 22 

5,972.07 

5,913.04 

412. 96 

8, 144. 40 

2,680.07 

2, 575. 51 

982.00 

3, 768. 63 

453. 84 



192, 990. 37 



Cost of 
messenger 
deliveries. 



S370. 00 

2, 383. 00 

1,691.04 

297. 00 

622. 00 

168. 00 

6,359.28 

252.00 

1, 152. 00 

930. 00 

336. 00 

2, 103. 00 

718. 00 

460. 80 

170.00 

864. 00 

246. 75 

430. 00 

204.00 

374. 00 

300. 00 



20, 430. 87 



Express 
earnings. 



§2,500.00 

72,365.00 
7,702.58 
1,732.04 
3, 629. 91 
1,680.00 

56,765.40 
3,470.00 

18,700.00 
2, 843. 70 
1,771.56 

14,631.29 
8,588.07 
6, 120. 78 
441. 78 
9,377.38 
3,560.00 
2,430.00 
2, 720. 00 
5,450.11 



226,479.60 



Express earnings were $53,920.10 in excess of mail earnings. 



844 



EAILWAY MAIL PAY. 



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RAILWAY MAIL PAY. 



845 



CONDENSED SHOWING OF FOREGOING 22 ROADS. 

Statement of railway-mail pay earnings and expenses of 22 representative short-line rail- 
roads, covering 47 mail routes, aggregating 3,139.26 miles, during the month of Novem- 
ber, 1909, with percentage and ratio, as compared with passenger and express business. 



Mail. 



Passenger 
and express 



Total. 



Foot-miles 

Percentage of foot-miles 

Cost, including taxes: 

Total 

Per 1,000 foot-miles 

Percentage 

Cost, including interest and taxes 

Total , 

Per 1,000 foot-miles 

Percentage 

Revenue: 

Total 

Per 1,000-foot miles 

Percentage 

Ratio of foot-mile revenue 

Ratio cost to revenue: 

Including taxes 

Including taxes and interest . . 



6,421,151 
9.31 

$39,072.30 

$6.08 

9.56 

$48,606.29 
$7.57 
9.53 

$20,961.29 

$3.26 

5.44 

100 

187 
232 



62,557,136 
90.69 

$369,303.79 
$5.90 
90.44 

$461,459.98 
$7.37 
90.47 

$364,084.02 

$5.82 

94.56 

179 

102 
127 



68,978,287 
100.00 

$408,367.84 
$5.92 
100.00 

$510,066.27 
$7.39 
100.00 

$385,045.31 

$5.58 

100.00 

171 

106 
132 



49396—14- 



-61 



SIDE SERVICE ON ROCK ISLAND LINES, 

(Cost of.) 



The following communication from Mr. John Sebastian, third vice 
president of the Rock Island lines, containing a statement of the cost 
incident to side service rendered the Government by his system, is 
submitted : 

Chicago, June 6, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee of Congress, 

Senate Office Building, Washington, D. C. 

Dear Sir: In reading over the testimony given at the hearings before your com- 
mittee on the subject of railway-mail pay, I note inquiries by you of several of the 
railway representatives as to cost of side service, i. e., what amount of " out-of-pocket 
expense " and approximate value of service rendered by our employees in handling 
mail to and from post offices. Therefore, in view of your apparent desire for such 
data, I submit figures for this company: 

Our mileage is 8,024. The mail pay, including R. P. 0., approximately $1,700,000. 
Total number of stations reporting, 937, the service being divided as follows: 

By Government messenger 271 

By contractors (or special arrangement) 110 

By railroad employees 556 

The amount of cash paid to the 110 contractors is $1,276 per month, or $15,312 per 
annum. 

The value of the time of employees at 556 stations handling the mail to and from 
post offices, but not including time consumed in hanging pouches and watching until 
train passes, is $3,342.63 per month, or $40,111.56 per year, a total of $55,423.56, or 
3.26 per cent of our mail revenue. 

These figures are based on individual reports from each agent, showing number of 
trains exchanging mails, the number of pouches and sacks, and the actual time to 
make each trip, this computed at the salary drawn by the employees doing the work, 
and where report in this respect was doubtful, have taken the lowest rate paid at that 
station, so that I consider these figures as very conservative. 

The question of night exchanges has been covered very fully, so I will not touch 
upon that, except to say that the conditions as outlined apply generally to our line. 

Another item on which information was desired is that of amount of free transpor- 
tation furnished post office officials, inspectors, and other employees other than postal 
clerks while on their regular trips or returning from or to their work. A careful check, 
by actual count, covering 30 days from March 24 to April 24, 1913, shows the following: 

Number of passengers carried free 14, 952 

Value of such transportation . $31, 448. 76 

Trusting the above may be of assistance to your committee in the consideration of 
the subject, I remain, 

Very truly, yours, Jno. Sebastian, Third Vice President. 

846 



Washington, D. C., December 11, 1913. 
To the Joint Committee on Postage on Second-Class Mail Matter 
and Compensation for the Transportation of Mail. 
Gentlemen : At my request Mr. M. O. Lorenz, associate statis- 
tician of the Interstate Commerce Commission, then in the special 
employ of our joint committee, and Mr. R. H. Turner, secretary of 
the committee, have made during the summer and fall independent 
investigations of the subject of railway-mail pay and submitted their 
individual reports in review of the testimony and with recommenda- 
tions. 

In order that we may have before us for reference purposes their 
individual viewpoints on this phase of the inquiry which we have 
been instructed to investigate and report our conclusions to Con- 
gress, the summaries and suggestions of Mr. Lorenz and Mr. Turner 
are herewith submitted. 

I further submit data from Bureaus of Fisheries, Standards, and 
Mines showing the rates charged by railroads for transportation of 
Government cars. 

Respectfully, yours, 

Jonathan Bourne, Jr., 

Chairman. 
847 



REPORT ON RAILWAY-MAIL PAY. 

M. O. Lobenz. 



Washington, D. C, /September 27, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail 
Matter and Compensation for the Transportation of Mails, 
Washington, D. C. 

My Dear Sir: I hand you herewith a report embodying the re- 
sults of my study of the subject of the compensation to railways for 
carrying the mails. I have attempted to present the leading ideas 
brought out in the testimony taken by your committee as well as to 
comment on them critically, and I have also endeavored to combine 
the various proposals into a practicable solution of the problem. 
Respectfully, 

M. O. Lorenz. 

I. General Summary of Results. 

After a brief description of the railway mail transportation serv- 
ice, the leading defects in the plan of the existing law relative to 
railway mail pay are presented. These defects are, chiefly, the fail- 
ure to take account of the length of the haul and of the frequency of 
service, the inconsistency of paying for full railway post office but 
not for apartment cars, the confusion resulting from having two 
payments for hauling a loaded car instead of one payment, and the 
unjust distribution among the roads of the burden of side and ter- 
minal services. 

Various plans and suggestions for amending or replacing the ex- 
isting law are then passed in review. These plans generally con- 
template the reference of certain questions to the Interstate Com- 
merce Commission. This being the case, it may be asked whether 
any further discussion is necessary, the whole matter being disposed 
of by such reference to the Interstate Commerce Commission. But 
in reply it may be urged that if Congress states a prima facie rea- 
sonable schedule of rates the Interstate Commerce Commission will 
be in much better position to pass upon questions coming under the 
law for two reasons: (1) The complainant will have to make a clear 
case in order to change the rates prescribed. If he does not, the rates 
stand without that arbitrary determination by the commission neces- 
sarily involved in fixing rates in the first instance; (2) the actual 
experience and statistics developed under a new law would put the 
commission in a much better position to make a thorough determina- 

849 



850 RAILWAY MAIL PAY. 

Hon of the matter. Two years more of debate of what might hap- 
pen if the space basis were used will not be nearly so illuminating as 
an actual trial for the same length of time. The results of decades of 
debate on this subject seem to warrant a trial of the space basis, 
especially if the weighing of the mails is not entirely abandoned. 
An attempt has been made to show how this basis may be modified 
so as to overcome the objections to it, although such modification 
may not be necessary. An outline of a bill embodying the space 
basis with the weight modification is given on page 873 below. 

After this conclusion as to the method of payment, the determina- 
tion of the level of rates — that is, the total amount to be paid the 
railways for this service — is taken up. On the basis of the commer- 
cial principle, the conclusion is reached that 22^ cents per 60-foot 
mail car hauled 1 mile, with a separate payment for side and ter- 
minal services, would constitute a fair adjustment for the first year, 
being an increase over the present rate of pay, but still probably an 
underpayment, the exact determination of a fair rate .being left to be 
decided after more complete experience and statistics have been 
gained. Exclusively closed-pouch routes are treated separately and 
a payment of 1 cent per pouch per mile is suggested. 

II. Description or the Mail Service for which Compensation is 

to be Determined. 

It will be helpful to have before us, first of all, an outline of just 
what the Railway Mail Service means. The mail which leaves the 
post offices is almost all in the well-known blue and white striped sacks 
or pouches. The pouch is a sack containing first-class mail and closed 
by a leather strap and locked, whereas the sacks " proper are simply 
closed with a clasp sliding on a string. A few parcels are of such 
size and shape that they can not be put in sacks. With the develop- 
ment of the parcel post these may become more prominent, and other 
containers, such as hampers, may be employed. These sacks, pouches, 
etc., may be brought from the post office to the train either by the 
employees of the post office or those of the railroad, depending on the 
local arrangements. In large cities the Government does this work. 
Arrived at the station, the mail may sometimes be put directly into 
the car by the postal employees, if the wagon can back up to the car, 
but probably the general rule would be that it is received by em- 
ployees of the railroad and hauled on trucks to the cars in the train. 
If the train has only a closed-pouch service, we would see the pouches 
or sacks of mail given to the baggageman, by him to be dropped off 
at the proper station along the route ; that is, there is no post-office 
representative in charge of this mail. But if the volume of mail is 
larger, the Post Office Department may have asked the railroad to 
provide, say, a 30-foot apartment — that is, a section of a baggage car 
fitted up with racks, pigeonholes, lighted, and heated, enabling a 
mail clerk to sort the mails en route, so that the mail destined for a 
particular city or even a particular carrier may be brought together. 
If the mail sacks will not all go into this apartment, the storage 
space being limited in order that the clerk may have room in which 
to work, a number of sacks or pouches may be piled into the baggage 
car. On a route with still more traffic an entire car, known as a 
railway post office car, will be fitted up as a distributing room in a 
post office with space in which a half-dozen or more mail clerks may 



RAILWAY MAIL PAY. 



851 






".work" the mails en route. The amount of mail placed in such 
a car may be less than a ton, and may be as much as 3 or possibly 
6 tons. This seems a small load for a car, but the reasons why the 
load is so small is at once apparent from the fact that only a small 
portion of the floor space can be used for storing sacks of mail. 

The force of clerks may be so large that they distribute more mail 
before the end of the run than can be piled into the car at the start. 
If the surplus mail will not go into the baggage car the railroad com- 
pany must furnish a storage car, which is a car like a baggage car, 
but with vertical poles at intervals so that the various piles of sacks 
may be kept separate. When there is a sudden rush of mail and no 
regular storage car is available, an ordinary baggage car or even a 
horse car may be supplied. 

The work of unloading and loading the mail at many stations is 
done by railroad emploj^ees who have this merely as an incidental 
duty, but at the larger stations a special force of porters must be sup- 
plied by the railroad company. If a junction point is reached and 
the mail must be delivered to another road so it may continue its 
journey, the work of transferring it is also done by railroad em- 
ployees. 

No attempt will be made to describe the service in all its details. 
The mail cranes erected along the road so that pouches may be taken 
on the train without stopping may- be mentioned. Emphasis was also 
laid by railroad representatives on the fact that mail cars frequently 
had to be placed at the disposal of the department hours before the 
departure of the trains. A useful description of the service rendered 
by the railroads was furnished by Mr. V. J. Bradley and is printed in 
the hearings on page 624. The relative importance of the railway 
post office cars, apartment, storage, and closed pouch services as meas- 
ured by the space occupied on trains, in November, 1909, is shown by 
the following table. The term " deadhead " space in this table means 
the unused space for which the Post Office Department considered 
itself responsible, and the " dead " space is the unused space for which 
it did not think it ought to pay, being largely storage cars returning 
empty. 



Table 1. 



-Relative importance of full railway post office, apartment, and storage 
cars, closed pouch service, and total mail service. . 



[From Table 5.T, House Document 105, Sixty-second Congress, first session.] 



Class of service. 


Car-foot 
mileage. 


Per cent of 
total mail 
including dead- 
head space. 


Per cent of 

total passenger 

train space. 




431,210,671 
94, 420, 509 

364,370,260 
26, 299, 260 
16,070,585 


46. 249 

10. 127 

39. 080 

2.821 

1.723 
















Dead-head space 








Total 


932,371,285 


100. 000 


7 179 






Dead space 


211,413,013 




1.628 








Mail, including dead space 


8. 807 




10, 464, 699 451 
1,379,396,873 




80 573 


Express 




10 620 








Grand total 


12,987,880,622 




100 000 









852 



RAILWAY MAIL PAY. 



III. The Present Law. 

• 

In transporting mail with the aid of railroads the Post Office De- 
partment has divided the roads into aJbout 3,400 mail routes, and a 
separate amount is computed to cover the railroad service on «acli 
and every one of these routes. Primarily the pay is based on 
the ton-miles of mail matter ; that is, the weight of the mail and the 
distance it is carried. But the rate per ton-mile is not the same on 
every route. Where there is a large volume of mail going over the 
road each day the pay per ton-mile is less than when the volume of 
mail is small. Thus, if less than 211 pounds goes over the route each 
day the railroads get over $1.11 a ton-mile, while if the average daily 
weight of mail is, say, 50,000 pounds a day, the rate is reduced to 
approximately 7 cents a ton-mile, the lowest possible rate being about 
5.4 cents. (Hearings, pp. 103-104.) The law does not use these 
terms. It gives the amounts to be paid per mile of route as the aver- 
age daily weight carried over the route varies, but this is equivalent 
to the explanation just given. The law also gives an additional pay- 
ment for full cars fitted up as post offices, but not for apartments. 

The following table, compiled under the direction of Mr. C. H. 
McBride, Division of Railway Adjustments, in the Post Office De- 
partment, gives a general survey of the working of the present law : 

Table 2. — Railway mail pay and ton-mileage by classes of routes, Apr. 30, 1913. 



Class of routes according 
to average daily weight 
carried. 


Number 
ofroutes. 


Length of 
routes. 


Per 
cent. 


Transportation 
pay per annum 
(weight basis). 


Per 
cent. 


Railway post 

office car 
service pay 
per annum 

(space basis). 


Per 
cent. 


211 pounds or less 

212 to 519 pounds 


1,152 

754 
504 
220 
128 
172 

91 
350 

45 


Miles. 
25, 934. 75 
28, 699. 66 
32,785.26 
19,439.16 
12,088.65 
19,504.36 
13,811.27 
63, 451. 15 
12,485.76 


11.36 

12.58 
14.36 
8.52 
5.30 
8.55 
6.05 
27.81 
5.47 


$1,069,548.49 
1,525,429.02 
2,404,607.79 
1,849,205.73 
1,380,419.58 
2, 610, 702. 36 
2,177,189.51 
17, 224, 144. 12 
16,620,926.50 


2.28 
3.25 
5.13 
3.95 
2.95 
5.57 
4.65 
36.75 
35.47 










520 to 1,019 pounds 

1,020 to 1,519 pounds 

1,520 to 2,059 pounds 

2,060 to 3,559 pounds 

3,560 to 5,079 pounds 

5,080 to 48,103 pounds 

48,104 pounds and over. . . 






$284.37 

851.50 

6,862.63 

27,636.64 

1,935,110.59 

2, 453, 138. 96 


0.01 

.02 

.16 

.62 

43.74 

55.45 


Total 


3,416 


228, 200. 02 


100.00 


46,862,173.10 


100. 00 


4,423,884.69 


100. 00 







Class ofroutes according to aver- 
age daily weight carried. 


Combined 

transportation 

and railway 

post office car 

service pay per 

annum. 


Per 
cent. 


Ton-miles 
per annum. 


Per 
cent. 


Pay per 
ton-mile for 
transporta- 
tion. 


Pay per 
ton-mile for 
transporta- 
tion and 
railway 
post office 
car service 
combined. 


211 pounds or less 


$1,069,548.49 
1,525,429.02 
2, 404, 607. 79 
1,849,490.10 
1,381,271.08 
2,617,564.99 
2,204,826.15 
19, 159, 254. 71 
19,074,065.46 


2.09 
2.97 
4.69 
3.61 
2.69 
5.10 
4.30 
37.36 
37.' 19 


716, 621 

1,901,145 

4,533,012 

4, 466, 261 

3,815,778 

9,678,984 

10,899,157 

186, 445, 262 

288,371,302 


0.14 

.37 

.89 

.87 

.76 

1.89 

2.13 

36.50 

56.45 


$1. 4924 
.8024 
.5305 
.4140 
.3618 
.2697 
.1998 
.0924 
.0576 


$1. 4924 


212 to 519 pounds 


.8024 


520 to 1,019 pounds 


.5305 


1,020 to 1,519 pounds 


.4141 


1,520 to 2,059 pounds 


.3620 


2,060 to 3,559 pounds 


.2704 


3,560 to 5,079 pounds 


.2023 


5,080 to 48,103 pounds 


.1028 


48,104 pounds and over 


.0661 






Total 


51,286,057.79 


100.00 


510, 827, 522 


100.00 


.0917 


.1004 







RAILWAY MAIL PAY. 



853 



FINANCIAL RESULTS OF THE PRESENT LAW. 

The following table shows the total expenditures of the Post Office 
Department and the amount paid to railways for carrying the mails, 
1870-1912. It will be seen that the per cent which the payments 
to railroads are of the total postal expenditures increased markedly 
from 1870 to 1890, but has declined again since that date, so that at 
present the percentage is similar to what it was in 1870. 

Table 3. — Railway-mail pay compared with total post-office expenditures, 1810- 

1912. 

I From reports of the Postmaster General and the Second Assistant Postmaster General.] 



'Year. 


Total ex- 
penditures of 
Post Office, 
all depart- 
ments. 


Payment to 
railroad for 
mail trans- 
portation 
(including 
post-office 
cars). 


Per cent 
payments to 
railroads are 
of total postal 

expendi- 
tures. 


1870 


$23,998,838 
36, 542, 804 
66, 259, 548 
107, 740, 267 
115,554,921 
124, 785, 697 
138,784,487 
152,362,116 
167, 399. 169 
178, 449, 778 
190, 238, 288 
208.351,8*6 
221.004,102 
229, 977, 224 
237,648,926 
248, 525, 450 


$5, 128, 901 
10,498,986 
23,395,232 
37, 793, 982 
38, 519, 624 
39, 953, 608 
41, 886, 849 
44, 695, 610 
45, 576, 515 
47, 481, 038 
51,008,111 
49, 404, 763 
49, 606, 440 
49, 302, 217 
50, 910, 262 
50, 703, 323 


21.4 


1880 


28.7 


1890 


35.3 


1900 


35.1 


1901 


33.3 


1902 


32.0 


1903 


30.2 


1904 


29.3 


1905 


27.2 


1906 


26.6 


1907 


26.8 


1908 


23.7 


1909 


22.4 


1910 


21.4 


1911 


21.4 


1912 


20.4 







The following table compares the railway-mail revenues of the 
railroads with their revenues from other traffic. From 1888-1897 
the per cent which the mail earnings are of the total passenger-train 
earnings rose from 6.8 to 10.7, but since that time this percentage 
has decreased again to 6.3. 

Table 4. — Comparative growth of total operating revenues, passenger-train 
revenues, and mail revenue, railways of the United States, 1888-1911. 

[From Statistics of Railways, Interstate Commerce Commission.] 



Year. 



Total operat- 
ing revenues. 

A 



Total passen- 
ger service 
train revenue. 
B 



Mail revenue. 


Per cent 




C is of A. 


c 




$18, 752, 284 


2.1 


21,923,031 


2.3 


23,367,873 


2.2 


24, 870, 015 


2.3 


28,861,143 


2.5 


28,445,053 


2.3 


30,059,657 


2.8 


30, 969, 746 


2.9 


32,379,819 


2.8 


33,754,466 


3.0 


34,608,352 


2.8 


35,999,011 


2.7 


37,752,474 


2.5 


38,453*602 


2.4 


39,835,844 


2.3 


41,709,396 


2.2 


44,499,732 


2.1 


45,426,125 


2.2 


47,371,453 


2.0 


50, 378, 964 


1.9 


48,537,768 


2.0 


49,391,681 


2.0 


48, 946, 052 


1.8 


50,702,625 


1.8 



Per cent 
CisofB. 



1888 
1889 
1890 
1891 
1892 
1893 
1894 
1895 
1896 
1897 
1898 
1899 
1900 
1901 
1902 
1903 
1904 
1905 
1906 
1907 
1908 
1909 
1910 
1911 



$910, 
964, 
1,051, 
1,096, 
1,171, 
1, 220, 
1,073, 
1,075, 
1, 150, 
1,122, 
1,247, 
1,313, 
1,487, 
1,588, 

1, 726, 
1,900, 
1,975, 
2, 082, 
2,325, 
2,589, 
2, 394, 
2,419, 

2, 752, 
2, 789, 



621,220 
816, 129 
877,632 
761,395 
407, 343 
751,874 
361, 797 
371,462 
169,376 
089, 773 
325,621 
610, 118 
044, 814 
526,037 
380, 267 
846,907 
174, 091 
482,406 
765, 167 
105,578 
780, 410 
299, 638 
634, 153 
761,669 



$277 ; 339, 150 
300,063,891 
309,397,420 
333,025,811 
341,642,277 
360,024,041 
344, 632, 414 
313, 615, 220 
330, 514, 014 
316,421,439 
334,710,917 
361,555,421 
398,045,285 
429,134,462 
475,911,320 
511,567,229 
541, 617, 105 
574, 310, 154 
619, 729, 203 
684, 993, 137 
690, 666, 227 
690,493,165 
764,773.354 
799, 771, 186 



6.8 
7.3 
7.6 
7.5 
8.4 
7.9 
8.7 
9.9 
9.8 
10.7 
10.3 
10.0 
9.5 
9.0 
8.4 
8.2 
8.2 
7.9 
7.6 
7.4 
7.0 
7.2 
6.4 
6.3 



854 RAILWAY MAIL PAY. 

The railroad representatives laid great emphasis on the successive 
reductions in the rates of pay since 1873. As we have seen, the aver- 
age rate per ton-mile declines as the average daily weight over the 
routes increases, but in addition to this there have been successive 
reductions in the rates by action of Congress and further reductions 
by administrative interpretation of the law. That these reductions 
have taken place is not in itself proof that the present mail pay is 
too low. It may have been so high in 1873 that these reductions have 
not yet reduced the pay to a reasonable level. A chronology of im- 
portant events in connection with railway-mail pay from 1873 to 
1910 is supplied by Mr. Bradley, on pages 401 to 402 of the hearings. 
In this connection see also pages 48-50 of the hearings and the charts 
between pages 342 and 343. 

DEFECTS OF THE PRESENT LAW. 

The following are some of the prominent defects in the present 
law: 

(1) It pays the same rate per ton-mile, irrespective of whether the 
haul is long or short. This violates a universally recognized prin- 
ciple of freight transportation, for the mail is a species of high-class 
fast freight or express matter. The rate per ton-mile ought not to 
be the same when the ton is carried 500 miles as it is when carried 
only 50 miles. 

It is true that in the passenger service proper it is customary to 
make rates in proportion to mileage. The fact that this is customary 
is not a sufficient reason to make equal mileage rates in the mail 
service. In this country it is customary in street-railway transporta- 
tion to do just the opposite — to make one rate regardless of distance. 
This is not customary in some European countries. That there are 
certain terminal expenses in our passenger-train service which do 
not vary with the distance traveled, is undeniable. This alone would 
seem to require some fall in the rate as the distance increases. It 
may also be considered whether on long hauls more miles per day are 
not obtained from a mail car. There is probably proportionately less 
idle time waiting to be placed in a train for the next run. 

This defect in the law explains in part at least the clear underpay- 
ment to the New England roads. This is commented upon by an 
official of that road as follows (hearings, p. 276) : 

Mr. Lloyd. Why is it that that system is apparently loosing more than the 
other systems of the country? 

Mr. Buckland. I should say probably it is because of the shortness of the 
travel, the frequency of the trains, and the amount of terminal services which 
appertain to each train. As an illustration, the New York, New Haven & Hart- 
ford road runs a train for every mile of its road. It has, in round numbers, 
2,000 miles and runs 2,000 trains every day, and most of those trains carry mail. 
Each one of those trains has to perform certain terminal services. 

(2) The present law is confusing in providing two rates of pay for 
the same service. When a certain route has one post-office car pass- 
ing over it daily, the law provides one rate for the weight of the 
mail in the car and another payment for the car itself. It would be 
much simpler to have one rate for the loaded car. The proof of this 
is seen in the wide currency gained by the statements made by former 
Postmaster General Vilas in 1887 to the effect that the rental for a 



EAILWAY MAIL PAY. 855 

single year would suffice to purchase the cars and keep them clean, 
etc. (See hearings, p. 20.) The fallacy in his conclusions has been 
clearly shown. In the words of the present Second Assistant Post- 
master General : 

The fallacy of the statement of Mr. Vilas, it seems to me, lies in this, that 
there is no account taken of the cost of operating the cars. The payment that 
we make to the railroad companies for cars may soon equal their cost, but there 
is nothing to be argued from that as to the adequacy or the inadequacy of that 
pay, because that leaves out of consideration entirely the cost of operating or 
hauling the cars. (Hearings, p. 21.) 

If it be answered that the hauling of the cars is covered by the 
payment for the average daily weight of mail matter, the rejoinder 
is, How do we know that the hauling is really covered in that way? 
The light load in the railway post-office car is in itself a reason for 
thinking it is not so covered. The real question is, Does the railway 
post-office pay added to the payment for weight constitute a fair 
payment for the complete service of furnishing and hauling the car 
with its load? (See hearings, p. 337.) No plan of amending the 
present law is satisfactory which does not abolish the separate pay- 
ment for railway post-office cars as distinct from their load. 

(»>) The- present law again is open to criticism because it ignores 
the frequency of service in applying the wholesale and retail prin- 
ciple. Thus, if two routes have the same average daily weight, the 
payment is the same irrespective of whether that weight is loaded on 
one train or on 10 trains. There is a mistaken analogy here with the 
freight service. In the freight service it is generally true that as 
density of traffic increases — that is, as the volume of traffic per mile 
of road increases — the company is able to put more tons into one car 
and more cars into one train. This greatly reduces the cost per ton- 
mile. An increasing volume of mail, on the other hand, may be ac- 
companied by an increasing frequency of train service. The prin- 
ciple aimed at by the framers of the present law would be more 
nearly carried out if the routes were clasified, not by the average 
daily total weight, but by the average load per car. It may be noted 
that certain maintenance-of-way and general expenses per car mile 
would tend to decrease (or, perhaps, in the long run, to remain con- 
stant) with an increase in the number of car miles per mile of track, 
irrespective of the car or trainload. In other words, average load 
per car is not a perfect unit for the purpose in hand. It is offered 
simply as a better measure than the ton-miles per mile of line 
which the present law uses. It is true that, in a general way, in- 
creasing average daily weight is accompanied by an increased load 
per car, but not necessarily. This feature may be studied in the 
tables below. It was said in the hearings that the average load 
per mail car was negligible — being from 2 to 3 tons. But these 
tables suggest that the variation in the load is perhaps not 
negligible. It is obvious that on some routes the railroad com- 
pany is performing much more ^service per car than on other 
routes. A few words of explanation are necessary for these tables. 
Table 5 was constructed from the data in Document 105 and only for 
three classes of routes because of the clerical labor involved. Inas- 
much as the weights there given represent conditions earlier than 
November, 1909, the month for which the car-foot mileage is avail- 
able, the average weight per car is too small. 



856 



RAILWAY MAIL PAY. 



Table S.^Average load per car for three classes of mail routes. 
[From Document 105, Tables 5G, 5H, and 51.] 



Average daily weight. 


Ton-miles 
per day. 


Car miles 
per day. 1 


Average 
load per car. 


3,560-5,079 pounds 


26,750 

83,552 

710, 134 


29,153 
53,266 
217,944 


0.9 


5,080-48,103 pounds, first 100 routes 


1.6 


48,105 pounds and over 


3.3 







1 On basis of 60 feet to a car ; " dead " space included in car-foot mileage. 

But we are able to check in a rough way the extent of this error 
by using the average daily weights as compiled by the Post Office 
Department as of April, 1913, in place of those given in Document 
105. (See Table 6.) In this case the weights are too large for the 
car-foot mileage and we get an average weight per car that is too 
large. 

Table 6. — Average load per car for all classes of mail routes. 

[Ton-miles from Table 2 above; car-miles from Document 105, Table 5 J.] 



Average daily weight. 


Ton-miles 
per annum. 


Car-miles 
per annum. i 


Tons per 
car. 


Per cent 

storage 

space is 

of total in 

mail 
service.* 




716, 621 

1,901,145 

4,533,012 

4,466,261 

3, 815, 778 

9, 678, 984 

10, 899, 157 

186,445,262 

288,371,302 


3,235,000 

4,180,000 

8,720,000 

8,069,000 

4,422,000 

11, 814, 000 

10,442,000 

99,260,000 

78,605,000 

10,000 


0.22 

.45 

.52 

.55 

.86 

.82 

1.04 

1.88 

3.67 


2.30 


212-519. 




520-1,019 


.37 


1 ,020-1,519 




1 ,520-2,059 




2,060-3,559 


.03 


3,560-5,079 ' 


.63 


5,080-48,103 


2.52 


48,1 04 and over 


22.83 














Total 


510, 827, 522 


228, 757, 000 2. 23 


10.13 











1 On basis of 60 feet to a car 

2 Excluding "dead" space. 



dead " space included in car-foot mileage. 



These tables show a decided variation in the load per car. But 
that the present law does not fairly compensate for such variations 
is shown by the consideration of individual routes. From a study 
of the individual routes shown in Tables 5G, 5H, and 51, in Docu- 
ment 105, we find that routes may have the same average load per 
car while having very different average daily weights. Thus, route 
106001 shows an average daily weight of 5,958 pounds and an aver- 
age load per car of 2.2 tons, while route No. 131014, with the same 
load per car of 2.2 tons, has an average daily weight of 65,754 pounds. 
Certain routes which have only storage-car service show a much 
higher weight per car than the other routes. 

These weights include both the railway post office and storage cars. 
The relative importance of storage space is shown for the different 
classes of routes in Table 6 above. The presence of a storage car 
brings up the average weight. In the regular weighings, the weights 
in the two classes of cars are not separated, but in the special weigh- 
ing of 1907 the greater load of the storage cars was shown. Table 10 



RAILWAY MAIL PAY. 



857 



below is a summary of this information. It will be seen, however, 
that there is a great variation in the load of railway post-office cars 
taken by themselves in different sections of the country and similarly 
with storage cars. 

Table 10. — Average tons per car (special weighing of 1907). 





All divi- 
sions; 
United 
States. 


New Eng- 
land 
States. 


2 

New York, 
New Jersey, 
Pennsyl- 
vania, 
Delaware, 
etc. 


3 

Maryland, 
Virginia, 
West Vir- 
ginia, 
North Car- 
olina, 
District of 
Columbia. 


4 

South Caro- 
lina, 
Georgia, 
Florida, 
Alabama, 
Mississippi, 
Louisiana 
(east). 


5 

Ohio, 

Indiana, 

Kentucky, 

Tennessee. 


60-foot railway post office cars. 
60-foot storage cars 


2.83 
7.26 


2.03 
6.67 


3.39 
6.72 


1.82 
3.79 


3.01 
2.59 


2.38 
4.74 








6 

Illinois, 

Iowa, 

Nebraska, 

Wyoming, 

Black 

Hills. 


7 

Missouri, 
Kansas, 

Colorado, 

New 
Mexico. 


8 

California, 
Nevada, 
Oregon, 
Alaska, 
Arizona, 
Idaho, 
Utah, 
Washing- 
ton. 


9 10 

rvh™,-,,,-* Wisconsin, 
man via North Pen- 
WnfTaV? ' insula Of 

*£* :sa, 

o5£ ' s ° u tn 

Tw£,-t 1 Dakota, 
Detrolt - 1 Montana. 


11 

Arkansas, 
Oklahoma, 

Texas, 
Louisiana 

(east). 


60-foot railway post office cars. 
60-foot storage cars 


2.31 
8.11 


2.04 
5.17 


3.59 

9.26 


3.81 ' 1.93 
8.56 : 


2.60 
5.22 















(4) Other defects. — The present law again may be criticized be- 
cause it does not give a sufficiently direct incentive to economize in 
the loading per car. It is true the Post Office Department has an 
incentive to save in the matter of getting along with as few full 
railway post-office cars as possible, since it pays an extra amount for 
these; but so far as the baggage and storage cars are concerned, the 
loading is a matter of indifference, since it pays the same for a given 
weight irrespective of how many cars are used. It may be that much 
more economy is not possible here, but it seems a good principle to 
make those directly interested in the loading who have control of the 
loading. At present the way the department can economize in the 
matter of weight is in concentrating the weight on certain routes, 
thus increasing the average daily weight and thereby lowering the 
rate per ton-mile. It would be more sensible to have them try to put 
as much into a car as possible, thereby effecting a social and not 
merely a departmental saving. 

Certain criticisms of present practice, such as the inconsistency 
of paying for a full railway post-office car and not for apart- 
ment car space, the quadrennial weighing, and the question of side 
and terminal services, will be noted below in treating of the various 
suggested plans. One other difficulty may be mentioned here that 
is caused by the present law and is not necessary in the nature of 
things, namely, the divisor difficulty. When average daily weight is 
the basis, the weights taken must be divided by a certain number of 
days, and this raises the question of whether Sundays should be 



858 BAIL WAY MAIL PAY. 

counted. If average weight per car is made the basis, this difficulty 
disappears, because ton-miles and car-miles would be recorded 
simultaneously. 

Before indicating how all of these defects can be removed and 
worked into a practicable plan, we may review the various sugges- 
tions made in the hearings for dealing with the problem. 

IV. Discussion or Various Plans or Suggestions Presented at the 

Hearings. 

the cost and space plan. 

On August 12, 1911, the then Postmaster General transmitted a let- 
ter to the Speaker of the House of Kepresentatives submitting a 
report on the results of an inquiry as to the expense of railroads in 
transporting the mails. This was printed as House Document No. 
105, Sixty-second Congress, first session, and will be referred to as 
" Document 105." A bill embodying the conclusions of the Post Office 
Department at that time was introduced in the Senate on July 26, 
1912, but on January 20, 1913, a modification was made in the plan 
proposed. The modified plan is printed on page 109 of the pre- 
liminary report of Chairman Bourne to the Committee on Railway 
Mail Pay. The following is a condensation and explanation of the 
proposed law : 

SUMMARY OF THE PLAN PROPOSED BY MR. HITCHCOCK, JANUARY 20, 1913. 

1. From information supplied by the railroads the Postmaster General 
shall annually determine the cost of carrying the mails on each road, cost 
meaning operating expenses and taxes. The apportionment of such " cost " 
is subject to review by the Interstate Commerce Commission. The mail pay 
due each road is to be determined by adding to such " cost " 6 per cent and 
such additional amounts " if any be necessary " to make the whole payment 
a reasonable return on the value of the property " necessarily " employed 
in the mail service. (This determination of a capital charge is apparently 
not to be reviewed by the Interstate Commerce Commission. ) 

2. Land-grant roads shall receive only operating expenses and taxes ; that 
is, nothing for the use of the capital. 

3. Settlements are to be made with the 795 roads, not by the 3,400 mail 
routes. 

4. The car-foot miles devoted to the use of mails are to be ascertained 
during a statistical period, provided that the space in distribution cars is 
to be measured according to the authorization of space by the Postmaster 
General, the department being charged for the round trip with the maxi- 
mum space authorized in either direction. 

5. It shall be unlawful for railroads to refuse to carry mails. 

The railroads strenuously objected to this plan as originally pro- 
posed, and continue to oppose it as modified. Whatever future de- 
velopments of railway cost accounting may make possible, it would 
be premature, they say, at the present time to direct the department 
simply to ascertain the cost for each railroad. (Hearings, p. 728.) 
They also say that to pay each railroad according to cost would penal- 
ize efficiency (p. 727). In opposing the space basis, they laid especial 
emphasis on the administrative uncertainties. For example, Mr. 
H. E. Mack, manager of mail traffic on the Missouri Pacific, said : 

The question of whether it is a practical basis would have numerous illustra- 
tions to show that perhaps it is not. Our experience with the full postal-car 
service, with only 10 per cent of pay, illustrates to us that space would not be a 



BAILWAY MAIL PAY. 859 

satisfactory basis of pay where all of our mail earnings are involved. For in- 
stance, if I may refer to this feature of the case, suppose on an exclusive space 
basis the question comes up whether the Government should pay for a 30-foot 
or a 60 foot car; what would be the controlling factor in that case? Should 
the Post Office Department and an officer of the service, perhaps a subordinate 
officer, have the right simply to say, without, any controlling or determining fac- 
tors, that a 60-foot car should be required instead of a 30-foot car? 

We will take a line 490 miles long, and I made this calculation on my line 
from St. Louis to Texarkana : The probable increase from a 30-foot to a 60- 
foot car would be $36,000. While theoretically it looks like a car is a given 
quantity, and you can tell that if the car is furnished it ought to be paid for 
at such and such a rate; that is not the question at all, but it is a question 
of whether that car is needed, and that goes back to the question of opinion. 
The Post Office Department would have the authority, by a mere statement, to 
increase the pay on that railroad $36,000 or $37,000 a year, and it has no con- 
trolling factor, and there is not a thing in the world to prevent an officer of 
the postal service from increasing it, except just because he wants to. There 
is nothing to prevent that, in my judgment, and I am very sure that is the 
opinion of every traffic mail officer who has had any experience in the service. 
(Hearings, p. 666. See also pp. 44, 129, 248-249, 301, 351-352, 595, 670, et seq., 
681, and 728.) 

But it was also urged that it would be unfair as between various 
roads carrying different volumes of traffic for a given space. For 
example, Mr. Kalph Peters, president of the Long Island Eailroad, 
said : 

You may be liberal with one road and require a liberal furnishing of car 
space without the heavy weights of mail, and on another road concentrate your 
mail into a limited number of cars (p. 637). 

Again Mr. W. A. Worthington, of the Southern Pacific, stated this 
objection, as follows: 

On a space basis for mails they would be denied any additional revenue for 
hauling greater tonnage per foot, which is unfair, as the railroads ought to be 
permitted to offset rising operating costs in this way. * * * No matter how 
much tonnage we put in a foot of space, if we were paid on a space basis we 
would get no more compensation for it, and as the Government can double the 
weights per foot, they can pay the railroads a much smaller percentage of the 
revenue. (Hearings p. 353.) 

These views conflict somewhat with the opinion expressed by Mr. 
V. J. Bradley, supervisor of mail traffic, Pennsylvania Eailroad, to 
the effect that there is no great possibility that the Post Office De- 
partment will be able to increase the load per car. He says : 

In 1899, when the last joint congressional commission was studying this 
question, I held the opinion, which I surmise is still held by some officials of 
the Post Office Department, that if the department paid for car space instead 
of for weight they could load the space to the maximum, and so effect great 
economies. I am satisfied that this is a delusion. The low average load 
carried per car is really the result of the variable character of the traffic 
and not of the present basis of pay. The fact that the volume of mail in one 
direction is heavier than in the reverse direction lowers the average load, but 
the department can not control or change this condition. The further fact 
that the load from the heavy initial terminal varies from day to day can not 
be controlled by the department unless it takes all expedition and high quality 
out of the service by holding the mail back until it accumulates a full load, as 
in the freight service. Congress and the American people would not consent to 
this. (Hearings p. 626.) 

However that may be, we have seen from the tables given on 
previous pages that there is a considerable variation in the average 
load per car on various routes, and this should be considered in 
adjusting the compensation. 



860 RAILWAY MAIL PAY. 

It should be noted that the railroad representatives were opposed 
to the space basis partly because of the cost associations given it by 
the Post Office Department. " What we object to chiefly in the pro- 
posed bills," said Mr. Peters, " is the plan to pay for the mails on the 
basis of cost and not so much space, space being used merely as a 
measure for apportioning the cost between the different elements on 
the pasenger trains." (Hearings, p. 43.) Consider in this con- 
nection also the following testimony by Mr. S. C. Scott, of the 
Pennsylvania lines : 

Mr. Scott. Mr. Lloyd, I do not know anything about the space basis. That is, 
I do not know anything about where it is going to lead us. If we could agree 
with the Postmaster General upon the percentages and upon a division of the 
expenses between passenger and freight service, I do not know but what this 
might work out very satisfactorily to the railroads. 

Mr. Lloyd. Is not this true: The thing that has alarmed the railroads is 
the statement made by the Postmaster General that the space basis would result 
in a saving of $9,000,000? 

Mr. Scott. Why, undoubtedly. (Hearing No. 1, p. 233.) 

The following appear to be valid criticisms of the plan as printed : 

1. The 6 per cent on operating expenses and taxes in addition 
to an allowance for capital is a duplication. This is a minor 
point and could be readily remedied. 

2. The difficulty of ascertaining the cost is a serious but not 
an insuperable objection if the Interstate Commerce Commission 
be directed to work out an equitable method of cost accounting, 
which it has so far not done. 1 

3. A strong objection is that the cost is to be ascertained sepa- 
rately for each road and made the sole criterion of the rate on 
that road. Cost is an important guide to what is a reasonable 
rate as will be discussed more fully later, but as a matter of 
principle it would be wrong to pay every road according to cost, 
because this would be rewarding inefficiency or extravagance and 
penalizing efficiency. It would seem that cost along with all 
other pertinent facts should be weighed in fixing rates for in- 
dividual roads. But if this be done, the plan loses its character- 
istic simplicity and means a final reference to the Interstate Com- 
merce Commission or some other tribunal. The advantages of 
making a separate rate for each road should not be overlooked. 
While the plan provides for the space unit as a basis of payment, 
the association with the individual determination by roads over- 
comes some of the objections against the space basis. Thus the 
amount of loading and amount of side and terminal services 
peculiar to each road might be considered in determining the rate 
for each road. The question of varying lengths of haul would 
be automatically disposed of since the short-haul roads would 
show a higher cost per car- foot, 

4. The use of a single space unit of payment fails to give the 
department that most useful index to economy — the average load 
per car. In this connection the following quotation from the 
Postmaster General's annual report for 1911 is of interest: 

The reports of the inspectors who made the investigation showed that 
the Government had been paying large sums for car space that was not 
properly utilized, indicating a lack of proper supervision on the part of 

1 On Oct. 17, 1013, the Commission held a public hearing on the subject of railway 
cost accounting, but no conclusion has been announced. 



RAILWAY MAIL PAY. 861 

the officers of the service. Owing to the conditions disclosed by the in- 
vestigation a thorough reorganization of the Railway Mail Service has 
been undertaken. This reorganization, although not completed, has gone 
far enough to bring about a decided improvement over the unsatisfactory 
conditions reported. Unquestionably, the final result will mean a tre- 
mendous saving to the Government accompanied by important benefits to 
the employees of the service (p. 21). 

The danger involved in having no check on the use of space 
has been emphasized. (See hearings, pp. 728-9; 302.) But the 
Second Assistant Postmaster General is not impressed with this 
danger. (Hearings, pp. 708-9.) 

5. The administrative difficulties that have been referred to 
are taken up in connection with the standard unit suggestions in 
the following section. 

6. One interesting feature of the bill is the provision that 
land-grant routes are to receive not exceeding cost, in place of 
the present provision allowing them 80 per cent of the regular 
pay. If this percentage for the land-grant roads is to be 
changed, it would be desirable to have an investigation of the 
benefit or proceeds, or present value of those grants, to see what 
proportion of the capitalization chargeable to mail they repre- 
sent to-day. Then one could deduct the same proportion of 
whatever capital charge was included in the mail pay. The 
extreme difficulty of making any accurate adjustment, however, 
suggests the advisability of continuing the compromise which 
has received the sanction of a generation, especially as there is 
nothing obviously unjust about it. If a railroad receives 80 per 
cent of a fair rate, it is receiving an amount which about covers 
operating expenses — that is, it is not contributing to the capital 
charges. In the last analysis this adjustment means that the 
land grants were in part a gift to the Post Office Department in- 
vested in railroads, from which investment it is now drawing a 
revenue. 

THE STANDARD UNIT SUGGESTION. 

At the hearings Congressman Lloyd made a valuable suggestion 
that seemed to bear fruit in connection with the administrative diffi- 
culties of the space basis. He first suggested that there might be 
only one size of car — a 60-foot car (Hearings, p. 597), but as an 
outcome of the discussion between the chairman, Congressman Lloyd, 
and Mr. C. H. McBride (pp. 598-599) a 30-foot unit was added, and 
later the suggestion took the form of four units — the 60-foot car, the 
30-foot car, 15-foot car, and closed-pouch service (p. 636). The Sec- 
ond Assistant Postmaster General submitted estimates of the cost 
of this method of applying the space basis at assumed rates of 22-J 
and 25 cents per car-mile (p. 679). At the 22^-cent rate the result 
was reached that if apartment-car service is assumed to be per- 
formed one-half six times a week and one-half seven times a week, 
the total cost for 1912 would have been $58,679,549, an increase 
of 15.7 per cent. This suggestion has merit in directing our 
attention specifically to one of the most perplexing difficulties 
in the administrative detail for any plan that uses space, either 
in part or entirely. We find in use 70-foot cars, 60-foot cars, 
50-foot cars, and many different sizes of apartments, 25 feet being 

49396—14 62 



862 



HAILWAY MAIL PAY 



very frequent, with some as small as 10 feet. In the discussion of 
this feature of the Railway Mail Service it should be recognized that 
the car space "needed," the car space "used," and the car space 
" furnished " may be three different things. Again, the cars used 
by the mail service may be railway post office distributing cars or 
they may be storage cars for which no specific payment is made 
under the present law, and portions of the baggage cars may be used 
for storage also. The variety in the sizes of cars in use at the pres- 
ent time is shown by the following tables from the report of the- 
Second Assistant Postmaster General. 

Table 11. — Full cars in use and in reserve on June 30, 1912. 





Length of car in feet. 




40 


41 


42 


43 


44 


45 


46 


47 


48 


49 50 


51 


52 


Steel 


44 

5 

40 












































2 
19 


5 
103 


"4* 


1 


Wood 


8 


2 


a 


9 


2 






3 


2 












Total 


89 


8 


2 


5 


9 


2 






3 


21 


108 


4 


3 












Length of car in feet. 




54 


55 


56 


57 


59 


60 


61 


62 


64 


65 


69 


70 


Total. 


Steel 








1 


5 


361 
160 
409 


"ii' 


1 
6 
5 


.... 


3 
3 
3 


6 


124 


545 










182 


Wood 


4 


16 


1 




14 






661 










Total 


4 


16 


1 


1 


19 


930 


11 


12 


1 


9 


6 


124 


1,388 





Table 12. — Apartment cars in use and in reserve on June 30, 1912. 





Under 
15 feet. 


15-18 
feet. 


18-20 
feet. 


20-22| 
feet. 


22J-25 

feet. 


25-30 
feet. 


Over 
30 feet. 


Total. 


Steel 


34 


6 

13 

475 


8 
'"""296" 


6' 

569 


21 

29 

368 


59 

117 

1,187 


53 

53 

336 


181 


Steel underf rame 


221 


Wood 


396 


3,627 






Total 


430 


494 


304 


578 


418 


1,363 


442 


4,029 







The railroad representatives had a good deal to say about the fre- 
quent discrepancy between what the department said they needed and 
what the railroads actually furnished. The road may be hauling a 
70-foot car when the department says it needs only a 50 or 60 foot 
car. If units were adopted as standard, as Mr. Lloyd suggests, the 
roads would build those sizes only and the department could ask for 
those sizes only. This would tend to bring more nearly together 
what the department asked for and what the roads could furnish. 

In view of the varying lengths of actual cars in service, perhaps it 
could be provided that only in case of a road's inability to furnish 
what is asked for, the standard shall be the basis of a compromise, 
but that where what is asked and what is furnished substantially 
coincide the amount needed should be paid for. 



BAIL WAY MAIL PAY. 863 

These suggestions at the hearings implied the simple space plan, 
the payment per standard car being the same irrespective of what 
goes into the car. But it does not seem equitable to pay one road 
the same as another road when the first is furnishing four times as 
much service as the other road per car. One car on one route may 
carry on an average 1 ton of mail or less while the other route may 
carry on an average 4 tons. To be sure, the extra expense would 
not be four times as great, for while the work of loading and unload- 
ing might be four times as oreat, the extra cost of hauling the addi- 
tional tons would be comparatively small. But some account should 
be taken of the extra volume of mail handled. This point will be 
elaborated on a subsequent page. If it should be decided that this 
modification is unnecessary and that the Post Office Department does 
not need a record of the ton-mileage of the mail, the bill suggested 
on page 873 below could be considerably simplified. The payment for 
baggage-car mail, however, would have to be treated differently. 

It can not be said offhand that the standard-unit principle would 
favor the railroads over the department or vice versa. There will 
be cases in which the standard unit paid for will be more than the 
department needs, but on the other hand there will be cases also in 
which the railroad furnishes a larger unit than is asked for. Thus, if 
15 feet is asked for, the road may run a 30-foot apartment, having 
no 15-foot apartment on hand. If the equipment of the roads, how- 
ever, ever became adjusted to these units, so that the particular unit 
asked for could be furnished, then the advantage would lie with the 
railroads, because the department would always have to require the 
unit next larger than the number of feet actually needed, provided the 
length were not the same as that of any of the units. 

THE PERCENTAGE METHOD. 

Many persons have been impressed with the idea that a simple 
solution of the mail-pay problem would be to name a percentage of 
the postal receipts to be paid the roads each year, this lump sum then 
to be divided among the roads in a manner judged to be equitable by 
them. The idea appears in the hearings before the Wolcott Com- 
mission. Congressman Loud asked the following question : 

Would it be your idea that the Government should deal with all of the railroad 
cars as one system and insist upon the establishment of a railway clearing 
house, into which shall be paid the amount the Government deems adequate 
for the total mail service, and make the railroad companies through their clear- 
ing house apportion its proceeds among themselves? (56th Cong., 2d sess., 
Senate Doc. 89, Pt. II, p. 468.) 

It is discussed in the hearings of the present committee only casu- 
ally. The initial stumbling block is the determination of the per- 
centage. But this is not the greatest difficulty. In fact, this is no 
more difficult than to determine the level of the rates by any other 
method whatsoever. The weight plan, the space plan, or any other 
plan must face this same difficulty of determining the last analysis 
of how much shall be paid over to the roads. The present plan caused 
$50,703,323 to be paid to the railroads on account of the mail service 
in the year 1912. To decide whether this is a just amount brings us 
into the considerations necessary for all plans — that is, the commer- 
cial principle, cost accounting, and comparison of rates. If the per- 



864 KAILWAY MAIL PAY. 

centage method is really desirable, the difficulty of determining the 
percentage is not an insuperable obstacle, since that difficulty is com- 
mon to all methods. 

The real difficulty with the percentage method is that it is illogical. 
We should pay the railroads for the services they render, and it is 
clear that the post-office receipts might change out of proportion to 
changes in the amount of the railroad services. To be sure the per- 
centage might be revised from time to time if there should be great 
changes in the postal policy, such as penny postage. Mr. Stewart 
expressed this difficulty as follows: 

I do not think it is sound, mainly for the reasons I stated when I began. 
There is no necessary relation between revenues derived and service performed ; 
and furthermore there is no necessary relation between revenues derived and 
services performed by the railroad company or by the rural service or by the 
letter carriers. They are not comparable. It seems to me it is an effort to 
compare and reach a conclusion between two or more incomparable elements. 

Furthermore, there would still remain the problem of an equitable 
distribution among the railroads. To make the roads decide this 
for themselves by organizing a committee for the purpose is con- 
ceivable. In England the pay for carrying the parcel post is deter- 
mined by taking a percentage of the gross receipts, and the law 
specifies how it shall be distributed among the railroads, the dis- 
tribution being in accordance with each road's earnings from parcels 
carried for the public directly. There does not appear to be any 
such simple basis for the whole mail payment. Some scheme of 
weight or space or combination of the two would have to be adopted 
for distributing the money among the railroads. The only advan- 
tage the percentage scheme has, is in automatically determining the 
total amount to be paid each year after the percentage has once been 
adopted. It would be subject to scrutiny and reconsideration each 
year by Congress, or perhaps the justice of it could be considered 
on complaint by the Interstate Commerce Commission. The per- 
centage method must be discarded as a solution of the problem. 

THE PLAN OF SENATOR JOHN W. WEEKS. 

It was suggested by Senator Weeks that a director of posts be ap- 
pointed to make a contract with each railroad company, subject to 
an appeal to the Interstate Commerce Commission. To use the 
Senator's own words : 

Suppose Congress authorizes the appointment of an official in the Post Office 
Department — call him a traffic manager, or a director of posts, or whatever 
you like — and that it should be his business to arrange with railroad companies 
for the transportation of the mails and to fix the compensation for doing it, 
without any law whatever as to what the compensation should be, assuming, of 
course, if the railroad company and the traffic manager did not agree on a rate, 
that it should be referred to the Interstate Commerce Commission for 
adjustment. (Hearings, p. 395.) 

Like the percentage plan, this has the merit of being exceedingly 
simple from the standpoint of this committee or of Congress. It 
would leave all questions of ton-miles, car-foot miles, empty space, 
etc., to the brain of the director of posts. But would not this plan 
be more of an evasion than a solution? Imagine that such a director 
of posts had been duly appointed and made a bargain with a certain 
railroad company, paying it $1,000,000 for the service rendered. 



RAILWAY MAIL PAY. 865 

The director of posts, even though a man of broad business experi- 
ence, would hardly know by intuition that this was a good bargain 
for the Government. He would have to investigate the whole matter. 
He would have to be able to explain and justify his decision if he 
wished to escape the charge of being in collusion with the railroads. 
He would have to have records of weight or of space or of both, and 
then he would have to justify his rate for whatever unit of payment 
be selected. In other words, he could be a committee of one to do 
what the joint committee of Congress has been trying to do. The 
director of posts presumably would have the further duties of 
straightening out minor difficulties in the administration of the 
agreements, but this work is now being done by the Division of 
Railway Adjustments in the Post Office Department. It is not clear 
why a new name should be given to the department doing this kind 
of work. 

Without attempting to pass final judgment on the suggestion of 
Senator Weeks, it may be further pointed out that its practical re- 
sult would, like the Peabody plan, probably be to turn the whole 
matter over to the Interstate Commerce Commission. 

THE PLAN OF HON. DAVID J. LEWIS. 

This plan will be found on pages 696-698 of the hearings. The 
total amount of pay due the railroads is to be determined separately 
for parcels and for letter mail. For parcels the ton-mileage is to be 
ascertained at the various post offices by recording the weight and 
destination of each parcel and then a rate per ton-mile is to be ap- 
plied to the total ton-mileage, the rate per ton-mile being roughly 
estimated at first at 5 cents, subject to revision when cost principles 
can be satisfactorily applied. Letter mail is to be paid for at a rate 
per ton, the weights being taken during a weighing period as the 
mail leaves the post office. A rate of $43.65, equivalent to about 8 
cents a ton-mile, is suggested. Thus the total amount due the rail- 
roads will be ascertained, and this amount is to be distributed among 
the roads on a space basis. The following criticisms are offered for 
consideration : 

1. If the money is to be distributed among the railroads on a 
space basis, there is no good reason why the total amount due 
should not also be ascertained on that basis, since the cost per 
car-mile can be ascertained more readily than the cost per ton- 
mile. 

2. As Mr. Lewis does not discuss the details of the space basis, 
he apparently assumes the justice of it as between roads, but 
this is open to question. (See p. 859.) He also throws no light 
on the administrative difficulties of applying that basis. 

3. If the labor of calculating both ton-miles and car-miles is 
warranted, we can readily get the average load per car on each 
railroad, and this enables us to state a fair rate per car-mile or 
per ton-mile for that road, irrespective of what kind of parcels 
or mail matter is in the car. The separation of letter pay from 
parcel pay is therefore unnecessary. That Mr. Lewis should 
suggest that both space and weight be utilized is interesting, but 
the great defect in his plan is that he fails to correlate the two. 



866 RAILWAY MAIL PAY. 

THE PEABODY PLAN. 

It has been suggested by Mr. James Peabody, statistician of the 
Atchison, Topeka & Santa Fe Railroad, that we are dealing here 
with a problem of rate making and that we have a machinery now 
by which to determine the reasonableness of rates. Rates for haul- 
ing coal are now published, in the first instance, by the railroad com- 
panies and are subject to complaint before the Interstate Commerce 
Commission. Similarly, he would have Congress determine simply 
the unit of payment, and then let each railroad announce a rate for 
carrying the mails. Against this rate the Post Office Department 
could appeal to the Interstate Commerce Commission. (Hearings, 
pp. 684-688.) 

This is equivalent to turning the whole matter over to the Inter- 
state Commerce Commission. Why should the railroads make this 
rate in the first instance, placing the burden on the Post Office De- 
partment of going to court to prove the rate unjust? Probably all 
of the rates would be complained against when first announced. All 
the advantages of this plan can be retained by having Congress go a 
little further than simply name the unit, by prescribing a schedule 
of prima facie reasonable rates, but giving flexibility to the law by 
permitting an appeal as suggested, by either party, putting the burden 
of proof on the complainant. 

THE BUCKLAND PLAN. 

Mr. Edward G. Buckland, of the New York, New Haven & Hart- 
ford Railroad Co., submitted a brief bill (hearings, pp. 268 et seq.) 
which also makes the Interstate Commerce Commission the final 
judge of the reasonableness of the compensation, but which differs 
from Mr. Peabody's suggestion in that the Postmaster General is 
to initiate the rates. The Postmaster General is to make such regu- 
lations as he pleases, and then the commission is to say what the 
transportation service under such regulations is worth. In deter- 
mining what the service is worth, Mr. Buckland accepts the cost 
basis practically in the words of the Hitchcock bill discussed on a 
previous page. No additional comment is necessary, as the reference 
of the whole matter to the Interstate Commerce Commission and the 
cost feature have already been discussed. 

THE GROSS-TON PRINCIPLE. 

It was suggested by Mr. John Hall Bowman, an accountant testi- 
fying for the New Haven Railroad, that an admirable method for 
separating passenger train costs would be on the basis of the gross 
weight of car and contents, but that this would require too many 
arbitraries. (Hearings, p. 295.) It is obvious that the weight of car 
and contents takes into account both the weight of the mail and the 
space furnished, since the tare weight hauled will depend largely on 
the number of cars hauled. It would not be advisable to pay for 
the mail service directly on the basis of the gross ton-miles, as that 
would make the mail pay depend upon how much dead weight a 
xnnpanv chose to attach to a car. Nevertheless, in constructing a 



KAIL WAY MAIL PAY. £67 

scheme of railway-mail pay, we may well keep in mind this gross- 
ton idea, which has been used frequently in the construction of 
freight rates. The further application of this idea will he found 
below in the presentation of the weight-space method. 

THE PROPOSALS OF THE RAILROADS. 

The only constructive proposal made by the representatives of 
railroads was the correction of certain inconsistencies in the present 
law. One of these is that at present a railroad receives extra com- 
pensation if it runs a full car for distribution purposes, fitted with 
racks and letter boxes, while if it furnishes two 30-foot apartment 
cars similarly fitted up but on a smaller scale, it receives nothing 
whatever for this service aside from the compensation for weight 
carried. This is clearly an inconsistency which nobody will seriously 
defend. But there are two ways of correcting the inconsistency. 
The representatives of the roads suggest pay for apartment cars, but 
the matter could also be adjusted by not making a separate payment 
for either the apartment or the full railway post-office cars, but mak- 
ing the payment per car sufficient to cover the total amount due. 
We have seen that two payments for hauling a loaded car is confus- 
ing. The financial effect of such a change may be roughly estimated 
as follows: According to Document 105, the apartment car-foot 
mileage was 84.5 per cent of the railway post-office car-foot mileage. 
The railway post-office pay in 1912 was" $4,367,029. Taking 84.5 per 
cent of this we get $3,690,140 as the probable cost to the Government 
of this change. The railroad representatives also suggested that side 
and terminal services are a burden in many cases. The railroads are 
at present required to carry the mails from and into all terminal 
post offices, except in cities where other provision is made by the 
department. In cases where the department has not made such pro- 
vision, the distance between terminal post office and nearest station is 
computed in and paid for as part of the route. At intermediate 
post offices located not more than 80 rods from the nearest railroad 
station at which the railroad company has an agent, the railroad 
must carry the mails between station and post office without extra 
charge. This is known as side service. At connecting points where 
railroad stations are not over 80 rods apart, a company having mails 
on its train to be forwarded by a connecting train must deliver them 
into the connecting train. 

These customs are inherited from the clays of the stage coach, when 
the stage had to deliver the mails into every post office along the 
route. It has been estimated that the side service would cost the 
department $4,393,000 if it had to provide this service. (Hearings, 
pp. 211, 181, 17.) But it probably is not costing the railroads that 
much directly. (Hearings, pp. 2i8 et seq.) They perform a good 
deal of this service incidentally and the direct outlay would perhaps 
be considerably less than a million dollars (pp. 219, 231, 5<0, and 
706). The railroads have indicate'd a willingness to continue per- 
forming these services, but " urge that they should be specially and 
adequately compensated for all side and terminal services." (Hear- 
ings, p. 726.) 



863 E AIL WAY MAIL PAY. 

An important point in this connection is that the burden of per- 
forming the side service falls unequally on various railroads, being 
regarded as a special burden on short lines. The amount paid out 
directlyby the road for mail-messenger service is frequently a large 
proportion of the entire mail pay received from the Government. 
(See statements of short-line railroads, pp. 830 et seq. of Hearings; 
also Hearings, pp. 520 and 247.) 

Whatever disposition is made of this matter, it seems clear that pay 
for side service ought not to be mingled with the pay for railroad 
transportation. The amount paid for side and terminal services 
should be kept separate. The railroads might be directed to perform 
the side and terminal services when required by the Postmaster 
General at a price not to exceed the additional cost to the railroad 
company for that service. 

The representatives of the railroads also ask for an annual weigh- 
ing (Hearings, p. 724) in place of the present quadrennial weighing. 
The loss for the Western States (fourth contract section) was esti- 
mated by Mr. Worthington of the Southern Pacific at $2,800,000 for 
the years 1905 to 1909. (Chart F, p. 342.) The testimony does not 
give an estimate for the country as a whole. In lieu of anything 
more exact, the following calculation is offered. The report of 
Mr. H. C. Adams estimated the ton-mileage at 272,714,017 in 1898. 
The department calculated the ton-mileage at 510,827,522 in 1913, 
or an increase of 238,113,505 in 15 years. This is equivalent to about 
4J per cent increase each year over the preceding year. If we take 
the latest estimate of 510,800,000 ton-miles and calculate the increase 
for four years on this basis of 4| per cent of each year, noting that, 
as compared with an annual weighing, the first year's increase will 
be carried without pay for a period of three years, the second year's 
increase for two years, etc., we get a total ton-mileage of 141,990,000 
carried without pay, or an annual gratuitous carriage of 35,497,500 
ton-mijes. This at 9.17 cents per ton-mile yields a value of $3,255,000 
as the annual increase in transportation charge if annual weighings 
are adopted with the existing rates. This estimate takes no account 
of the fact that the ton-mile rate would decline with the increased 
weight and is a very rough estimate. 

Putting the three estimates together, of $3,690,140 for apartments, 
$1,000,000 for side service, and $3,255,000 for annual weighing, the 
cost of correcting the inconsistencies in the present law in the manner 
asked for by the railroads would be nearly $8,000,000 annually. 

WEIGHT, SPACE, AND DISTANCE. 

An attempt will be made in this section to indicate how to modify 
the present law so that we can utilize the suggestions that have been 
given. A leading feature of this plan is the substitution of the aver- 
age load per car for the average daily weight as the basis of classifi- 
cation of routes. Whether the rate be then stated as a rate per ton- 
mile, or whether it be stated as a car-mile rate is optional. It is 
obviously a matter of indifference whether a car containing 5 tons 
be paid at 5 cents per ton-mile or at 25 cents per car-mile. Which is 
chosen is a matter of administrative convenience. In presenting 
these suggestions in detail we shall outline a bill stating the rates on 
a car-mile basis. 



RAILWAY MAIL _ PAY. 869 

It is a well-recognized principle in the making of freight rates that 
the space occupied by an article for a given weight shall be considered 
in making the rate. Furniture set up takes a higher rate than furni- 
ture knocked down and packed in boxes. The bulkiness of an article 
of given weight affects the load that can be gotten into a car. It is 
pertinent to inquire into the loading of mail per car as a preliminary 
to fixing a rate for mail, and this is equivalent to taking into account 
both space and weight. Tons per car is a unit of weight compared 
with a unit of space. That this is a vital factor has long been recog- 
nized. The Thompson-Slater Commission has this to say : 

While it is proposed to pay for space, yet the amount of space and consequent 
expenditure on any railroad must be restricted by some method which in its 
operation will lie outside of the discretion of executive officers. Without some 
such restrictive gauge there would be no limit to the expenditures for trans- 
portation by railroads, save such as might be fixed at the will of an officer of 
the Post Office Department. Under such a condition of affairs it is evident 
that space itself would be an arbitrary bnsis of compensation, unsafe both for 
the railroads and for the Post Office Department. The gauge prescribed by the 
committee, resting upon the weight of mails, modified by the room necessary in 
which to assort and distribute the same, and the speed with which they are 
conveyed, removes all possibility of improper or arbitrary allowances in de- 
termining the space and pay on any particular railroad. (48th Cong., 1st sess., 
Ex. Doc. No. 35.) 

They then recommended a certain payment per car-foot mile (5 
mills at a speed of 20 miles per hour) and an additional payment 
for weight, counting 500 pounds as equivalent to 13 feet, from 500 to 
1,000 pounds not to exceed 15 feet, etc. But they do not enter on a 
discussion of just how this would be applied in practice. 

The remarks of Mr. W. H. Moody in the report of the Wolcott 
Commission are of especial interest in this connection : 

We all agree that the loading of the cars is the " principal question," to use 
Mr. Adams's expression. It is the one point of agreement between the repre- 
sentatives of the railroads, the Post Office officials, the members of the com- 
mission, and its expert. Yet it is the one question upon which there is no evi- 
dence beyond mere assertion. (Hearings, p. 41.) 

Again, Mr. Julius Kruttschnitt presented to the Wolcott Commis- 
sion a plan utilizing both space and weight in the following language : 

In thinking over the matter it occurred to me that some such adjustment as 
outlined below would be equitable to the interests of both the railroads and of 
the Government: 

1. From the statistics of the Interstate Commerce Commission determine the 
cost per train mile in each of the 10 groups into which the country is divided 
by the commission for statistical purposes, the cost to include operating ex- 
penses, taxes, interest on funded debt, and dividends, following the principle 
laid down by the late chairman of the commission, Mr. Cooley, in the matter of 
the petition of the Louisville & Nashville Railroad Co. and others, page 79, 
annual report of the Interstate Commerce Commission for 1887 : 

"Every railroad ought, when it is practicable, to so arrange its tariffs that 
the burden upon freights shall be proportional on all portions of its line, and 
with a view to revenue sufficient to meet all items of current expense, including 
the cost of keeping up the road, buildings, and equipment, and of returning a 
fair profit to the owners." 

2. The railroad companies to keep in their car-accounting offices an accurate 
record of the mileage made by all railway post-office and apartment cars, and 
from such data to deduce the actual foot-mileage made by railway-post-office 
and apartment cars. 

3. The cost of the passenger-train mile being known, and the number of feet 
occupied by the Post Office Department in apartment and railway-post-office 
cars being known, each linear foot so occupied to be charged its length pro rata 
of the train expenses. 



870 RAILWAY MAIL PAY. 

4. In each foot of length of a railway post-office car or apartment car, 40 
pounds of mail and attendant clerks to be carried without any compensation 
other than that determined by paragraph 3, providing for compensation for car 
haul. All excess of mail matter in railway-post-office or apartment cars above 
40 pounds to the linear foot, and all pouch mail carried in baggage or express 
cars to pay a charge for transportation one and one-half times the rates estab- 
lished for first-class freight by the carrier performing the service between the 
post-route terminals in question. 

5. The weight of mails to be taken annually, the weights in railway post- 
office and apartment cars and the weights of pouch mail to be kept separately 

6. The carriers to be relieved of all terminal service and obligations to receive 
and deliver mail into wayside post offices, the mails in every case to be received 
by the Post Office Department officials at points where they are unloaded from 
trains, the expense of delivering to be assumed by the Government ; or, if it be 
desired that the carrier should still perform this service, compensation at the 
rate of at least $100 per office per annum at every point where the mail is re- 
ceived or delivered into post offices by the carrier should be fixed. 

7. All classes of mail now sent through the post office to continue being sent 
under this proposition ; that is to say, the Government not to divert the carriage 
of second-class and fourth-class mails to freight trains or other methods of car- 
riage. (From the testimony taken by the commission to investigate the Postal 
Service. 56th Cong., 2d session. S. Doc. No. 89. Pt. 2. p. 97.) 

An attempt has been made to show on a previous page how the 
average load per car varies on different routes, with the result indi- 
cated that while the average on any route is affected by the presence 
of storage cars, still the load in the railway-post-office car varies 
considerably, and while even a large load for such a car, say 4 tons, 
is small compared with the total weight of the car, it is doubtful if 
the variation can be ignored. Let us imagine a route on which one 
railway-post-office car was run in 1909. In 1913 the one car is still 
run, but the weighing shows an increase in weight of, say, 50 per 
cent. The straight-space basis would give no increase in pay, but 
should there not be some increase in the pay if the net service ren- 
dered has increased 50 per cent? Such an occurrence would be less 
probable on routes which have attained a large tonnage. The fol- 
lowing data are taken from the testimony of Mr. S. C. Scott (repre- 
senting the Pennsylvania lines West, Hearings, p. 239) : 

Pittsburgh to East St. Louis. 



1897 



1912 



Number of cars: 

Storage 

Railway post office 

Weight of mail per car tons. . 

Ton-miles per day 

Amount received per car-mile cents. . 

Amount received per ton-mile: 

Net load cents. . 

Car and contents mills. . 



15 
2.30 

27,858 
20.80 



20 

2.94 

53,018 

20.32 

7 
3.19 



Here the ton-miles per day have practically doubled, but the 
change in the average load per car is relatively small. The straight- 
space basis here would have paid the railroad one-half cent per car- 
mile more than the present law did, if 20.80 cents had been adopted 
as the rate per car-mile in 1897. 

Neither would the average load per car basis have made much 
change in the rate in the preceding case, and this indicates one ad- 



RAILWAY MAIL PAY. 871 

vantage of the average load per car over the average daily weight 
basis in that there would not be any need of such frequent weigh- 
ings. Once in four years would be frequent enough. 

Summarizing this part of the discussion, we may say that the 
space-weight basis has all the advantage of the space basis ex- 
cept the cost of the weighing, but this cost, as has just been indicated, 
would be comparatively slight because of the infrequency of the 
weighing period. It is only when simple weight is the basis of pay 
that an annual weighing is important. The arguments in favor of 
taking both space and weight into account are: (1) The cost of load- 
ing and unloading and possibly delay to trains is in proportion to 
weight of the mail, and transportation costs are somewhat affected 
by the heavier loads; (2) while the load may be small at present, it 
may change with the growth of the parcel post, not because parcel 
post is any less bulky than other mail — in fact, it is more so — but be- 
cause it may demand relatively less distribution en route. The aver- 
age load per car basis will meet any such future changes automatic- 
ally; (3) we should have statistics of both ton-miles and car-miles, 
because (a) the load per car is a useful index for administrative 
supervision; (b) comparisons of rates with freight and express rates 
can thereby be made more intelligently. 

The conclusion to be drawn on this point is that as against the 
weight basis alone, as found in the present law, the argument for a 
weight-space, or average load per car basis, is overwhelming, but as 
against the simple space basis it is only somewhat preferable, but 
still preferable. With a knowledge of the weight periodically, the 
objection that the space basis makes possible an extravagance of 
space would be minimized. (Hearings, p. 728.) 

The second prominent feature of the plan under consideration is 
the variation in the rate for different lengths of haul. That mail 
cars differ greatly in the length of their runs is evident from an 
inspection of the Railway Mail Service time tables. Table 13 has 
been compiled to show the extent of the variation in three Railway 
Mail Service divisions. The New England division shows an aver- 
age run of 133 miles as against 222 miles for a western division and 
240 miles for the fifteenth division, being the through railway post 
offices and mails on the Pennsylvania Railroad and via other lines 
centering at Pittsburgh. The car-miles are also shown classified by 
zones to show the feasibility of a current record as a basis for pay- 
ing the railroads. In this computation the lengths " needed " have 
been uniformly adopted. There may be some errors in the compila- 
tion, as one must be familiar with the details of the Railway Mail 
Service in each division to say in all cases just how far a certain car 
runs. The tables are shown here as an example of the kind of in- 
formation needed for the plan under discussion and the practicability 
of obtaining it. It is assumed that no argument is necessary for 
compensating short runs at a higher rate than long runs. There are 
undeniably certain expenses which, are independent of the distance 
run, such as the expenses for switching, for cleaning, and the interest 
and depreciation for time lost on account of short runs. A car will 
be idle more hours per day as a rule on short than on long runs. 



872 



BAILWAY MAIL PAY. 



Table 13. — Gar trips and car miles for one week for three divisions of the Rail- 
way Mail Service. 

[Apartments reduced to 60-foot standard.] 





Car trips. 


Car miles. 


Average 

miles 
per trip. 


Car miles classified by zones. 


Division. 


50 miles 

and 
under. 


50-100 
miles. 


100-200 
miles. 


200 and 
over. 


Fourteenth division: Nebraska, 
Wyoming, and Colorado 

First division: Maine, New 
Hampshire, Massachusetts, 
Rhode Island, and Connecticut 

Fifteenth division 


560.2 

1,064.9 
440.1 


] 24, 296 

141,326 
105, 730 


222 

133 

240 


1,244 

10,341 
2,081 


7,450 

10,853 
4,583 


28,456 

33,518 
12,845 


87, 146 

86,614 
86,221 





In order to obtain a preliminary working estimate of the average 
run of a mail car the results in the preceding table were supplemented 
by the data in Table 14 following. Weighting the average length of 
each class of routes by the car-foot miles in the several classes, we 
find the average length of the routes to be 214.6 miles, as against 70.05 
for the unweighted average. But the 214.6 is not exact, because all 
cars do not run over exactly one route. We shall assume tentativelv 
that the average run of a car is about 215 miles. 

Table 14. — Length of routes according to average daily weight and character 

of service. 

[From data in Document 105.] 



Classification according to average daily weight. 



Total 

number of 

routes. 



Total 
length of 
routes. 



Average 

length of 

routes. 



Car-foot 



211 pounds or less 

212 to 519 pounds 

520 to 1,019 pounds 

1,020 to 1,519 pounds 

1,520 to 2,059 pounds 

2,060 to 3,559 pounds 

3,560 to 5,079 pounds 

5,080 to 48,103 pounds. . . 
48,104 pounds and over.. 

Total 

Weighted average, 214 



1,120 
681 
492 
232 
113 
178 

92 
361 

40 



Miles. 
28, 463. 70 
24,281.73 
30, 476. 61 
19,104.68 

9,581.34 
29, 368. 00 
13,257.08 
63,649.94 

9,563.63 



Miles. 

25.41 

35.66 

61.94 

82.35 

84.79 

164.99 

144. 10 

176.32 

239.09 



11,837,000 
15,817,000 
34,911,000 
31,038,000 
17,510,000 
49,599,000 
43,011,000 
396,529,000 
332,117,000 



3,5 



227, 746. 71 



68.83 



Character of service. 


Total 

number of 

routes. 


Total 

length of 

routes. 


Average 

length of 

routes. 


Closed pouch only 


955 
595 
928 
293 

7 


16,982.48 
44,123.36 
75,877.10 
57,078.10 
526. 42 


17.78 


Apartment car only 


74.12 


Apartment car and closed pouch 


81.76 


Railway Post Office car, apartment car and closed pouch 


194. 74 


Railway Post Office car only 


75.21 






Total 


2,778 


194,587.46 


70.05 







The details of this plan are explained in connection with each 
section of the following bill, which is intended to be merely an outline 
and not a complete elaboration in legal form. 



EAILWAY MAIL PAY. 



873 



OUTLINE OF BILL ON WEIGHT-SPACE-DISTANCE BASIS. 

Section 1. The Postmaster General shall determine the compensa- 
tion due each steam railroad carrier in accordance with the rates 
specified herein, separately for the following groups of services: (1) 
All mail transportation services, except side and terminal services, on 
routes having Railway Post-Office car, apartment car, or storage-car 
service; (2) all side and terminal services; and (3) services on routes 
having closed-pouch service only. 

Comment. — It is the intent of this section to include in the third group merely 
the routes having closed-pouch service only; that is, where there is no apart- 
ment, Railway Post-Office, or storage-car service, but not the trains having 
closed-pouch service on routes falling under group 1, because on such routes 
weighings are provided for, and the closed-pouch service can be weighed and 
treated as baggage-car mail, as indicated below. Still, it would be possible to 
include in group 3 all trains having only closed-pouch service, and this would 
be more consistent with the provisions in the following section : 

Sec. 2. The Postmaster General shall ascertain for each steam 
railroad mail line (as defined in section 3 hereof) having Railway 
Post Office, apartment, or storage-car service, the average load per 
car (as defined in section 3 hereof) for the year 1915 and quadren- 
nially thereafter. He shall further cause to be compiled currently 
for each mail line the "completed mail-car mileage" (as defined in 
section 3 hereof). He shall summarize the number of completed 
mail-car miles by classes of car loadings, and shall pay monthly the 
amount due each steam railroad company at the rates in the follow- 
ing schedule, side and terminal services to be compensated separately 
as hereinafter provided : 

Rate schedule. 



Net load per car. 


Combined 
initial and 
terminal 
charge for 
eafh one-way 
trip of a 60- 
foot car or 
equivalent 
thereof. 


A dditional 

distance 

charge for 

each mile run 

per 60-foot 

car or 

equivalent 

thereof. 


Under 1 ton 


S3. 00 
3.25 
3.50 
3.75 
4.00 
4.25 
4.50 
4.75 
5.00 
5.25 
5.50 


Cents. 

20.20 


1 to 2 tons 


20.54 


2 to 3 tons 


20.87 


3 to 4 tons 


21.20 


4 to 5 tons 


21.54 


5 to 6 tons 


21.87 




22.21 


7 to 8 tons 


22.54 


8 to 9 tons 


22.87 


9 to 1 tons 


23.21 


10 to 11 tons 


23.54 







Explanation.— For example, with a load of 2i tons the total charge for a distance of 215 miles would be: 
$3.50 plus (215X20.87 cents), which is .|48.37i, equivalent to 22\ cents a mile for this distance. 

Comment. — As explained on a previous page, a quadrennial weighing is suffi- 
cient, since the average load per car does not change rapidly. In constructing 
this table, 22£ cents per car-mile for the average load and distance was taken 
as the standard. The reasons for taking 22£ cents will be given subsequently 
in the discussion of the level of rates. The proper terminal charge is difficult 
to determine. The charges -given in the table are subject to modification. They 
are intended to include switching, loading, cleaning, and interest and depre- 
ciation while standing idle at a terminal. It may be noted that the rehandling 



874 KAILWAY MAIL PAY. 

ot me average ioaci eii route is to be regarded as a line and not as a terminal 
charge, because the amount of such rehandling is affected by the number of 
stations served on the run. The variation in the distance charge for the dif- 
ferent weights per car is in accordance with the gross tons, the tare weight of 
the car being taken as 60 tons. 

The question of speed is discussed on page 895 below. 

Sec. 3. Definitions. — The average load per car shall be the quo- 
tient obtained by dividing the tons of mail 1 mile by the number of 
cars 1 mile, as recorded during the statistical period. The cars 1 
mile shall be one-sixtieth of the combined car-foot mileage of all 
cars authorized in accordance with section 4. For the purpose of 
obtaining this average on any mail line, the mail in baggage cars 
and space occupied by same shall be ignored, but the ton-mileage 
in such baggage cars shall be separately recorded. The statistical 
period shall consist of 105 days every fourth year, selected so that 
the results will be as nearly representative of the entire year as pos- 
sible. The tons of mail 1 mile shall be ascertained from the actual 
weights of the mail and distances same was carried during the statis- 
tical period, but the Postmaster General may, after the weighing of 
1915, which shall be universal for all sections of the country, con- 
fine the actual weighings to the larger stations on each mail line 
if he finds that the weights at the smaller stations can be satisfac- 
torily estimated and added to the weights actually taken; but the 
estimated weight shall not exceed 10 per cent of the total. The com- 
pleted cars 1 mile for the monthly record shall be one-sixtieth of the 
car-foot mileage run by cars authorized in accordance with section 
4, increased by the per cent which the ton-mileage in baggage cars 
is of the remainder of the ton-mileage. (The number of one-way 
trips to be similarly defined.) A mail line on any steam railroad 
shall include all the mail service on trains of such road having the 
same initial point and a substantially continuous run to the same 
terminal point. 

Comment. — The mail line as here defined is different from the present mail 
route, but need not interfere with the retention of those routes if such retention 
is desired by the Post Office Department. The mail line is an operating unit, 
while the present mail route is a geographical contract unit. The mail line 
may extend over several of the present routes, but the department can readily 
break up the pay by routes according to the miles run on each. 

As here provided the average weight of mail in storage and railway post- 
office cars is not distinguished. It may be desirable to separate storage from 
other cars and have a separate rate table for them. As the mail is carried 
back and forth between storage and railway post-office cars en route, it may 
be thought impossible to separate the ton-mileage for each, but this could be 
done readily by noting during the weighing period the amounts loaded at the 
important stations on each mail line into each class of cars and the total ton- 
mileage could be divided in the proportion thus indicated. There would be 
good ground for making the storage-car less than the railway post-office 
rate, because of the smaller cost of storage cars, and also the rate on apartment 
cars might reasonably be more than in proportion to the rate on the full rail- 
way posi-office car if it appears that roads can not use the remainder of the 
car in which the apartment is provided to any great extent. But consider also 
what was said on page 863. These are refinements which have been omitted in 
order not to obscure the general plan. 

Sec. 4. Authorizations and requests. — On , 191 — , the Post- 
master General shall notify each operating carrier over the road of 
which he des : res mail to be transported of his needs for postal-car 
facilities, stating the number, length, and type of cars, and the mail 
line upon which each is to be run. Each operating carrier is re- 



RAILWAY MAIL PAY. 875 

quired forthwith to state to what extent it is able to furnish the 
precise equipment needed. Wherever the length of apartment or 
car needed coincides within 2 feet with the length which can be 
furnished, such length needed shall be authorized. Wherever the 
length of apartment or car needed does not coincide with the length 
which can be furnished within 2 feet, the authorization shall be for 
the smallest standard unit which will suffice for the needs of the de- 
partment. The standard units shall be " 15-foot apartment," " 30- 
foot apartment," " 60-foot railway post-office car," and " 60-foot 
storage car." Authorizations may be for such period, not less than 
one month, as the Postmaster General may designate. The Post- 
master General shall authorize subordinate officials in charge of the 
expedition of mails to request additional storage cars for temporary 
use upon short notice, and the car-foot mileage of such cars shall be 
included in the car-foot mileage upon which the payments to car- 
rier are computed. Authorizations of full railway post-office storage 
or apartment cars shall be for round trips only, except that by 
mutual consent authorizations may be in one direction only. 

Comment. — The question should be considered whether storage cars should 
be paid for in one direction only. The railroad, company has control of them 
when empty and might have some use for them in the reverse direction. There 
would be no injustice in paying for the loaded movement only if the rate in- 
cluded a consideration of the average empty storage car movement as compared 
with the loaded movement While some illustrations were given at the hear- 
ings, we have no comprehensive statistics on the subject. 

Sec. 5. Side and terminal services shall be paid for separately, and 
the payment shall be the actual additional cost to the railroad com- 
pany on account of such service. Disputes as to the amount of such 
costs shall be settled by the procedure outlined in section 7. 

Sec. 6. On routes having exclusively closed-pouch service the pay- 
ment shall be 1 cent per pouch, sack, or other piece of mail matter 
carried 1 mile. The pouch, sack, and piece mileage shall be ascer- 
tained annually from actual records kept for a period of not less 
than one month. 

Comment. — In providing for payment on a pouch-mileage basis, the sugges- 
tion of Mr. C. H. McBride has been followed, although there may be some war- 
rant for making a flat rate per pouch irrespective of distance, since the average 
length of the routes to which this section applies is about 18 miles. 

The rate suggested is lower than the present rate. From Table 2 on page 
852 it will be seen that the routes under 211 pounds have an average ton- 
mile rate of $1.49. As there are 100 pouches or sacks to the ton (taking the 
average weight at 20 pounds, as estimated by the Post Office Department) the 
present rate would be nearly 1| cents per pouch per mile. But there should 
be a reduction because the side and terminal services are separately provided 
for. That it is not i:oo low, however, is indicated by the fact that if we assume 
a load of only 1 ton of all classes of matter in a baggage car, we would have 
at this rate, since there are 100 pouches to the ton, a car-mile rate of $1, which 
is more than three times the average passenger-train car-mile earnings of Class 
III roads (see p. 892). That it is not burdensome to the department, however, 
is indicated by the fact that just as soon as the volume of traffic becomes large 
enough to lose its distinctly retail character, the department can protect itself 
by authorizing a storage or apartment car on such a route and putting a man in 
charge to unload the mail at the proper points. 

Sec. 7. The Postmaster General or any mail carrier may bring 
complaint before the Interstate Commerce Commission concerning 
the rates herein provided for, or concerning any regulations or prac- 



876 RAILWAY MAIL PAY. 

tices under this act, and the Interstate Commerce Commission shall 
consider such complaints in the same manner as in cases under the 
interstate-commerce act. 

Comment. — If the question be raised whether it is expedient to make the acts 
of the Postmaster General subject to the approval of another branch of the Gov- 
ernment other than the judicial branch, it may be replied that the Interstate 
Commerce Commission is a semi-judicial body, and it is no more unreasonable 
to have it pass upon questions concerning mail pay than it is to permit the 
Court of Claims to consider financial disputes between the Government and its 
citizens. Any change which the commission might make in the rate of pay for 
carrying the mails would probably not involve as great financial consequences 
as do the freight-rate adjustments which it makes every year. If a satisfactory 
bill can be drawn without this right of appeal, a decided advantage would be 
gained, from the social standpoint, in the saving of expense necessarily involved 
in litigation. 

Sec. 8. Land-grant routes shall be paid for at rates 20 per cent 
lower than the rates which would otherwise prevail under this act. 

Sec. 9. Rates for mail lines lying in whole or in major part in the 
Mountain Sates (Montana, Idaho, Wyoming, Nevada, Utah, Colo- 
rado, Arizona, and New Mexico) shall be per cent higher than 

the rates which would otherwise prevail under this act. 

Comment. — It seems reasonable to make some allowance for permauent dis- 
advantages in operating conditions. In framing the recently promulgated ex- 
press rates the Interstate Commerce Commission recognized five districts each 
entitled to a different rate level. But in the problem before us this seems un- 
necessary, because the classification of the mail lines in the first instance 
according to average load per car takes some account of differences in condi- 
tions. In this connection the car-mile expenses shown in Table 15 may be of 
interest. 

Sec. 10. Any railroad company refusing to carry the mails upon 
request by the Postmaster General on regular passenger trains shall 
be subject to a fine of $ for each day of such refusal. 

Sec. 11. The rates herein specified shall include the transportation 
of persons in charge of the mails and of officials or employees of the 
Post Office Department while traveling for the purpose of inspecting 
or supervising the transportation of mails by steam railway. 

Comment. — The mail service, being treated as a portion of the passenger 
train service, sharing in the expenses of same, should also share in the benefits ; 
that is, if railway employees are carried free, postal employees should be car- 
ried free also. 

V. The Determination of the Rate Level. 

IS THE COMMERCIAL PRINCIPLE THE PROPER BASIS OF JUDGMENT? 

No answer can be given to the question whether the railways are 
underpaid until it has been decided whether the Government should 
pay the same rate that could be reasonably asked of a private shipper, 
or whether it should be regarded as entitled to preferential treatment. 
Both views were brought in the hearings. 

Thus, Second Assistant Postmaster General Stewart says that we 
should — 

Consider what it is worth to the railroad companies to carry the United 
States mails and what they owe the Government of the United States, what 
they owe the people, what they owe the country at large for their privilege of 
maintaining their corporate existence and receiving public grants of land, rights 
of way, and performing practically a monopoly of the transportation service of 
the country. 



RAILWAY MAIL PAY, 877 



He continues: 



Those things, I think, are very potent in the consideration of the subject, and 
I think very earnest consideration should be given to what the value of those 
intangible elements are, and that what you might call the fair commercial or 
business gauge of the service should be reduced by such an amount as would 
fairly represent those very material elements that should be concerned in the 
matter (pp. 656-657). 

Again, the possession of the right of eminent domain was suggested 
as a ground for making a special rate to the Government (p. 543) . A 
somewhat different argument for a special price was also suggested 
in the hearings (pp. 231 and 265) to the effect that the transportation 
company receives an indirect benefit through the facilitation of busi- 
ness by improved mail service. 

Again, it was suggested that railroads receive protection in case 
of strikes on account of carrying the mails (p. 229). 

The opposite views are expressed as follows in the brief for the 
railroads (p. 730) : 

The further idea has been advanced that on account of carrying the mails 
the railways enjoy the power of eminent domain and the protection of the 
Government in case of strikes, and that therefore they should carry the mail 
for less than what would be a full compensation therefor. The same reasons 
would apply equally to all other carrying functions of the railways. They enjoy 
the power of eminent domain because they are common carriers of passengers 
and freight and they enjoy the protection of the Federal Government because 
they are instrumentalities of commerce among the States. If these are reasons 
for their being paid less than full compensation for their services, the reduction 
of compensation can not be restricted to the mails. If the power of eminent 
domain and the governmental protection operated as an excuse for giving the 
railways less than just compensation, then there would be no inducement what- 
ever for anybody to invest his capital in the construction and operation of 
railways. 

The railways owe to the public, and to every member of the public, the duty 
to transport all passengers and all commodities seeking their services efficiently 
and safely and at just and reasonable rates. This is the highest of obligations, 
and the sum of their obligations to the individual members of the public is 
their obligation to the Government. They owe no obligation to the State 
which is separate or apart from, or independent of, or inconsistent with their 
obligations to individual applicants for their services. They can have no 
obligation to the people's Government which could require them, except when 
necessary to the public defense, to discriminate in rates in favor of traffic 
offered by the Government when, in order to offset such unnecessary discrimina- 
tion, they would be compelled to collect higher charges from some members 
of the public and upon other traffic. Words better adapted to the assertion of 
this principle could not be chosen than those used to express it by the Joint 
Commission to Investigate the Postal Service, which reported in 1901. We 
quote : 

" It seems to the commission that not only* justice and good conscience 
but also the efficiency of the postal service and the best interests of the country 
demand that the railway mail pay shall be so clearly fair and reasonable that 
while, on the one hand, the Government shall receive a full quid pro quo for 
its expenditures and the Public Treasury be not subjected to an improper drain 
upon its funds, yet, on the other hand, the Railway Mail Service shall bear 
its due proportion of the expenses incurred by the railroads in the maintenance 
of their organization and business as well as in the operation of their mail 
trains." (S. Doc. No. 89, 56th Cong., 2d sess., p. 10.) 

The following further expression of opinion by the Wolcott Com- 
mission is directly to the point : 

The commission, therefore, believes that the determination whether the pres- 
ent railway mail pay is excessive or not should be reached, as near as may 
be, upon a business basis and in accordance with the principles and considera- 
tions which control ordinary business transactions between private individuals 
(Parti, p. 10). 

49396—14 63 



878 EAILWAY MAIL PAY. 

It seems desirable that in our social bookkeeping each institution 
or service should stand on its own bottom so far as possible. If it 
needs special financial assistance, that assistance should be given 
directly for its own benefit. If the Post Office Department shows a 
deficit when it is charged a fair commercial rate for the materials 
and services it buys, we do not eliminate, we merely hide that deficit 
if we reduce the mail pay ; that is, we permit the department to meet 
the deficit by an indirect tax on the passenger and freight services 
to the extent that a cut in mail pay could be recouped from the other 
services. 

Whatever policy of taxation had best be adopted in meeting a 
possible deficit in the postal administration, it would seem necessary 
first to answer the question whether the railways are over or under 
paid on the basis of the commercial principle as the prima facie 
correct principle. Whether it is deemed desirable to pay less than this 
amount, with the expectation that passenger or freight rates should 
be correspondingly increased, is a matter of public policy in the field 
of taxation and need be decided at this stage of our inquiry. 

The suggestion was also made that the mail service should be 
considered as a by-product (pp. 230 and 591-593) and it should pay 
to the railroads only the additional expense it occasions, assuming 
that the passenger trains are in operation before the mail is taken 
into account. The idea may be expressed in this way: Suppose all 
the mail carried by the New York Central, for example, was sent 
by parallel routes. How much would the expense to that com- 
pany be reduced, allowing sufficient time for it to dispose of all mail 
cars, station mail facilities, etc. ? That would be the mail cost viewed 
as a by-product. While the idea is a definite one, it is not logical 
to apply it in the present connection if we are proceeding on the 
basis of the commercial principle, because the mail service is not a 
by-product any more than the express service is a by-product or than 
the whole passenger service is a bj^-product of the freight service, 
or than the freight service is a byproduct of the passenger service. 
It would seem equitable to make each service share in the cost of 
the facilities which it uses jointly with other services. 

COST OF SERVICE AS A GUIDE TO WHAT IS A FAIR PAYMENT UNDER THE 
COMMERCIAL PRINCIPLE. 

The testimony taken by the committee contains much concerning 
the difficulties of ascertaining the cost of the mail service to the 
railroads, but it is safe to say that the hearings developed no method 
of testing the adequacy or inadequacy of railway-mail pay not rest- 
ing, in the last analysis, upon some estimate of the cost of service. 
While cost may not be capable of that exact ascertainment which 
enables us to make it the sole determinant factor on which to base the 
rate of pay for each road, the usefulness of a cost estimate seems clear 
if used merely as a general guide to help us to decide whether the 
fifty-odd millions which the railroads receive from the Post Office 
Department constitutes an excessive payment or not. It is true, a 
subcommittee of the Association of American Railway Accounting 
Officers says that " no appreciable benefit " can come to a public com- 
mission from having even a partial separation of operating expenses 



RAILWAY MAIL PAY. 879 

as between the passenger and freight services (p. 632), but, on the 
other hand, consider the following testimony (p. 046) : 

The Chairman. How are you gentlemen able to demonstrate that you are 
insufficiently paid by the Government, which, I understand, is your contention, 
unless you use costs to the transportation company in reaching your conclu- 
sions upon which you claim your demonstration? 

Mr. Peabody. We can not. 

The Chairman. So that cost is a factor? 

Mr. Peabody. Cost is a factor to determine whether or not we are properly 
paid as a whole, yes, for each individual road ; but how far you can use that, as 
a common basis, is a very serious question. 

The Chairman. What are the factors that you take into consideration by 
which you come to your conclusion that you are underpaid? 

Mr. Peabody. I never have made any figures except in connection with the 
Santa Fe road proper. We use the cost there to determine we are underpaid, 
and we have on file in the record a statement showing the basis that we did 
use and showing the returns to the railroads are not remunerative. 

The Chairman. Then, with the Atchison System, cost is your primary factor 
in your determination? 

Mr. Peabody. So far as the minimum rate is concerned, yes. 

Moreover, in addition to the Santa Fe, whose statistician was just 
quoted, representatives of the Pennsylvania Railroad, the Burling- 
ton, the New Haven, the Grand Trunk, and the Southern Pacific 
placed before the present committee estimates of the cost of perform- 
ing the mail service on their respective roads with the idea of 
demonstrating that the railways are underpaid for carrying the 
mails. " I think that the principle of additions to profits beyond 
operating cost and fair charges against the capital expenditures could 
be easily developed," said Mr. Buckland, of the New Haven (p. 275). 
Mr. Worthington, of the Southern Pacific, says (p. 348) : "There is 
no reason why the adequacy of the pay as a whole can not be gauged 
in some way at an estimated cost, but I would not say that as a rate- 
making proposition." The representatives of the Post Office De- 
partment seem also to have come to the conclusion that there is no 
other way to test the fairness of the railway-mail pay than by esti- 
mates of what the service costs the railroads, cost being one of the 
leading features of the bills which they have proposed. The rail- 
road representatives, while admitting that cost estimates might be 
used to decide whether the payment as a whole is adequate or not, 
nearly always qualified their statements by saying that they did not 
think the cost should be the determinant basis for each individual 
railroad, while the bills submitted by the former Postmaster General 
do so provide. It was, indeed, suggested by some representatives of 
the railroads that the value of the service was the important factor 
in determining the total amount to be paid by the Post Office Depart- 
ment, but how intangible this becomes is shown by the discussion 
beginning with the middle of page 653 of the hearings. However 
important value of service may be in adjusting rates to private ship- 
pers in accordance with what the traffic will bear, it does not help us 
in determining what the Government should pay to the railroads as 
a whole. If necessary, it could pay $100,000,000 for the present 
service received. While value of service may be considered in com- 
paring the pay of one road with that to another, to avoid favor- 
itism to one as compared with another, we must reject that principle 
in reaching a conclusion as to whether the roads as a whole are over- 
paid or underpaid. 



880 RAILWAY MAIL PAST. 

When we are dealing, as here, with corporations rendering im- 
portant public services, the price for which can not be regulated by 
competition, the measure of what is a just payment is what is neces- 
sary to evoke a continued high quality of service — that is, the neces- 
sary payments to cover wages, salaries, fuel, and all other operating 
expenses, together with what is necessary to attract the required in- 
vestment of capital. This means that we must pay primary atten- 
tion to the cost in the complete sense. This is not the place to enter 
into a lengthy discussion of the theory of railroad rates, and in view 
of the statements regarding cost of service made by representa- 
tives of both the railroads and the post office, no further defense need 
be given for taking cost as the primary factor in determining whether 
the railroads are overpaid or underpaid. If the present committee, 
after considering the discussions regarding cost, should adopt that 
basis as the ultimate determinant of what is a fair payment to the 
railroads, its conclusion would not be without precedent in this mat- 
ter. The following is from the majority report of the Wolcott Com- 
mission. After referring to the division of expenses between freight 
and passenger and then between the three branches of the passenger 
service, they say: 

We are of the opinion that this means of arriving at the cost of the trans- 
portation of the mails affords the safest method by which to reach a just ap- 
proximation or estimate of the cost to the railroads of transporting the mails. 
All the parts or classes of the railroad business are so intimately interwoven 
the one with the other and the accounts of the railroads are, from the nature 
of the business, so intermingled that it is impossible, and unreasonable to 
expect, that the amounts properly and solely chargeable to the freight depart- 
ment on the one hand and to the passenger department on the other can be 
segregated from each other with absolute accuracy. We are, however, of the 
opinion that, upon principles recognized and practiced by all railroad com- 
panies, the expenses to be chargeable to one or the other department, and the 
revenue to be credited to each, can be arrived at with sufficient certainty to do 
no injustice to either, and that in the same way a fair division of the expenses 
and receipts can be made between the three classes of the passenger department. 

The commission, therefore, has arrived at its conclusion largely by this 
method, giving due consideration to whatever light seems to be thrown upon 
the question by the other facts appearing in the testimony. (Pt. I, pp. 13 
and 14.) 

This does not mean that we can get no assistance from a com- 
parison of earnings from the mail and other passenger train services, 
It simply means that such comparisons are not convincing unless we 
know that the rates with which we are comparing mail rates are 
not excessive, and to ascertain this means some prior determination 
of cost. In view of the fact that the passenger rates of this country 
have frequently been investigated on a cost basis by our courts and 
State railroad commissions, a good deal of weight should be given 
to the comparative earnings from the mail cars and other passenger- 
train cars. It may be of interest to note that in 1883 the Elmer- 
Thompson- Slater committee (a committee appointed by the Post- 
master General under an act of Congress) adopted the principle 
" that a rate of pay which will in general yield the railroad com- 
panies carrying the mails a return per car-mile run, not differing 
materially in amount from the returns now realized by these same 
corporations from the running of their passenger trains, can not be 
other than just and reasonable." (48th Cong., 1st sess., Ex. Doc. No. 



RAILWAY MAIL PAY. 881 

35, p. 13.) They also quote the following, from an early decision of 
the Supreme Court of the United States: 

Viewed as a question of law, it is impossible to say that either of these rules 
of computation is the true one. The question is, What is a fair and reasonable 
rate of compensation? And in reference to that we adopt the opinion of the 
Court of Claims as thus expressed : 

" Construing the statute as we do, we think the court would not be limited, 
in an action where it was compelled to estimate damages, to the rates charged 
by the companies to private parties for a single kind of similar service. We 
think that a court or jury would be authorized to look over the entire field of 
service in determining what was a fair and reasonable charge for a kind which 
was similar to but not identical with any other. For instance, if it should 
appear that the receipts of passenger cars were less than the receipts of postal 
cars, and the cost and running expenses no greater, we are inclined to think 
that that fact might be a proper element in the problem of estimating the 
amount of fair and reasonable rates of compensation." (Union Pacific Rail- 
road Co. v. The United States. 14 Otto. 667.) 

A. EVIDENCE AS TO THE COST OF THE SERVICE. 

It will be well to define, in the first place, just what is meant by 
cost. We may have in mind a restricted meaning or a complete 
meaning. A restricted meaning would include merely the wages 
paid, the repair of equipment, the cost of fuel, the maintenance of 
the rails, ties, etc.; in short, the current expenses of operation and 
upkeep, or what is known in the official reports as the operating ex- 
penses. If a railroad collected only this amount from its patrons it 
would go into bankruptcy. It needs additional money for the fol- 
lowing purposes : It must pay taxes, it must pay interest, and, if it is 
not to discourage new investment, it must pay dividends, and, fur- 
thermore, it must have a surplus to carry it through the lean years. 
When all these items have been added to operating expenses we have 
cost in the complete sense; in short, operating expense plus taxes and 
return on investment. 

To put this in concrete form, the relation of these railways of the 
items may be shown for the United States as a whole : 

Year ending June 30, 1911 : 

Operating expenses (including salaries and maintenance of 

organization of nonoperating companies) $1,976,750,851 

Taxes 108, 309, 512 

Interest, rents, etc. (net deductions) __ 389,105,963 

Dividends 291. 497, 164 

Appropriations for additions and betterments, new lines or 

extensions, and other reserves 70.156,077 

Increase in profit and loss balance 91,669,663 

Total operating revenues and net credit adjustments 

through profit and loss 2, 927, 489, 230 

From this table it is readily calculated that for every $1 of operat- 
ing expenses it is necessary for the roads as a whole to have 5.5 cents 
for taxes and 19.7 cents for interest and other charges before they 
can think of paying any dividends, or making any improvements. In 
other words, 25.2 cents at least must be allowed in addition to every 
dollar of operating expense to keep the roads from bankruptcy. 
This provides an average of 4.18 per cent on the funded debt. How 
much additional must be allowed for dividends and surplus will not 
be known until a valuation has been made of the roads. But these 



882 RAILWAY MAIL PAY. 

considerations are sufficient to show that the original suggestion of 
the Post Office Department that 6 cents be added to each dollar of 
operating expense and taxes was entirely too low. 

In the following discussion we shall first consider the operating 
expenses alone, excluding taxes. 

We shall first concern ourselves with the operating expense per 
passenger-train car-mile, leaving to subsequent considerations the 
correction necessary to get the expense of a mail car-mile as com- 
pared with other passenger-train miles. 

B. OPERATING EXPENSES ACCORDING TO DOCUMENT 105. 

From Table 7 in Document 105 we get the following data for the 
roads reporting: 

Month of November, 1909 : 

Total operating expenses, passenger and freight $130, 148, 881 

Taxes 7, 206, 270 

Total 137, 355, 151 

Operating expenses chargeable to passenger traffic 38, 016, 625 

Taxes chargeable to passenger traffic 2, 105, 022 

Total 40, 121, 647 

From Table 3 in Document 105 we are able to ascertain the car- 
miles made in the passenger trains, although the total car mileage 
given in that table must first be reduced, because this table con- 
tains more roads than those which could be included in Table 7. 
This can be done approximately because both tables happen to con- 
tain one item in common — the total mail car-foot miles. By this 
means we get a car mileage of 205,170,262 for the month. Divid- 
ing this into the $38,016,625, we have a passenger-train car-mile 
operating expense, excluding taxes, of 18.5 cents. The railroad 
companies will criticize this figure aside from the fact that it 
represents the business of a single month nearly four years ago, 
on the ground that the department divided common expenses be- 
tween the freight and passenger services by what it calls the " direct- 
charge " method, which assigns a smaller percentage to the passenger 
service than does the revenue train-mile method most commonly 
employed by the railroad companies. 

C EESULT OF THE SPECIAL REPOKTS MADE TO THE INTERSTATE COMMERCE COMMIS- 
SION FOR THE YEAR ENDING JUNE 30, 1912. 

Sixty-four railroads reported a complete separation of their operat- 
ing expenses as between freight and passenger services in a special 
report required by the Interstate Commerce Commission in 1913. 
With few exceptions, the apportionment was not made for this par- 
ticular purpose, the roads being asked to give the results as they had 
made them for their own purposes. The methods employed are not 
uniform, as uniform rules for this purpose have not been prescribed 
by the Interstate Commerce Commission, but the prevailing method 
of dividing common expenses is based on revenue train miles. Never- 
theless, we have here the estimate as made by each road for itself, and 



RAILWAY MAIL PAY. 883 

without taking the result as final, it will be of interest to see what the 
average for all the roads taken together is. It should be noted that in 
many cases railroad officials in making their report remarked that they 
did not use these results for rate-making purposes, but simply for 
comparative purposes from year to year. The average operating ex- 
pense per passenger-train car-mile for all of these roads taken to- 
gether for the year ending June 30, 1912, was 19.41 cents. This re- 
sult is probably somewhat lower than it would have been if all roads 
had been included, because among the omitted roads are those in the 
New England States and the Pennsylvania Railroad, which have a 
higher operating expense per car-mile than the above average. This 
is indicated by the fact that the average passenger car-mile revenue 
of 62 roads was 23.9 cents as against 25.4 for the country as a whole. 



884 



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RAILWAY MAIL PAY. 
Summary of Table 15. 



887 



Class of roads. 


Number 
of roads. 


Passenger train 

car-miles 

(regular and 

special). 


Passenger oper- 
ating expenses 
for specified • 
accounts. 


Average 
per car- 
mile (does 
not incluc e 
interest cr 
dividends). 


1. Those making complete separation of operat- 
ing expenses 


64 
64 
93 


1,485,024,242 
1,485,024,242 
2,204.885,597 


$288,296,577 
189,648,248 
100,797,190 


Cents. 
19.41 


2. Those separating maintenance of equipment 
and transportation expenses 


12.77 


3. Those separating expenses account. 80, 82, 
and 88 


4.57 







A great variation in results will be noted. It may be thought that 
this variation is primarily due to the methods employed in dividing 
the common expenses. While this is an important factor, it will be 
seen that it is not the only factor. Thus the table also shows the cost 
for the equipment and transportation accounts alone, in which the 
common expenses play a less prominent part. In order that a still 
further comparison may be made of the variation in costs where the 
common expenses are least important, an average expense is given for 
merely the three important accounts — road enginemen, fuel for road 
engines, and road trainmen. 

D. THE EEGTJLAE REPORTS OF THE CARRIERS TO THE INTERSTATE COMMERCE 

COMMISSION. 

These reports do not separate operating expenses as between pas- 
senger and- freight services, but we are enabled to estimate what is 
probably a minimum operating expense per passenger train car-mile. 
Those reports show the percentage which operating expenses are of 
operating revenues for both freight and passenger services together. 
Probably few persons would assert that, taking the country as a 
whole, the passenger service was more profitable than the freight serv- 
ice at existing passenger rates, although the New Haven officials 
think their passenger service is the more profitable of the two. If we 
proceed on the assumption that, for the country as a whole, the pas- 
senger service is not more profitable, it is the same as saying that the 
percentages of expenses to revenues in the passenger service is not less 
than the percentage for all business together. If, then, we apply 
this expense percentage for all business, as officially reported, to the 
passenger revenues, we get a minimum operating expense for the 
passenger service. This method yields 17.5 cents as the passenger 
train car-mile expense for the United States as a whole for the year 
ending June 30, 1911. This figure, we repeat, could be objected to if 
it were presented as the true passenger-train car-mile operating ex- 
pense, because, in using the percentage of expense to revenue for all 
business, we are using the existing passenger revenue in part to get 
a figure from which ultimately to judge what that revenue ought to 
be. This objection will not hold if we present the IT. 5 cents as merely 
a minimum, resting on the single assumption that the passenger 
service is not more profitable than the freight service. If that 
assumption is granted, we can not escape the conclusion that the 
operating expense must be more than 17.5 cents, and from this stand- 



888 



RAILWAY MAIL PAY. 



Eoint is interesting for comparison with the 18.5 cents shown by 
document 105 and the 19.41 cents shown by the 62 roads for 1912. 

E. THE COST ESTIMATES SUBMITTED BY INDIVIDUAL COMPANIES. 

For the Pennsylvania Eailroad Co., Mr. V. J. Bradley presented a 
discussion of the cost estimates prepared by that company as com- 
pared with the results of the Post Office Department. (Pp. 420 et 
seq. of the Hearings.) For the month of November, 1909, the com- 
pany's estimate of the operating expenses (and taxes), chargeable to 
passenger traffic, was $2,743,857, while the corresponding figure of 
the department was $2,056,328. The car-miles for this month run in 
passenger trains were 11,624,356. (This figure was subsequently 
supplied by Mr. Bradley.) The corresponding car-mile expenses 
are: 26.48 cents and 17.69 cents. What is the cause for this great 
divergence ? Some light is thrown on the matter by noting the per- 
centage of each general account charged to the passenger service by 
the two computations : 

Per cent of operating expenses charged to passenger service, Pennsylvania 
Railroad, November, 1909. 





General account. 


Post Office. 


Pennsyl- 
vania 
R. R. Co. 


Maintenance of way 


23.2 
25.6 
49.2 
20.2 
17.5 


36.5 


Maintenance of equipment 


33.1 


Traffic 


49.2 




25.3 




30.7 








Total 


22.5 


30.0 







The Post Office Department found that of certain items reported 
by the company as directly divided between freight and passenger 
services, 17.5 per cent were assigned to passenger. They used this 
percentage in dividing many of the common items. The company, 
on the other hand, divided the most important common items on a 
train-mile basis, which on this road would apportion nearly 47 per 
cent to passenger. (Year ending Dec. 31, 1912.) 

However, there must have been some error in the return of the 
company to the department for November, 1909, or else that month 
was abnormal. The proportion of 17.5 per cent for passenger in the 
items directly assigned seems entirely too low. It is possible to test 
this by a later month. The method of accounting employed by the 
Pennsylvania Eailroad does not readily admit of a separation of the 
items which it assigned directly in getting its final result, because the 
work of dividing the expenses is not all done in the central office. 
The divisions are made by separate items according to prescribed 
rules, and the central office simply combines the results. It would be 
necessary to re-examine the expenses in detail to make a return which 
would admit of the best application of the method preferred by the 
Post Office Department. Such an examination was made for a later 
month (May, 1911) and the result filed with the Interstate Commerce 
Commission in connection with the special report referred to on a 



BAIL WAY MAIL PAY. 889 

previous page. The data for this month may be summarized as 
follows : 

Expenses assigned according to facts or bearing a close relation 
to traffic $6, 034, 694 

Passenger (26.5 per cent) 1,601,220 

Freight (73.5 per cent) 4,433,474 

Common expenses as divided by the company 3, 277, 009 

Passenger (46 per cent) 1,505,942 

Freight (54 per cent) 1,771,067 

Grand total 9,311,702 

Passenger (33.4 per cent) 3,107,161 

Freight (66.6 per cent) 6,204,541 

The expenses divided according to facts are about 65 per cent of 
the total, and of these expenses 26.5 per cent fell to the passenger 
service, as against the 17.5 per cent which the department found for 
November, 1909. If the department had had the full data available 
for this month in 1911, the divergence between its estimate and that 
of the company would have been considerably less. We shall not 
enter into an extended discussion of the merits of the various bases 
for dividing common expenses. It may be true that the use which the 
passenger department makes of the common facilities is entirely 
out of proportion to the expenses occasioned directly by each depart- 
ment. But it is worth noting that the Pennsylvania Railroad Com- 
pany's method charges the passenger department with 46 per cent 
of the common expenses when it occasions only 26.5 per cent of the 
expenses directly traceable to either branch of the service, and we 
may perhaps regard the result obtained by the company as a maxi- 
mum estimate. 

THE NEW YOBK, NEW HAVEN & HAETFOED. 

The New York, New Haven & Hartford filed with the committee a 
" report on the value of service rendered in the transportation of mail 
for the two and one-half years to December 31, 1911." This report 
was prepared by Mr. J. H. Bowman for Price, Waterhouse & Co. 
The principal method used for dividing common operating expenses 
was a combination of revenue, train, and switching miles, which for 
the year 1911 charged 58.27 per cent to the passenger service as 
against 68.28 per cent for the train-mileage basis alone. In criticiz- 
ing the direct-charge method of the Post Office Department, Mr. 
Bowman points out that in the period in which passenger traffic was 
especially heavy, and the passenger equipment could not be spared so 
that repairs had to be postponed, the result under this method would 
be to charge a smaller part of the common expenses to passenger. 
The final result was for one year, 1911, a charging of $18,412,754 
to the passenger service for all operating expenses, excluding taxes 
and investment costs, or 24 cents per passenger-train-car mile. The 
high result does not in this case appear to be the result of the method 
of accounting. Its methods employed are much more favorable to 
the passenger department than that of the Pennsylvania Railroad. 
The explanation is to be found rather in the nature of the traffic. 
The New Haven has well-filled cars and few cars to the train and 



890 



RAILWAY MAIL PAY. 



short runs as compared with the rest of the country. This state- 
ment is emphasized if we compare certain averages for the New 
Haven, the Pennsylvania, and the Burlington : 

Traffic averages on three systems with different lengths of haul, 1912. 



Unit compared. 



New 


Pennsyl- 


Haven. 


vania 
R. R. 


18.4 


25.5 


25 


16 


95 


63 


4.79 


5.55 


20.1 


17.3 



Chicago, 
Burlington 
& Quincy. 



Distance traveled per passenger 

Passengers per car , 

Passengers per train 

Passenger cars per train , 

Per cent which station expenses and cost for station employees 
of total transportation expenses, freight and passenger 



49.14 
15 
60 
6.19 

14.6 



The greater proportion of terminal expenses resulting from the 
short hauls, the greater amount of service per car, and the smaller 
number of cars per train seem to be some of the reasons why the New 
Haven's car-mile expense should be greater. Compare the state- 
ment of Mr. E. G. Buckland, of that company, quoted on page 854 
above. 

CHICAGO, BURLINGTON & QUINCY- 

In a pamphlet analyzing railway and mail pay (Hearings, p. 762) 
the operating expenses as charged to the passenger service by the 
Burlington are given as follows (for the month of November, 1909) : 

Assignable operating expenses $637, 355 

Proportion of nonassignable 1,278,016 

Total 1, 915, 371 

The car-foot mileage in passenger trains was 529,936,590, or 3.61 
mills per car-foot-mile. For a 60-foot car this would be 21.66 cents 
per car-mile. This is considerably higher than the 17.8 cents which 
we found reported for the year 1912. The reason for this difference 
is not apparent. 

MR. KRUTTSCHNITT'S ESTIMATE FOR THE UNITED STATES, 1908. 

In a pamphlet submitted to the committee an estimate is made for 
the United States as a whole in 1908. (Hearings, p. 807.) Operat- 
ing expenses are given as $670,094,653. Dividing this by the 
passenger-train car-miles of that year we get 24.8 cents per car-mile. 
This high result can be explained readily by the assumption made 
by Mr. Kruttschnitt that a passenger- train mile and a freight-train 
mile are equally expensive, an unjustified assumption. The data 
do not exist for making a satisfactory assignment and apportionment 
for all roads in the United States from the present reports to the 
Interstate Commerce Commission. 



THE SOUTHERN PACIFIC. 



An estimate was presented by Mr. W. A. Worthington for this 
compan}^ for the year 1911. (Hearings, p. 329.) The total passenger 
operating expenses were estimated at $42,072,019. The car-foot miles 






RAILWAY MAIL PAY. 891 

are given on the same pages, as 8,945,429,100, which would give an op- 
erating expense of 4.7 mills per car-foot mile or 28.42 cents per car- 
mile. This is a surprising result when one considers that the revenue 
per passenger-train car-mile in the same year for this company was 
29.39 cents. Nearly two-thirds of its revenue train mileage was re- 
ported as passenger that year. As Mr. Worthington assigned common 
expenses on a train mileage basis, the proportion of them going to 
passenger was unusually large. This would indicate that the 
passenger department was being conducted at a heavy loss. It is 
unfortunate that we do not have a complete assignment of expenses 
made by this company. Without further study we can hardly ac- 
cept Mr. Worthington's results. It may be noted that the Post 
Office figures for this company in November, 1909, showed a car-mile 
expense of 22.8 cents, including taxes. 

ATCHISON, TOPEKA & SANTA FE. 

A statement submitted by Mr. Peabody is printed on page 526 of 
the Hearings. This gives the operating expenses chargeable to the 
passenger service as $4,394,347 for two months, September and Octo- 
ber, 1911. The car-foot mileage is given as 1,505,409,704, or 2.92 
mills per car-foot-mile. For a 60-foot car this would be 17.52 cents 
per car-mile. The corresponding result in Table 15 was 18.2. Mr, 
Peabody also uses the train mileage basis, and his result is in marked 
contrast with result attained by the Southern Pacific. The result 
of the Post Office Department for November, 1909, was 17.7 cents, 
including taxes. 

GRAND TRUNK WESTERN. 

An estimate of operating expenses for the company is given on page 
562 of the Hearings for the year ended June 30, 1912. The passenger 
train operating expenses are estimated at $2,191,071, and the car 
mileage at 798,641, or an average of 27.5 cents per car mile. The 
witness presenting the statement gives the following explanation of 
method : 

"When the Post Office Department called for information in regard to the 
carriage of mails in 1909, on the basis of monthly experience, for the month 
of November we had* a statement prepared for our Grand Trunk Western Rail, 
way only based on the data that was obtained at that time for reporting to 
the Post Office Department, which I turned over to our audit department to 
prepare me a statement based on their estimates showing how this worked 
out. They took our total expense account, divided it between passenger and 
freight, on our train-mile basis, which I understand is what general auditors 
concur is as close an approximation as they can get, especially of the common 
or unassignable expenses. (Hearings, p. 531.) 

If this means that all expenses were divided on the train-mile 
basis, not merely the common expenses, this would account for the 
high expense per car mile and would destroy the value of the result, 

SUMMARY AND CONCLUSION AS TO COST DATA. 

Uncertain as this testimony may be, we think we may safely con^ 
sider the average operating expenses per passenger train car mile as 
not less than 18 cents. We have already seen that for every dollar 



892 RAILWAY MAIL PAY. 

of operating expense the absolute minimum that must be added is 
25.2 cents for taxes and interest. This would increase the 18 cents 
to 22.5 cents without any provision for dividends or contribution 
to surplus. A contribution to the dividends would readily bring 
this minimum figure above the average car-mile earnings in the 
passenger-train service. We conclude that the cost evidence indicates 
that the railroads would certainly not be overpaid if the passenger- 
train car-mile earnings be assumed to be fair, with such a deduction 
as measures the difference in the cost of a mail car as compared 
with the average passenger car. It should also be borne in mind that 
the operating expenses charged to the passenger service are to be 
supported by not merely the passenger-train revenue, but certain 
incidental revenues, such as parcel-room receipts, etc. This, how- 
ever, would be a matter of from 2 to 3 per cent. 

Let it be understood that in view of the undeveloped state of rail- 
road cost accounting, we can hardly consider the cost data submitted 
as giving a persuasive and definite answer to what is a fair rate. But 
they tend to support the conclusion to be derived from a study of 
ihe average car-mile earnings in passenger trains. This basis rests 
for its reasonableness on the assumption that the general level of 
passenger earnings is not excessive. The basis for this assumption 
is that the passenger-train rates have been regulated in the past in 
part by competition and also to a large extent by commissions and 
legislatures. To take a single example : After an exhaustive investi- 
gation of passenger costs in Wisconsin, the Wisconsin railroad com- 
mission decided that 2J cents was a fair rate per passenger mile. 
The legislature made it 2 cents. It would be of interest but is un- 
necessary, to pass in review here all of the opinions by State com- 
missions or courts that have considered passenger rates. 

The latest available information regarding the average passenger- 
train car-mile earnings is given in the following letter from the 
secretary of the Interstate Commerce Commission : 

March 24, 1913. 
Hon. Jonathan Bourne, 

Chairman Joint Committee on Transportation of Mail, 

United States Senate. Washington, D. C. 
Bear Sir: Answering yours of the 20th instant inquiring concerning the 
average car-mile revenue for passenger-train service, I hajre to say that from 
compilations made in the division of statistics of this commission from annual 
reports of railway companies for the year ended June 30, 1911, it appears that 
for what we denominate class 1 roads, being those whose operating revenues 
for the year exceeded $1,000,000, the average revenue per car-mile from pas- 
senger-train service is 25.35 cents; for class 2 roads, being those having oper- 
ating revenues for the year below $1,000,000 and above $100,000, the corre- 
sponding figure is 28.29 cents; for class 3 roads, being those whose operating 
revenues for the year were less than $100,000, the corresponding figure is 
27.45 cents, and for all three classes the figure averages at 25.43 cents. 

Owing to the fact that the reports of car mileage and revenues made to this 
•commission in the annual reports of common carriers are not segregated with 
sufficient detail to enable us to state the revenue derived from the passenger 
service per car-mile, we are unable to comply with the second request contained 
in your letter. To get any reliable information on that point would require a 
collection of special data from the carriers and the analysis and compilation of 
such data. This would be a matter requiring a considerable amount of time, 
for the reason that the carriers in their accounts do not make segregations 
which would enable them to state from their present records the figures which 
you seek. To show precisely what you desire would require the setting up of 
special records by the carriers for a time sufficient to furnish reliable data. 

Respectfully, 

G. B. McGinty, Secretary. 



EAILWAY MAIL PAY. 893 

While this average of 25.43 cents includes the mail revenue and 
mail cars, which can not be segregated, the error involved in using 
it as representation of passenger-train car-mile earnings other than 
mail is not serious. We have now to inquire whether a mail-car 
mile should earn more or less than the other passenger-train car-miles. 

COMPARISON OF THE MAIL SERVICE AND OTHER PASSENGER TRAIN SERVICES. 

It is true that the mail is loaded by railroad employees, and that the 
passengers get on the train by themselves, yet it is clear that rel- 
atively more money is expended per car in getting the passengers on 
the right car, providing them with tickets, and making them com- 
fortable, than is expended in loading a car of mail. The furnishing, 
fittings, lighting, and heating would certainly not be greater for the 
mail car than for the passenger car. The switching expense is prob- 
ably greater for the mail car. So far as the hauling expense and in- 
vestment are concerned, the postal-car cost is probably no greater 
than for the average car in the train if we consider that the average 
weight of all cars in the passenger service is about the same as the 
average for the mail service. (Hearings, p. 794, par. 5.) This, how- 
ever, takes in the Pullman service. It was pointed out by one of the 
witnesses (Worthington, p. 336, see also p. 794) that the average 
operating revenue per passenger-train car-mile (and similarly the ex- 
pense) as shown by the reports of the railroad company is too low, 
because it excludes the sleeping-car revenue collected by an outside 
company, out of which the maintenance of the sleeping cars is paid. 
In other words, the sleeping cars are fully represented in the car 
mileage reported by the railroad companies, but they are not fully 
represented in the operating revenues and expenses of such com- 
panies, these being separately reported by the Pullman Co. The 
entire operating revenues of the Pullman Co. amounted to $35,- 
697,582 in 1911 or 4.5 per cent of the total passenger service train 
revenue in the United States for that year. But if this correction be 
allowed, the contrast between the service represented by the average 
passenger-train car and the mail car becomes more pronounced. 

The testimony on this matter of comparative cost did not follow 
the lines of cost accounting but was of a descriptive nature. Con- 
sequently, it is difficult to arrive at a conclusion in dollars and cents. 
The reader will find the discussions of the subject on pages 16-17, 
43-44, 437 ; 563, 607, 611, 793-794. After reading the testimony 
and assuming that side services are to be separately considered, and 
after a study of the relative importance of the accounts relating to 
traffic expenses, station employees, station supplies and expenses, and 
maintenance of buildings, as compared with the total operating 
expenses, the writer believes that while the mail car-mile is somewhat 
less expensive, the difference can not exceed 10 per cent at the outside. 
This is indefinite, but such is the nature of the testimony. It may 
be of interest tn compare with this conclusion that expressed by the 
Thompson-Slater Commission about 30 }^ears ago. They said: 

This careful analysis of the returns of all the railroads in the United States 
points to the conclusion that as the average yield per car per mile is about 26 
cents, if the roads receive 5 mills per linear foot per mile run, or at the rate of 
25 cents for a 50-foot car, at the ordinary speed of 20 miles per hour, they will 
be getting a rate corresponding closely to the returns from all passenger traffic 

49396—14 64 



894 RAILWAY MAIL PAY. 

combined, which on the face of it would seem to be both just and reasonable. 
And the committee feel constrained to make this further qualification, that the 
regularity and frequency of the service, the freedom of the railroads from lia- 
bility, the certainty of the compensation, the exemption of the carrier from 
those expenses ordinarily attending passenger traffic all combine to strengthen 
the conviction in the minds of the committee that the rate herein recommended 
is both just and reasonable. 

Comparison between the mail and express services is difficult, be- 
cause express car-mileage is not regularly segregated in our statistics. 
For November, 1909, the estimate of 23.16 cents per car-mile has been 
made as the express revenue to the railroads. Probably the express 
ought to pay somewhat less than the mail per car-mile. But compari- 
son with express payments is not conclusive, because it is by no means 
clear that equitable relations exist between railroad companies and 
express companies. 

CONCLUSION AS TO THE LEVEL OF RATES TO BE ALLOWED. 

Taking into account the maximum deduction of 10 per cent from 
the average passenger-train car-mile earnings of 25.4 cents referred 
to above, the writer has concluded that 22^ cents would probably not 
constitute an overpayment on the commercial principle, side and 
terminal services not being included. This would be an increase of 
certainly more than 10 per cent, but the per cent of increase can not 
be stated definitely until further compilations are made by the Post 
Office Department. This is without reference to possible economies in 
loading. It may be said that a conclusion involving such a large sum 
annually must receive a thorough test, and in any case, even if we were 
convinced as to the soundness of the conclusion, it would be unwise to 
recommend a complete correction of the underpayment in a single year. 
Although the mail traffic is no immediate burden to the railroads at 
the present rate of pay, the payment being easily sufficient to cover 
current outlays on account of the mail for the roads as a whole, yet 
if we accept the principle that the mail service should bear its pro- 
portion of capital charges — in other words, that it should stand the 
cost of borrowing the capital which it utilizes — we can not escape the 
conclusion that the mail-pay adjustment must be in the direction of 
an increase. For these reasons the rate of 22J cents per car-mile has 
been chosen for the average haul in constructing the rate table on 
page 873. If the railroads think it too low, they are given in the sug- 
gested bill an opportunity of convincing the Interstate Commerce 
Commission of that fact. Similarly, the Postmaster General would 
have the opportunity of protesting against it, if he thought it too 
high. If it be deemed unsafe for even a single year, a maximum 
amount to be disbursed could be specified. 

VI. Miscellaneous Notes and Comments. 

COMPARISONS OF PRESENT RAILROAD-MAIL REVENUE WITH REVENUES FROM 
PASSENGER, EXPRESS, AND FREIGHT SERVICES. 

There is undoubtedly a widespread popular impression that the 
Government pays the railroads relatively more for the mail service 
than they get for the express and freight services. There was con- 



RAILWAY MAIL PAY. 895 

siderable testimony at the hearings regarding such comparison. On 
the basis of space furnished to each service, the Post Office Depart- 
ment determined that the revenue from mails was 4.14 mills per car- 
foot mile and from other passenger train service 4.16. (Hearings, p. 
324.) The railroads challenged this on the ground chiefly that the 
department had charged the passenger service with part of the space 
of the train actually run for the mail service. A joint committee of 
the Post Office and railroad representatives agreed that if the rail- 
road view be taken that the empty space hauled on account of the 
mail service should be charged to that service, their earnings are for 
mail 3.37 mills and for other passenger services 4.34 mills. (Hear- 
ings, p. 324.) For a 60- foot car this would amount to 20.22 and 26.04 
cents respectively for the month of November, 1909. There would 
seem to be no question but that in such a comparison the entire space 
run in connection with each service must be charged to that service 
whether loaded or empty. The express service for the same month 
was stated to have yielded the railroads a revenue of 3.86 mills per 
car- foot mile. (Hearings, p. 361.) For a 60-foot car this is equiva- 
lent to 23.16 cents. For the Pennsylvania lines east and west, the 
relative earnings are reported by Mr. V. J. Bradley, of that company, 
as follows: Passenger, 4.473 mills; mail, 3.195 mills; express, 3.898 
mills per car- foot-mile. (Hearings, p. 427.) On the Southern Pacific 
the car-foot-mile revenues were from mail, 4.05 mills, and from ex- 
press, 3.84 mills. This road receives only 40 per cent of the express 
rate (Hearings, p. 335). On the Union Pacific the corresponding 
figures were: Mail, 4.03 mills; express, 4.48 mills (p. 335). The 
Burlington reports 3.12 mills from mail and 4.75 mills from express 
]9v car-foot (p. 763). For the Atchison, Topeka & Santa Fe, Mr. 
Jas. Peabody stated the relative earnings as, mail, 3.43 mills ; express, 
3.28 mills; passenger, 3.89 mills per car- foot-mile (p. 526). The same 
witness also submitted a comparison between mail service and less- 
than-carload freight service on a gross ton-mile basis — that is, the 
combined weight of car and contents — showing for mail 4.08 mills 
per gross ton-mile and for 1. c. 1. freight 6.50 mills per gross ton-mile 
(p. 515) . Comparisons between these services on the basis of net ton- 
mile of paying load without taking account of the difference in load 
per car are obviously absurd. (See further, Hearings, pp. 437, 773, 
783-788, 821, 739-758.) < 

Earnings on a car-mile basis for specific routes are given by 
Mr. S. C. Scott of the Pennsylvania lines. On the mail line from 
Pittsburgh to East St. Louis, the mail car-mile earnings were in 1912, 
20.32 cents, and in 1897, 20.80 cents (p. 239) ; Pittsburgh to Chicago, 
the corresponding figures were, 1912, 17.89, and in 1897, 26.1 cents 
(p. 240) ; and for the run from New York to East St. Louis, 1912, 
22.54 cents ; 1897, 23.75 cents. (P. 242.) 

SPEED. 

The present law requires that the mails be carried with due fre- 
quency and speed, but no variation in pay is made on account of 
variation in speed. It has been proposed by various commissions in 
the past to do this. (See Hearings, pp. 34, 35, and 38.) The great 
difficulty of making any accurate adjustment on this account is shown 



896 RAILWAY MAIL PAY. 

by the following statement prepared by Mr. A. M. Buck, Assistant 
Professor of railway engineering, University of Illinois: 

In the following discussion of the subject it is to be understood that it 
relates entirely to a comparison of passenger trains operated at different speeds, 
but it would apply with even more force if applied to freight and passenger 
trains. 

The cost of passenger-train operation as a function of speed is subject to 
a number of variables which are quite irregular in their manner of variation. 
In general the cost of operation may be subdivided as follows : 

1. Cost of fuel, supplies, labor, etc. 

2. Maintenance of equipment. 

3. Maintenance of way and structures. 

4. Interest and depreciation. 

5. General expense. 

Under the first heading, the most important item is fuel. If the resistance 
to motion offered the train varied directly with the speed, if the amount of 
fuel required to develop a pound of steam remained constant, and if the steam 
would do the same work at all speeds, then the cost of fuel for hauling a 
given train a given distance would remain the same irrespective of speed. For 
as the speed increased, the time of the run would diminish in inverse ratio, 
keeping the amount of coal burned constant. This condition, however, does 
not hold true in practice. The train resistance increases faster than in direct 
proportion to the speed, as has been determined by many investigators. (See 
Bull. 43 of the University of Illinois Experiment Station, by E. C. Schmidt.) 
To meet the increased resistance at the higher speed more steam must be used 
in the cylinders. With a greater demand on the boiler, the rate of combustion 
must be increased to maintain the steam pressure, and this occasions greater 
losses in the furnace and stack. The steam is also somewhat less effective in 
its work at the high speed. In consequence, the increase in the use of fuel 
with increase of speed may be very considerable. This condition occurs when 
the locomotive is being forced to its maximum capacity. ( Some figures on this 
topic are given in Locomotive Operation, by G. R. Henderson, pp. 486-488.) 
With modern, fast, passenger engines it is quite possible to have the coal con- 
sumption doubled by an increase of speed from 60 miles per hour to 70 miles 
per hour. 

The cost of water, oils, and other supplies increases to some extent with the 
speed. For fast trains, more and better supplies. are required than for slow, 
although the difference is not nearly so marked as in the case of fuel. As 
a general proposition, labor costs do not enter to any great extent, since our 
practice in this country is to pay by the mile instead of by the hour. 

The cost of maintaining equipment is higher for the fast trains than for the 
slow. It is almost impossible to obtain accurate costs for the different classes 
of service, but maintenance records of different roads show more repairs on 
high-speed equipment. 

Maintenance of way costs also show considerable increase with increasing 
speed. It costs considerably more to maintain a track for a speed of 50 miles 
an hour than one for 25 miles an hour with the same margin of safety. The 
impossibility of segregating costs may be readily seen. Most roads that run 
trains at 50 or more miles an hour on tracks maintained for such speeds also 
operate many trains over the same tracks at lower speeds. 

The maintenance costs for structures are similarly involved, although it can 
be stated authoritatively that the wear on a bridge or other railway structure 
is much more at high speeds than at low. 

From the foregoing it may be seen that in order to maintain a road operating 
high-speed trains requires greater expenditures than one operating low-speed 
trains only. For a road operating all classes of trains it is very difficult to 
divide the costs equitably, although we know that the high-speed trains are 
more expensive to operate. Similarly, the depreciation will be higher for the 
high-speed road unless more expensive construction and equipment have been 
provided. Either requires greater overhead charges. 

The general expenses of the road, such as salaries of officials and clerks, is 
not changed by the fact of high or low speed operation, but this item is of such 
small importance that it does not modify the cost to any marked degree. 

All things considered, high-speed trains cost more to operate in most respects 
save that of labor. The expense can not be stated as an exact function of the 
speed. The variables entering the problem are of so diverse a character and 



EAILWAY MAIL PAY. 897 

are so little understood that no logical separation has as yet been made. While 
a solution of the problem in exact terms is probably desired by all the railroads, 
the cost of making the necessary cost analyses is so great that it is not likely 
it will be attempted on any comprehensive scale in the near future. (From a 
letter to the chairman of the present committee, Sept. 13, 1913. ) 

In view of the difficulties here set forth, it is apparent that if 
the mail compensation is to be varied in accordance with speed, 
a factor must be selected arbitrarily. We are certain that higher 
speed costs more and is worth more, but we can not say exactly 
how much. The variation in train resistance at different speeds 
may be considered. (See the discussion of this subject in connection 
with increased weight of cars on page 643 of the Hearings.) It 
may be that both the Post Office Department and the railroads would 
find it advantageous if certain mail matter could be concentrated 
upon slower trains at a reduction in the rate ; but a general gradation 
of the rate scale in accordance with variations in speed would con- 
siderably complicate the statistical records to be kept, and for this 
reason the speed factor has been omitted in the plan of payment out- 
lined on a previous page. 

ELECTRIC RAILWAYS. 

Electric railways are now being paid on a space basis for carrying 
the mails, the maximum rate being 1 cent per linear foot per mile, 
with a maximum of 20 feet per car. Fcr pouch service the payment 
is 3 cents a mile, irrespective of the number of pouches or cars." The 
general auditor of the Boston Elevated Railway Co. testified that the 
car-mile cost for his company is 23.137 cents, including taxes, inter- 
est, depreciation, and insurance (p. 147) . An estimate was presented 
for the Brooklyn Heights Railroad Co. showing a car-mile cost of 
24.574 cents, including taxes and fixed charges (p. 164). A com- 
mittee of the American Railway Association prepared a bill (printed 
in the hearings, p. 778) increasing the compensation to 1J cents per 
foot per mile. There is no disposition to change the space basis 
(p. 152). This bill was presented for criticism to the Postmaster 
General, who sent a memorandum prepared by the Second As- 
sistant Postmaster General (pp. 780 to 782). He shows how this bill 
would increase the cost to the department for this class of mail serv- 
ice, and suggests that the department's plan of paying for mail serv- 
ice on the basis of cost would apply to electric railways as well as to 
steam railways. 



RAILWAY MAIL PAY. 



Robert H. Turner. 



Washington, D. C, November 28 y 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on 
Second-Class Mail Matter and Compensation 
for the Transportation of Mail, Washington, D. C. 
My dear Mr. Chairman : In accordance with your request, I have 
prepared and herewith submit a memorandum in review of the testi- 
mony taken before your committee for such use as you and other 
members thereof may deem proper and appropriate to make of same. 
Very truly yours, 

Robert H. Turner, 
Secretary Joint Committee on Postage on 
Second-Class Mail Matter and Compensa- 
tion for the Transportation of Mail. 



Introduction. 

The irresistible conclusion must be reached by anyone who has 
given the matter of mail transportation even superficial considera- 
tion, that the adequacy or inadequacy of rates paid to the railroads 
of this country for transportation furnished and services rendered 
must be determined upon not only by a general consideration of the 
problem but also by painstaking and conscientious scrutiny of sta- 
tistics. Statistics, being the main and the decisive element of the 
inquiry suggested, should be tabulated and presented by one who 
has had a broad and varied experience in that line of work. Doubt- 
less the joint committee had this in view in securing the services of 
Mr. M. O. Lorenz, associate statistician for the Interstate Commerce 
Commission, who has prepared a report presenting in chief a statis- 
tical view of the controversy. The writer therefore has confined his 
observations more particularly to a general consideration of the 
problem, with such references to statistics as were necessary to illus- 
trate the subject matter. 

HISTORICAL SKETCH. 
EARLY HISTORY. 

That this memorandum may be kept within reasonable limits, only 
sufficient will be said to enable one interested in this phase of the 
subject to have at his command for ready reference the most valuable 
source of information. 

The most illuminating and extended history of the Eailway Mail 
Service is given in Senate Executive Document No. 40, Forty-eighth 
Congress, second session (1885). That document discusses among 

at 



900 RAILWAY MAIL PAY. 

other things the " Stage-coach era," " Early contracts," " Railway 
post offices, fast mails," together with a general survey of the service 
by decades from 1835 to 1885. It describes with particularity trans- 
portation of mail by stage coach, together with the scope and char- 
acter of the contracts entered into by the Government for such 
service ; how on the appearance of railways, stage contractors supple- 
mented their services to the Government by utilizing that means of 
conveyance secured by direct contracts between them and the rail- 
road companies; how mail-carrying contracts were secured by the 
Government on a competitive basis after due advertisement, applica- 
ble first to stage-coach and then to rail transportation; how in 1838 
railroads were made post routes and compensation for carrying the 
mails over such routes limited not to exceed in any instance " more 
than 25 per centum over and above what similar transportation would" 
cost in post coaches " ; how in 1839 this compensation was further 
limited " by an act restricting the cost on any route to not exceed 
$300 per mile per annum " ; how in 1845 the railroads were classified, 
dependent upon size of mails, speed, and importance of the service, 
and " the Postmaster General * * * empowered to contract with 
any railroad company, either with or without advertising for such 
contract, pay being limited to $300 per mile for first-class, $100 per 
mile for second-class, and $50 per mile for third-class; how these 
rates were kept within the prescribed limits for a period of 20 years," 
" wholly arbitrary and subject to the varying judgment of officers of 
the department " ; and how in 1867 the mails were weighed in order 
to secure a more equitable assignment of roads. 

Under the act of March 3, 1873 (the basis of the present law for 
compensating the railways for carrying the mails), the practice of 
inviting proposals by formal advertisement for carrying the mails 
on railroad routes was abandoned. Under the same law the classifi- 
cation basis referred to above " was superseded by making the average 
weight of mails carried the whole length of the route with the accom- 
paniment of space, speed, and frequency, the gauge of compensation, 
with additional allowance for railway post-office cars of length " of 
40, 45, 50, and 60 feet, respectively. 

In the hearings, volume 1, page 48, may be found a brief history 
of the handling of mail by railroads made on January 6, 1911, by a 
railroad committee on railway-mail pay. Reference also may be 
made to an article entitled "A consideration of the question as to 
whether the carriage of the United States mails represents an intan- 
gible asset to the railroads which should be given weight in fixing the 
rates for transportation," presented to the joint committee on March 
28, 1913, by Mr. V. J. Bradley, general supervisor of the Pennsyl- 
vania Railroad system, and printed in volume 2, page 439, of the 
hearings on railway-mail pay. 

LAW OF 1873. 

The chronological sequence, beginning with the law of 1873 as a 
basis, of laws and events affecting railway mail are stated in various 
parts of the hearings on railway-mail pay, reference being here made 
to volume 1, page 48 ; volume 2, page 401 ; and volume 5, page 795. 
The most complete summary is perhaps that given Mr. V. J. Bradley, 
general supervisor of mail traffic of the Pennsylvania Railroad sys- 
tem, stated on pages 401 and 402, volume 2 of the hearings. 



RAILWAY MAIL PAY. 90X 

DOCUMENT NO. 10 5. 
[House Report, Sixty-second CoDgress, first session.] 

This document, as stated on its title page, is "A report giving the 
results of the inquiry as to the operation, receipts, and expenditures 
of railroad companies transporting the mails, and recommending leg- 
islation on the subject." Since this document contains the method of 
compensating the railways for carrying the mails and in large part 
responsible for this investigation, it will be discussed more at length 
in subsequent pages of this memorandum. Since, too, a discussion 
of the legislation recommended therein is discussed and referred to 
throughout the five volumes of hearings on the subject of railway 
mail pay, it will only be necessary here to refer to Document No. 
105 itself, to the preliminary report of the chairman of the joint 
committee, to Hon. Joseph Stewart's testimony, beginning on page 
3, volume 1, of the hearings, and a statement presented by Mr. V. J. 
Bradley, to be found on pages 401 to 406, inclusive, of volume 2 of the 
hearings, as sufficient to acquaint the inquirer of the history leading 
up to the compilation of data and recommendations therein contained. 

APPOINTMENT OF JOINT COMMITTEE. 

The provision of law authorizing the appointment of the joint 
committee may be found in the Post Office appropriation act ap- 
proved August 24, 1912, under the heading " For inland transporta- 
tion by railroad routes." Since Hon. Jonathan Bourne, jr., and Hon* 
Harry A. Richardson would cease to be Members of the Senate after 
March 3, 1913, and Hon. John W. Weeks to be a Member of the 
House of Eepresentatives and to become a Senator of the United 
States, it was necessary, if the personnel of the committee was to 
continue, that a law specifically so authorizing should be enacted. 
Such provision was made and is to be found in the Post Office ap- 
propriation act, approved March 4, 1913. 

While the law approved August 24, 1912, contemplates two in- 
quiries to be made by the joint committee, viz — (1) into the subject 
of postage on second-class mail matter and (2) compensation for the 
transportation of mail — the appointment of the joint committee, so 
far as the second inquiry is concerned, was suggested, as strongly 
indicated in the chairman's preliminary report of January '24, 1913, 
when Second Assistant Postmaster General Stewart submitted to the 
Senate Committee on Post Offices and Post Roads (which then had 
under consideration the Post Office appropriation bill for the fiscal 
year ending June 30, 1913), a draft of bill embodying in legislative 
form the recommendations made in Document No. 105. The recon> 
mended draft which provided for changing the method of compen- 
sating the railways for carrying the mails from a weight to a space 
basis was incorporated in one of the several committee prints of the 
Senate Committee on Post Offices and Post Roads. After a brief 
consideration it became apparent to the members of that committee 
that the subject matter was of too great magnitude and of too far- 
reaching importance to be acted upon without fuller and more de- 
liberate consideration than time then permitted of. However, in 
view of the strong indorsement of then Postmaster General Hitch- 
cock, supplemented by that of his Second Assistant, Gen. Stewart, of 
the plan proposed, the committee authorized Hon. Jonathan Bourne, 
jr., who was then its chairman, to introduce a bill containing in toto 



902 KAILWAY MAIL PAY. 

the provisions of the draft referred to, the purpose being to get 
before Congress and the country the views of the department as ex- 

?ressed therein. The bill was introduced on July 26, 1913, numbered 
371, and referred to the Senate Committee on Post Offices and 
Post Roads. 

PROGRESS OF THE WORK OF THE JOINT COMMITTEE. 

Prior to the organization of the joint committee, and, as fully 
explained in the chairman's preliminary report, the concrete bill 
recommended by the department was submitted to the 795 mail- 
carrying railroads having contracts with the Government. A com- 
mittee of the railroads entitled "committee on railway-mail pay" 
presented a pamphlet on " Mail-carrying railways underpaid," giving 
in detail their objections to the proposed plan, this committee repre- 
senting a total of 214,275 miles of railroad. Responses in protest 
were also made by the Short Line Railroad Association and indi- 
vidual railroad companies. The responses made clearly disclosed 
that the railroads were not at all in accord with the space plan 
recommended by the department, and further that they were opposed 
to any change in the present method of pay except with certain 
modifications to be hereinafter noted. 

Informal conferences were held, at which both representatives 
of the railroads and of the Post Office Department were present, 
in order, if possible, to reconcile the differences between them. 

The department did, as a result of the informal conferences 
referred to, make certain concessions in response to objections made 
by the committee on railway-mail pay in its pamphlet entitled " Mail- 
carrying railways underpaid," and amended its proposed plan in 
these particulars, to wit: 

First. That the Interstate Commerce Commission instead of 
the Postmaster General be authorized to make the primary 
separation between passenger and freight business. 

Second. That in the matter of car space the railroad com- 
panies be credited with the maximum space in both directions. 

Third. That in addition to a compensation of 6 per cent of 
the operating expenses the railroad companies, after an appor- 
tionment, be credited with a reasonable percentage of the capital 
employed in and relating to the Railway Mail Service. 

As will be noted by reference to the hearings, the foregoing con- 
cessions, while responsive to their protests, were not sufficient to 
Warrant the railroad representatives subscribing to the plan pro- 
posed, which in brief contemplated a cost determination using space 
represented by a linear car- foot as the unit of measure of such 
determination. 

HEARINGS. 

The joint committee after its organization on January 6, 1913, 
held hearings on January 28 and 29, February 7, 12, and 17, March 
27 and 28, April 8 and 22, and May 14, at which both representatives 
of the railroads and of the Post Office Department were present. 
The hearings were concluded on May 14 and at that hearing repre- 
sentatives of the railroads and of the department were invited, in 
response to their expressed desire, to file briefs. The committee on 
railway-mail pay, by its chairman, Mr. Ralph Peters, on June 26, 



RAILWAY MAIL PAY. 903 

1913, filed its brief which is printed in the addenda to volume 5 of 
the hearings, pages 720 to 735, inclusive. The department's brief 
has not yet been filed. Mr. M. O. Lorenz, associate statistician of 
the Interstate Commerce Commission, was invited to attend the hear- 
ings, to testify, and to become a participant in the discussions be- 
tween the railroad representatives themselves, between representa- 
tives of the railroads and the Post Office Department, and between 
members of the joint committee and the departmental and railroad 
representatives, a practice inaugurated by the chairman in order that 
every possible viewpoint bearing upon a solution of the problem 
mignt be presented. 

SPECIAL SERVICES. 

In order to obtain an impartial review of the testimony, of the 
presentations made by representatives of the railroads and of the 
Post Office Department, and, if possible, a demonstrable plan of 
compensating the railroads for carrying the mails that would be fair 
to both the Government and the railroads, meeting the objections of 
both, the joint committee through its chairman, after first ascertain- 
ing that same would be agreeable, requested of the Interstate Com- 
merce Commission that its associate statistician be given leave of ab- 
sence without pay that he might devote his whole time to the service 
of the joint committee for the purpose above indicated. The request 
was courteously granted, and Mr. M. O. Lorenz's services secured at 
a compensation equaling what he was then receiving as associate 
statistician for the commission. His employment began on July 28 
and terminated on September 30. His report giving a full review of 
the testimony and containing recommendations may be found by 
reference to pages 849 to 897 of this volume. 

POSTAL-SERVICE COMMISSION ( WOLCOTT-LOUD COMMISSION ) , 190 0-1 9 01. 

Preliminary to a review of the testimony taken before the present 
joint committee, it may be of interest to refer in a general way to the 
work of the above-named commission. That commission was ap- 
pointed under the act of June 13, 1898, and continued by the acts of 
March 1, 1899, and June 2, 1900. That commission, so far as the 
present inquiry is concerned, was created to "investigate the ques- 
tion whether or not excessive prices are paid to the railroad com- 
panies for the transportation of the mails, and as compensation for 
postal-car service." That commission did not make its report until 
January 1, 1901, more than two years after its appointment. A ma- 
jority, of the members of that commission reached the conclusion that 
the prices paid to the railroad companies for the transportation of the 
mails were not excessive (S. Doc. No. 89, 56th Cong., 2d sess., pt. 1, 
p. 19), and, further, that the prices paid as compensation for the 
postal-car service were not excessive. (Same document, pt. 1, p. 20.) 

Mr. Loud, who was in favor of a space basis, and who filed a sepa- 
rate report advocating it, stated that tiie railroad companies did not 
derive a profit from the carriage of mails, and that no reduction in 
rates should be made as long as the present system prevailed. (S. 
Doc. No. 89, 56th Cong., 2d sess., pt. 1, p. 22.) 

Mr. Flemming, one of the members of the commission, while indors- 
ing a recommendation made by Mr. Henry C. Adams, a statistical ex- 
pert of national reputation employed by the commission, referred to 



904 RAILWAY MAIL PAY. 

in the paragraph next following, stated that he was " fully convinced 
that those persons who have contended that, under the law of 1873 
and its amendments of 1876 and 1878, the railroads are being paid, as 
some have charged, from 2 to 10 times what they should receive, are 
in grave error. There is no such exorbitant overpayment for the total 
transportation of the mails, as has been charged." (S. Doc. No. 89, 
56th Cong., 2d sess., pt. 1, p. 35.) 

The recommendations of Mr. Adams were : 

(1) A reduction of 5 per cent on all routes. 

(2) A further reduction, varying from 1 to 12 per cent, on 
all routes receiving 20 cents per ton-mile and carrying an ex- 
cess of 5,000 pounds daily per mile of line. (S. Doc. No. 89, 56th 
Cong., 2d sess., pt. 2, p. 240.) 

He justifies his recommendation — 

(1) Because of economies in railway transportation not de- 
pendent on increase in the density of mail traffic; and 

(2) Because of more economic operation as density of mail 
traffic increases. 

Mr. Chandler joins with Mr. Flemming in giving his indorsement 
to Mr. Adams's recommendation. (S. Doc. No. 89, 56th Cong., 2d 
sess., pt. 1, p. 32.) 

That Mr. Adams is in doubt as to the possibility of concentrating 
mail loading is indicated from his own statement : 

If it is impossible to introduce greater economy in the railway mail service, 
then the railway mail service is not under the law of transportation that says 
economy follows density of traffic. (S. Doc. No. 89, 56th Cong., 2d sess., pt. 2, 
p. 416.) 

The evidence before that commission disclosed that the maximum 
loading of a postal car averaged from 2J to 3 tons and the evidence 
before the present joint committee is to the same effect. 

Mail, so far as concentration of load is concerned, is sui generis : 

(1) The paying load of a postal car is limited because of 
the post-office fixtures and the space necessarily required for 
the working of the mails by the postal employees. 

(2) Because the railroads are required to carry mail on any 
train which may run over their road without extra charge 
therefor. 

Such considerations, if sound, make it apparent that the same 
economies in operation characteristic of freight transportation ef- 
fected by concentrated loading are impossible of application to that 
of mail. 

Mr. Adams argued in effect that if a postal car could be loaded 
upon an average to, say, five tons, such increased loading would war- 
rant a reduction in the rates paid. (S. Doc. No. 89, 56th Cong., 2d 
sess,, pt. 2, p. 417.) In order to strengthen his 'recommendation, 
which seems to have been based upon mere hypothesis, he says : 

Should a further investigation disclose the fact that increased economy does 
not, as a matter of fact, follow increased density of mail traffic, and conse- 
quently warrant a reduction in the rate of compensation, the fact would ex- 
pose railway mail service as now administered by the Post Office Depart- 
ment to the suspicion of undue regard to facilities and inadequate regard to 
expense. (S. Doc. No. 89, 56th Cong., 2d sess., pt. 2, p. 235.) 

Mr. Adams placed himself in the anomalous position, as suggested 
by Chairman Wolcott in part 2, page 417, of the document above- 
referred to, of recommending a reduction first and an investigation, 



RAILWAY MAIL PAW 905 

afterwards to ascertain whether the reduction was warranted. His 
own testimony can not but be regarded as indicative that the rail- 
roads were not overpaid in 1901. To disprove the hypothesis upon 
which he based his recommendation, the following is quoted from a 
paper entitled " Space or weight," by Mr. V. J. Bradley, 1 supervisor 
of mail traffic, Pennsylvania Railroad system, and printed in volume 
4, pages 624 to 626, of the Hearings on Railway Mail Pay : 

In 1899, when the last joint congressional commission was studying this ques- 
tion, I held the opinion, which I surmise is still held by some officials of the 
Post Office Department, that if the department paid for car space instead of for 
weight they could load the space to the maximum and so effect great economies. 
I am satisfied that this is a delusion. The low average load carried per car is 
really the result of the variable character of the traffic and not of the present 
basis of pay. The fact that the volume of mail in one direction is heavier than 
in the reverse direction lowers the average load, but the department can not 
control or change this condition. The further fact that the load from the heavy 
initial terminal varies from day to day can not be controlled by the department 
unless it takes all expedition and high quality out of the service by holding the 
mail back until it accumulates a full load, as in the freight service. Congress 
and the American people would not consent to this. 

Superficially it appears quite clear that the average load per car is too low 
and therefore extravagant, but close examination discloses the fact that this 
is an inseparable characteristic of the mail traffic and partly the price paid 
for expedition (including distribution en route). 

This advertence to the conclusions reached by the Wolcott-Loud 
commission is deemed essential because of the frequent reference 
made to same by various railroad representatives to substantiate their 
claim that they are not overpaid. (Preliminary Report, pp. 15 and 
16; vol 1 of the Hearings, pp 53, 54, and 111; vol. 5, pp. 726 and 
759.) Advertence was also made to that phase of the subject relat- 
ing to the possibility of concentrated loading, as there will be fre- 
quent reference to it in subsequent pages of this memorandum. 

PROCEDURE OF THE PRESENT JOINT COMMITTEE CONTRASTED WITH THAT 
FOLLOWED BY THE WOLCOTT-LOUD COMMISSION. 

This joint committee by the act of August 24, 1912, creating it, 
was charged with the duty of making "inquiry * * * into the 
subject of * * * compensation for the transportation of mail and 
to report at the earliest practicable date." The former commission 
was specifically charged with the duty of " investigating the ques- 
tion whether or not excessive prices are paid to the railroad com- 
panies for the transportation of mails." The difference in language 
in the laws creating the respective commissions confirms the im- 
pression already indicated that this joint committee is more vitally 
concerned with the question of evolving a system, simple and easy 
of explanation, and fair and equitable to the Government and rail- 
roads alike, of paying the railroads of this country for transporting 
the mails, and one that would remove the almost ceaseless agitation 
in Congress and the endless friction between the railroads and the 
Post Office Department. (Hearings, vol 1, p. 236; vol. 2, p. 397; 
vol. 4, p. 549 and 616.) 

This joint committee at the very outset of its investigation had 
before it two concrete plans, namely : 

(1) The present law, a weight plan. 

1 Mr. Bradley, at the time of the Wolcott-Loud commission, was stationed at New York 
City as superintendent of the Railway Mail Service. He appeared before that commission 
as an advocate of a space basis in his individual and personal capacity. (S. doc. No. 89, 
56th Cong.. 2d sess., pt. 2, p. 143.) 



906 BAILWAY MAIL PAY. 

(2) The plan recommended by the Post Office Department in 
Document No. 105, a space plan based on cost. 
While it is true that suggestions were made to the Wolcott-Loud 
commission to substitute a space for a weight basis, it does not appear 
to have been presented with that definiteness of purpose character- 
istic of the recommendations made in Document No. 105. In support 
of this view the following is quoted from Mr. Loud's report : 

The system of space payment was regarded generally by the commission as 
impracticable, and a proper investigation in that direction was not pursued. 

The present joint committee occupies a more advantageous posi- 
tion than the former in having at the very outset of its investigation 
a specific concrete plan to contrast with the present method of pay- 
ment. 

It shall now be the purpose of the writer to discuss (1) the present 
law, and (2) the space plan recommended in Document No. 105. 

THE PRESENT LAW (WEIGHT BASIS ) . 

At present the compensation the railroads receive for carrying the 
mails is based upon 90 per cent weight and the remaining 10 per cent 
upon facilities furnished by the railroad companies as represented 
by railway post-office cars of 40 feet up to 60 feet and over in length, 
inside measurement. No pay is allowed for postal cars of less than 
40 feet in length. In other words, 90 per cent of the compensation 
received is based upon weight and 10 per cent upon space. It was 
found after the initiation and in the development of the traveling 
railway post-office cars that such cars were limited in their mail load- 
ing because of the post-office fixtures in the car and the space neces- 
sarily required by the postal employees to work the mails, hence a 
rate was provided in addition to that paid for the weight carried in 
order that the railroads might receive a remuneration commensurate 
with the service performed and facilities furnished. 

The basis of the present law is the act of 1873. The rates there 
fixed were subsequently reduced by the acts of July 12, 1876, June 17, 
1878, March 2, 1907, and May 12, 1910, this latter act applying ex- 
clusively to land-grant railroads. 

The law of 1873 fixing the rate of pay for railroad post-office cars 
was reduced by the law of 1907, as indicated in the following state- 
ment: 





Act of 
1873. 


Act of 
1907. 


40-foot car 


$25.00 
30.00 
40.00 
50.00 


$25.00 


45-foot car 


27.50 


50-foot car 


32.50 


1 5-60-foot car (or more) 


40.00 







Why a proportionate rate under the law of 1873 was not made for 
cars of under 40 feet in length, commonly known as apartment cars, 
is not apparent. These cars are fitted up similarly as full railway 
post-office cars, and the same reasoning justifying increased pay for 
them should equally apply to apartment cars. A computation based 
on Table 5J, Document No. 105, page 196, will disclose that approxi- 
mately 85 per cent of the car foot-mile mail space is represented in 
the railway post-office and apartment cars, divided as follows: 46 
per cent railway post-office and 39 per cent apartment cars. This 



KAILWAY MAIL PAY. 



907 



seems to clearly demonstrate that a special rate, proportioned accord* 
ing to length of car, should have been provided for cars of less than 
40 feet in length, which, as will be pointed out on pages 915 and 916 of 
this memorandum, can be no more economically loaded than the 
regular railroad post-office car. 

The transportation and service rates fixed by the law of 1873, and 
the subsequent reductions in same by the amendatory acts referred 
to, may be seen at a glance by reference to the following schedule of 
rates promulgated by the Post Office Department : 

Schedule of rates for railway mail transportation. 



Average weight of mails per day carried over 
whole length of route. 



Pay per mile per annum. 



Rates al- 
lowable 
under R.S. 

sec. 4002 
(act of 
Mar. 3, 
1873). 



Rates allow- 
able under 
acts of July 
12, 1876, June 
17, 1878, and 
Mar. 2, 1907. 
(See note 1.) 



Rates allow- 
able to land- 
grant rail- 
roads under 
acts of July 
12, 1876, June 
17, 1878, Mar. 
2, 1907, and 
May 12, 1910. 
(See notes 1 
and 2.) 



Intermediate 
weight war* 
ranting allow* 
ance of $1 per 
mile under the 

law of 1873 and 

the custom of 

the depart- 

ment,subject to 

acts ! of July 12. 
1876, June 17, 

1878, and Mar. 

2,1907. (See 

note 1.) 



200 pounds 

200 to 500 pounds 

500 pounds 

500 to 1,000 pounds 

1,000 pounds 

1.000 to 1,500 pounds 

1,500 pounds 

1,500 to 2,000 pounds 

2,000 pounds 

2,000 to 3,500 pounds 

3,500 pounds 

3,500 to 5,000 pounds 

5,000 pounds 

For each additional 2,000 pounds above 5,000 

and less than 48,000 pounds 

Above 5,000 and less than 48,000 pounds 

For each additional 2,000 pounds in excess of 

48,000 pounds 



$50. 00 
"75." 66' 



542.75 
"64."i2" 



$34. 20 
"5L30* 



100. 00 
i25."66' 



85.50 
"166*87" 



68.40 
"85."56" 



150. 00 
"175." 66' 



128.25 
i49.'62* 



102. 60 
ii9."70" 



200.00 
25.00 



171.00 
20.30+ 



136. 80 
16. 24+ 



25.00 



19.24 



15.39 



Pounds. 



12 



20 



80 



Intermediate weights above 48,000 pounds warranting addition of $1 net. 



Character of route. 



Nonland 
grant. 



Pounds. 
103.96 



Land 
grant. 



Pounds. 
129.96 



1 The application of these acts reduces the allowance of SI to $0.85+ on nonland-grant and to $0.68+ on 
land-grant routes carrying less than 5,000 pounds average daily weight. On routes carrying above 5,000 
and less than 48,000 pounds the allowance of $1 is reduced to $0.81+ for nonland-grant and to $0.64+ for 
land-grant routes. 

Note 1.— The act of Mar. 2, 1907, affects only routes carrying over 5,000 pounds. 

Note 2.— The act of May 12, 1910, affects only land-grant routes carrying over 48,000 pounds, 

No allowance is made for intermediate weights not justifying the addition of $1. 

Rates allowable per mile per annum from July 1, 1907, for use of railway post-office cars: 

Per daily line. 

Railway post-office cars 40 feet in length, inside measurement $25. 00 

Railway post-office cars 45 feet in length, inside measurement 27.50 

Railway post-office cars 50 feet in length, inside measurement 32. 50 

Railway post-office cars 55 feet or more in length, inside measurement , 40. 00 

To constitute a "line" of railway post-office cars between given points, sufficient railway post-office 
cars of full width and of authorized length must be provided and run to make a trip daily each way be- 
tween those points. 



908 BAILWAY MAIL PAY. 

In view of the frequent criticisms made of the complexity of the 
present law relating to railway mail pay, particularly with reference 
to figuring out and stating accurately and concisely the method by 
which the railroads' compensation is determined, an attempt is made 
in the footnote below to explain the manner of arriving at the rates 
given and referred to in the department's circular on the next pre- 
ceding page : x 

Under the law and practice of the Post Office Department the 
weight of the mail carried over railroad routes (now 3,409 in number, 
as stated by the Second Assistant Postmaster General on p. 7 of his 
annual report for the fiscal year ending June 30, 1912) is determined 
by weighing the mails for a period of 90 successive working days once 
in every four years, the daily average weight thus ascertained being 
the average daily weight for the four-year period. The United 
States, however, is divided into four weighing sections, and, perhaps 
for the purpose of convenience, one section only is weighed each year, 
the equivalent of once in four years for the entire country. 

lr rhe law of 1873 specifies the number of pounds and the rates which shall apply to 
the pounds stated up to 5,000 pounds, after wMch a rate of $25 shall be paid for each 
2,000 pounds in excess of that amount. By the act of 1876 the rates stated in the fore- 
going act, including the rate of $25, were reduced 10 per cent. By the act of 1878 the 
rates fixed in the law of 1873, and reduced by the act of 1876, were still further reduced 
5 per cent. The foregoing was the extent of the reduction on weights up to and in- 
cluding 5,000 pounds, subsequent reductions only affecting rates in excess of that number 
Of pounds. As indicated in the department's circular, for intermediate weights between 
those specifically stated in the law, the Post Office Department has prescribed a certain 
number of pounds, varying from 12 to 60, entitled to receive an allowance of $1. This 
$1 is also subject to the 5 and 10 per cent reductions. For instance, the rate for 2,000 
pounds, under the law of 1873, was $150. The law of 1876 reduced this 10 per cent 
($15), making the rate for 2,000 pounds $135. The law of 1878 reduced this 5 per 
cent ($6.75), making the rate for 2,000 pounds $128.25. Now, if the weight were from 
2,000 pounds to 3,500 pounds, the department would allow for each 60 pounds in excess 
of 2,000 pounds $1. Here there is a remainder of 1,500 pounds, which divided by the 
60-pound allowance gives 25 sixties entitled to a rate of $1, or $25 for the 1,500 pounds, 
Which reduced by 10 and 5 per cent would give $21,375, which added to $128.25, the rate 
for 2,000 pounds, gives $149.62, the rate for 3,500 pounds. The law of 1907 carries the 
reductions of 10 and 5 per cent of the law of 1876 and 1878, respectively, providing in 
addition for a further reduction of 5 per cent on weights in excess of 5,000 pounds and 
less than 48,000 pounds, the percentage applying to each 2,000 pounds, which, under the 
law of 1873, yielded $25 and to the $1 departmental allowance for each 80 pounds on 
Intermediate weights. 

APPLICATION OF LAW TO A WEIGHT OF 48,000 POUNDS. 

Rate. 
First. — 48,000 pounds. n n , 

5,000 pounds, at $200 (1873),- less 10 per cent (1876) less 5 per 

cents (1878), equals___ $171,000 

2,000) 43,000 pounds (21 tons; $25 per ton (1873). 
40,000 

3,000 
2,000 

80) 1,000 pounds ; remainder entitled to $1 for each 80 pounds. 

$12 for 1,000 pounds, 
twenty-one tons multiplied by the rate ($20.20625) equals $426.43125, the 
rate for 21 tons, ascertained in the following manner : 

$25 less 10 per cent ($2.50) equals $22,500 (law of 1876). 
$22.50 less 5 per cent ($1,125) equals $21,375 (law of 1878). 
$21,375 less 5 per cent ($1.06875) equals $20.30625 (law of 

19 21 ) tonsXby $20.30625 $426. 43125 

Eeducing the $1 allowance by 10 per cent, 5 per cent, and 5 per 

cent will give a result of $0.81225, the rate for each 80 pounds. „ A - nnt 

This multiplied by 12 gives 9 - 7470Q 

Rate for 43,000 pounds equals 436. 179 

Rate for 48,000 pounds equals 607 - 179 



KAIL WAY MAIL PAY. 909 

Tabulations, therefore, of the character indicated in the example 
given in the footnote on this and the preceding page have to be under- 
taken by the Post Office Department each year in order to determine 
the compensation that the railroads operating in the section weighed 
shall receive for the next ensuing four years. The complexity of the 
calculations is apparent, to say nothing of the cost to the Government 
in obtaining and compiling the data on which such calculations are 
based, which on an average is stated to be $400,000 for each weighing 
section, or $1,600,000 for the whole country. (Doc. No. 105, p. 15.) 

In Document No. 105, page 15, the present basis of pay is described 
as follows: 

At present railroad mail pay is provided for and adjusted upon the basis 
of the average daily weights carried over the several established railroad 
routes, and an additional amount is allowable for railway post-office cars 
when the space for distribution purposes equal or exceed 40 feet in the car. 
Space for distribution purposes in apartment cars — that is, space less than 
40 feet — is not compensated for in addition to the pay for the weight of the 
mails. There are, therefore, under the present law, two different methods of 
pay for service which cover three different conditions in the service; that is, 
there is pay for weight under all circumstances; there is additional pay for 
space, 40 feet and more, in cars; and there is pay for weight only in cases 
where apartments less than 40 feet in cars are furnished. 

Second. — 

Rate for 5,000 pounds (obtained as above) $171,000 

21 tons (obtained as above) multiplied by $25 equals $525. 000 

$1 for eacb 80 pounds in remainder, wbicb is 12, equals 12. 000 

537. 000 
10 per cent reduction (3 876) 53.700 

483. 300 
5 per cent reduction (1878) 24.165 

459. 135 
5 per cent reduction (1907) 22! 956 

Rate for 43,000 pounds equals 436. 179 

Rate for 48,000 pounds equals 607. 179 

In the foregoing example the weight on 48,000 pounds has been worked out in two 
ways. First was ascertained the rate on 5,000 pounds, which under the law of 1873 took 
a rate of $200, and this reduced by 10 per cent and 5 per cent, as provided by the laws 
of 1876 and 1878. gives $171. 

Then was taken 43.000 pounds, which, divided by 2,000 pounds (or 1 ton), gives a quo- 
tient of twenty-one 80 pounds entitled under the law of 1873 to a rate of $25, which, re- 
duced bv 10, 5, and 5 per cent, under the laws of 1876, 1878, and 1907, gives a rate of 
$20.30625. This multiplied by 21 tons gives a total rate of $426.43125 for that number 
of tons. 

As indicated in the example, there is a remainder of 1,000 pounds, an intermediate 
weight entitled under a prescribed allowance made by the Post Office Department to re- 
ceive (in its administration of the law of 1873) $1 for each 80 pounds. This would entitle 
1,000 pounds to a rate of $12. The percentage reductions made in the laws of 1876, 1878, 
and 1907 are made applicable to the $1 rate, which would reduce the $1 rate for each 80 
pounds to $0.81225. This rate multiplied by 12. the number of eighties, gives $9.74700, 
which, added to $426.433 25, gives a total sum of $436,178. the rate for 43,000 pounds. 
Adding this to $171, the rate for 5,000 pounds, gives a rate of $607,179 for 48,000 pounds. 

When the rate exceeds 48,000 pounds each additional 2,000 pounds receives a rate of 
$19,238, or $19.24, the rate stated in the law itself, which is arrived at in the following 
manner : 

$25 (1873 rate) less 10 per cent (2.50) equals $22,500 

$22.50 (1876 rate) less 5 per cent (1.125) equals 21.375 

$21,375 (1878 rate) less 10 per cent (2.13750) equals 19.238 

Or $19.24, the amount specified in the law of 1907 as the rate for each 2,000 pounds in 
excess of 48,000 pounds. 

For intermediate weights above 48,000 pounds an allowance of $1 is made for each 
103.96 pounds. 

The act of 1876 provided that land-grant roads should only receive 80 per cent of the 
compensation authorized by the act of 1873. Such roads are also subject to the per- 
centage reductions applicable to nonland-grant railroads and to a further reduction by 
the act of May 12, 1910, reducing the rate for each 2,000 pounds in excess of 48,000 
pounds from $17.10, the rate prescribed by the act of 1907, to $15.39. The percentage 
reductions on the $1 allowance applicable to nonland-grant railroads are also made appli- 
cable to land-grant railroads. 

49396—14 65 



910 RAILWAY MAIL PAY. 

The objections of the Post Office Department to the present system 
can perhaps best be stated by quoting below from Document No. 
105, wherein the substitution of a space plan is recommended : 

It (referring to the space plan recommended) will insure payment at an 
ascertained, known, and reasonable rate for services performed, and will put 
at rest the question of overpayment, or adequacy or inadequacy of the rates. 
A further advantage would be gained by the elimination of the weighing of 
the mails as now conducted. The plan proposed would eliminate all dis- 
tinction between payment for weight and payment for space, and would adopt 
but one unit, namely, that of space occupied by the mails in transit and the 
length of haul of the same. (Doc. No. 105, p. 15.) 

Under the new plan the method of fixing railway-mail pay in accordance 
with weight will be entirely abandoned. The weighing process has not only 
proved to be a most expensive operation, but it has been quite unsatisfactory 
as a basis for adjusting compensation. The laws now in force relative to rail- 
way-mail pay provide that the compensation shall be adjusted on the basis 
of the average daily weights carried over the several established railway 
routes, and that an additional amount may be allowed for railway post-office 
qars when the space for distribution purposes occupies 40 feet or more of the car 
iength. No additional compensation is allowed for space for distribution pur- 
poses occupying less than 40 feet of the car length. This distinction is a 
purely arbitrary one and without any logical reason for its existence. It 
affords a striking example of the unscientific and unbusinesslike methods now 
followed in adjusting railway-mail pay. (Doc. No. 105. p. 3.) 

Hon. Joseph Stewart, Second Assistant Postamster General, in 
Volume I of the hearings, page 28, makes the following statement : 

The space basis seems to present a definite and scientific gauge of measuring 
the service and paying for the service rendered and received. It furnishes a 
means of definitely settling the question of the adequacy of rates paid and 
putting an end to the endless controversy that is going on and always will go 
on * * * to the annoyance of the department, Congress, and the railroad 
companies themselves. 

An analysis of the foregoing recommendations in favor of a space 
basis disclose the following objections of the Post Office Department 
to the present system of pay : 

(1) That rates will continue to be profitable to certain rail- 
road companies and unprofitable to others. 

(2) That the question of adequate or inadequate rates will 
continue. 

(3) That the expensive method of weighingthe mails, which 
has proven unsatisfactory as a basis for adjusting compensation 
will be continued. 

(4) That two units of pay, namely, space and weight, will be 
continued. 

(5) That the present method is an indefinite and unscientific 
gauge of measuring the service, and one, which, if continued, can 
only result in continued controversy to the annoyance of the 
Post Office Department, Congress, and the railroads themselves. 

With the exception of the passenger service (vol. 1, p. 128) the 
railroad companies regard weight as the test or measure of the service 
performed in all transportation, as " weight is a given, definite thing 
that adjusts itself " (vol. 5, p. 667) , " and that you can not devise any 
rule or law that would define space in its application to the service 
that would eliminate the discussion and operate as weight does, a 
self-determining factor of the service rendered" (vol. 5, p. 668). 
They assert that " weight must be the gauge and space merely an 
incidental" (vol. 1, p. 125), but admit that space is and necessarily 



KAIL WAY MAIL PAY. 911 

must be used as a measure to gauge the service rendered in certain 
limited cases. For instance, that buggies set up should take a higher 
proportionate rate than buggies knocked down because of the greater 
amount of space the former occupies in the car. In the freight serv- 
ice, however, rates based on space are the exception. Likewise in the 
Railway Mail Service a rate based on space, so far as the aggregate 
compensation derived from such a basis is concerned, is the excep- 
tion rather than the rule. This exception is instanced in the travel- 
ing railway post-office car of 40 feet and more in length, which ex- 
ception, according to the railroad's contention, should be extended 
to include apartment cars or cars of less than 40 feet in length. 
(Vol. 5, p. 726.) 

Mr. XL E. Mack, mail traffic manager of the Missouri Pacific Rail- 
way Co. and one of the mail experts of the railroad's committee on 
railway-mail pay, in response to a question of Chairman Bourne as 
to what factors he would take into consideration in the fixing of 
mail rates, says : 

The weight of the mail transported and the post-office cars hauled. These 
are the two factors in the performance of the service. We have that basis 
to-day and a single standard of weight, or a single standard of space, would not 
be a proper basis of pay. (Vol, 5, p. 663.) 

Mr. Mack, continuing on page 655, says : 

The present plan should be extended to pay for the apartment cars. The 
apartment cars are under one basis only at the present time, and that is the 
weight basis, and we believe it should be extended to include the space basis 
also. 

To the extent above indicated, and only to that extent, are the rail- 
road representatives, with the exception of Mr. E. G. Buckland of 
the New York, New Haven & Hartford Railroad Co. (vol. 1, p. 275), 
in accord with the department's or any other proposed space or cost 
recommendations. They stand squarely on the weight basis and the 
principles of the present law. While insisting on the basic principles 
of the present law they think it should be amended in certain particu- 
lars to correct alleged existing inequities. 

In the hearings it was suggested that the representatives of the 
railroads prepare a concrete bill for submission to the members of the 
joint committee. In response to this suggestion Mr. Ralph Peters, 
the chairman of the committee on railway mail pay, did, on February 
12, 1913, submit a bill, which is in the language following, to wit : 

A BILL To provide for the transportation of parcel-post matter, to amend existing laws 
relative thereto, and to equalize pay for mail service on railroad lines. 

Be it enacted by the Senate and House of Representatives of the United States 
in Congress assembled, That the proviso in the act of March third, nineteen hun- 
dred and five, "That hereafter, before making the readjustment of pay for 
transportation of mails on railroad routes, the average weight shall be ascer- 
tained by the actual weighing of the mails for such number of successive work- 
ing days, not less than ninety," be, and the same is hereby, repealed, and that 
hereafter such weighings shall be simultaneous on all railroad mail routes not 
less frequently than once in each year; and the Postmaster General is hereby 
authorized and directed to require a railroad mail carrier to provide for the 
carriage of the mails between its trains and a post office or postal station only 
where such post office or postal station is located in a railroad depot or station 
of such carrier, and the Postmaster General is hereby authorized and directed 
to pay for space used as railway post offices in apartment cars in proportion to 
the present rate allowed for postal cars sixty feet in length. (Vol. 1, p. 181.) 



912 KAIL WAY MAIL PAY. 

The provisions of the bill are substantially those recommended by 
the short-line railroads, with the exception that such roads further 
recommend increasing the rate of pay per mile per annum on roads 
carrying whole length to $75 for any number of pounds up to and 
including 500. (Vol. 5, p. 830.) 

The recommendations of the foregoing bill are : 

(1) An annual instead of a quadrennial weighing; 

(2) Relief from side and terminal service; 

(3) A pro rata compensation for postal cars less than 40 feet 
in length. 

These will now be discussed in the order stated : 

ANNUAL WEIGHINGS. 

The Post Office Department, perhaps for the purpose of conven- 
ience, has divided the country up into four weighing sections. The 
law provides that the mails shall be weighed not less frequently than 
once in four years, and the department in its administration of the 
daw has strictly adhered to this minimum. The result is that the 
mails in each section are weighed only once in every four years, the 
equivalent of once in every four years for the entire county. 

The department adheres to the minimum because of the alleged 
additional expense that would be entailed if more frequent weighings 
were had. The estimated cost of weighing the mails is stated to be 
$1,600,000 for the whole country, or $400,000 for each section. (Doc. 
105, p. 15; hearings, vol. 1, p. 14; vol. 4, p. 599.) 

The railroads contend that the mails should be weighed and ad- 
justments made annually by the Postmaster General, who now has 
full authority to do so. (Vol. 1, p. 53.) They further contend that 
quadrennial weighings are not fair to them, for the reason that they 
receive no pay whatever for the increased weight per year through- 
out the four-year period. (Vol. 1, pp. 117 and 299; vol. 4, pp. 
584-585; vol. 5, pp. 724-725.) Estimating the increased weight per 
annum for which they receive no pay at 6 per cent, means a reduc- 
tion in their compensation of nearly $3,000,000. (Hearings, vol. 1, 
p. 53.) Mr. W. A. Worthington, assistant director of maintenance 
and operation, Southern Pacific Co., states the loss for the fourth 
contract section (Western States) to be $2,800,000. (Vol. 2, p. 342; 
see also chart there referred to.) 

Mr. Baldwin, vice president of the Burlington system, in response 
to a question of Senator Weeks as to whether, in the event the mails 
were weighed every year, it would be fair to the railroads to pay 
three-fourths of the expense, says : 

Our impression, Mr. Weeks, has been that the weighing every year, for 35 days, 
properly organized, will cost very little more than weighing quadrennially for 
105 days. I think the railroads ought to be willing, speaking for myself, to 
share in any increased expense. (Hearings, vol. 1, p. 132.) 

If it were practicable, both from an administrative and economical 
standpoint, the fairest method of ascertaining the weight of the mail 
would be to weigh every day, but as to this the evidence is conflict- 
ing. Mr. Kalph Peters, chairman of the committee on railway mail 
pay, expresses himself in the affirmative. (Hearings, vol. 1, pp. 188 
and 189.) Mr. H. E. Mack, manager of mail traffic of the Missouri 
Pacific and one of the mail experts of Mr. Peters's committee, ex- 



EAILWAY MAIL PAY. 913 

presses himself strongly in the negative. (Hearings, vol. 1, p. 308.) 
While Mr. Peabody, statistician of the Atchison, Topeka & Santa Fe, 
suggests the possibility of developing an automatic weight-recording 
device. (Hearings, vol. 3, pp. 465 and 493.) 

On October 29, 1913, Mr. Lloyd introduced a bill (H. E. 90T1, 63d 
Cong., 1st sess.) " Providing for the annual weighings of the mails." 
The bill reads as follows : 

lie it enacted by the Senate and House of Representatives of the United States 
of America in Congress assembled, That hereafter, in order to readjust the com- 
pensation on railroad mail routes as provided by law, the Postmaster General 
shall have the mails weighed simultaneously in all sections of the country an- 
nually, for not less than thirty successive working days selected by the Post- 
master General, as shall represent most nearly the average weights for each 
annual period as shall be fair and just to both the Government and the rail- 
roads, such weights to be taken by employees of the Post Office Department, 
except the Postmaster General may require contractors on railroad mail routes, 
where practical for regularly employed force at railroad stations to weigh the 
mail, to have such employees take and report the weights upon forms provided 
and under regulations prescribed by him, all such railroad employees being 
sworn, and for this purpose all postmasters are hereby empowered to administer 
oaths on forms provided by the Postmaster General. 

The purpose of the bill as stated by Mr. Lloyd (Cong. Kec, Oct. 
29, 1913, p. 6500) is: 

First. To authorize the Postmaster General to require the railroad com- 
panies to have their agents weigh the mails, where their regularly employed 
station forces can do the work. 

Second. To reduce the period of weighing from 105 to 35 days. 

Third. To provide an annual weighing of the mail instead of quadrennial. 

In conclusion he summarizes the effect of his bill, if adopted, as 
follows : 

During the last four years there were employed 3,260 weighers for 105 days, 
at $3 per day each, a total cost of $1,026,900. There were employed 840 sta- 
tion weighers for 105 days, at $2.50 each, $211,050. There were also employed 
372 tabulators for 105 days, at $3 per day, $117,180. A total cost of $1,355.130 ; 
an average annual cost of $338,702.50. Under the proposed law the train 
weighers would be eliminated; station weighers would be employed only 35 
days, which would cost $70,350. Tabulators would be employed for 35 days and 
would cost $39,060, a total annual cost of $109,410, or less than one-third the 
present cost. 

Under his plan no weights will be taken on the trains. The mail 
will be weighed on and off at stations by railroad employees under 
oath, except at large terminals and junction points where Government 
weighers will be stationed, and where the Postmaster General, for 
the purpose of checking or verification, may deem it expedient to have 
such employees. 

With reference to possible collusion he makes the following state- 
ment: 

In order to effect collusion it would be necessary that all these parties should 
be implicated, because every one of these agents and also the Government 
weighers at the terminals would not only have to participate in the collusion 
but each would have to know exactly what extent any weight padding were at- 
tempted. 

It would appear that the object sought in this bill is a move in the 
right direction and that its provisions, if collusion is prevented as 
claimed, should be satisfactory to both the railroads and the Gov- 
ernment. 



914 RAILWAY MAIL PAY. 

SIDE AND TERMINAL SERVICE. 

Under postal laws and regulations the railroads are required to 
take the mails from and deliver them into all terminal post offices, 
whatever may be the distance between the station and post office, the 
distance to be computed in and paid for as a part of the railroad 
route; also to take the mails from and deliver them into all inter- 
mediate post offices and postal stations located not more than 80 rods 
from the nearest railroad station. (Sec. 1911, Postal Laws and Eegu- 
lations, 1902, or amendments thereof.) For the latter service the 
railroads receive no extra compensation and for the former, accord- 
ing to the railroads' representations, inadequate compensation. 

The railroads contend that such services are not reasonably a part 
of the railroad transportation service and can not lawfully be re- 
quired of them as common carriers. (Hearings, vol. 5, p. 726.) 
Hon. Joseph Stewart, Second Assistant Postmaster General (vol. 1, 
p. 17), maintains that the department can not do otherwise; in 
ract, asserts that it is its duty to continue the requirement, refer- 
ring in support of his statement to a decision of the Court of 
Claims, wherein it was held upon a suit to recover for side service 
that Congress, when it fixed the rates provided for in the law of 1873, 
had in view the continuance of the requirement under the old con- 
tract service applicable to star-route service, namely, to deliver the 
mails into every post office along the route. (Jacksonville, Pensacola 
and Mobile Kailroad Company v. The United States, 21 Ct. Cls. E., 
155; affirmed on appeal, 118 U. S. E., 626; Eastern Eailroad case, 
20 Ct. Cls. E., 41; affirmed on appeal, 129 U. S, E., 391; Minneapolis 
and St. Louis Eailway Company v. The United States, 24 Ct, Cls. 
E., p. 350.) 

Second Assistant Postmaster General Stewart testifies, volume 1, 
page 17, of the Hearings, that if the Government were compelled to 
provide and pay for side and terminal services that it would cost 
it over $4,000,000 per year. Mr. H. E. Mack, of the Missouri Pacific, 
in his testimony, volume 1, page 211, after referring to report made 
by former Postmaster General Meyer on February 19, 1909, to the 
Senate Committee on Post Offices and Post Eoads, wherein the esti- 
mated value of this service was given as $4,393,000 per annum, says: 

It may be fair to assume that its value is higher to-day, as the rate per mile 
traveled on mail messenger service routes in 1909 was 12.28 cents, while in 1911 
it was 13.36 cents. 

As far back as 1898 former Assistant Postmaster General Shallen- 
berger, testifying before a subcommittee of the Senate on the Post 
Office appropriation bill, stated in effect that out of 27,000 stations 
supplied by messenger service 7,000 of them were supplied by the 
Post Office Department at a cost of between $1,000,000 and $1,100,000, 
leaving the other 20,000 stations to be supplied by and at the expense 
of the railroads, on which basis it would have cost the Government 
at that time $3,000,000 or over to perform the entire service. (Vol. 2, 
Postal Commission Eeport, 1900-1901, p. 731.) 

The railroads frankly admit that they can perform the service 
much more economically than the Government. (Vol. 1, pp. 211, 
231, 232; vol. 5, p. 725.) On the other hand, they allege that in 
many cases the cost exceeds the payments for the routes on which 



KAIL WAY MAIL PAY. 915 

such services are rendered. (Preliminary Report, p. 27; Hearings, 
vol. 1, pp. 66-69, giving in detail requirements made by postal laws 
and regulations; vol. 1, pp. 129, 231, 254, 268; vol. 3, pp. 513-14; 
vol. 4, pp. 546-47, 556, 570-71.) 

Mr. H. E. Mack, manager of mail traffic, Missouri Pacific Railway 
Co. (Hearings, vol. 1, pp. 210-222), in making a general statement 
with reference to this subject, testified that out of an annual railway 
mail compensation of $2,500,000 received by his company $25,000 to 
$30,000 was expended for side service. The compensation of that 
company was approximately one-twentieth of the total railway mail 
pay. If the same proportion of expense were applied to the railroads 
receiving the remaining nineteen-twentieths of the total amount paid 
by the Government for the carriage of its mails, the total cost to 
them for side service would be $500,000, which, from the testimony, 
would appear to be a very conservative estimate. (See also p. 570, 
vol. 4.) 

The cost for side service falls particularly heavy on the short-line 
railroads. They are the retailers of mail transportation, and as 
stated (vol. 1, p. 212), side service would cost them proportionately 
much more than it costs the larger railroads. Mr. Peters (vol. 1, 
p. 183) states that " the length of the road is counted not to the sta- 
tion but to the post office; mails are handled to the station by train 
and then special contracts are made for wagon service from the 
station to the post office, which is, in many cases, three or four times 
the amount of compensation that the railroad gets by having that 
distance included as constructive mileage for the railroad." Illus- 
trations indicating that payment for constructive mileage referred to 
by Mr. Peters is often inadequate to cover expenditures made and 
service performed may be found in the Preliminary Report, page 27, 
and volume 5 of the Hearings, pages 830 to 845, inclusive. 

While the testimony does not disclose with particularity how 
$4,393,000 was arrived at as the cost to the Government should it 
undertake this service, it does strongly indicate that it is a service 
that can be performed much more cheaply by the railroads. If it 
should be determined that side service is not properly one of trans- 
portation and can not in equity be required of the railroads, the 
railroads should either be relieved of that service or else receive a 
fair compensation for its performance. 

The estimated cost of $500,000 to the railroads can not but be 
regarded as a conservative one, particularly in view of demands by 
contractors for increased compensation because of parcel post and the 
hiring of extra employees by the railroads to take care of that 
business. 

It would appear therefore that it would be to the interest of the 
Government to accept the second alternative, namely, to permit the 
railroads to continue the service at a remuneration fair and adequate. 

APARTMENT CARS. 
GENERAL STATEMENT WITH REFERENCE TO RAILWAY POST-OFFICE CARS. 

As already indicated the law of 1873 made weight the measure or 
yardstick in the determination of the compensation that the rail- 
roads should receive for carrying the mails. At that time, however, 



916 BAIL WAY MAIL PAY. 

the railway post-office car had begun to reach a stage of develop- 
ment as to warrant an inquiry as to whether or not a compensation 
based on weight alone would be sufficient to compensate the rail- 
roads for the weight carried and facilities furnished. It developed 
that because of the post-office fixtures contained in the car and the 
necessary space that had to be set apart for the postal employees to 
work the mail contained therein, only & limited amount of mail 
could be carried, averaging between 2^ to 3 tons. These cars weighed 
anywhere from 90,000 to 100,000 pounds. Since the proportion of 
dead weight so far exceeds the paying load, it is manifest that a rate 
based on weight alone would be unfair and noncompensatory to the 
railroads. Space here, in all justice and equity, ought to have been, 
as it was, recognized. The law of 1873, therefore, wisely provided 
for a rate based on space to increase the inadequate rate that would 
be paid if weight alone were the measure. Payment upon this basis 
represents 10 per cent of the compensation that the railroads re- 
ceive for transportation and facilities furnished. 

The rates for railway post-office cars provided by the act of March 
3, 1873, and as amended by the act of March 2, 1907, together with 
rates for cars of 40 feet and over in length are stated on page 906 of 
this memorandum. 

APARTMENT CARS. 

The records do not disclose why, under the law of 1873, compensa- 
tion was not allowed for cars of less than 40 feet in length. These 
cars, in proportion to their length, are fitted up similarly as the 
regular post-office car of 40 feet or more in length. They are pro- 
vided with letter boxes, racks, and other post-office facilities to aid in 
mail distribution en route. These facilities restrict the paying load 
that can be carried the same as in the regular railway post-office car. 
Notwithstanding this, they only receive a transportation rate meas- 
ured by the weight of the mail contained in the car. 

The "Second Assistant Postmaster General, in his annual report 
for the fiscal year ending June 30, 1913, gives the number of apart- 
ment cars in use and in reserve as 4,029, 181 of which are of steel, 221 
of steel underframe, and 3,627 of wood construction. If the different 
lengths stated by the Postmaster General were consolidated into 15, 
20, 25, and 30 foot cars and compensation prorated on a 40-foot car, 
as suggested in the Talbott bill, printed in full on page 71 of the pre- 
liminary report and frequently referred to in the hearings, a 15-foot 
car would receive $9,375, a 20-foot car $12.50, a 25-foot car $15,625, 
and a 30-foot car $18.75, these amounts being three-eighths, one- 
half, five-eighths, and three- fourths, respectively, of $25, the amount 
stated in the law as the compensation per mile per annum for a 
40- foot car. 

Former Postmaster General Hitchcock, in referring to the dis- 
crimination made in the law of 1873 in favor of railway post-office 
cars of 40 feet and over in length, made the following statement : 

This distinction is a purely arbitrary one and without any logical reason for 
its existence. It affords a striking example of the unscientfic and unbusiness- 
like methods now followed in adjusting railway-mail pay. (Doc. 105, p. 3.) 

In this connection, the following is quoted from a memorandum 
dated January 17, 1913, prepared by Hon. Joseph Stewart, Second 



KAIL WAY MAIL PAY. 917 

Assistant Postmaster General, on behalf of the Post Office Depart- 
ment : 

The facts are that apartment-car service existed long before full railway 
post-office car service, and the Postmaster General was authorized by the act 
of 1872 (17 Stat. L., 309) to compensate railroad companies who furnish rail- 
way post-office cars by allowing such additional compensation beyond that 
allowed for the service as he might see fit, not exceeding, however, 50 per cent 
of such rates. It was not until the law of 1873 that Congress afterwards 
authorized specific additional payment to the transportation pay for full railway 
post-office cars. This statute, however, repealed the act of 1872 and left the 
Postmaster General without authority to make specific payment for apartment 
cars. (Preliminary Eept, p. 107.) 

In Document No. 105 the railway post-office car distribution space 
is stated to be 431,210,671.03 car foot miles and the apartment car 
space 364,370,259.64 car foot miles. Dividing the railway post-office 
car space into that of the apartment car space a percentage of ap- 
proximately 84.5 is arrived at. Applying this percentage to $4,367,- 
029.16, the amount stated in the Second Assistant Postmaster Gen- 
eral's report for the fiscal year ended June 30, 1912, as the railway 
post-office expenditure for that year, a product is reached of $3,690,- 
139.63 as the amount the railroads should receive for their apart- 
ment-car service, or, as they would probably state it, the amount of 
their underpayment. (Mr. Newcomb, statistician for the committee 
on railway mail pay, states the amount to be $4,008,643.06. Vol. 1, 
p. 116.) 

The railroads' committee on railway-mail pay in its letter of 
October 3, 1912 (preliminary report, p. 7), and again in its brief filed 
with the joint committee on June 26, 1913 (vol. 5, p. 726), in addition 
to the foregoing recommendations, ask for a repeal of the act of 
March 2, 1907, reducing the rate of pay for weights in excess of 5,000 
pounds and for railway post office cars, and that they be relieved of 
the further application of divisor order No. 412, issued by ex-Post- 
master General Meyer on June 7, 1907. 

The reductions in pay occasioned by the law of 1907 computed on 
weight of the mails and for postal cars are stated by Mr. H. T. New- 
comb, statistician for the committee on railway-mail pay, from 
figures taken from the annual reports of the Second Assistant Post- 
master General for 1907 and 1908 (vol. 1, pp. 98 and 99) to be 
$2,676,468.72. 

The reductions occasioned by divisor order No. 412 are stated by 
Mr. Newcomb, from figures taken from the report of the Second 
Assistant Postmaster General for the year 1910, to be $4,941,940.34. 

The divisor order referred to may be briefly described as one re- 
quiring that the whole number of days included in the weighing 
period shall be used as a divisor for obtaining the average weight per 
day instead of successive working days, excluding Sundays as here- 
tofore. This order was made almost contemporaneously with the 
passage of the law of 1907 just referred to. The railroads assert that 
" had Congress been advised of the purpose of the Postmaster General 
to issue an order increasing the number of days taken as the divisor, 
the statutory reductions of May 2, 1907, would not have been adopted." 
(Vol. 1, p. 99.) This contention of the railroads has been sustained 
in the recent case of Chicago & Alton Kailroad Co. v. The United 
States, rendered by the Court of Claims on June 2, 1913. That court 
has declared the order in question to have been issued without author- 



918 RAILWAY MAIL PAY. 

ity of law and the plaintiff entitled to a judgment in the sum of 
$82,604.84, said amount representing the difference in the amount it 
should have received had a divisor of " six," instead of " seven," been 
used. The case is still pending before the Court of Claims on alter- 
native motions by representatives of the Government ; namely, for a 
restatement of its finding of facts or an opening up of the whole case 
de novo. 

From the foregoing it would appear that, if the present system of 
pay is to continue, the railroads are entitled — 

(1) To an annual weighing. 

(2) Belief from or adequate compensation for side and ter- 
minal service. 

(3) Extra pay for apartment cars. 

It would also appear that by the elimination of these items as a 
basis on which to compute their compensation the railroads are under- 
paid as follows: 

On annual weighings $2, 900, 000 

Side and terminal service 500,000 

Apartment cars , 3, 700, 000 

Total 7,100,000 

(In this connection, see pp. 958 and 959 of this memorandum.) 

It is believed for reasons indicated on prior pages of this memo- 
randum that the estimate for the two latter items are more than con- 
servative. 

Since the railroads have received a favorable decision in the divisor- 
order case and the legality of that order is still before the courts for 
final determination, it would appear only proper that congressional 
action be suspended until the case has reached the Supreme Court 
and its decision rendered. It will then be time enough to consider the 
reductions made in the law of 1907. The impression gained from the 
quotation appearing on page 917 of this memorandum, taken from 
volume 1, page 99, of the Hearings, is that the protests of the rail- 
roads against the reductions made by that law have been occasioned 
more because of the rendition and application of the administrative 
order referred to than the specific r^ notions made in the law itself. 

On the whole it would appear that if the railroads are able to 
secure annual weighings, additional pay for their apartment cars, a 
fair remuneration for their side and terminal service and relief from 
the further application of the divisor order that the law of 1907 
should remain undisturbed, and this without depriving the railroads 
of a fair return on service rendered and property employed. 

Space Basis. 

[.Recommended by the Post Office Department in House Document 105, Sixty-second 
Congress, first session, and as subsequently modified by it as will appear by reference 
to pages 96 to 111, inclusive, of the chairman's preliminary report to the joint com- 
mittee, dated January 24, 1913.] 

The conclusion reached by the Post Office Department with ref- 
erence to the foregoing heading was the result of an investigation 
authorized by the act of March 31, 1879, reading as follows : 

The Postmaster General shall request all railroad companies transporting 
the mails to furnish, under seal, such data relating to the operating, receipts, 
and expenditures of such roads as may in his judgment be deemed necessary 



RAILWAY MAIL PAY. 919 

to enable him to ascertain the cost of mail transportation and the proper 
compensation to be paid for the same; and he shall, in his annual report to 
Congress make such recommendations, founded on the information obtained 
under this section, as shall, in his opinion, be just and equitable. 

Intermittent efforts to secure information called for under the law 
developed the fact that the information was not obtainable. In 1907 
ex-Postmaster General Cortelyou vitalized the law in an effort to 
secure the information. His action was followed by his successor, 
ex-Postmaster General Meyer, and further initiation made by efforts 
to secure information by preparation and submission to the railroads 
of a series of questions. The work continued and was completed dur- 
ing the administration of ex-Postmaster General Hitchcock through 
the efforts of an administrative commission, of which his Second 
Assistant, General Stewart, was chairman. 

The result was the submission to Congress, through the Speaker 
of the House of Eepresentatives, under date of August 12. 1911, of 
a new plan of compensating the railroads for carrying the mails, 
together with a concrete bill embodying in legislative form the 
principles of the plan recommended. The matter transmitted was 
printed and numbered " Document 105, House of Eepresentatives." 

The railroads claim that in round numbers it cost them a quarter 
million of dollars to secure the information sought for by the depart- 
ment (Vol. 1, p. 187). Two appropriations were made by Congress 
of $10,000 each to enable the Post Office Department to compile and 
tabulate the information contained in the answer to its interroga- 
tories. All but about $500 of these two appropriations were ex- 
pended. 

As already indicated on page 901 of this memorandum, a more 
complete history, leading up to the compilation of data and the rec- 
ommendations contained in Document No, 105, may be had b} 7 refer- 
ence to the literature there stated. 

ORIGINAL PLAN. 

The department selected the month of November, 1909, as the 
period in which to obtain the data on which Document No. 105 was 
formulated. As stated in Document No. 105, railroads representing 
88.95 per cent of the total railroad mileage of the country responded 
to the request for information and in the manner prescribed by the 
forms and instructions prepared by the department and submitted 
to them. 

In brief, the plan of the department is to substitute space for 
weight as the main factor to be used in the determination of the 
compensation to be paid the railroads for carrying the mails. At 
present 90 per cent of the railroad pay is based upon weight and 10 
per cent, represented in the railway post-office car, upon space. The 
department proposes to reverse these percentages to 90 per cent space 
and 10 per cent weight; the latter being represented by the closed- 
pouch service. 

To measure the space used, it has made a linear car-foot the unit. 
It has taken the linear car-foot mile as the yardstick or measure by 
which to determine the cost incurred by the railroads in the perform- 
ance of the mail service. The plan recommended can therefore 
properly be denominated a space plan based on cost. 



920 EAILWAY MAIL PAY. 

Its first step was, as more fully explained in Document No. 105, 
p. 7, to allocate the expenses and taxes common to freight and pas- 
senger service, respectively. Having thus ascertained the expenses 
and taxes chargeable only to the passenger business, it then ascer- 
tained the number of car-foot miles made in that service. The car- 
foot mileage was then apportioned between passenger proper, mail, 
and express. Applying the car-foot mileage made in each service to 
the total passenger car-foot-mileage a percentage is obtained of what 
each service should contribute to cost of operation and taxes. The 
total passenger expenses multiplied by the percentage thus obtained 
gives the operating cost for each service. 

Having ascertained in the manner briefly outlined above the pro- 
portion of passenger operating expenses and taxes chargeable to the 
mail service, it then proposes, in addition to reimbursing them for 
the cost incurred and taxes paid on account of mail service, to pay 
them a 6 per cent return on such cost, including taxes, leaving out 
altogether any calculation of cost of road, terminals, and equipment. 

The conclusion reached by Ex-Postmaster General Hitchcock, as 
stated in his letter of August 12, 1912, transmitting the recommended 
plan to Congress, was : 

The railroads are receiving from the Government for transporting mails pay- 
ments considerably in excess of the cost of such service. The committee esti- 
mates that through a readjustment of railway-mail pay on the basis of cost with 
6 per cent profit, a saving to the Government could be made of $9,000,000. 

This statement, to say nothing of the inauguration of a new plan, 
naturally attracted the attention of the railroads and was the oc- 
casion of their making a united and strenuous protest to Congress 
in rebuttal of the Postmaster General's claim. 

The basic reasons prompting the department to recommend to 
Congress the substitution of the plan proposed for the present system 
have already been indicated on page 910 of this memorandum, and 
it is unnecessary here to again specifically mention them. 

That the Post Office Department, in its failure to make some allow- 
ance for capital cost, committed an egregious error, there can be 
no doubt, former Postmaster General Hitchcock himself inf erentially, 
if not clearly, recognizing the inequity and injustice of his first pro- 
posal by providing in his modified plan (preliminary report, pp. 109 
to 110, and hereafter more specifically referred to) for a fair allow- 
ance, to be determined by Congress, on the capital cost in addition 
to the 6 per cent return on the actual operating cost. 

The department, too, from an analysis of the compilations made 
in Document No. 105, taking a 60-foot car as the standard, announced 
to the country that the railroads were receiving from their mail serv- 
ice a revenue of 4.14 mills per car-foot-mile, and from other passen- 
ger service 4.16 mills per car-foot-mile. The railroads regarded this 
as an inaccurate and misleading statement, as, from their figures, the 
revenue from mail per car-foot mile was 3.23 mills, and from other 
service 4.35 mills. The contention of the railroads was that the Post- 
master General only provided for the minimum necessities of the 
postal service, refusing 

to credit the mail service with much of the space required by the department, 
although his figures for the other passenger-train service allowed fully for all 
such space actually required by them. In fact, in many cases such space actu- 



RAILWAY MAIL PAY. 921 

ally required by the mails, and so reported by the railways, was taken from 
the total mail space, and, without reason, assigned to the passenger service. 
(Preliminary report, p. 13.) 

The railroads reported that 9.32 per cent of all the car space was 
devoted to the United States mails as against the department's figure 
of 7.18 per cent. (Vol. 5, p. 73.) The amount of space rejected by 
the department, and which the railroads claim should be restored 
(vol. 5, p. 733), was 211,413,012.90 car-foot miles (Document 105, p. 
59), resulting in an estimated annual loss to the railroads of approxi- 
mately $10,000,000. (Vol. 5, pp. 734r-735.) Since the evidence dis- 
closes that the railroads are only receiving, on the basis of a 60-foot 
car, 19 to 20 cents per car mile from their mail service, the indication 
is that the department erred in its assignment of car space to the mail 
service. That it did so is practically admitted by the department, 
which admission will be more specifically referred to in the discus- 
sion following the next succeeding paragraph on the " Department's 
modified plan." 

The railroads further claim in effect that the department paid no 
proper regard to figures presented by the railroad companies with 
reference to amounts expended by them for station and terminal 
services required by the department and the amount of free trans- 
portation furnished on the Postmaster General's requisition for offi- 
cers and agents of the postal service when not in charge of the mail. 
(See General Stewart's statement, vol. 1, p. 27, for value of such 
transportation.) 

department's modified plan. 

The department, as already indicated on page 902 of this memo- 
randum, in response to various objections urged by the railroads, 
made certain modifications of its original proposal in that the plan 
should provide for a fair and reasonable allowance on capital neces- 
sarily employed in connection with the mail service; that it should 
empower the Interstate Commerce Commission rather than the 
Postmaster General to make the separation of operating expenses 
between passenger and freight service, and that "in computing the 
car- foot miles the mail service should be charged in both directions 
for a line of railway post-office cars with the maximum space author- 
ized in either direction." (Preliminary report, pp. 96, 108, and 111.) 

The department admits that the railroad companies should be fully 
compensated for the service they perform from year to year, as weil 
as the special services between stations and post offices and for the 
furnishing of apartment cars, but claims that compensation for these 
services are fully provided for in Document No. 105. (Preliminary 
report, p. 107.) 

It admits that data relative to personal transportation were not 
considered owing to the fact of its inability to satisfactorily verify 
the data reported by the railroad companies and the fact that similar 
data regarding the passenger service were lacking. (Preliminary 
report, p. 104.) 

With reference to the department's concession that a fair allowance 
should be made on the capital employed in connection with the mail 
service, the following is quoted from a memorandum prepared by 



922 RAILWAY MAIL PAY. 

Mr. V. J. Bradley and made a part of the final brief of the Com- 
mittee on Kailway Mail Pay, printed in volume 5, pages 720 to 
736, inclusive: 

The capital cost, if calculated on the Post Office Department's figures (Docu- 
ment No. 105, p. 280), would take note of the fact that railway expenses and 
taxes chargeable to the mail service were $2,682,797.92, in comparison with total 
operating expenses and taxes (both freight and passenger) of $137,355,150.79, 
or 1.95 per cent. Hence the mail service should be charged with the use of 
1.95 per cent of the total railway property having a net capitalization of 
$14,000,000,000, or a charge of $273,000,000. Interest at 6 per cent on this 
sum would require an annual payment by the Post Office Department of 
$16,380,000. Matching this against the finding of the Post Office Department 
of a saving to the Government of $9,000,000 per annum, it is evident that 
despite its rejection of essential car space and despite its special formula for 
dividing railway expenses, its own investigation shows an underpayment to 
railways of $7,000,000 a year. 1 (Vol. 5, p. 733.) 

While the department through its Second Assistant Postmaster 
General admits that — 

upon further and more careful consideration of the subject we were convinced 
that the railroads were entitled to consideration for this additional element 
(vol. 1, p. 9). 

he does not admit the premise of Mr. Bradley as to the capitaliza- 
tion given or the rate stated on the mail's proportion of such capitali- 
zation. (Vol. 1, pp. 9, 16, 18, 20.) He does admit, however, in re- 
sponse to a question of the chairman, without stating what percentage 
should be applied to the capital employed in the mail service, that 
a fair allowance contemplated in the modified plan would wipe out 
the estimated saving of $9,000,000. (Vol. 1, p. 8.) 

If a 6 per cent allowance were made on 1.78 per cent (percentage 
of mail revenue to total operating revenue for the year 1910) of an 
estimated railroad capitalization of $14,000,000,000, the railroads 
would receive $15,000,000 more annually than they now receive. If 
in the preparation of Document No. 105 the percentages and figures 
stated had been applied, the $9,000,000 saving to the Government 
would have been converted into an apparent underpayment to the 
railroads of at least $6,000,000. General Stewart admits this, grant- 
ing the premises stated. (Vol. 1, p. 20.) 

That the department did exclude from the mail service and throw 
into the passenger service car-foot miles which had no proper ap- 
plication to that service is practically admitted by it on the record 
made. By reference to volume 2, page 324 of the hearings, it will 
be noted from a joint letter signed by railroad and departmental rep- 
resentatives that an agreement was reached between them that the 
earnings derived per car-foot mile in mail service was 3.37 mills, 
and from other passenger service 4.34 mills, thus converting a 2-point 
excess of passenger revenue over that of mail (as originally an- 
nounced by the department) to a 97-point excess. The department's 
mistake was to have taken car-foot miles which could be used for no 
purpose other than mail and bodily transfer it to the passenger serv- 
ice, where it could have no possible application. What it should have 
done, if the car-foot miles were to be discarded at all, was to ex- 

1 The mail percentage of the total operating revenues of the railroads is stated to 
be, on page 57 of the " Text of the Twenty-fourth Annual Report of the Statistics of 
Railways in the United States for the year ended .Tune 30, 1911," 1.82 per cent. 

On page 33 of the same report the total railway capital, including stock and funded 
debt, is given as $19,208,935,081 ; net capitalization, $15,008,707,570. 



EAILWAY MAIL PAY. 923 

elude them from both services. Then the relative percentages of 
cost and revenue would not have been affected. The railroads would 
not then have been subjected to the erroneous impression that they 
were receiving approximately as much from their mail as their 
passenger business. (See pp. 961 and 962 of this memorandum for a 
further discussion in support of what is stated in the foregoing para- 
graph.) 

As to other admissions by departmental representatives with refer- 
ence to improper assignment of space as represented in car-foot miles, 
and referred to by others, see preliminary report, pages 96 and 111 : 
volume 1, page 303; volume 2, page 406; volume 3, pages 509, 510, 
511, 512, 513, and 514; volume 5, pages 647 and 648. 

The objections of the railroads to a space basis, briefly, as summar- 
ized by the chairman, volume 2, page 356, is : 

That it is undesirable from the governmental standpoint as being impracti- 
cable of administration, and from the transportation standpoint as being in- 
equitable to the transportation companies and necessitating a very expensive 
method of accounting in the transportation companies. 

The most elaborate objections to a space basis are stated by Mr. 
H. E. Mack, mail traffic manager, Missouri Pacific Eailway Co.. and 
Mr. Y. J. Bradley, general supervisor of mail traffic, Pennsylvania 
Eailroad system, as will appear by reference to their statements 
printed, respectively, in volume 1, pages 301 to 312; volume 4, pages 
624 to 625. In Mr. Mack's opinion the plan proposed by the depart- 
ment would result in space being determined upon judgment and 
opinion which " would provoke continuous and interminable dispute 
and dissatisfaction " ; would afford opportunity for favoritism, po- 
litical pull, with unavoidable resultant scandals. In addition to the 
alleged instability of the plan occasioned by determination of space 
used upon the judgment and opinion of an administrative officer, he 
regards the plan as unscientific, for the reason that "the mail pay 
would be fixed, not merely by the mail space used, but would be 
largely regulated and determined by the number and size of the 
passenger or baggage cars in the train." 

Neither Mr. Mack nor Mr. Bradley seems to subscribe to the view 
entertained by other railroad representatives, particularly Mr. 
Worthington and Mr. Peters, that the adoption of a space plan would 
mean concentration of load in railway post-office cars with resultant 
decrease in their revenue. This phase of the subject, together with 
the variety of rates that a space basis would occasion, and which is 
another objection stated by Mr. Mack to its adoption, will be more 
specifically referred to in the discussion of the " four-unit " or 
" Lloyd plan," on pages 930 to 935, inclusive, of this memorandum. 

The objections of Mr. Peters, chairman of the committee on rail- 
way mail pay, may be found stated in the hearings, volume 1, pages 
43, 45-46, 126-127; his views as summarized by Chairman Bourne, 
volume 1, pages 129-130, and volume 5, page 636 ; of Mr. Worthing- 
ton, of the Southern. Pacific Co., volume 2, pages 350 to 360, inclu- 
sive ; of Mr. Rowan, of the New York Central lines, volume 4, pages 
579-580, 595 to 600, inclusive; of others, volume 1, pages 233-249, 
254; volume 4, page 540; as stated in the " Brief of the committee on 
railway mail pay," volume 5, pages 728-729. 



924 KAILWAY MAIL PAY. 

COST. 

The principal element of the department's plan is " cost." It has 
attempted to demonstrate the reasonableness of the compensation 
proposed to be paid the railroads on that basis. Space is used as a 
means to an end. A car-foot mile of space is the unit adopted by 
which to measure the cost incurred by and the proportion of taxes 
chargeable to the railroads in their rendition of mail service. As 
has been already noted, the department has conceded that the rail- 
roads were, in addition to 6 per cent on operating cost and taxes, en- 
titled to receive a fair allowance on capital cost. 

The mere suggestion of cost as a basis upon which to determine the 
compensation that they shall receive accentuates the opposition of the 
railroads to a space basis, of which cost is made the chief component. 

The Second Assistant Postmaster General at the conclusion of a 
memorandum prepared by him (preliminary report, p. 108) and sub- 
mitted to the joint committee on behalf of the Post Office Department, 
in referring to fully compensating each railroad company for the 
service rendered, says : 

The present plan does not do this, whilst the plan proposed by the Postmaster 
General in Document No. 105 seeks to do it. 

The railroads do not at all admit such a premise. On the con- 
trary, they assert with almost unanimity that no transportation rate 
was ever based on cost. The department has attempted to fix a rea- 
sonable rate on such a basis. The railroads, on the other hand, have 
failed, as the testimony will disclose, even to make an effort to dem- 
onstrate the reasonableness or unreasonableness of a rate on such a 
basis. It is true, individual roads have figured out a cost basis not 
acceptable to or followed by other railroads, and only acceptable to 
them for their own purposes and not as a basis for railway mail pay. 
Practically half of the roads seem to have a basis of accounting by 
which they can determine whether they are over or under paid for 
carrying the mails. 

Mr. Peabody, statistician of the Atchison, Topeka & Santa Fe 
Railway system, from a reading of his testimony presented in vol- 
ume 3 of the Hearings, refers with apparent satisfaction to a system 
his company has evolved of definitely ascertaining the cost of and 
revenue from each transportation service. A statistical statement 
showing this can be found by reference to volume 3, page 526, to- 
gether with his explanation thereof on page 498 et seq. of the same 
volume. 

Mr. Baldwin, vice president of the Burlington Railroad, in a letter 
to the chairman, dated February 19, 1913 (vol. 5, p. 759), refers to 
a pamphlet entitled " The mail pay on the Burlington Railroad," 
and printed in volume 5, pages 760 to 777, inclusive, as illustrating 
that his company has formulated an accounting system which " cov- 
ers every question of cost and space and earnings." 

The New York, New Haven & Hartford, the New York Centra] 
Lines, the Pennsylvania Railroad system, and the Long Island Rail- 
road Co., of which latter Mr. Peters is president, all can say how 
much money they are gaining or losing in transporting the mails. 
How do they determine this except on cost? They do not answer, 
except to assert that the estimated cost of a specific service is not a 






KAIL WAY MAIL PAY. 925 

proper basis for fixing rates for the transportation of any com- 
modity (preliminary report, p. 8) ; that such an ascertainment is 
impracticable, a guess, and unattainable (vol. 2, p. 374) ; that the 
fixing of a rate on such a basis is an absurdity (vol. 3, p. 506) ; and 
finally, as stated by Mr. Peters, that cost should be used " merely for 
comparison to know that you are going too high or that your rate is 
more than compensatory or less than compensatory " ; that " cost is 
an element to consider in getting at what is a fair basis " (vol. 5, p. 
636). 

It would seem, therefore, that the railroads can so allocate their 
expenses between freight and passenger and then between the vari- 
ous passenger services as to satisfy themselves whether they are 
over or underpaid, necessarily implying the use of a cost determina- 
tion to reach such a conclusion. 

Mr. A. H. Plant, comptroller of the Southern Kailway, in a paper 
submitted to the joint committee and printed on pages 628 to 632, 
inclusive, of volume 3 of the hearings, calls attention in effect to the 
impossibility of assigning railway operating expenses to the vari- 
ous classes of service for which such expenses are incurred, closing 
his paper with a report of a subcommittee on statistics of the Asso- 
ciation of American Railway Accounting Officers, from which report 
the following quotation is made : 

Resolved, That this subcommittee concurs in the view expressed by the special 
committee on corporate, fiscal, and general accounts in the year 1906, and that 
this subcommittee, after due and deliberate consideration, reiterates that no 
fixed rule for the division of common expenses between freight and passenger 
can be devised which will be equitable to all carriers, to the same carrier under 
all conditions, or to all divisions of the same carrier. 

Reference to pages 632 and 633 of the same volume will disclose 
that Mr. M. O. Lorenz, associate statistician of the Interstate Com- 
merce Commission, who filed a memorandum in reply, does not agree 
with the conclusion reached by Mr. Plant, indicated by the following 
quotation : 

It should be stated that much of the opposition to cost estimates probably 
would disappear if it were thoroughly understood that the term " cost esti- 
mate " should be understood as meaning " cost and use " estimate. Common 
expenses can not be assigned in a convincing way to branches of traffic on the 
ground that each branch causes so much expense. What can be measured is the 
use which each branch of the traffic makes of the common facilities, and what- 
ever may be determined as a fair measure of the use will also be a fair measure 
for the distribution of the expense. 

Mr. Plant's paper is purely destructive. In place of the post-office method, 
which he attacks, he gives us absolutely nothing to put in place of it as a 
means of ascertaining what is a fair payment to the railroads for the service 
of carrying the mails. The statement may be ventured without fear of contra- 
diction that neither he nor any other railroad representative can suggest a 
method of telling whether the railroads are overpaid or underpaid for this 
service and demonstrate its correctness without directly or indirectly making 
a " cost and use " estimate. 

To the claim frequently suggested by railroad representatives that 
a cost basis such as recommended would be discriminatory and in- 
equitable to some roads (vol, 2, pp. 345 to 349), the suggestion might 
be made in response that the application of the present law has the 
same apparent result, as illustrated by the case of the New York, 
New Haven & Hartford Railroad Co. That company, as testified 
to by Mr. Buckland (vol. 1, p. 276), operates in round numbers 2,000 
49396—14 66 



926 RAILWAY MAIL PAY. 

trains every day, most of which carry mail. In Document No. 105, 
page 63, the car-foot mileage of that company made in the railway 
post-office car service is stated to be 8,848,255.10, and in the apart- 
ment-car service 3,994,316.11, making a total car-foot mileage of 
12,842,571.21 out of a total of 14,687,728.45 car- foot miles. Since the 
department under the law has the right to require of any railroad 
with which it has a mail contract to carry the mail " on any train 
which may run over its road, and without extra charge therefor," 
and since it appears from Mr. Buckland's testimony that the de- 
partment exercised its right in this respect, the figures above given 
are significant to indicate the increased cost incurred by this com- 
pany in having the car-foot mileage distributed among so many 
trains. The figures given indicate that a large proportion of the mail 
is carried in railway post-office cars, which under the most favorable 
conditions carry only on an average 2^ to 3 tons of mail. The dis- 
tribution of mail among so many trains must therefore necessarily 
reduce this average load materially with resultant loss to that com- 
pany. The loss to this company in carrying the mails, in document 
No. 105 is stated to be $16,201.15 for the month of November, 1909. 
The direct loss for this company in the carriage of the mails for the 
year ending June 30, 1911, is stated to be $297,371, eliminating any 
return on capital allowance (vol. 1, pp. 283 and 286). Mr. John 
Hall Bowman, a chartered accountant employed by the company, 
in his testimony (vol. 1, pp. 277 to 298) states the loss, making an 
allowance for capital charge, to be considerably more than this. To 
correct an impression gained from Mr. Bowman's testimony that 
the New York, New Haven & Hartford Eailroad would have been 
the gainer by $93,000 one year and $97,000 another (vol. 4, p. 589) 
if they had been relieved from the carriage of the United States 
mail, Mr. Lorenz (vol. 5, p. 789) says : 

We must recognize a distinction between what have been called " out-of- 
pocket " costs and total operating expenses, both of these being distinguished 
from " total operating expenses, taxes, and fair return on investment." The 
carrying of the mails occasions out-of-pocket costs for the maintenance of mail 
cars, certain extra wages, lubricants, fuel, etc. If the mail revenue did not 
cover such expenses this traffic would be a drain on surplus, but there are 
other operating expenses which are no more directly connected with the mail 
traffic than are interest charges. Thus, the rotting of the ties would go on 
whether there were mail cars in the train or not ; bridges would have to be 
painted, washouts repaired, etc., even if the mail traffic were discontinued. 
Concerning this the Interstate Commerce Commission has recently said: 

"Anything above the out-of-pocket cost of handling is a contribution to general 
expenses, and to that extent tends to relieve rather than burden other traffic." 
(Opinion No. 2141, Louisville & Nashville Railroad coal and coke rates, decided 
Jan. 7, 1913.) 

He is satisfied, however, that the present law works out unjustly 
in the case of the New Haven. 

steel cars; effect on speed and hauling resistance. 

The New York, New Haven & Hartford Eailroad being peculiarly 
a passenger road (operating many mail trains a day, the law re- 
quiring that all railroad post-office cars, except those which are now 
of steel or steel underframe, must be replaced by steel cars before the 
SOth of June, 1917, wooden cars to be retired at the rate of 25 per 






RAILWAY MAIL PAY. 927 

cent per year) , the loss to this company under the operation of the 
present law will be the more pronounced. 

The replacement of wooden with steel cars suggested to Senator 
Weeks the desirability of having figures presented to show what 
increased cost there was incident to this substitution. In volume 5, 
page 641, he says: 

Here is a service which we admit is safer and better than the service which 
was rendered 5 or 10 years ago, necessarily the cars cost more, necessarily it 
costs more to haul the cars, and we would like to have those figures in the 
record. 

To this suggestion a " Comparative statement of cost of handling 
steel and wooden postal cars " prepared by A. W. Gibbs, chief 
mechanical engineer of the Pennsylvania Eailroad Co., was sub- 
mitted for the record. (Vol. 5, pp. 642-643.) 

Mr. Gibbs reaches the conclusion that the increased hauling re- 
sistance of the 62-ton steel postal car, as compared with the previous 
40-ton wooden car, " is about 20 per cent at speeds of 30 to 60 miles 
an hour, reaching 22 per cent at 70 miles * * *. This per cent 
increase in resistance will result in an equal per cent decrease in the 
number of cars which can be hauled by a locomotive at the various 
speeds." 

He further states that — 

As an incident of the introduction of the steel car we have been obliged to 
discard from the service in which these cars have replaced wooden cars prac- 
tically an entire set of engines and substitute larger ones, and our annual state- 
ment of the coal consumed per car-mile seems to indicate an increase varying 
on different divisions from 9 per cent to as much as 19 per cent, and what is 
rather striking is an apparent diminution in the number of cars per train. 

After mentioning the cost of construction of steel postal cars, 
their weight, their maintenance cost, and the 20 per cent increased 
tractive effort to haul the present steel equipment as the factors to 
be taken into consideration in attempting to measure the increased 
cost in the operation of steel cars, he concludes : 

Thus, not taking into account the question of wages, the increase of 105.1 
per cent in the cost of construction, the increase of 41.2 per cent in the weight, 
the increase of 20 per cent in the resistance, with the large increase in the cost 
of maintenance, would, I think, justify the increase of from 5 to 10 per cent 
in compensation, notwithstanding the fact that it is impossible to attribute to 
each of these factors an exact money value. 

To pursue the inquiry further, the chairman, under date of July 
31, 1913, addressed a letter to Prof. E. C. Schmidt, University of 
Illinois, Urbana, 111., having been advised that he had made a study 
of train resistance in relation to speed, asking whether he thought 
any formula could be worked out showing the increased cost of the 
faster over the slow passenger trains. Prof. Schmidt being absent on 
an extended vacation, Mr. A. M. Buck, assistant professor of rail- 
way engineering, replied for him. After stating that train resist- 
ance increases faster than in direct proportion to speed, and giving 
cost of fuel, supplies, labor, etc., maintenance of equipment ; mainte- 
nance of way and structures ; interest and depreciation ; and general 
expense among the variables entering into the cost of passenger- 
train operation as a function of speed, concludes as follows: 

All things considered, high-speed trains cost more to operate in most respects 
save that of labor. The expense can not be stated as an exact function of the 
speed. The variables entering the problem are of so diverse a character and 



928 RAILWAY MAIL PAY. 

are so little understood that no logical separation has as yet been made. While 
a solution of the problem in exact terms is probably desired by all the railroads, 
the cost of making the necessary cost analyses is so great that it is not likely 
it will be attempted on any comprehensive scale in the near future. 

While no definite ascertainment can be had of the cost incident 
to increased train resistance by reason of the increased weight of 
the modern postal car, sufficient has been said to indicate that some 
provision should be made, under any basis of railway-mail pay, of 
remunerating the railways for an expense incurred, which appears 
to be a real although not a definitely ascertainable expense item. 
It is true that in the construction of the law of 1873 consideration 
was given to speed of trains and frequency of service, and the rates 
.fixed were thought sufficiently high to recompense the railroads for 
the service rendered in those respects. However, the case of the 
New York, New Haven & Hartford Eailroad Co. affords an illus- 
tration that no sufficient regard in the rates fixed by the present law 
is given to those cost factors. 

The railroads do not agree with the department that the plan 
proposed by it will fully compensate each railroad company for the 
service rendered. They assert that it is seriously wrong in principle 
and would encourage and perpetuate injustice; that " it involves pay- 
ing the highest rates to the railroad that by reason of physical disa- 
bilities or inefficient methods is most expensively operated and the 
lowest rates to the railroad which, by reason of the highest efficiency, 
operates at the lowest cost" (preliminary report, p. 19) ; that a rate 
based on cost would result in inequality of payment to railroads 
because of the varying operating conditions obtaining in different 
sections of the country and lead to a multiplicity of rates. To meet 
the objection just indicated a group basis was suggested, arranged 
either with reference to the geography of the country or density of 
traffic. It was argued, however, that the objections applicable to a 
cost basis applied to the railroads as a whole would be equally appli- 
cable if applied to railroads geographically arranged. The variation 
in operating conditions on and consequent variation in rates paid to 
the railroads generally would apply equally to the railroads within the 
group. The testimony on the whole indicates that a group basis 
would not aid in a solution of the problem. (Vol. 2, pp. 366-367, 
370-371, and 390 ; vol. 4, pp. 619-620.) 

It would appear that the argument the railroads make that trans- 
portation rates can not properly be based on cost is not tenable when 
applied to mail. Mail can be differentiated and disassociated from 
all commodities transported. It can not properly be regarded as an 
article of commerce. It it not a subject of barter and sale. The 
carriage of the mails is a Government function, to be wholly per- 
formed under its direction and supervision, the railroads simply 
being made the agent or instrumentality of the Government in such 
carriage. The railroads in constructing their commercial rates give 
due consideration to high and low grade traffic. Value is a material 
element ; cost frequently an incidental one. In order that a low-grade 
article may get into the channels of commerce the railroads have to 
make a rate sufficiently low in order to enable the producer thereof 
to make his profit ; otherwise the article would not move and same be 
lost to commerce. The rate fixed in many such cases does not cover 



BAIL WAY MAIL PAY. 929 

the actual cost of handling and hauling, yet it contributes something 
to overhead charges. The railroads are glad to get such traffic to 
fill up the space of their empty freight-car return movement. As 
already suggested it contributes something to overhead charges, pro- 
ducing some revenue which would not accrue if the car were per- 
mitted to return empty. If such a principle were applied to all 
traffic the railroads would soon be unable to meet their obligation 
and bankruptcy would be the inevitable result. A high-grade article 
will move because of its market value. The railroads not only 
endeavor here to fix a rate that will move the traffic but also to make 
it sufficiently high to cover the cost of operation and a return on 
investment. 

The foregoing is sufficient to illustrate the railroads' contention 
that transportation rates are not and can not properly be based 
solely on cost. It sustains their implied argument that there are too 
man}^ other additional factors to consider to warrant the utilization 
of cost as the sole test or gauge of the service rendered. 

Mail is sui generis — it is a matter of governmental concern. It is 
an article not comparable with anything transported. The services 
required by the Government to be performed and expected by it to 
be performed by the railroads in connection with its transportation 
are stated with particularity. Why is it so difficult to ascertain the 
cost of performing these services? If the railroads had made the 
same effort to ascertain the cost of such services as they have to 
show underpayment, it would not be missing much the mark to state 
that the ascertainment would now be available. 

The courts have held that the railroads, in the transportation of 
mail, are agents of the Government. As agents of the Government, 
and consequently performing a Government service, what more 
should they expect than a reasonable rate? If they are reimbursed 
for the cost incurred and taxes paid, and receive a reasonable return 
on such costs and the proportion of capital employed in the mail 
service, it would seem that a plan so providing should meet with 
their approbation. 

If the department has evolved such a plan it would appear to be 
the ideal one of measuring the service rendered by the railroads and 
the compensation to be paid therefor. 

The department, in Document No. 105, in effect frankly admits 
that the last word has not been said. On page 15, in referring to the 
necessity for a new ascertainment, it says : 

It is believed * * * that with the experience gained by this inquiry the 
next inquiry, if authorized for the basis of a readjustment as recommended 
herein, could be conducted by the department and responded to by the com- 
panies with better results than the last one. 

The above quotation applies with equal force to the department's 
modified plan. 



Having now discussed — 

(1) The present law, the basic principle of which is weight, 
and which, with the modifications noted, has received the indorse- 
ment of the railroad companies. 



930 KAILWAY MAIL PAY. 

(2) The space plan originally recommended by the Post Office 
Department and as subsequently modified by the granting of 
certain concessions to meet railroad opposition — 
consideration of other plans suggested during the course of the hear- 
ings will be taken up in the order below stated : 

(1) The four-unit, or Lloyd, plan. 

(2) The percentage basis.* 

(3) The Buckland plan. 

(4) The Weeks plan. 

(5) The Peabody plan. 

(6) The Lewis plan. 

FOUR-UNIT BASIS ( LLOYD PLAN). 

The plan here proposed, which is a space plan, seems apparently 
to have been suggested by the following considerations : 

(1) The alleged complexities of the present system. (Vol. 4, 
p. 616; vol. 5, pp. 650-651.) 

(2) Continued protests by railroad companies against any pro- 
posed space basis particularly because of the friction and irrita- 
tion that would ensue between the Post Office Department and 
the railroads as to the amount of space used. (Vol. 1, pp. 301- 
304; vol. 2, pp. 351-353, 355, 357, 363 ; vol. 4, pp. 540, 579, 580, 581, 
596, 597.) 

(3) Railroads continued adherence to weight as the main and 
determining factor rather than the space plan recommended by 
the department in Document No. 105 and insisted upon by de- 
partmental representatives at the hearings. (Vol. 1, pp. 4, 10, 11, 
43-45, 129, 130, 235, 249, 255, 301-313 ; vol. 2, pp. 355-435 ; vol. 4, 
pp. 531-579; vol. 5, pp. 636 and 705.) _ 

(4) Desire of the members of the joint committee themselves 
(recognizing the apparently irreconcilable differences between 
representatives of the railroads and of the department) to evolve 
a plan, demonstrable and easy of explanation, that would be fair 
and equitable to both interests. (Vol. 4, p. 549.) 

The railroads allege that under the present law the department 
in making its authorizations for space in railway post office cars 
ignores entirely space necessarily required for operation, or, as Mr. 
Bradley expresses it (vol. 4, p. 600), "The railroads are obliged to 
operate a certain amount of space beyond what the department calls 
for." 

The railroads further refer and object to the department, in its 
administration of the law, being permitted, after an allowance for 
car space has once been made, to reduce such allowance or authoriza- 
tion, as is now frequently being done, on 30 days' notice, or even less. 
(Vol. 4, p. 626.) Reference to correspondence relative to railway 
mail service on Atlantic Coast Line Railroad (Addenda, vol. 5, pp. 
823-825) will afford an illustration of this objection. 

The railroads admit (vol. 4, p. 597), as they must, because the 
Supreme Court of the United States has so decided, that under the 
present law when the department calls for a car of a certain length 
that the railroads " can not by using a larger railway postal car than 






RAILWAY MAIL PAY. 931. 

that authorized by the department recover the greater value of the 
car." (A., T. & S. F. Ky. Co. v. U. S., 225 U. S. R., p. 640.) 

Reverting to the fact that 10 per cent of the compensation received 
by the railroads for carrying the mails as represented in the railway 
post office cars is based on space, the testimony discloses that the 
railroad representatives, while fully recognizing the alleged irritating 
administrative features referred to in the three paragraphs next pre- 
ceding (vol. 2, p. 355), are in accord in having the special rate of 
pay applicable to railway post office cars continued and extended to 
apartment cars (vol. 4, p. 665). Further than this, they desire 
weight to remain as the determining factor for reasons already 
stated on pages 910, 911-912 of this memorandum. 

The situation as outlined in the preceding paragraph prompted a 
suggestion by Mr. Lloyd (vol. 4, p. 597), namely, to have a standard 
car of 60 feet in length, which, when authorized by the department 
and furnished by the railroad, to be paid for whether the entire 
space was used or not. Then a suggestion by the chairman (p. 598) 
to have two standards, a 30-foot car and a 60-foot car, followed by a 
further suggestion to make a special rate for closed-pouch service. 
These and other suggestions finally developed into a proposal to 
establish four units, first a 60-foot car, a 30-foot car, a 15-foot car, 
and a closed-pouch service, the space occupied by the latter to be de- 
termined by a weight ascertainment. (Vol. 4, pp. 595, 597-599, and 
600; vol. 5, pp. 636-637, 667, 673, 675, 676, 677, 679, 680-682.) 

The four-unit basis having been tentatively evolved, the next in- 
quiry was to fix upon and apply a proper rate to the respective units. 
The claim having frequently been made in the course of the hearings 
that the mail revenue per unit should more nearly approach, equal, 
or even exceed (vol. 4, pp. 609-616) that derived from the passenger 
business, which, according to the Interstate Commerce Commission 
(vol. 2, p. 363), was for the fiscal year ending June 30, 1911, 25.43 
cents per car-mile for the whole country, the Second Assistant Post- 
master General was asked to make an ascertainment on a 25-cent 
basis of the estimated cost to the Government if the plan proposed 
were adopted. 

. The result of his computation is given in a letter to the chairman, 
dated May 23, 1913 (vol. 5, pp. 679 and 680), which reads as follows: 

Post Office Department, 
Second Assistant Postmaster General, 

Washington, May 23, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Claw 

Mail Matter and Compensation for the Transportation of Mail, 

Congress of the United States. 
My Dear Me. Chairman : Referring to the proposed plan suggested to the 
committee by Representative Lloyd for payment of transportation of the mails 
on railroads, whereby compensation in the railway post-office and storage-car 
service would be based upon car-mile units for cars of 15 feet, 30 feet, and 60 
feet in length, respectively, and in the closed-pouch service upon a unit of 
miles traveled, and to the informal discussion at the hearings of May 14 of the 
estimate of the cost of service under such' plan, prepared by the Superintendent 
of the Division of Railway Adjustments, I have the honor to transmit herewith 
the estimate referred to, with an explanation of the manner of its preparation. 
The estimate has necessarily been based upon such data as were found avail- 
able, and while it is believed to be sufficiently accurate to enable an idea to be 
gained of the probable expenditure under the suggested plan, it should not be 
accepted as a conclusive calculation. 



932 



RAILWAY MAIL PAY. 



The following table recapitulates the calculations made: 

Estimate of cost for railroad transportation under plan proposed by Hon. 

James T. Lloyd. 



Character of service. 



Rate per 
car-mile. 



Rate per 
car-mile. 



Amount. 



R. P. O.i 

Storage 2 

30-foot apartment. 
15-foot apartment. 
Closed pouch 



$0.25 
.25 
.121 

.06| 



$31,699,601 

5,524,554 

3 20, 882, 468 

3 4, 748, 399 

4 1,372,821 



$0. 22J 
.221 



$28,529,641 

4,972,099 

i 20, 882, 468 

i 4, 748, 399 

1,372,821 



Total. 



64, 227, 843 



60,505,428 



SECOND ESTIMATED 



R. P. O. 



Storage 

30-foot apartment. 
15-foot apartment. 
Closed pouch 



.25 
.25 
12J 

,061 



31,699,601 

5,524,554 

6 19,394,949 

6 4, 410, 039 

n, 372, 821 



,22i 
■ 22J 



28,529,641 
4,972,099 

19,394,949 
4,410,039 
1,372,821 



Total. 



62, 401, 964 



58,679,549 



1 On basis of car-miles of service for 1912 reported by Railway Mail Service. 

2 On basis of car-foot miles of service reported in H. Doc. 105, storage and deadhead. 

3 On basis of seven times a week mail service. 

4 On basis of car-foot miles reported in H. Doc. 105 at $0.00435 per car-foot mile, average passenger service 
revenue per car-foot mile reported by railroads. 

5 Same as above, except that apartment car service based on 50 per cent being performed six times a week 
service, and 50 per cent seven times a week. 

6 Based on estimate that 50 per cent of apartment car service performed on Sundays. 

7 On basis of car-foot miles reported in II. Doc. 105 at $0.00435 per car-foot mile, average passenger service 
evenue per car-foot mile reported by railroads. 

The method of ascertainment of the different items contained in the foregoing 
table was as follows: 

RAILWAY POST OFFICE CAR SERVICE. 

The car mileage of full railway post-office cars for the fiscal year 1912 was 
reported to have been 126,798,405 car-miles. Multiplying this car mileage by 
25 cents and 22£ cents a car-mile, the former rate being the average car-mile 
revenue for passenger service of the country and the latter rate being that rate 
less 10 per cent, the result is $31,699,601 and $28,529,641, respectively, as the 
probable cost of full railway post-office car service. 

APARTMENT RAILWAY POST OFFICE CAR SERVICE. 



The suggested plan provides for two standard sizes of apartment postal cars, 
15-foot and 30-foot. In the actual operation of the service there are apart- 
ments in use ranging in length from 7 feet to 30 feet. Statistics as to the daily 
route mileage of apartment cars of the various lengths were compiled in the 
department about a year ago, upon which the estimate of the probable cost 
for this kind of service was based. The process was to first ascertain from 
the data the daily route-foot miles of all lines of apartment cars. Inasmuch 
as but two sizes of cars are proposed to be furnished under the plan, namely, 
15-foot and 30-foot, cars of the minimum length and up to 17 feet in length 
were considered as 15-foot cars, and those 18 feet or more in length were 
considered as 30-foot cars, and the route-foot miles increased or decreased 
accordingly. From the daily route-foot miles the annual car mileage was then 
ascertained by the following formula : The daily route-foot miles multiplied by 
2 equals the daily car-foot miles. This product divided by the length of car 
(15 or 30 feet, as the case may be) and multiplied by 365 (for seven times a 
week service) or 313 (for six times a week service) equals the annual car- 
miles. Multiplying the car-miles thus obtained by 12* cents (for 30-foot cars) 
and Qi cents (for 15-foot cars) produced the estimated cost of apartment postal 
car service. 



BAIL WAY MAIL PAY. 933 

STOBAGE-CAB SEBVICE. 

Estimated cost based on the car-foot miles for this class of service ( includ- 
ing deadhead cars) reported in House Document 105 as having been operated 
during the month of November, 1909 (110,491,094 car-foot miles), extended to 
embrace a year's operation (1,325,893,128 car-foot miles) reduced to car miles 
on a 60-foot basis (22,098,218 car-miles) at same rates as full railway postal 
car service,- viz, 25 cents and 22^ cents per car-mile, producing $5,524,554 and 
$4,972,099, respectively. 

CLOSED-POUCH SEEVICE. 

The estimated cost of the closed-pouch service was based upon the car-foot 
mile statistics for this class of service reported in House Document 105 for the 
month of November, 1909 (26,299,260 car-foot miles), extended to cover the 
operation for a year (315,591,120 car-foot miles). The cost was figured at the 
rate of 4.35 mills per car-foot mile, the rate of revenue per car-foot mile re- 
ported by the railway mail pay committee as being received from all passenger 
service. This produced $1,372,821 as the estimated cost of closed-pouch service. 
Yours, very truly, 

Joseph Stewaet, 
Second Assistant Postmaster General. 

It is to be noted that the pay for 30 and 15 foot apartment cars is 
to be prorated on the 25-cent rate fixed for the larger 60-foot car 
unit, namely, 12^ cents for 30-foot cars and 6£ cents for 15-foot cars. 
Mr. Peters, chairman of the committee on railway mail pay, in the 
event of the adoption of such a plan urges the application of the 
wholesale and retail principle ; that is, the 30 and 15 foot cars should 
take a higher proportionate rate than the 60-foot car, as the smaller 
units can not be handled as economically as the larger. He was 
therefore of the opinion that the two smaller units should be paid for 
at the rate of 18 and 10 cents, or 15 and 8 cents, respectively. (Vol. 
5, pp. 692 and 693.) - 

The plan seems to contemplate making authorizations yearly in 
advance and adherence by the department to such authorizations 
until the expiration of the statistical period; also to compensating 
the railroads for additional space furnished during the statistical 
period. (Vol. 5, p. 673.) After the Government has once ascer- 
tained the space necessary and issued its authorizations therefor it 
will be required to pay for the space so authorized whether it uses 
same or not. (Vol. 2, p. 352; vol. 5, p. 675.) 

The railroads object to the departmental space plan because of the 
difficulty in arriving at any definite or accurate basis on which to 
compute costs. (Vol. 4, p. 579.) Since the plan here proposed is 
based on a revenue rather than a cost basis, that objection, as sug- 
gested by Mr. Lorenz (vol. 4, p. 595), does not apply. 

The railroads also object to the department's space plan because of 
the varying rates of pay that would ensue on different railroads. 
(Vol. 4, p. 579.) It is difficult to understand how there would be any 
more variety of rates under that, or the proposed plan, than under 
the present system. There are now (Second Assistant Postmaster 
General's report for 1912) 3,409 railroad routes, the compensation for 
carrying the mails varying with the weight carried over each route. 
The route is the unit in the determination of what the total compen- 
sation is to be for an entire system. There are 795 railroads with 
which the Government has contracts for carrying the mails. (Pre- 
liminary report, p. 6.) Under the proposed plan the number of 



934 KAILWAY MAIL PAY. 

linear feet of space would determine the compensation to be paid. 
The compensation paid to the railroads would, therefore, only vary- 
as the space furnished by each varied. 

The claim is made by the railroads that this or any other space 
plan places in the hands of the Postmaster General the power of 
adjusting pay for the railroads. (Vol. 4, p. 579.) In the matter of 
mail transportation the Government may properly be regarded as an 
employer. The employer must necessarily have the right to de- 
termine how many units of service he will require in his business and 
to control the process by which such determination is reached. It 
is therefore but proper that the Postmaster General, head of that 
department of the Government which has been intrusted with the 
supervision of mail transportation, should determine and authorize 
the service needed and pay for it at a rate fixed by law. As suggested 
by the chairman (vol. 5, p. 675), the initiation must necessarily take 
place with the departmental representative, and again, on page 674, 
61 The department must determine what the ordinary business shall 
be, and the transportation companies comply — so far as their ability 
will permit them — with the requirements made by the postal authori- 
ties, and the Government pays for the service rendered according to 
a plan fixed in the law itself." 

The claim is made, as already indicated, that if a space plan were 
adopted there would be constant friction between the Post Office 
Department and the railroads as to the amount of space used. It 
would appear that this plan disposes of that objection in that it con- 
templates three standard units fixed by law. It contemplates yearly 
authorizations in advance and departmental adherence to them until 
the expiration of the statistical period. The units are fixed by law. 
The department has no discretion in the matter. Cars of a length 
up to 17 feet are to be considered as 15-foot cars, and cars of 18 
feet and more in length as 30-foot cars, the department to pay for 
15 and 30 feet of space, as the case may be, whether it uses all of it 
or not. 

Mr. Peters, chairman of the committee on railway mail pay (vol. 
5, p. 636), in stating his objections to the plan here proposed, refers 
to the possibility of the department exercising " all the economy it 
can to concentrate its load and keep down space." (Contra — Mr. 
Bradley, vol. 5, p. 626.) This presents rather an anomalous argu- 
ment. As already indicated (pp. 906, 907, 911, 915, and 916 of this 
memorandum), the railroads justify a special rate of pay for railway 
post office cars because of their limited loading capacity. When a space 
basis is suggested they strenuously argue in protest of its adoption that 
it would mean concentration of load and resultant decrease in their 
revenue. If the space plan here proposed were adopted, storage cars 
as at present would be utilized, but not to an extent to interfere with 
and delay distribution. The railway post-office cars must continue 
to be so loaded as not to interfere with mail distribution en route. 
Storage cars would be no more heavily loaded than at present, as 
maximum loading would in many instances mean failure to work the 
mail that should properly have been so handled en route and delay its 
distribution at destination. Such a practice would simply mean a 
return to distributing post offices a method early condemned and 
abandoned because of its costliness and impracticability. (S. Ex. 
Doc. 40, 48th Cong., 2d session, pp. 76 to 80.) From the very begin- 



RAILWAY MAIL PAY. 935 

ning there has been a continued and insistent demand on the part of 
the public for rapid dispatch and delivery of mail, and that demand 
is no less insistent at the present time. It is therefore highly im- 
probable that the department would attempt economies in a direction 
which could have no other effect than arousing public indignation to 
such an extent as to compel the department in its administration of 
the law to regard efficient and expeditious service rather than economy 
of first consideration. 

The railroads in objecting to this and other space plans refer to 
the opportunities afforded the Postmaster General for favoritism. 
Such opportunities could be no more frequent under the proposed 
plan than under the present system. Under the present system there 
are competition of routes and the department has exercised the right 
where there are two competing railroads operating between the same 
points, in making its contract with the route having the larger mile- 
age, to make it dependent upon that railroad accepting the same 
compensation as the railroad having the shorter mileage. The longer 
mileage railroad has the right to decline to enter into such a contract 
if the department's terms are not satisfactory to it. If it accepts 
the terms, it is difficult to perceive how the department can properly 
be criticized for entering into such an arrangement which can only 
be regarded as one of business acumen. It affords the Government 
two agencies of transportation for its mail. It is efficient as well as 
economical administration. Under the proposed j)lan why should 
the department be criticized if it diverts surplus mail to a competing 
route which has not reached its maximum authorization? Certainly 
the department could not be criticized for declining to authorize 
additional service at increased cost when it has available another 
agency which has been specifically contracted for and which can be 
utilized without additional expense. 

It has been suggested informally that if such a plan were adopted 
it would subject some railroads to the criticism of bringing improper 
influence to bear upon the Postmaster General to unduly increase 
space in some instances and to reduce it in others, and the Post- 
master General to the charge of succumbing to such influence, re- 
sulting in the condemnation of both by the public generally as well 
as by the railroads discriminated against. 

In answer to this objection, the following quotation is made from 
Mr. Loud's report : 

It may be urged, and it is the testimony of some, that under the space basis 
the tendency would be to unduly increase the space, hence increase the rate of 
pay beyond what would be fair and just. To admit this would, to my mind, be 
a conclusion that our executive officials are incompetent or corrupt, and almost a 
conclusion that our form of Government is a failure. Experience has taught 
me that our officials are honest, careful, and painstaking and competent. I be- 
lieve that a larger degree of personal responsibility placed upon the officials 
would result in a more efficient and economical administration, especially of 
this branch of our governmental affairs, which is a business branch wholly. And, 
if this basis be adopted, Congress then, as now, would hold the purse strings 
and could appropriate for only so much space as it saw fit, after a careful in- 
vestigation of the recommendations of the department and in their opinion the 
demands of the service required. (S. Doc. 89, 56th Cong., 2d sess., pt. 1, p. 23.) 

The plan on the whole, in so far as it provides a rate of compensa- 
tion equal to that earned from the passenger business, would prob- 
ably be acceptable to the railroads as more nearly compensating them 
for the services rendered. 



936 RAILWAY MAIL PAY. 

PEECENTAGE BASIS. 

The statement having been made by Mr. V. J. Bradley that the 
amount paid by the Government of Great Britain to the railroads for 
transporting the mails, including parcel-post payments, equaled 21J 
per cent of the total postal expenditures (vol. 2, p. 440) ; the chair- 
man, in order to bring out the relativeness of that percentage, if 
applied to conditions in this country, made a calculation of his own, 
based on the expenditures of the Post Office Department for the fiscal 
year ending June 30, 1912. From one computation the chairman se- 
cured a percentage of 19.47 and from another (taking into considera- 
tion expenditures made in 1912 and including those coming over 
from a previous year) of 20.7. (Vol. 4, p. 550; vol. 5, p. 655.) 

The matter was presented by the chairman in order to determine 
whether the figures indicated could be used for comparative purposes 
to the advantage of the joint committee. On page 551, he says: 

Why is it not safe to take 21^ per cent as the revenue to the railroads in 
England, to the total expenses to the postal service and take 21^ per cent as a 
figure, for instance, as to what the railroads should receive in this country of 
the total expense of operation of the postal service? 

Mr. Bradley, on the same page, stated : 

I think it would be a very good comparison if we could get the English data 
as to average haul and the progress that is being made in replacing the railroad 
mail service by motor van service. I do not know of any source from which 
that information could be obtained, but I think the general statement could be 
made and accepted that in the United States the haul is several times as great 
as in Great Britain, the tonnage is greater, and the necessity of the railway 
service is greater to the Post Office Department. (Vol. 4, p. 551.) 

Mr. Lorenz expressed the opinion that the difference in the length 
of the haul was a vital factor to be considered (vol. 4, p. 551), and to 
a question of the chairman " that the mere statement of percentages 
of receipts and cost of operation can not be used without further in- 
formation," replied " not conclusively." 

The question finally developed into using the postal receipts rather 
than expenditures on which to base the percentages. 

In this connection the following is quoted from Mr. Bradley's 
testimony : 

Congress in appropriating money for railway mail pay is perhaps not appro- 
priating public funds for public services in the usual sense, but is rather dis- 
tributing the revenues derived from the postal service to those who perform 
that service in proportion to the value of such service. If we follow the line 
of thought to estimate the proportion of the postal revenues or of the postal 
expenditures (which are about even) that should be devoted to railway mail 
pay, and if we glance back a few years to the time when the last investigation 
was made by the Wolcott-Loud Commission, we find that the item of railway 
mail pay at that time was about 35 per cent of the total expenditures. At the 
present time it is, roughly speaking, about 20 per cent of the postal expenditures. 
(Vol. 5, p. 652.) 

Hon. Joseph Stewart, Second Assistant Postmaster General, takes 
exception to Mr. Bradley's statement, as follows : 

There is one element which has produced this difference in ratio which Mr. 
Bradley has not mentioned, and that is the large increase in revenue from 
postal rates, and it has not been mentioned yet that the increase in revenue 
may be greatly disproportionate to the service performed in carrying the mails ; 
so that when Mr. Bradley says that at a certain period the railroads were re- 
ceiving such a per cent of the revenue and that now they are receiving a much 
lower per cent of the revenue, and he names two causes which have contributed 



RAILWAY MAIL PAY. 937 

to that (and I named the other cause — the great increase in the revenues 
themselves), you see it does not follow from the premises that the railroads 
should have an increase in the percentage of the revenue; that does not neces- 
sarily follow. (Vol. 5, p. 655.) 

As an indication that the adoption of the percentage basis would 
be impracticable of application to conditions in this country, the fol- 
lowing is quoted from Gen. Stewart's testimony : 

In the first place, it seems to me that any theory which predicates a payment 
upon revenue derived from the business must necessarily be fallacious. The 
revenue we derive is based entirely on the rate of postage on the several classes 
of mail matter and upon the amount of business done. The amount of business 
done will have somewhat of a relationship to the service performed and rendered 
by the railroad companies or the department, but the rates of revenue on the 
matter carried have no necessary relation at all to the service performed. The 
rates on second-class matter have been shown to be very low. While we are 
making, according to the statement of 1911, say, $42,000,000 a year over ex- 
penses for carrying first-class mail, that is no argument that we should hand 
over 25 per cent of that to the railroad companies if they are getting fair com- 
pensation for the service they render. I should say, too, that if we are getting 
only one-sixth or one-seventh of the amount in revenue of the expenses in car- 
rying and handling the second-class mail matter, that it would not be fair to the 
railroad companies to cut their pay down on carrying second-class matter six- 
sevenths. (Vol. 5, p. 656.) 

The view expressed by Gen. Stewart that the revenues received 
by the Post Office Department have no necessary relationship to the 
compensation that the railroads should receive for their services inci- 
dent to mail transportation appears to be concurred in by Mr. 
Lorenz when he says (vol. 5, p. 829) : 

The variation in postal receipts does not necessarily reflect the variation in 
the amount of service rendered by the roads. 

In the application of a percentage basis there are several difficulties 
to overcome. In the first place, a determination would have to be 
made as to the method of arriving at a general percentage for the 
railroads of the country. The next difficulty to overcome 'would be 
to determine upon the percentage of the general percentage that 
individual railroads should receive. The difficulties suggested are 
emphasized in the following quotation from a statement made by 
Mr. Lorenz: 

The suggestion has been made that a very simple solution of the problem 
would be to turn over to the railways as a body a fixed percentage of the 
postal receipts, or some portion of them. Can this be justified from the cost 
standpoint? Obviously cost would have to be drawn into consideration in 
arriving at a judgment as to what is a fair percentage. 

The railways would have to organize a corporation to receive the money 
and to collect statistics on the basis of which the payments would be made 
to each company. From the broad social standpoint there would perhaps be 
as much expenditure of effort in getting the payments in proper amount to 
each company as if the Post Office Department made the payments directly. 

From the foregoing it would appear that the percentage basis 
would not be a proper one for the Government to adopt on which to 
compensate the railroads for their mail-transportation service. 

BUCKLAND PLAN. 

The plan here proposed is a modification of the recommendations 
made by the Post Office Department in Document No. 105. 

Mr. E. G. Buckland, vice president of the New York, New Haven 
& Hartford Railroad Co., author of the plan, in response to a request 
of the chairman as to whether there was " merit in the suggested 



938 KAIL WAY MAIL PAY. 

plan submitted by the department of compensation being based upon 
the cost of the operation, with a reasonable profit," replied in the 
affirmative. (Vol 1, p. 275.) In this connection he stated: "The 
ascertainment of railway-mail operating costs would reduce itself 
to such routine (referring to a submission of the matter to the Inter- 
state Commerce Commission) as to be easily ascertainable," and that 
" the principle of additions to profits beyond operating cost and fair 
charges against the capital expenditures could be easily developed." 
(Vol 1, p. 275.) 

He objects to the phraseology of paragraphs 1 and 3, of the modi- 
fied tentative drafts of the Post Office Department's proposed bill 
(preliminary rept., p. 109), reading, respectively, as follows: 

The Postmaster General is authorized and directed to require companies 
operating railroads by steam, etc., carrying the mails to furnish, under oath 
and seal, not less frequently than once in each fiscal year, such information 
relating to the service, operation, receipts, and expenditures, and such other 
information of such roads for a period of not less than 30 days, to be desig- 
nated by him as may in his judgment be deemed necessary to enable him to 
ascertain the cost to the companies of carrying the mails on their respective 
roads and the proper compensation to be paid for that service. 

The Postmaster General shall determine the cost to each railroad company 
of carrying the mails on its respective road or roads, and shall verify and state 
the result in such form and manner as he shall deem proper. For this purpose 
he shall transmit the information furnished by the railroad companies relating 
to the operating expenditures to the Interstate Commerce Commission, who 
shall credit, assign, and apportion such operating expenditures to the passenger 
and freight service, and report the result as to the passenger service to the 
Postmaster General. 

The words objected to by Mr. Buckland in the preceding paragraphs 
are "in his judgment" and "as he should deem proper." The 
thought intended to be conveyed by Mr. Buckland is that the reten- 
tion of the words objected to would give the Postmaster General the 
power of withholding information from the Interstate Commerce 
Commission that the railroads deemed necessary to be submitted in 
order that an understanding might be had and a proper determina- 
tion reached of the issues arising between them and the Post Office 
Department. 

While admitting that the Postmaster General should have the 
fullest information, he states that " he should not be authorized, even 
by inference, to include or exclude finally such information or such 
data as would be material in determining the cost of carrying the 
mail " (vol. 1, p. 261), otherwise " he might not require such informa- 
tion as the railroads may desire to give him or he might exclude such 
information as being immaterial that the railroads might wish to 
give him." (Vol. 1, p. 261.) 

To sum up his views, the following quotation is made from his 
testimony : 

If, whether or not he determines the cost, all of the data that he asks the 
railroad companies to furnish and all of the data in addition thereto that they 
desire to furnish can be submitted to the Interstate Commerce Commission, and 
they in the last analysis may have the determining of this cost, I have no par- 
ticular objections to his determining it for his own purpose in the first instance. 
(Vol. 1, p. 262.) 

As a further objection to the department's plan, Mr. Buckland 
states : 

It leaves in the power of the Postmaster General the right to prescribe addi- 
tional services after we have made our contract. I do not think that is fair. 
(Vol. 1, p. 275.) 



KAIL WAY MAIL PAY. 939 

The bill proposed by Mr. Buckland reads as follows: 

Be it enacted by the Senate and House of Representatives of the United States 
in Congress assembled: 

Section 1. That every railroad company operating as a common carrier shall 
convey by any train all such mail as may be tendered for conveyance by such 
train, and where necessary shall provide sufficient and suitable room, fixtures, 
and furniture in a car or apartment properly lighted and heated for route 
agents to accompany and distribute the mails. Every such railroad company 
shall afford all reasonable facilities for the receipt and delivery of mails at 
any of its stations. 

Sec. 2. That the Postmaster General is authorized to make and enforce all 
proper rules and regulations to govern the receipt, transportation, and delivery 
of the mails, which rules, regulations, and penalties for the violations thereof 
shall be filed with the Interstate Commerce Commission prior to any hearing 
in regard to remuneration and be considered in determining the cost of service 
for which remuneration is hereinafter provided. 

Sec. 3. That every such railroad company shall be entitled to reasonable re- 
muneration for any services performed by it in receiving, transporting, and 
delivering the mails. Such remuneration shall be paid by the Postmaster 
General and shall equal the cost to such company for the performance of such 
services plus six per centum of such cost; in addition such company shall be 
entitled to such additional amounts as shall constitute a proper proportion of 
a fair and reasonable return on the value of the property necessarily employed 
in the performance of such services. Any difference between the Postmaster 
General and any railroad company as to the amount of such remuneration shall 
be determined by the Interstate Commerce Commission after due notice and 
full hearing to all parties in interest. The Postmaster General or any such 
railroad company may not oftener than once in two years apply to the Inter- 
state Commerce Commission for a readjustment of the remuneration previously 
fixed, and thereupon the Interstate Commerce Commission shall proceed as 
before to hear and determine the amount of such remuneration. 

Sec. 4. Any such railroad company which shall refuse to perform such serv- 
ices in the receipt, transportation, and delivery of the mails for the remunera- 
tion fixed as hereinbefore provided shall be guilty of a violation of law, and 
for every such offense shall be fined not exceeding five thousand dollars. 

Sec. 5. This act shall become effective as to any railroad company at the 
expiration of any period during which such company shall have contracted to 
carry the mails. 

Sec. 6. All laws or parts of laws inconsistent herewith are hereby repealed. 

The bill in brief continues the present requirements with reference 
to frequency of service and the furnishing of all reasonable facilities. 

It authorizes the Postmaster General to enforce all proper rules 
and regulations to govern the receipt, transportation, and delivery 
of the mails. 

The remuneration to be paid to the railroads by the Postmaster 
General is based upon the cost of performing the service in connec- 
tion with receiving, transporting, and delivering the mails plus 6 
per cent of such cost, and in addition a fair and reasonable return on 
the value of the property necessarily employed in the performance of 
such services. 

It apparently gives the power of ascertaining the cost of carrying 
the mails in the first instance to the Postmaster General and the 
railroads. If they can not agree then the matter, after all rules, 
regulations, and penalties for the violations thereof have been filed 
with the Interstate Commerce Commission, to be submitted to the 
Interstate Commerce Commission for determination after the due 
notice and full hearing to all parties in interest. 

In support of this construction the following is quoted from the 
testimony (vol. 1, p. 272) : 

Mr. Lloyd. But all the power you vest in the Postmaster General to fix the 
rates and fix the rules to determine what shall be paid. 



940 RAILWAY MAIL PAY. 

Mr. Buckland. I think there is no power in him to fix the rate. He has the 
power to fix the rules and he ought to have that power, and he should have the 
fullest power. 

Mr. Lloyd. Who fixes the rates? 

Mr. Buckland. The Interstate Commerce Commission, if you can not agree. 

Mr. Lloyd. Before you go to the court, who fixes it? 

Mr. Buckland. It must be by agreement between the two. 

The bill prescribes that the " Postmaster General or any such rail- 
road company may not oftener than once in every two years apply to 
the Interstate Commerce Commission for a readjustment of the re- 
muneration previously fixed." 

The bill makes it obligatory upon every railroad to comply with 
all proper rules and regulations with reference to the receipt, trans- 
portation, and delivery of the mails and at the remuneration fixed 
as above indicated, a penalty to be prescribed for failure so to do. 

The bill provides for giving the railroads remuneration for any 
service performed by it (whether it be in receiving, transporting, or 
delivering of the mail). The cost of side service to the railroads 
would be one of several factors in determining the total compensa- 
tion the railroads should receive. The bill leaving to the railroads 
and the Post Office Department, in the first instance, the matter of 
deciding as to what unit (whether it be weight, space, or some other) 
shall be employed in the cost ascertainment, the weighing of the 
mails may or may not be necessary. 1 

The courts have held that the railroads are not " common car- 
riers " of the mail (117 Fed. Rep., p. 434) . The Supreme Court of the 
United States, in the case of the Atchison, Topeka & Santa Fe Bail- 
way Co. v. The United States (225 U. S., p. 649), refers to the plain- 
tiff railroad company as an agency of the Government and not a 
"common carrier," with corresponding rights and liabilities. This 
bill proposes to make them such and as such to require them to carry 
the mails in order that they may have " an equal standing under the 
law to determine whether they were being required to carry at a rate 
which was confiscatory." (Vol. 1, p. 299.) 

1 That the construction of Mr. Buckland's bill, stated in the text, is correct, the follow- 
ing is quoted from a letter addressed by him. to the secretary of the joint committee, dated 
Nov. 6, 1913 : 

" My bill was a combination of the existing English statute and that proposed by the 
Postmaster General in House Document No. 105. Your understanding is correct that the 
cost determination was to be arrived at, in tbe first instance, by the Pcstmaster General 
and each railroad company, but if no agreement can be reached, then the matter is to be 
submitted to and determined by the Interstate Commerce Commission. It was my 
thought that the Postmaster General should say to a railroad company what service he 
expected that company to perform ; that the railroad company should tell the Postmaster 
General what it believed the service was worth and to open its books to the Postmaster 
General in order to indicate to him in what way this cost was determined and to give 
him any other information in its possession which would enable him to form an opinion 
as to whether the railroad was or was not correct in its contention. This principle being 
once established, the question as to when, if at all, annual weighings would be necessary 
or what side service should be performed would be entirely a matter of agreement between 
the Postmaster General and the railroad company ; for instance, the Postmaster General 
might say to a railroad company, ' The department agrees with you that the service 
which you are called upon to perform is worth $500,000 for the next fiscal year. The 
data for a number of years indicates that your mail has increased substantially 5 per 
cent each year ; therefore the department will make a contract with you to carry the mail 
for, say, $500,000 for the first year and an increase of 5 per cent for each ensuing year 
until such time as, upon reasonable notice, either party desires a revision of the contract.' 

" I beg to say that I haA'e just had an extended conference with Mr. W. M. Acworth, 
the distinguished English statist, who tells me that under the English act an issue be- 
tween the railroads and the post office department seldom, if ever, arises ; that each rail- 
road confers with the post office department, submits its data, and in a large majority of 
cases an agreement is arrived at without the necessity of arbitrating it before the Rail- 
way and Canal Commission." 

In a subsequent letter, dated Nov. 10, 1913, Mr. Buckland further said : 

" The point which I wished to impress most on the committee is that no unit system 
can properly apply alike to all of the railroads; whether it be space or weight, it is 






KAIL WAY MAIL PAY. 941 

As to the right of the Government to require the railroads to carry 
the mails there can be no question, subject to the constitutional pro- 
vision that private property shall not be taken for public use with- 
out just compensation. In the exercise of its constitutional right to 
establish post offices and post roads Congress, under a statute passed 
in 1838, declared railroad lines to be post roads. 

It is unnecessary to cite authorities holding that the Constitution 
must be so construed as to give effect to the express powers delegated 
to Congress by that instrument. In order, therefore, that the power 
conferred upon it to establish post roads may be effectively exer- 
cised, it must necessarily have the right to call upon the railroads of 
the country to carry the mails over their lines even though such 
lines may be wholly intrastate. 

In the case of the Bankers' Mutual Casualty Co. v. Minneapolis. 
St. Paul & Sault Ste. Marie Eailway Co. (117 Fed. Rep., p. 434) it 
is said: 

The power to establish post offices and post roads * * * was granted by 
the people as one of the Government powers, to be exercised by the General 
Government exclusively. By virtue of this grant of power the United States 
has always, through its Post Office Department, assumed the exclusive charge 
of the carriage and delivery of the mail for the benefit of the people. In doing 
so, the United States is beyond question engaged in the discharge of a gov- 
ernmental function. 

The Supreme Court, in the case of the Atchison, Topeka & Santa 
Fe Railway Co. v. The United States (225 U. S., p. 65), has said: 

The railroad, however, was not bound to furnish " half lines " nor to accept 
the terms named by the Postmaster General, for Congress had not legislated 
so as to require compulsory service at adequate compensation to be judicially 
determined on in a method provided by statute. And as the plaintiff's road be- 
tween Chicago and Kansas City had not been aided by a land grant, it was, 
under existing law, not obliged to carry the mails when tendered nor to supply 
railway post-office cars when demanded. 

While the language with reference to compulsory service can only 
be regarded as obiter dicta, that consideration not being necessary 
to a determination of the case, it strongly indicates what the decision 
of the Supreme Court would be upon a case presented to it involving 

likely to overpay some and underpay others. Senator Weeks suggested that a basis 
might he used by which to modify the unit system. I assume, for instance, that if X 
should represent the unit of space or weight A might represent density of traffic, B fre- 
quency of service, and C speed. Then, according to his suggestion, ABCX would deter- 
mine the price. It may be that some such formula can be worked out, but we have not 
yet been able to approximate it. It seems so much more common sense for the Post 
Office Department to discard all units and the railroads likewise ; for the Post Office 
Department to say what services it wishes to have performed, and for the railroad com- 
pany to state upon what terms it will perform it, at the same time giving the Post 
Office Department full information upon which it bases its charge. If the two parties 
can not agree let the Interstate Commerce Commission decide. This, as I said, is the 
English method, where an issue between the post office department and the railroads 
does not exist, although it seems to be eternally springing up here in this country. 

" To show you how impossible it would be to fix any unit for the cost of side service, 
compare square or cubic foot space in the Grand Central Terminal at New York with 
similar space in the way station at New London or some other small place. Two dollars 
per square foot per year would be reasonable in the former, whereas 25 cents per square 
foot might be exorbitant in the latter. How much more sensible it would be for this 
company to ask the Post Office Department how much space it desires and to say that so 
much will be charged per square foot in New York, so much in New London, etc., allow- 
ing the department to investigate to see whether the charges are reasonable. The longer 
I think over this subject the less I can understand why the common ordinary business 
methods which obtain between man and man should not obtain between the Government 
and the railroads in regard to mail pay. The only objection is that suggested by Senator 
Weeks and Mr. Lloyd before the committee, on page 272, to wit, that the Postmaster 
General and the railroads might be working in cooperation. I can hardly think that that 
suggestion is well founded, and yet it would be easy to check against such an event by 
giving the Interstate Commerce Commission power upon its own initiative to investigate 
and change a rate, just as it now has such power to investigate and change rates upon 
other commodities." 

40300—14 07 



942 BAILWAY MAIL PAY. 

the constitutionality of an act of Congress compelling the railroads 
of the country to carry the United States mails when offered. 

It has therefore been judicially determined under existing law that 
the railroads are not obliged to carry the mails when tendered, nor 
to supply railway post-office cars when demanded. (129 U. S., pp. 
391-396 ; 142 U. S., p. 615 ; 225 U. S., p. 650.) 

It has been judicially determined that the railroads are not com- 
mon carriers of mail. (117 Fed Rep., p. 434.) 

Inferentially it has been declared that the railroads can be required 
to perform compulsory service. (225 U. S., p. 650.) 

Mr. Buckland strongly advocates the passage of a law specifically 
requiring the railroads to perform mail service. (Vol. 1, p. 299.) 
He is of the opinion that in the matter of railway mail pay the ques- 
tion of space and weight is immaterial. (Vol. 1, p. 270.) 

The following quotation from his testimony will perhaps best dis- 
close his opposition to a space or weight system and his reasons for 
advocating the bill proposed by him : 

There is a contention on the part of the public that the railroads are over- 
paid, and there is a contention on the part of the railroads that they are 
underpaid. Certainly nobody can object if a neutral tribunal should determine 
to what expense the railroads are put in the performance of this service and 
give them a stated profit over that. It seems to me if you agree to (day upon 
a bill which shall amply compensate every railroad in the country in accord- 
ance with this contention, by making a specific ton-mile or a specific cubic 
foot rate of compensation, that two years will not roll around before this matter 
will be up in Congress again on the proposition that that ought to be reduced. 
You will never get this out of continued legislation until the question of re- 
muneration is made flexible and to be determined by some neutral tribunal. 
(Vol. 1, p. 270.) 

DIRECTOR OF POSTS. 
WEEKS PLAN. 

This plan, only incidentally developed in the hearings, was sug- 
gested by Senator Weeks. (Vol. 2, pp. 395 to 399, inclusive.) It 
is related to the Buckland plan, in that, without any declaration of 
Congress as to what the compensation should be, it proposes to leave 
the determination of the compensation to be paid the railroads for 
the transportation of the mails to an agreement entered into between 
the railroads and a post-office official whose appointment has been 
authorized by Congress, to be known as a " director of post." If an 
agreement can not be reached between them as to a proper rate to 
be paid then the matter to be submitted to the Interstate Commerce 
Commission for adjustment. 

Senator Weeks expresses himself with reference to his suggested 
bill as follows : 

I have gone into this enough to see how difficult it is to arrive at any fair 
basis, and in turning the whole question over in my mind I have not been able 
to work out, to my own satisfaction, why that is not the businesslike way to 
adjust it. I do not mean to say that is final even with me, but it seems to me 
that that is the way of adjusting this service which ought to be satisfactory to 
the Government and to the transportation companies. 

In the last analysis the effect of Senator Weeks's plan apparently 
seems to be to leave rate initiation to the respective railroads, and 
the rates thus fixed to be reviewed by the director of post. If he 
accepts the rates proposed then same become immediately effective. 



RAILWAY MAIL PAY. 943 

If he declines and the railroads will not agree to such amendatory 
rates as he may propose then the matter to be submitted to the Inter- 
state Commerce Commission for final adjustment. 

The Buckland plan prescribes a basis on which the compensation 
is fixed, namely, a cost determination, but fails to prescribe a unit of 
measure by which such cost determination is reached. The Weeks 
plan prescribes neither basis nor unit. 

THE PEABODY PLAN. 

The suggestion for this plan is to be found on page 684, volume 5, 
of the Hearings of May 14, 1913, presented by Mr James Peabody, 
statistician of the Atchison, Topeka & Santa Fe Railway Co., and 
elaborated upon by him in communications written subsequently to 
the hearings, dated, respectively, May 22 and June 3, 1913, and 
appearing in the printed volume, pages 685 to 687, inclusive. 

Reference to the pages indicated will disclose alternative plans, 
which in effect and briefly stated are as follows : 

1. To put mail transportation on a commercial basis and permit 
the railroads to initiate the rate, which, if satisfactory to the Post 
Office Department, to become immediately effective; otherwise sub- 
mitted to the Interstate Commerce Commission for determination, 
Congress, however, first defining with exactness the unit of service. 

2. To permit the railroads to initiate the rate, giving the Interstate 
Commerce Commission sufficient time before same becomes effective 
to inquire into its reasonableness, and if found by it to be unreason- 
able to prescribe a reasonable rate for the future, say, " for at least 
a period of two years and thereafter until changed." 

The first suggestion harmonizes with the Buckland and Weeks 
plan, already referred to, in that the rate to be fixed in the first 
instance is one for agreement between a representative of the Post 
Office Department and representatives of the railroads. He fails, 
however, to develop the unit of service to be defined by Congress. 

The second suggestion proposes to take the matter out of the 
hands of both Congress and the Post Office Department. The Post 
Office Department, however, being the shipper, would be entitled to 
appear before the commission to protest against the inauguration of 
a rate which is regarded unreasonable. 

In order not to misrepresent Mr. Peabocly's position as to his first 
suggestion, the following quotations are made from his own state- 
ment: 

If that rate (referring to rate initiation by railroads) is deemed by the ship- 
per, which in this case is the Post Office Department, to be reasonable they can 
accept it and make np their budget and recommend to Congress an appropria- 
tion on that basis. If they do not deem it reasonable they can refer it, the 
same as any other shipper, to the proper tribunal for determining what the 
rate shall be. That gives the railroad the opportunity of appearing before 
the tribunal to sustain their rate, if they are able to sustain it and the commis- 
sion will authorize it ; if not, the commission will determine what a reasonable 
rate will be, and that rate, as determined by the commission, will be used in 
their recommendations for a budget to be presented to Congress. (Vol. 5, 
p. 684.) 

Congress may well and should define with exactness the unit of service, such 
as the whole car, one-half car, and one-quarter car for the general service and 
the car-mile for the closed-pouch service, in case the space basis is adopted, 
leaving to the Post Office Department to determine the frequency of the service, 
thereby permitting a discretionary adjustment as between economy and effl- 



944 RAILWAY MAIL PAY. 

ciency, but, as it seems to me, it would welcome any plan which would relieve 
it of the annual discussion over the rate of pay to the carriers of the mail. 
* * * The floor of Congress is neither the logical nor possible place for the 
equitable settlement of such a question. (Vol. 5, p. 686.) 

As to his second suggestion the following is quoted from the 
testimony : 

There is nothing inherent in the transportation of the mails that from a 
transportation standpoint distinguishes it from any other commodity. The 
Post Office Department is a shipper, having a commodity which it desires to 
have transported between various points. It can predetermine with reasonable 
certainty the amount it will have to transport, and may make a tender of it? 
business upon the space or weight basis, as may be preferred. The carriers can 
then name their rate, filing same with the Interstate Commerce Commission. 
If such rate is satisfactory to the Post Office Department, no further action is 
needed except to make up a budget for the report to Congress as to the amount 
of the appropriation needed for the transportation of the mails. (Vol. 5, 
p. 685.) 

With reference to the determination of a reasonable rate, Mr. 
Peabody says : 

The determination of a reasonable rate is purely a judicial function, and, 
recognizing that fact, the Congress of the United States has wisely designated 
a tribunal for this very purpose, authorized to pass upon this very question, 
and it would seem to be wise, therefore, both on the part of the railroads and 
the United States authorities, to submit the question to this tribunal that no 
injustice to either party may be done. (Vol. 5, p. 6S5.) 

The chairman in a letter dated May 26, 1913, to Mr. Peabody, 
referring to the failure of the railroads to demonstrate what is a 
reasonable rate to be paid for the transportation of mail, says : 

If you and other specialists in rate making are unable to demonstrate a 
reasonable rate, then, necessarily, an arbitrary rate must be adopted, in which 
event, it seems to me, it is much better that the representatives of the people, 
the Post Office Department, and the railroads, namely, Members of Congress, 
shall declare what the arbitrary rate shall be than delegate that power to either 
the postal department or the railroads themselves. (Vol. 5, p. 686.) 

To this Mr. Peabody replies : 

There is no such thing as a reasonable rate per se, nor is such a rate sus- 
ceptible of mathematical demonstraion. I is wholly a judicial question, to be 
determined by legal authority, after full hearing. The question of railway-mail 
pay is too important for the people and too vital for the railroads to be left 
to the arbitrary action of anybody. All other rate questions, many of them even 
more important for the people as well as vital to the railways, have been re- 
moved from the zone of arbitrary action and brought under proper control. 
(Vol. 5, p. 687.) 

Mr. Peabody's plan on the whole contemplates in the first instance 
the initiation of mail transportation rates by the railroads them- 
selves subject to review by the Interstate Commerce Commission 
upon complaint made by the shipper, the Post Office Department. 
He qualifies his position in this respect by stating that — 

It might, perhaps, be better for Congress to specifically direct the commission 
to take such action without the preliminary naming of a rate by the railroads. 

Because of the varying transportation conditions throughout the 
country and further because of his view already expressed that the 
fixing of a rate is a matter for judicial determination, he believes that 
such consideration necessitates the submission to and inquiry by the 
Interstate Commerce Commission of rates proposed to be charged for 
carrying the mails. 



BAIL WAY MAIL PAY. 945 

LEWIS PLAN. 

The proponent of this plan is Congressman Lewis, of Maryland. 
He has presented it on several occasions, as will be noted by reference 
to volume 5, pages 695 to 699, inclusive, of the hearings on railway 
mail pay ; to a pamphlet entitled " Brief for a general parcel post " 
(pp. 25-30), addressed to Hon. Joseph L. Bristow, chairman joint 
committee on general parcel post, and to Hon. Albert S. Burleson, 
Postmaster General of the United States, and to an address delivered 
by him in the House of Eepresentatives on September 3, 1913, on 
the " Parcel post and the Postmaster General " and printed in the 
Congressional Record of September 6, 1913, pages 4820 and 4821. 

This plan contemplates two rates, one for what he denominates 
" parcel railway pay " and the other " letter railroad pay," the fund 
from the former to be derived from a ton-mile basis and the latter 
from an absolute ton-mile basis. (Vol. 5, p. 699.) 

For the parcel railway mail pay he propose a ton-mile rate of 5 
cents, excluding weight of equipment, which is approximately 77 
points less than the railroads will receive from the express com- 
panies per ton-mile by reason of the recent reduction in express rates 
ordered by the Interstate Commerce Commission. 

In order that the smaller railroads may be fully compensated he 
proposes to adopt two standards, namely, the ton-mile and car-mile 
unit — ■" the ton-mile unit to make certain the amount the Government 
shall pay the railroads for parcels so it can intelligently load its rates 
for parcel service to the public, and the car-foot mile unit to secure a 
just relative distribution of the fund thus derived among the rail- 
roads, according to the amount of car-foot 'mileage service rendered 
by each." 

The details of his proposal are thus stated : 

1. The postal department would make notations of the weight and zone find- 
ings for each parcel, which occur in determining the rates to be charged the 
shipper. The gross weights of such parcels in each zone, when multiplied by 
the average mile journey of the respective zones, would by a simple computa- 
tion give the total ton-mileage of parcel matter receiving railroad transportation. 
Let this ton-mileage be multiplied by the rate to be paid per ton-mile, say 5 
cents, and the gross sum due the railroads as a whole is obtained. 

2. The gross sum thus payable the railroads would then be divided by the 
total number of car-foot miles of car movement performed ( " the postal-car 
mileage " being " a matter of easy ascertainment and record for any railroad, 
while the weight distance parcels statistics can be almost automatically 
recorded during the act of weighing by pencil notations, as now, upon blanks 
having distinct columns for the several zones"), which would give the common 
car-foot rate payable, when each railroad company would be paid this rate 
for the car-foot mileage service performed by it under orders from the postal 
department. (Vol. 5, p. 697.) 

He justifies a different rate for letter-railroad pay as distinguished 
from parcel-railway pay, because in his opinion no single rate would 
be just to both kinds of traffic. As letter mail demands much 
greater car space and greater speed than an equivalent weight of 
parcel matter he proposes a rate for it of $43.65 per ton, " or on the 
experience of the average mail journey in 1908, 8 (8.12) cents a ton- 
mile." 

The details of how to ascertain the weight and to distribute the 
gross amount to be paid the railroads are thus stated : 

All ordinary or first, second, and third class railway-going mail, during the 
weighing period, would be pouched in bags by itself and weighed at the post 



946 EAILWAY MAIL PAY. 

office before going to the railroads. These weights totaled into tons 'or the 
entire country would give the gross amount of railway service rendered the 
ordinary mail, and multiplied by the ton-rate, say $43.65 per ton, as now, 
would give the total fund payable to the railroads for this branch of the service. 
This fund should be then distributed among the railroads according to the 
car-foot mile basis employed for the payment of parcel transportation. (Vol. 
5, p. 698.) 

The plan therefore contemplates a rate each, as already stated, for 
parcel and letter pay, namely, " a rate of 5 cents a ton-mile for postal 
express matter, excluding the weight of equipment, and of 8 cents a 
ton-mile for the other mails, equipment weight included," the amount 
of compensation to be paid each railroad to be measured in the last 
analysis on a basis of car-foot miles. 

The plan proposes, as already indicated, to ascertain the weight of 
parcel matter as is now being determined by the Post Office Depart- 
ment in the administration of the parcel-post law, leaving the postal- 
car mileage to be made up from records furnished by the railroads. 

The weight of letter mail is to be ascertained, during a weighing 
period to be designated, by the postmasters of the country generally. 

The burden of delivering the parcel-post matter from the depot 
to the post office is shifted from the railway to the local postmaster. 

The plan finally provides that " either the Postmaster General or 
the railroads shall have access to the Interstate Commission to make 
any changes necessary to move the potential traffic or to meet future 
contingencies in railroad operating costs." 

For the Government it would save the special expense of the weighings and 
provide it with simple standards for determining its obligations to the rail- 
roads. For the shipping public, through reduced postal express rates, it 
would provide a means by which the potential traffic in life's necessaries could 
be moved direct from producer to consumer, or otherwise, and lower our ag- 
gravated price levels. And for the railroads it offers the great advantages of 
distributing postal transportation compensation equitably between them, of 
paying them for the actual weights carried rather than the outdated weighings, 
while assuredly doubling and probably quadrupling the volume of their highest 
price traffic. (Vol. 5, p. 698.) 

With reference to Congressman Lewis's recommendation that the 
postmasters throughout the country be designated to weigh the mails, 
it has been suggested that such designation would not be desirable based 
on the difficulty experienced by the Department rn securing informa- 
tion from them in connection with the special weighing of the mails in 
1907. In many instances information transmitted in response to the 
department's specific request was only partially or inaccurately given, 
and in other instances no responses were made at all to the original 
request and no attention paid to voluminous correspondence that 
followed to secure the information called for and desired by the 
department. 

Mr. Lewis's plan, while proposing that Congress shall prescribe in 
the law the standards or units to be used and the rates to be paid, the 
ultimate effect would be, since " either the Postmaster General or the 
railroads shall have access to the Interstate Commerce Commission to 
make any changes necessary to move the potential traffic or to meet 
future contingencies in railroad operating cost," to take the whole 
matter out of the hands of Congress and transfer it to the Interstate 
Commerce Commission. The Post Office Department would as now 
administer the law, and any desired changes it could inaugurate, after 



RAILWAY MAIL PAY. 947 

first securing the consent of the Interstate Commerce Commission 
and without any reference to Congress. 

From the foregoing it would appear, on the whole, that Congress 
might just as well, if Mr. Lewis's proposal meets with its approval, 
not define or name any standards or rates, as the Interstate Commerce 
Commission could, at the request of the Post Office Department, 
change or nullify them at will and adopt standards or rates of its 
own. 

The view entertained by Mr. Lewis that a distinction must neces- 
sarily be made in the handling of parcel and letter mail matter is 
concurred in by Mr. Logan, vice president, Grand Trunk Railway, 
and inferentially so by Senator Bankhead. Mr. Logan says : 

The parcel post ought to be treated as a parcel-post business, separate and 
distinct, and a basis of division of the rate used — a percentage basis — similar to 
that in England, a percentage to be determined by competent authorities. (Vol. 
4, p. 549.) 

Senator Bankhead expresses himself as follows: 

The point I have in mind is, I do not know whether it is practicable or not, 
but sooner or later we will have to separate the parcel post from the first-class 
mail matter. 

All the plans proposed and discussed in the foregoing pages, with 
the exception of the present law (weight basis) and the percentage 
basis, contemplate, either expressly or by implication, reference of 
the railway-mail pay question to the Interstate Commerce Com- 
mission. 

In the Lloyd plan there is a strong implication that the Interstate 
Commerce Commission shall determine the passenger car-mile revenue, 
that being the basis on which the rates of his plan are fixed. 

The other plans specifically and expressly contemplate such refer- 
ence, the effect of which would be to relieve Congress of railway- 
mail pay rate making. 

Government Ownership or Railway Post Office Cars. 

The basis for the advocacy of Government ownership of railway 
post-office cars seems to have been a report made in 1887 by the then 
Postmaster General, Hon. William F. Vilas, in which he estimated 
that an approximate saving of a million and a half dollars could be 
made by such ownership. (For extract from his report see vol. 1 
of the hearings, p. 20.) On the same page Hon. Joseph Stewart, 
Second Assistant Postmaster General, in referring to Mr. Vilas's 
statement, says : 

The fallacy of the statement of Mr. Vilas, it seems to me, lies in this: That 
there is no account taken of the cost of operating the cars. The payment that 
we make to the railroad companies for cars may soon equal their cost, but 
there is nothing to be argued from that as to the adequacy or the inadequacy 
of that pay, because that leaves out of consideration entirely the cost of oper- 
ating or hauling the car. 

By reference to the addenda (vol. 5, pp. 783, 784) of the hearings 
will be found extracts from a speech delivered by Senator Ashurst, of 
Arizona, to the effect that the Government could save millions by 
owning its own postal cars. 

The record does not appear to support the conclusions of either Mr. 
Vilas or Mr. Ashurst. 



948 RAILWAY MAIL PAY. 

In a letter dated March 2, 1910, from ex-Postmaster General 
Hitchcock, addressed to Hon. John W. Weeks, chairman, House Com- 
mittee on the Post Office and Post Eoads (vol. 1, pp. 21, 22), the esti- 
mated cost of operating a post-office car per car-mile is given as 18 
cents and the average run per day 300 miles, which would be some- 
thing over 100,000 miles per annum, and the approximate cost of 
maintenance as $2,049. 

The compensation received by a railroad company for operating 
a car and carrying the mails in it would be approximately as follows : 

The pay for a 60-foot car at $40 a track mile per annum for a track mileage 
of 150 miles would be $6,000. The average load of a 60-foot car, according to 
statistics obtained recently, is 2,83 tons. The rate per ton of an average daily 
weight of 50,000 pounds carried over the route is $25.06. At this rate the 
company would receive $10,637.97 per annum for the average load of mail 
hauled in the car. This sum added to the specific rate for the railway post- 
office car ($6,000) makes the total pay for the car and its average load 
$16,637.97 per annum. (Vol. 1, p. 22.) 

This communication further refers to the necessity of such cars 
being overhauled, cleaned, and inspected daily, necessitating the use 
of shops of the several railway companies or the establishment of a 
Government repair shop, which latter is regarded as not at all 
feasible. 

Mr. Worthington, of the Southern Pacific Co., in testifying before 
the commission (vol. 2 of the hearings, pp. 337 and 338), makes the 
following statement : 

In some quarters there seems to be an impression that the additional com- 
pensation allowed the railroad company for railway postal cars represents a 
rental on the value of these cars and is, therefore, excessive, as the usual 
compensation for a car making the normal mileage will equal the value of a 
car in about two years. Payment to the railroad, however, includes not only 
payment of rental to cover interest on investment, depreciation, and cost of 
maintenance, but also is supposed to cover the extra cost imposed on the rail- 
roads of hauling in trains the great weight and space due to moving a dis- 
tributing post office on wheels, with necessary working space for clerks, as 
compared with transporting the mails merely as weight, in which case far less 
space would be required, and that in much lighter cars. Indeed, it is likely 
that but for the traveling post offices the available space elsewhere on the train 
might be sufficient for most of the tonnage now carried in the railway post- 
office cars. 

Mr. Worthington, on page 338, also states that if these cars were 
loaded solid to the roof they would probably hold from 20 to 25 tons 
of mail, but as now operated are limited to a carrying capacity of 2J 
tons. (See also p. 53, vol. 1, of the Hearings, where it is stated that 
42 railway post-office cars and 16 storage cars operated daily between 
two important cities carry only 192 tons of mail matter, an average 
of 3.4 tons per car.) The mail in the storage cars would reduce the 
railway post-office load to less than 6,000 pounds (or approximately 
2.83 tons) the average tonnage stated in a preceding paragraph. 

Mr. Worthington, pages 338 and 339, makes the further statement : 

The cost of a 60-foot steel railway post-office car at the present time is 
between $10,000 and $11,000. Senate document No. 810, Sixty-first Congress, 
third session, covering letter of the chairman of the Interstate Commerce Com- 
mission of February 2, 1911, gives this cost as $9,500 to $10,500. Ten thousand 
dollars may be taken as rather below than above the average price. This same 
letter gives the cost of repairs to postal cars as $7.50 per 1,000 miles. This is 
less than our experience, and, as the railroads are often obliged to make changes 
in the interior arrangement by direction of the department, we believe it is 






HAIL WAY MAIL PAY. 949 

too low, but have, nevertheless, adopted it for this purpose. The cost of clean- 
ing, lighting, and heating the car is given in the document referred to as $4.75 
per 1,000 miles. These cars make an average mileage of 90,000 to 100,000 
yearly, the Interstate Commerce Commission using the latter figure in its 
computations by which they determine that the annual cost of maintenance per 
postal car amounts to $1,225. 

After estimating the life of a postal ear to be from 20 to 30 years, 
Mr. Worthington continuing on page 339 says : 

If we allow only 8 per cent for interest on investment and depreciation — a 
low figure — $800 must be set aside for this purpose. A conservative estimate 
of the actual cost of hauling in trains — that is to say, train-hauling cost, ex- 
cluding station and road forces, and all other operating expenses — would be 15 
cents per mile run, or $15,000 per annum. This would make an aggregate for 
direct train haul and maintenance per annum of $17,025, or, say, 17 cents per 
mile run. 

To cover these expenses the railroads receive from the department for rail- 
way-post-office-car pay, for 60-foot car, $40 per mile per annum, or 10.96 cents 
per day for furnishing a car, maintaining it, and hauling it both ways over a 
mile of railroad, this being equivalent to 5.46 cents per car-mile run. Assum- 
ing an average annual mileage of 100,000, the total railway-post-office-car pay 
per annum would be $5,480, or about one-third of the above expenses. In the 
case of half lines, where no pay is received for return movement, the revenue 
would be only one-half of this. 

On the same page he makes the following comparison of rates per 
mile received by his company for 60-foot railway post-office cars as 
compared with rates it would receive under its published tariff from 
Chicago to California for moving empty cars belonging to other 
railroads : 

Cents. 

Railway postal-car pay for 60-foot car, per mile run 5. 5 

Tariff rates for empty sleeping and dining cars, per mile run 16. 7 

Tariff rates for passenger coaches, per mile run 15. 4 

Tariff rates for empty freight cars moving in freight trains, per mile run 8. 3 

He calls attention to the fact that the tariff rates mentioned " are 
for hauling in trains only, and do not include any obligation on the 
part of the carrying railroad for maintenance or cost of car owner- 
ship." 

Mr. Bradley (vol. 2, p. 433) gives 4.4 cents a running mile as the 
average present pay for railway post office cars on the Pennsylvania 
lines, and 3.4 cents as the cost of repairs, light, heat, etc., leaving 1 
cent a mile for cost of hauling and return on capital invested. 

Mr. Worthington being reminded by the chairman that his compu- 
tation was based entirely on his railway post office revenue, and upon 
the latter's suggestion that he should have considered in his computa- 
tion the revenue received from the mail carried in the railway post 
office car, stated on page 340, that if the pay for the 2J tons were 
included, the total rate for these cars would be about 20 cents, whereas 
for their passenger cars they received 31.3 cents. 

Mr. A. H. Rowan, of the New York Central Lines, in his testimony 
(vol. 4, p. 572) states that in addition to the transportation charge for 
the weight of mail handled in the car (estimated to be 2 to 3 tons) 
his lines receive for their railway post office service pay ranging from 
3.4 cents per mile for a 40-foot car to 5.04 cents per mile for a 60-foot 
car, making the average earnings on a railway post office car 20 
cents per mile as compared with 32 cents per car-mile received from 
passengers, the average number of passengers carried being 16. 



950 



RAILWAY MAIL PAY. 



The joint committee has made every effort to obtain specific infor- 
mation bearing on the question of Government ownership of postal 
cars, as is evidenced by interrogatories made of Gen. Stewart and 
Mr. Peters by the chairman, respectively, stated on page 23 and pages 
221 and 222 of volume 1 of the hearings. 

A committee representing the railways and the Post Office Depart- 
ment in response to and as suggested by the interrogatories referred 
to was appointed and reported on matter relating to car-foot-mile 
revenue (vol, 2, p. 324), but have so far failed with reference to the 
railway post office statement, except in this particular, namely : 

Under date of September IT, 1913, Mr. Peters, chairman of the 
committee on railway mail pay, submitted sworn statements of 14 
railroads relative to cost of construction and maintenance of 60-foot 
steel railway post office cars, estimates of which had previously been 
laid before the Post Office Department members of the committee. 
That a compliance with the request of the chairman for a report on 
Government ownership would be embarrassing to the railroad mem- 
bers of the committee, is indicated by the following quotation from 
Mr. Peters's letter : 

It was the belief (referring to a number of meetings held) of the railroad 
members of the committee that it was their special province to furnish to the 
Post Office Department members of the committee any information or data 
relating to the subject, and that it would be best for the Post Office Department 
members to issue their own statement which might include an expression of 
opinion as to the policy of undertaking the responsibility and burden of gov- 
ernmental ownership of railway post office cars in addition to a discussion as 
to the economy or lack of economy from the financial viewpoint of undertaking 
the experiment. 

A summary of the sworn statements of the 14 railroads referred 
to on the preceding page might be of interest and profit. This sum- 
mary is as follows : 

Summary of report of Ik railroad companies to the committee on railway pay 
relative to the cost of construction and maintenance of railway post-office 
cars. 





Number of cars. 


Length. 


Name of road. 


Part steel. 


All steel. 


Total. 


Part steel. 


All steel 


* 


Number. 


Feet. 


Inches. 


B & R R 




15 

4 

11 

33 

36 

10 
2 
22 
10 


15 

11 

11 

33 

41 

10 
2 
22 
10 
31 
34 


Ft. In. 


{ 1 


60 
70 
60 
40 
60 
60 
40 
60 
66 
60 
60 
60 
60 
60 


1 


C M & St P Ry 


7 


60 J 




C B & Q R R 


{ I 




C & N W Ry 








C, R. I. & Pac. R. R 

C C C & St L Ry 


5 


5 60 


ooooo 


hY 








ii 


111 Central R R 










Mich Central R R 






10 


&rV 






31 
•U 






n. y. c&h."r.rVr ".!!".! 






34 


6 















19 


51 
19 




{ 1 

19 


60 
40 
60 




St.L.&S. F.R.R 






1| 







RAILWAY MAIL PAY. 



951 



Nummary of report of Ik railroad companies to the committee on railway pay 
relative to the cost of construction and maintenance of railway post-office 
cars — Continued. 





Average weight. 


Average cost of construc- 
tion. 


Estimated 
cost ac- 


Name of road. 


All steel. 


Part steel. 


All steel. 


cording to 
post-office 
specifica- 




Feet. 


Pounds. 


tions. 




/ 60 

\ 70 

117,400 

/ 4 
|\ 60 


128, 650 
132, 300 
125,300 

84, 000 
119,700 
110,000 

90,000 
123,000 
128,052 
107, 400 
114,200 
127, 600 
109, 900 
117,000 








B. & 0. R. R 




$10,823.11 

12, 168. 56 

> 8, 798. 37 

2 10, 464. 76 

10, 500. 00 

i 8, 395. 00 

2 10,550.00 

12, 144. 66 

9, 636. 57 

9, 427. 27 

12, 050. 80 

9,340.87 

10,900.00 


$i2, 700. 66 


C.,M.&St.P.Ry 

C, B. &Q.R.R 


$8, 190. 40 


12, 840. 56 




10, 863. 35 
11,500.00 


C. &N. W. Ry 




C., R.I. &Pac.R.R 

C, C, C. & St. L. Ry 


106,000 { gQ 






9, 588. 00 


12, 000. 00 
12, 000. 00 


Central of Ga. Ry 


1 




10, 500. 00 


111. Central R. R". 


:::::::::::::::::::::: 




10,393.09 


Mich. Central R. R 






12, 100. 00 


Mo. Pacific Ry 







12,000.00 
11,655.00 


N. Y.C.&H.R. R. R 


:::::::::::::::::::::: 




Perm Lines. . 




11,000.00 


So. Pacific Ry 


1/ 4 ° 


77, 200 
109,800 
115,500 




16,710.00 
2 9,361.00 
11,410.00 








l\ 60 


9, 650. 00 
12,000.00 


St. L. &S. F.R.R 











Maintenance. 


Annual 

average 

run per 

postal car. 


Name of road. 


Total,part 
steel. 


Total, all 
steel. 


General 

repairs ! Running 
and paint- repairs. 3 
ing.s j 


Light- 
ing. 3 


Clean- 
ing. 3 


B.& O.R.R 

C, M. & St. P. Ry 

C.,B.&Q.R.R 

C. &N. W.Ry 


$4,' 076.' 83' 


$2,855.23 
4, 196. 18 
2,595.51 
2, 943. 16 
2,348.39 
2,365.39 
2,322.03 
3,267.54 
2,928.75 
2,483.60 
2,924.74 
3,418.56 
2,372.00 
2,516.28 


$567.00 

238. 27 

605. 70 

U, 021. 14 

790.00 

1,011.46 


$832. 04 

1,609.94 

457. 12 


$517.50 
496. 31 
690. 00 
1,315.60 
292. 69 
252. 15 
480.00 
680.00 
436. 52 
624.00 
655.67 
663. 98 
286.00 
427.43 


$358. 00 
1,183.25 
255. 30 
456. 00 
299. 21 
146. 93 
273. 75 
225.00 
219.00 
210.00 
406. 20 
206. 34 
214. 00 
216, 59 


Miles. 
120,000 
111,031 
114,214 
121, 277 


C, R. I. & Pac. R. R 

C, C, C. & St. L. Ry 




347. 13 
345. 00 


104, 400 
94, 795 


Central of Ga. Ry 




550.00 | 500.00 
755.17 1,000.00 
800.00 ! 905.16 
560.00 | 407.00 
375.00 719.01 
799.45 1,060.00 
773.00 1 587.00 
711.57 j 496.02 


81,775 


111. Central R. R 




106,384 


Mich. Central R. R 




90,516 


Mo. Pacific Ry 




110,293 


N.Y.C.&H.R.R. R 

Perm. Lines 




135, 400 
106,000 


So. Pacific Ry 




95, 279 


St.L.&S.F.R.R 




87,324 


Total 




39,537.36 
2, 824. 09 


9,557.76 
682. 70 


9,265.42 
661. 82 


7, 817. 85 
558.42 


4, 669. 57 
333. 54 


1,478,688 


Total average 




105,620 









i 40-foot. 

' 60-foot. 

3 The items entering into estimated cost of maintenance for a 60-foot steel car are the following: General 
repairs and painting, running repairs, lighting, cleaning, inspection, lubricating, icing and watering, 
heating, depreciation at 3 per cent per annum on cost of construction. For the purpose of comparison, 
only the larger items are indicated in the statement. 

* This item includes running repairs. 

Average weight, 40-foot all-steel cars pounds. . 83, 733 

Average weight, 60-foot all-steel cars do 118, 931 

Average weight, 70-foot all-steel cars do 132, 300 

334,964 

Total average do Ill, 655 

Average cost of construction: 

40-foot steel cars $7,967.79 

60-foot steel cars S10, 675. 20 

Total average cost according to post-office specifications, $11,514.42. 



952 EAILWAY MAIL PAY. 

The Second Assistant Postmaster General, in his report for the 
fiscal year ending June 30, 1912, gives the number of railway post- 
office cars in use and reserve as 1,388, of which 930 are 60 feet in 
length, proportioned as follows: Steel, 361; steel underframe, 160; 
and wood, 409. As stated by General Stewart, " Under the present 
law, all cars which shall be used in the service, excepting those which 
are now of steel and steel underframe, must be replaced by steel cars 
before the 30th of June, 1917." (Vol. 1, p. 22.) Wooden cars must 
be retired, beginning with the fiscal year 1914, at the rate of 25 per 
cent per year. (Vol. 1, p. 22.) The railroads, too, are, as a general 
rule, only building postal cars of 60 feet and over in length. 

In the light of the foregoing, the total average of 111,655 pounds, 
stated in the foregoing summary, for postal cars is misleading. The 
Pennsylvania Railroad Co., since it is only building 70-foot cars, 
made no estimate of the average weight and average cost of con- 
struction of a 60-foot postal car. It did, however, based on esti- 
mated cost of a 70-foot car of $12,000, estimate the cost of a 60-foot 
car, according to the Post Office Department's specifications, to be 
$11,000, and the maintenance cost $3,418.56. 

In the foregoing summary there are 290 cars — 5 seventies, 263 
sixties, and 22 forties. The average cost of construction, according 
to the railroad's standard, is $10,675.20; $11,514.42 based on the 
latest specifications of the Post Office Department; and the average 
cost of maintenance $2,824.09. 

According to the Postmaster General's report for the year ending 
June 30, 1912, there are 174 70-foot cars in use. If these were in- 
cluded in a cost computation the average cost of construction of 
postal cars would probably approach $12,000. 

Figuring on a cost of construction of $12,000, which is perhaps 
too high, the Government would, if it took over the 1,388 postal cars 
and replaced those of wooden construction with cars constructed of 
steel and steel underframe, have to expend $16,656,000, and to main- 
tain them $3,470,000, based on an estimate of $2,500, which is per- 
haps too low a maintenance figure, making a total first-cost expend- 
iture of $20,126,000. The railroads could not be expected nor could 
they be compelled to haul cars for nothing. Repair shops would 
have to be provided for, necessitating the employment of additional 
men at the Government's expense. 

The conclusion of the whole matter is that there is nothing before 
the joint committee which would appear to sustain the claim made 
by Senator Ashurst or which would warrant it in recommending 
Government ownership of postal cars. 

ELECTRIC LINES. 

The compensation that electric and cable car lines receive for 
carrying the mails is dependent upon a space basis. For indepen- 
dent or apartments in independent cars not exceeding 16 feet in 
length, and for 20 feet in certain exceptional cases, they are paid 
1 cent per linear foot for each mile run, and for closed pouch service 
certain rates for certain distances regardless of the number of pouches 
dispatched. 

In a bill prepared by Mr. Henry C. Lyons, secretary of the Boston 
Elevated Railway Co., and submitted to the joint committee on behalf 



RAILWAY MAIL PAY. 953 

of the American Electric Railway Association, it is proposed to in- 
crease the 1 cent per linear foot rate above referred to to 1J cents and 
to limit the number of closed pouches that can be carried without 
extra compensation being paid therefor to three. It is also proposed 
to increase the car space for which compensation can be paid from 
16 to 30 feet and to provide for a minimum annual rate on the basis 
of 30,000 miles. 

The proposed bill is set out in full in volume 5 of the Hearings, 
page 778. The Post Office Department disapproves of same as set 
forth in a memorandum prepared by Hon. Joseph Stewart, Second 
Assistant Postmaster General, and submitted to the joint committee 
by the Postmaster General on July 25, 1913. (Vol. 5, pp. 780 to 782, 
inclusive.) General Stewart is of the opinion that the tentative bill 
proposed in Document No. 105 and as subsequently modified and 
printed on page 109 of the preliminary report provides " a scientific 
and equitable plan for the fixing of compensation for the carriage of 
mails by railroads, both steam and electric." (Vol. 5, p. 782.) 

From a conversation had with Mr. Lyons, the representatives of 
electric railroad lines have failed to appreciate that the suggested 
plan of the department contemplated its application to their lines 
as well as to steam railroads. While they have proposed a bill to 
amend existing law, it does not appear that they are opposed to a 
space basis predicated on cost. 1 

The testimony of electric railway representatives may be found in 
volume 1 of the Hearings, beginning on page 140 to 171, inclusive. 
The testimony of representatives of the Boston Elevated Railway 
Co., the Brooklyn Heights Railroad Co.. and of the Chicago railways 
indicate that thev claim a loss in the carriage of the mails of approxi- 
mately $18,000 for each company. (Vol. 1, pp. 142, 161, and 167.) 

Under the bill proposed by the electric lines, Mr. J. H. Neal, audi- 
tor of the Boston Elevated Electric Railway Co., presents a state- 
ment showing that if it had been enacted into law a year previous to 
his statement that his company would have received $19,506.86 more 
than it did receive if linear foot rate had been 1^ cents instead of 1 
cent, and $12,076.63 additional if they had been guaranteed a mini- 
mum annual rate based on 30,000 miles run. Mr. Lyons states that 
the $19,506.86 would make the company whole." (Vol. 5, p. 779.) 

LORENZ PLAN. 

This plan is one proposed by Mr. M. O. Lorenz, associate statistician 
of the Interstate Commerce Commission, and for a period employed 
by the joint committee to make a study of the railway mail problem. 
Since he has. as already indicated on the first page of this memo- 
randum, filed a report and one embracing the plan recommended by 
him, full details may be had by reference to same. 

It will only be necessary here to say that his plan is in the nature 
of a compromise between a space and a weight basis. His plan in 

1 For a qualification of the statement made in the text see p. 981 of a letter ad- 
dressed to Hon. John A. Moon by a committee of the American Electric Railway Asso- 
ciation, printed in this volume, under heading " Electric and Cable Car Routes," where it 
is said : " The proposition of the Post Office Department to pay the carriers on the 
basis of 6 per cent upon the capital invested is not believed to be" a practicable proposi- 
tion, as it is not believed that the Post Olfice Department and the carriers could ever 
agree upon the valuations involved." 



954 RAILWAY MAIL PAY. 

brief proposes to pay a certain rate for a standard car, say 60 feet r 
a lower rate being paid as the distance, measured by zones, increases r 
and a proportionately higher rate in each of the distance zones as the 
weight of the mails increases. His plan provides for ascertaining the 
average load per car rather than the average daily weight over the 
line as at present. 

His plan further provides or rather contemplates a submission of 
the rates fixed to the Interstate Commerce Commission by either the 
Post Office Department or the railroads upon complaint made that the 
rates fixed are too high or too low, and then for an appeal to some 
court for judicial and final determination. 

His method of treatment of the closed pouch service will be dis- 
closed by reference to his report. (See pp. 873 to 876, inclusive.) 

Now, having discussed the first premise, namely, various bases of 
compensating the railroads for carrying the mails, the next consid- 
eration will be to inquire what attitude the Government should as- 
sume in reaching a determination as to the rate or rates to be paid, 
and whether or not the railroads are receiving adequate compensation 
for the services they are now rendering the Government. 

The foregoing considerations will be respectively discussed under 
the headings following, namely : 

(1) Should the United States Government be given preferential 
treatment in the matter of mail transportation ? 

(2)» Are the railroads underpaid or overpaid? 

Should the United States Government be Given Preferential 
Treatment in the Matter of Mail Transportation? 

Frequent intimations have been made in the hearings, because of 
the so-called power of eminent domain, a privilege not enjoyed by 
any individual, and the protection the Federal Government affords 
them in case of strikes, that the railroads should perform the services 
incident to transporting the mails for the Government at a less price 
than if they were doing the same service for an individual. Repre- 
sentatives of the railroads are in accord that there is no justification 
for this view. (Vol. 2, p. 439.) 

Hon. Joseph Stewart, Second Assistant Postmaster General, makes 
the following statement as to what, among other things, should be 
taken into consideration in determining a proper return the railroads 
of the country should receive for their services in transporting the 
mails : 

What the relation is between what they receive and the fair value of what 
they give * * * what it is worth to the railroad companies to carry the 
"United Sates mails and what they owe the Government of the United States, 
what they owe the people ; what they owe the country at large for the privilege 
of maintaining their corporate existence and receiving public grants of land, 
rights of way, and performing practically a monopoly of the transportation 
service of the country. (Vol. 5, p. 657.) 

The Government of the United States in asserting jurisdiction over 
the matter of mail transportation is simply carrying out an obliga- 
tion imposed by necessary implication by that provision of the Con- 
stitution which authorizes Congress "to establish post offices and 
post roads." In controlling and regulating mail transportation, by 
whatever agency or intrumentality employed, it can only be regarded 



KAILWAY MAIL PAY. 955 

as in the proper discharge of a governmental function. On the other 
hand, a railroad corporation is a private concern and entitled to re- 
ceive that same protection and consideration from the Federal Gov- 
ernment that is accorded an individual under those provisions of the 
Constitution which declare that no person shall be deprived of his 
property " without due process of law " and that " private property " 
shall not be taken " for public use without just compensation." 

A railroad corporation is nothing more than an aggregation of 
individuals. The capital employed in the conduct of such a business 
is larger than most individuals can furnish or are willing to risk, 
hence the necessity of combining the resources of individuals. The 
officers, bondholders, and stockholders of these corporations are a 
part of the people engaged in a legitimate business that is essential 
to the happiness and welfare of the people of the country as a whole, 
for railroads mean expansion and development. In this connection 
the following is quoted from an address delivered by Mr. Elliott, the 
new president of the New York, New Haven & Hartford Railroad 
Co., at Helena, Mont., in September, 1909, and appearing in an article 
printed in Leslie's Weekly of August 21, 1913 : 

Now, who is the owner of this enormous and complicated piece of machinery 
built up in the last 50 years? The best figures obtainable as to the number of 
stockholders of our railways show 440,000, and while the number of bond- 
holders can not be determined with the same accuracy, information about a few 
roads indicated that the number of bondholders exceeds the number of stock- 
holders, and that 1,000,000 is not an unfair figure to represent those holding 
railway securities. The average of each owner of railway property in this 
country is $13,600. Of course, some individuals hold more than this, and very 
many hold much less, but the statement that the railways are owned and con- 
trolled by a very few rich men is not correct. These 1,000,000 owners represent 
at least 4,000,000 people in the United States, whose daily bread and butter 
depends more or less on the failure or success of the railways. In addition to 
the 1,525,000 employees working directly for the railways, there are 2,500,000 in 
coal mines, steel mills, manufacturing plants, all supplying what is necessary 
for the railways in their operations, who represent at least 10.000,000 of our 
total population. So the railway employees and the employees of the industries 
dependent more or less upon its maintenance on a sound basis represent approx- 
imately 16,000,000 people whose rights must be considered. 

It is true that in times gone by the railroads have received grants 
of land and donations in the way of subsidies from the Government. 
In the early days capital was limited and the railroads had to be 
so encouraged; otherwise they would not have been built, and our 
country opened up and developed. 

The power of eminent domain should not be regarded wholly 
as a privilege, but rather as an arrangement of reciprocal advantage 
to the State and its citizens generally on the one hand and its citizens 
comprising the corporation and those dependent upon the corpora- 
tion for support on the other. But for such a power, who can say 
what effect individual avarice and cupidity would have had on the 
development of our country ? A few individuals, or even one, could 
have held up railroad extension indefinitely with resultant dis- 
comfort, inconvenience, and pecuniary loss to thousands of other 
individuals. 

Such considerations can only lead to the conclusion that the rail- 
roads are entitled to receive from the Government for service 
rendered in transporting the mails a reasonable rate. They are just 
as much entitled to it as an individual. They contribute large 



956 RAILWAY MAIL PAY. 

amounts to Government support in the way of taxes and in the 
purchase of postage stamps. A rate to be reasonable must be suffi- 
ciently high to include compensation for the service performed and 
a return on the capital employed. More than this the railroads 
should not expect or be permitted to receive. To deny them a 
reasonable rate and to fix upon one that was noncompensatory would 
certainly mean, if applied to all articles transported, withdrawal of 
investments in railroad properties resulting in bankruptcy of rail : 
roads and then ultimately Government ownership of railroads. 

As a corallary to the plea advanced that the railroads are entitled 
to receive a reasonable rate it can be just as positively asserted that 
they should be regulated in order that they may be prevented from 
charging an unreasonable rate. It is necessary for the protection 
of society and for the well being of the individual himself to regulate 
his conduct. So, too, in order to protect the public from an 
avaricious corporation, it is necessary to regulate its conduct and its 
affairs. In this respect the individual and the corporation should 
stand on an equality before the law. Both should be permitted 
under the laAV to receive a reasonable rate and the .affairs of both 
should be so regulated that such a rate may not be exceeded. 

On the whole it would appear that any theory advanced that the 
railroads are not entitled to receive a reasonable rate for the trans- 
portation of mails as above defined is subversive of that principle 
of " equality before the law " which is the very foundation of our 
Government as well as repugnant to the constitutional provisions 
already referred to. 

ARE THE RAILROADS UNDERPAID OR 0VEKPA1D ? 

Having determined that the railroads are in all justice and equity- 
entitled to a reasonable rate for their services in the matter of mail 
transportation, the next inquiry is to determine whether they are 
now receiving such a rate or one that is below or in excess of a rea- 
sonable rate. 

Since the law of 1873 was enacted there have been, as already indi- 
cated on page 906 of this memorandum, several reductions in railway 
mail pay. These reductions were doubtless made in response to a 
steadily growing general impression that the railroads were being 
overpaid. 

Congress after making the reductions of 10 and 5 per cent in the 
years 1876 and 1878, respectively, later, namely, on June 13, 1898, 
authorized the appointment of a commission to inquire, among other 
things, " whether or not excessive prices are paid to the railroad com- 
panies for the transportation of mails and as compensation for postal- 
car service." That commission in the discharge of the duty imposed 
upon it made its report on January 1, 1901, reaching the conclusion 
that the railroads were not receiving excessive prices for either the 
transportation of mail or their postal-car service. Its statistician, 
inferentially at least, reached a similar conclusion, but on a hypoth- 
esis, fully referred to on pages 904 to 905, inclusive, of this memo- 
randum, that mail could be more economically loaded, recommended 
a reduction in the rates then obtaining, as will also appear by refer- 
ence to the pages just indicated. 



RAILWAY MAIL PAY. 957 

Under the operation of the basic law of 1873 there was, as will 
appear from a table presented by Mr. H. C. Adams (vol. 2, p. 249, 
Wolcott-Loud Postal Commission Report), an automatic decrease 
in the rate per ton-mile as the volume of mail increased, varying, 
exclusive of postal-car pay, from $1.17 for an average daily weight 
of 200 pounds to 6.073 cents per ton-mile for an average daily weight 
of 300,000 pounds. These figures, under the operation of subsequent 
reductions made in 1876, 1878, 1907, and the application of divisor 
order No. 412, made in the latter year, to be hereafter referred to, 
were reduced to $1.11 per ton-mile for an average daily weight of 
200 pounds and to 5.534 cents per ton-mile for an average dai.ly 
weight of 300,000 pounds, exclusive of postal-car pay, as will appear 
from a statement prepared by Mr. H. T. Newcomb, statistician of 
the railroads committee on railway mail pay. (Vol. 1, p. 97.) 

Notwithstanding the conclusion reached by the commission in 
1901, Congress again, as referred to in the preceding paragraph, on 
March 2, 1907, reduced the rate 5 per cent on weights in excess of 
5,000 pounds and less than 48,000 pounds and the equivalent of a 
10 per cent reduction for each 2,000 pounds in excess of 48,000 
pounds, and also reduced the rates fixed by the law of 1873 for rail- 
way post-office car service. In addition to this administrative order 
No. 412 was issued the same year, reducing the average daily weight 
by the application of a divisor of 7 instead of 6. (Vol. 1, pp. 98-99 ; 
vol. 5, p. 726.) 

The reductions occasioned by the law of 1907 and by divisor order 
No. 412 have already been discussed on pages 917 and 918 of this 
memorandum, and there is no occasion to more than refer to them 
here. 

Congress also on May 12, 1910, reduced the rate on land-grant 
routes for each 2,000 pounds in excess of 48,000 from $17.10, the rate 
prescribed by the act of 1907, to $15.39. 

Mr. Newcomb makes the following summary of the reductions 
occasioned by the acts and administrative order No. 412, above re- 
ferred to (vol. 1, p. 101) : 



Cause of reduction. 



Natural operation of law of 1873 

Competition stimulated hy Post Office Department 

Act of Mar. 2, 1907, and amendment of May 12, 191.0 

Postmaster General's divisor order 

Withdrawal of pay for special facilities 

Withdrawal of mail supplies from mails 

Total (with no allowance for the first item above). 



Amount of 
reduction. 



0) 

.$174,544.51 

2,723,658.90 

4,941,940.34 

167,005.00 

525,000.00 



i, 532, 148. 75 



1 No estimate. 

Two items of this aggregate of $8,532,148.75 should never have 
been mentioned, as their presentation tend to weaken rather than 
strengthen the railroad's argument that they are underpaid. The 
two items referred to are those for " Competition, stimulated by 
Post Office Department " and " Withdrawal of pay for special facili- 
ties," amounting, respectively, to $174,544.51 and $167,005, or a total 
of $341,549.51. The reason for our elimination of the former can 

40396—14 68 



958 EAILWAY MAIL PAY. 

be found by reference to page 935 of this memorandum. The special 
facilities appropriation is nothing more nor less than a subsidy, the 
discontinuance of which was recommended by the Wolcott-Loud 
Commission in its report (vol. 1, p. 21). The time has come when 
the Government should not expect the railroads to transport its mail 
at less than a reasonable rate, and equally true it is that the railroads 
should not ask or expect to receive special favors or concessions from 
the Government in the way of subsidies. While it is not quite so 
apparent, yet it would seem that the inclusion of the item of $525,000 
for " Withdrawal of mail supplies from the mails " also weakens 
rather than strengthens any claim of underpayment. The Post 
Office Department should certainly have the same right as a shipper 
of any other commodity to exercise the option of sending its sup- 
plies by freight or express as best suited its purpose and convenience. 

It would appear that the three items just discussed, aggregating 
$866,549.51, should have been omitted from the statistician's sum- 
mary of reductions, thus reducing the total of reductions stated to 
$7,665,599.24. This latter amount represents reductions of $2,723,- 
658.90 occasioned by the act of March 2, 1907, and the amendment of 
May 12, 1910; and $4,941,940.34 occasioned by the Postmaster Gen- 
eral's divisor order No. 412. 

The decision of the Court of Claims, holding the divisor order to 
have been made without authority of law, and rendering judgment 
for the plaintiff, Chicago & Alton Railroad Co., has been referred to 
and discussed in prior pages of this memorandum. (See pp. 917 and 
918.) The proposed promulgation of an order similar to the one sub- 
sequently issued and known as " No. 412 " was strongly condemned in 
1885 by the then Postmaster General Hatton, in a " Documentary 
history of the Railway Mail Service," transmitted to the Senate of 
the United States under date of January 21 of that year. (See 
S. Ex. Doc. No. 40, 48th Cong.,2d sess., p. 68.) While it is believed 
the Post Office Department's judgment was erroneous in insisting 
upon the issuance and then the administrative enforcement of the 
order in question and its further prosecution of the matter in the 
courts, particularly in view of the reductions made by the act of 1907, 
the opinion is expressed, as already indicated on pages 917 and 918 of 
this memorandum, that consideration of this item by Congress can 
well be postponed until a final decision has been rendered by the 
Supreme Court of the United States. If the Supreme Court's deci- 
sion should be favorable there would be no necessity of disturbing 
the law of 1907, as the amount to be recovered from and thereafter- 
to be paid by the Government by reason thereof, added to the 
$7,100,000, which amount, as indicated on page 918, the railroads 
appear to be entitled to receive from annual weighings for their side 
and terminal services and for the use of apartment cars, would ap- 
proximate a reasonable compensation for the service rendered. The 
amount of $500,000 for side service was there stated to be more than 
conservative, and this for the reason that said amount only covers 
the estimated cost without any compensation for the service 
performed. 

The railroads confidently rely on the report of the Wolcott-Loud 
Commission made in 1901 as demonstrative that they did not charge 
or receive excessive rates at that time and to sustain their claim that 
subsequent reductions were unwarranted because of the increase in 



RAILWAY MAIL PAY. 959 

cost of almost everv factor entering into railroad operation. (Pre- 
liminary report, pp. 14-17, 22-24; vol. 1, pp. 52-54, 110-119, 203, 
233, 252, 256, 266-267, 279-286; vol 2, p. 334; vol. 3. pp. 447, 525-526; 
vol. 4, pp. 531, 535, 556, 588-589 ; vol. 5, pp. 724-727, 729, 730.) 

If the present system of pay is to be continued the conclusion can 
not but be reached that the railroads are approximately underpaid 
$12,000,000, and this without reference to the plan embodied in Docu- 
ment 105 and subsequently modified by the department in its tenta- 
tive bill printed on page 109 of the preliminary report, except that 
the estimate made for apartment-car service is obtained by the ap- 
plication of a percentage obtained from the department's car-foot- 
mile figures for railway post-office and apartment-car service given 
on page 196 of Document No. 105. 

MAIL PER TON-MILE RATE VERSUS EXPRESS PER TON-MILE RATE. 

This leads to a consideration of certain observations, appearing in 
the Congressional Eecord of February 26, 1913, made by Senator 
Ashurst, of Arizona, the purpose of which evidently was to create an 
impression in the public mind that the compensation the railroads 
were receiving was largely in excess of what was fair and reasonable. 
He makes the positive assertion that the railroads receive between 
two and three times as much from the Government for carrying the 
mails as they do from express companies for carrying express. His 
statement is apparently based on a presentation made by Prof. Henry 
C. Adams, statistical expert of the Wolcott-Loud Commission, and 
printed in its report of February 1, 1901 (Pt. 2, p. 237), showing the 
relative earnings, between certain designated points, from freight, 
express, and mail traffic per 100 pounds or per ton. Mr. M. O. 
Lorenz, while admitting the correctness of the rates quoted by Sena- 
tor Ashurst, takes issue with him as to the application sought to be 
made in the following language: 

It is undoubtedly true that the railways get more from the Government for 
the transportation of mails per ton-mile than they do from shippers of freight 
per ton-mile and probably more than they get from express companies per ton- 
mile. But whether this indicates overpayment for carrying the mails depends 
on whether the ton-mile unit is the proper basis of comparison between these 
services. That there are important differences between the carrying of the 
mails and the carrying of even first-class freight is obvious. * * * 

It will be sufficient to say here that it can be demonstrated beyond question 
that it costs considerably more to haul a mail car a mile than it does to haul a 
freight car a mile, and the number of tons of mail in a mail car on an average 
will be less than the number of tons of less-than-carload freight in a car even 
on the denser routes. It follows that the cost of hauling a ton of freight a 
mile, and probably even a ton of first-class freight, will be considerably less 
than the cost of hauling a ton of mail for a given distance. For these reasons, 
it seems to me misleading to present a table giving freight rates and mail rates 
per ton-mile, or per ton for a given distance, with the idea of showing that the 
latter are higher for a similar service. 

On the basis of car-foot : miles the evidence before the joint com- 
mittee clearly discloses that the railroads are receiving less from the 
carriage of mail than from express. (Vol. 1, pp. 52, 95, 122, 123; 
vol. 2, pp. 324-325, 327-329. 333, 335, 360-362, 427-428, 437 ; vol. 3, 
pp. 515, 526; vol. 4, p. 607; vol. 5, pp. 732-734, 744, 747-757, 763-764, 
772-776, 820, 821, 843.) 

One company represented at the hearings showing a gain in mail 
revenue over that of express was the Atchison. Topeka & Santa 



960 RAILWAY MAIL PAY. 

Fe Railroad Co. In a statement presented by Mr. Peabody, statis- 
tician of that company, he gives (vol. 3, p. 526) the earnings per car- 
foot mile from mail as 3.43 mills and for express 3.28 mills, and this 
he accounts for because of the greater average haul of express made 
on his line, the average haul for the whole country being about 200 
miles. He stated, however, " that express pays more as a rule to the 
railroads than the mail — that is, they get more out of the express 
business than they do out of the mail." (Vol. 3, pp. 504, 505, 506.) 
On page 515 he presents a statement showing that the revenue per 
gross ton-mile in mills on mail traffic was 4.08 as against a revenue 
of 6.50 mills per gross ton-mile for less-than-carload freight. In 
other words, it developed in the course of his testimony that while 
the less-than-carload business on the Atchison, Topeka & Santa Fe 
amounted to only 7.31 per cent of the total freight business, yet it 
paid 2.42 mills more per gross ton-mile than did 90 per cent of the 
mail per ton-mile. (Vol. 3, pp. 516 and 518.) 

To indicate the dissimilarity between mail and express and the 
additional services required by the Government in the transportation 
of the former, which in most instances the express companies per- 
form for themselves, reference is made to the hearings as follows: 
Volume 1, pages 123-124, 335, 337, 360, and 361; volume 2, pages 
437-438; volume 3, pages 564 to 569, inclusive, 574, 590, and 591; 
volume 4, page 586; volume 5, pages 743, 745, 746, 772 to 776, 786, 
788, and 821. 

Reference to the foregoing volumes and pages of the hearings will 
indicate to, if not convince, the inquirer, because of the additional 
services required in mail transportation that the employment of a 
ton-mile unit is not a fair basis of comparison to reach the conclusion 
that the railroads are receiving a higher compensation for their mail 
than their express service. 

This leads now to a consideration of Document No. 105 itself as a 
guide to determine whether or not the railroads of this country are 
overpaid or underpaid for their services in connection with mail 
transportation. 

As already indicated on page 920, Postmaster General Hitchcock 
announced in Document No. 105 that if the plan there proposed 
were adopted it would result in a saving to the Government of 
$9,000,000 annually. 

It has been further indicated on page 922 that if 1.78 per cent (mail 
percentage of total railroad revenue) were taken and applied to 
$14,000,000,000 (total estimated railroad capitalization), approxi- 
mately $250,000,000 would be obtained as the proportion of capital 
employed by the railroads in their mail-service transportation. The 
department, as already indicated, has conceded that there should 
be some allowance made for capital employed. If 6 per cent 
is taken as a reasonable rate, that percentage applied to $250,000,000 
would entitle the railroads to receive $15,000,000 on capital account. 
From this amount, if conceding the department is correct in other 
respects, the alleged saving of $9,000,000 should be deducted, leaving 
an apparent underpayment of $6,000,000. If 4 per cent were taken 
as a fair return on capital account the apparent underpayment would 
be $1,000,000. In any event the department has admitted on the 
record made that a return on the capital employed would entirely 
wipe out the alleged $9,000,000 saving. (Vol. 1, p. 8.) 



RAILWAY MAIL PAY. 961 

The next consideration is to inquire what effect the car-foot miles 
eliminated by the department from the mail service has on the ques- 
tion of " underpayment " or " overpayment." An analysis of the 
department's figures presented in Document No. 105 will disclose 
that the railroads were receiving 4.16 mills from their passenger 
service and 4.14 mills from their mail service. The figures presented 
to the department by the railroads disclose, as claimed by them, 4.25 
mills from their passenger service and 3.23 mills in revenue from 
their mail service. These discrepancies were the result of the depart- 
ment throwing out car-foot miles that the railroads had reported 
necessary in the conduct of its mail-transportation service. In view 
of these discrepancies a committee, at the request of Chairman 
Bourne (vol. 1, pp. 221-222), was organized, consisting of three de- 
partmental and three railroad representatives. They met and on 
March 15, 1913, reported that the earnings per car-foot mile in mail 
service was 3.37 mills and in passenger service 4.34 mills. (Vol. 2, 
p. 324.) 

In order to be fair and not misrepresent the position of the depart- 
mental members of the committee just referred to, the following is 
quoted from the joint report: 

A computation made by the Post Office Department from the data reported 
by the railroads, representing 187,760 miles of service, as actually operated in 
November, 1909, without any of the changes and modifications which the de- 
partment deemed necessary and proper to make in preparing Document No. 105 
brings the result above indicated. 

However, since the railroad and departmental figures in the first 
instance were 3.23 mills and 4.14 mills, respectively, and those 
figures, after formal conferences had between representatives of those 
respective interests, changed to 3.37 mills, there is certainly a strong 
presumption that a compromise was reached and that there must 
have been in the minds of the departmental representatives that the 
department in its treatment of car space had not given sufficient con- 
sideration to the figures presented originally by the railroads. Sup- 
port for such a construction of the report referred to may be found 
in volume 3, page 509, where Mr. McBride admits that some mis- 
takes were made in the classification of car-foot-mile space, and again 
on page 511, where he says : 

I think where the demand of the service requires them to run an additional 
car in addition to the regular baggage car they should be credited with the 
return space if they do not use it. 

In this connection Mr. Lorenz says (p. 514) : 

I can not understand * * * why, on this particular point, the Post Office 
Department should have rejected the dead space from the mails and put it in 
the passenger service. 

Mr. McBride further states : 

I think the record will show that the department has conceded that part of 
the space that was charged as dead space should have been charged to the mail 
service, referring particularly to the return movement of full postal cars and 
storage cars that could not be made use of by the companies. The statement 
is made in a letter from the former Postmaster General, Mr. Hitchcock, that in 
the consideration of the question certain modifications in the use of the data 
were proper. (Vol. 5, p. 648.) (See also preliminary report, pp. 96 and 109.) 

Taking the readjustment by the Post Office Department of its car- 
foot-mile figures, resulting in a mail revenue of 3.37 mills instead of 



962 RAILWAY MAIL PAY. 

4.14 mills as a declaration on its part that the railroads were entitled 
to this concession, the indication is that the railroads were further 
underpaid in 1909 in the sum of $8,074,931.50. 

In Document No. 105, the total operating expenses and taxes 
chargeable to the mail service for the month of November, 1909, are 
stated to be $2,682,797.92. This cost should be increased by 23.7 per 
cent, or by $635,822.50, making a total cost for November, 1909, of 
$3,317,620.42. The percentage referred to was obtained by subtract- 
ing 3.37 mills from 4.14 mills and dividing the result (77 point 
difference) by 3.37, this percentage representing a reduction in the 
department's original per-car-foot mail revenue figure. Applying 
6 per cent to the cost as above stated a figure of $3,516,677.64 is ob- 
tained, this amount representing the actual cost of operation and 
taxes plus 6 per cent return to the railroads for that month. Multi- 
plying this amount by 12 an amount for the year is obtained of 
$42,200,131.78. Similarly, if the department's cost figure stated on 
page 280 of Document No. 105 and referred to above is taken, a result 
is obtained for the year of $34,125,200.28. Subtracting this from the 
last-named amount, gives a result, as stated in the next preceding 
paragraph, of $8,074,931.50 as the apparent underpayment by reason 
of the elimination of car-foot-miles. 

Applying the foregoing amount, dependent upon whether a 6 or a 
4 per cent return is used on capital employed, to $6,000,000 or 
$1,000,000, as the case may be (p. 960 ; also p. 922) , an apparent under- 
payment is obtained of $14,074,931.50 and $9,074,931.50, respectively, 
either of which amounts is a close approximation to the $12,000,000, 
which has been stated to be the amount the railroads are justly en- 
titled to under existing law. (See pp. 918, 958, and 959.) 

Conclusion. 

On page 609 to 616, inclusive, of volume 4 of the Hearings, Mr. 
H. E. Mack, manager of mail traffic of the Missouri Pacific Eailway 
Co., makes the argument that railway-mail pay should more than 
equal passenger-train earnings. Later, on page 664 of volume 5, he 
says : 

We think the present rates are not productive of sufficient revenue for the 
reason that the revenue produced is not equivalent to the earnings of other 
passenger-train service. 

This statement prompted the following query from Chairman 
Bourne : 

If you get 25£ cents per car-mile for passenger service and the same for mail 
service, that would settle the question? (Vol. 5, p. 664.) 

To this query Mr. Mack replied : 

I would hardly say that. That leads us to the exclusive space basis, which I 
do not consider as the proper one. (Vol. 5, p. 664.) 

While he admits that " the relative space determines whether the 
relative rates are compensatory," he suggests that rates equaling the 
passenger revenue could be " adjusted by an increase in the rates for 
weight or it could be adjusted by an* increase in pay for space." 
(Vol. 5, p. 664.) He does not, however, indicate how the proposed 
increase is to be applied on weight or space to equal the passenger 



RAILWAY MAIL PAY. 963 

revenue. His position is simply a restatement of the argument that 
space is a yardstick that should only be applied in connection with 
the ascertainment of cost to demonstrate a noncompensatory rate, 
but that, as a basis of pay, it is out of the question. Such an argument 
the writer has endeavored to explode in his discussion of the Lloyd 
plan (pp. 930 to 935) and also of " cost " (pp. 924 to 929). 

The writer is inclined to agree with Mr. Mack's contention to the ex- 
tent that the mail car-mile revenue should at least equal the passenger 
car-mile revenue. The Interstate Commerce Commission, through its 
secretary, Mr. G. B. McGinty, has said in a letter dated March 24, 
1913, addressed to the chairman of the joint committee, that the pas- 
senger car-mile revenue for the whole country was 25.43 cents (vol. 
2, p. 362) ; whereas in a memorandum submitted by Mr. M. O. 
Lorenz, the mail revenue per car, based on railroads' claim as to dead 
space, is stated to be 18.49 cents as against the Post Office Depart- 
ment's figure of 22.80 cents. (Vol. 2, p. *25; see also vol. 4, pp. 618 
and 620; and vol. 5, p. 652.) 

That the passenger business, generally speaking, is not compensa- 
tory to the railroads is indicated by reference to page 57 of the text 
of the Twenty-fourth Annual Report on the Statistics of Railways in 
the United States for the year ending June 30, 1911. On that page 
the percentage of passenger revenue to the total of railroad revenue is 
stated to be 23.57 per cent. On page 44 of the same report the aver- 
age receipts per train-mile from all passenger-train services rendered 
during that year is stated to be $1.30; whereas the average cost for 
operating expenses alone to run the trains of all classes, both passen- 
ger and freight, is stated to be $1.54. Mr. M. O. Lorenz, volume 4, 
page 627, while unwilling to commit himself to a statement that the 
passenger business was unremunerative, does say that " he is rather 
inclined to think is not likely to be found as profitable as the freight." 

If the passenger business is not remunerative the mail business is 
certainly not, for reasons indicated in various parts of this memo- 
randum. Should that premise be accepted as true, the railroads are 
entitled to a reasonable rate as defined on pages 955 and 956. The 
handling of first-class mail matter is remunerative to the Government ; 
there is a growing public demand that postage on second-class mail 
matter should be raised in order that it might more nearly pay the cost 
of handling ; fourth-class or parcel-post matter, from statements given 
out by the Post Office Department, is now yielding a profit, and third- 
class mail matter is being handled without any material loss to the 
Government. Wiry, therefore, should not the several classes into 
which railroad transportation is divided each pay its proportionate 
share of operating costs and receive its proportionate share in the 
way of profits in order that no one service may be a drain on the 
other? 

The following is a compilation made from pages 28 and 29 of the 
Statistical Report of the Interstate Commerce Commission, referred 
to above, showing the average wage per day of various classes of 
railroad employees for the year 1911 as compared with the year 1910. 



964 



BAILWAY MAIL PAY. 



Class of employees. 


Average wages per day. 


1910 


1911 


Increase. 


General officers 


$13.27 
6.22 
2.40 
2.12 
1.84 
4.55 
2.74 
3.91 
2.69 
3.08 
2.51 
2.18 
1.99 
1.47 
1.69 
2.33 
2.22 
2.01 


$12.99 
6.27 
2.49 
2.17 
1.89 
4.79 
2.94 
4.16 
2.88 
3.14 
2.54 
2.24 
2.07 
1.50 
1.74 
2.44 
2.34 
2.08 


Per cent. 
—2.11 




.80 


General office clerks 


3.75 


Station agents ; 


2.36 


Other station men 


2.73 


Enginemen 


5.27 


Firemen 


7.30 


Conductors 


6.65 


Other trainmen 


7.06 


Machinists 


1.95 


Carpenters * 


1.16 


Other shopmen 


2.75 


Section foremen 


4.02 


Other trackmen 


2.04 




2.95 




4.72 


Employees — accounting floating equipment 


5.41 




3.48 








1910 


1911 


Percentage 

of increase, 

1910-11. 


Total compensation paid railroad employees 


$1,143,725,306 


$1,208,466,470 


5.66 



For increased percentage of average wages paid same classes of employees for the year 1910 over 1901, see 
preliminary report, p. 23. 

Eecently differences between eastern railroads and their con- 
ductors and trainmen as to wages paid were submitted to arbitra- 
tion, with the result, as stated in a Washington newspaper, that the 
protesting employees were declared entitled to receive an increase 
of 7 per cent, amounting in round numbers to $6,000,000 to be ex- 
pended by the railroad companies concerned on that account. In this 
connection the Washington Times, in its issue of October 25, edi- 
torially says: 

But if the railroad wage earner must live, the railroad employing him must 
live, or it can't go on paying him so that he can live. And the railroad's show- 
ing is only typical of the higher cost of living of all business. 

The same statistical report of the Interstate Commerce Commis- 
sion, page 63, shows there was a 4^ per cent increase in taxes paid by 
the railroad companies for the year 1911 over 1910. (For increased 
per cent for years 1900 to 1910, see preliminary report, p. 23.) 

In an article appearing in Leslie's Weekly of August 21, 1913, Mr. 
Elliott, president of the New York, New Haven & Hartford Kailroad 
Co., is quoted as saying that out of every dollar collected by the rail- 
roads of the country in 1912 " there had to be paid out 91.41 cents 
for those things that were absolutely necessary for maintaining and 
operating the property, paying taxes and interest, leaving only the 
small balance of 8.59 cents for improvements and dividends." These 
expenditures he distributes as follows : 

Cents. 
Labor direct 44. 17 

Fuel and oil, 70 per cent labor 8. 98 

Material, supplies, and miscellaneous expenses 14. 06 

Loss and damages 2. 20 

Taxes - 4.21 



RAILWAY MAIL PAY. 965 

Cents. 

Rents for leased roads 4.41 

Interest on debt 13. 43 

Total 91. 41 

Balance 8. 59 

100.00 

Of the 8.59 cents balance, he states that " 3.75 cents were for better- 
ments and deficits and 4.84 cents for dividends." 

The eastern railroads are now before the Interstate Commerce 
Commission asking for a 5 per cent increase in freight rates on the 
plea that their expenditures are increasing faster in proportion than 
their gross revenue. In this connection the Washington Herald, in 
its issue of November 7, says editorially : 

The Interstate Commerce Commission should be sure it is fair and equitable 
and just with the railroads as well as with the shippers. The Nation needs 
prosperous railroads, safe roadbeds, and good accommodations for passengers 
and freight as well. 

And in the same connection the Washington Times, on November 
21, editorially says: 

Now, it is not to be declared that good American railroads, properly capital- 
ized, equipped, managed, and operated are being ruined; they are not yet near 
ruination. Nevertheless the railroads can't forever go on multiplying serv- 
ice and business but diminishing the profits without trouble. No business 
could. * * * 

But the public must have adequate transportation service. If railway reve- 
nues are to go on being eaten up by dearer labor, dearer fuel, dearer supplies, it 
is only a question of time till there won't be left any revenues to go into the 
improvements of existing facilities and creation of new ones. * * * 

It is idle, however, to talk about a suspension of railroad construction and 
deterioration of railway service. Those things will not be permitted. There 
must be adequate railways to do the business of this country, and their service 
must always be getting better and better. If the railway corporations can not 
for any reason whatsoever give these results — more imperative to-day than they 
ever were before and to become still more imperative in the future than they 
are now — then the State will have to give them. 

But do the American people want the State to undertake this work? Cer- 
tainly they do not. Not now, whatever may be their attitude in the future. 
But the State will have to take the railroads, and the American people will 
have to grin and bear that transfer, if the average railroad is not able to earn 
enough money to stay in the game, as first-class American railroads always have 
been in the game. 

It would seem, therefore, that any theory of rate making advanced 
which would deny to the railroads of this country a reasonable profit 
for the mail- transportation service (their revenue from this source 
being now, as stated in the statistical report of the Interstate Com- 
merce Commission for the year ending June 30, 1911, only 1.82 per 
cent of the total operating revenue) would result in a drain on other 
classes of transportation service and strengthen the plea now being 
made for higher freight rates. 

The writer can not, therefore, but agree with a statement made by 
Mr. H. E. Mack, mail traffic manager of the Missouri Pacific Rail- 
way Co., which is as follows: 

I think mail should pay its proportion of revenue, as the very highest quality 
of service is required. I think that is absolutely sound doctrine. I can not 
agree in the idea that the railroads should perform mail service for less. We- 
are not here considering a question of a new incorporation or franchise condi- 



966 RAILWAY MAIL PAY. 

tions. The whole fabric of rates is based on the theory that the mail will pay 
its proportion. Freight rates are not made higher or the passenger rates 
higher because the mails should be carried for nothing or for less than cost, 
or for less than relative earnings, and it seems to me it is not just to attempt 
to get mail service at less than relative revenue and then throw the burden 
upon the individual passenger or upon the shipper of freight to make up that 
deficiency. (Vol. 5, pp. 662-663.) 

RECOMMENDATION S. 

As already indicated in this memorandum, it is not believed that 
the present system of pay, even if continued with the modifications 
suggested by the railroads, would be any more satisfactory to the 
Post Office Department or the railroads in the future than it has in 
the past. It is believed that a cost plan is the ideal one, as cost can 
not but be the most accurate and fairest guide to reach a determina- 
tion as to what is or is not a reasonable compensation to be paid the 
railroads for carrying the mails. If such a plan Avere adopted it 
should take into consideration a return on the capital necessarily em- 
ployed as well as a return on the actual cost of operation. Cost in a 
strict sense must comprehend both capital employed and actual cost 
of operation. These represent the investment. The railroads are 
therefore clearly entitled to a fair return on their investment. To 
disassociate the two, namely, capital and operating cost, and to allow 
a return only on the latter, as first proposed by the Post Office De- 
partment, can only be regarded as a denial to the railroads of the 
country of that protection afforded by that provision of the Consti- 
tution of the United States which says that " private property " shall 
not be " taken for public use without just compensation." It is be- 
lieved that a system of cost accounting can and will be evolved on 
which to predicate what is a fair and reasonable remuneration to be 
paid the railroads for carrying the mails. There is a disposition to 
reiterate that if the railroads had made the same effort to ascertain 
the cost of, as above defined, as they have to demonstrate underpay- 
ment for the services performed by them, which the law and regula- 
tions of the Post Office Department state with particularity, the 
ascertainment would now be available. Inasmuch as that has not 
been done, and awaiting such an ascertainment by the Interstate 
Commerce Commission to be hereafter recommended, and believing 
that the railroads' objections to space are not insuperable, it is 
suggested : 

(1) That Congress repeal the law of 1873 and the subsequent 
amendments thereto so far as the rates for weight and railway post- 
office cars are concerned and substitute therefor a space basis as out- 
lined in the " four unit " or " Lloyd " plan, fully described on pages 
930 to 935, inclusive, continuing in effect such laws and post-office 
regulations not inconsistent therewith. 

(2) Inasmuch as the plan proposed adopts 4 units and the com- 
pensation to be paid for each is measured by the average passenger- 
car-mile earnings for the whole country, and the per car-foot-mile 
unit in mills ascertained by dividing a standard car of 60 feet in 
length into the average passenger-car-mile earning, it is suggested 
that the Lloy^d plan be modified so as to direct the Interstate Com- 
merce Commission to ascertain and report to the Post Office Depart- 
ment each year such average passenger-car earnings and at such time 



RAILWAY MAIL PAY. 967 

as will enable that department to make estimates for submission to 
Congress of the amount of appropriations that will be necessary for 
the next ensuing fiscal year. 

(3) That 25 cents per passenger-car mile be adopted as the basis 
of pay for the fiscal year ending June 30, 1915, and thereafter such 
figure as the Interstate Commerce Commission may ascertain and 
report to the Post Office Department as the average passenger-car- 
mile revenue. 

(4) No opinion is expressed as to the closed-pouch service. It is 
probable, however, that a specific and definite rate as well as a higher 
car-foot-mile rate will have to be fixed for this service in order that 
same may be compensatory. Mr. Lorenz has recommended and dis- 
cusses a rate to apply to this service, which a reference to his report 
will disclose. 

(5) It is further suggested that the railroads be required to carry 
the mail when offered. 

As the main features of the plan have already been fully discussed, 
it will not be necessary to further refer to them here. 

Simultaneously with the enactment of the proposed law just de- 
scribed, Congress should direct the Interstate Commerce Commission 
to immediately proceed to make an ascertainment of the cost to the 
railroads for carrying the United States mails along the lines pur- 
sued by the Post Office Department in Document No. 105, due regard 
being had to subsequent modifications made by it as stated in the 
preliminary report, pages 96 to 111, or in such manner as may be 
best calculated to bring about a correct cost ascertainment, due con- 
sideration being also given in the determination of such cost to a 
fair return on that proportion of capitalization which can be fairly 
accredited to the mail service. 

The commission should be empowered to call upon and the post 
office required to furnish all data that it may have in its possession 
that may be deemed necessary by the former to reach a proper con- 
clusion; also authorized to call upon the railroads to furnish such 
information as it may deem necessary and in such manner and form 
as may be prescribed. 

The commission should be directed to make its report to Congress 
on or before January 1, 1916, making specific recommendations with 
reference to side and terminal service and with reference to free 
transportation of Government emploj^ees. 

If the ascertainment reported to Congress was satisfactory, then 
Congress, in view of its familiarity with the plan proposed in Docu- 
ment No. 105. would have no difficulty in constructing a bill to meet 
the changes recommended by the Interstate Commerce Commission, 
same to remain in effect for a period of two years. The Interstate 
Commerce Commission would have formulated a method of making 
the ascertainment with which the railroads would be familiar, thus 
making it comparatively easy to bring up to date its initial ascer- 
tainment. Its second -and subsequent ascertainments would be re- 
ported to the Post Office Department instead of to Congress in order 
that it may be made the basis for its estimate to be transmitted to 
Congress and a guide as to how to distribute the amount appropri- 
ated by Congress among the railroads for the next ensuing two 
years. 



968 EAILWAY MAIL PAY. 

Under this plan the railroads should also be required to carry the 
mail. Both the Post Office Department and the railroads should be 
entitled to appear before the Interstate Commerce Commission to 
insist upon or protest against the ascertainment as made. The time 
for such appearances should be so arranged in order that the ascer- 
tainment might be ready for Congress at the time customary for it 
to receive through the Treasury Department the various depart- 
mental estimates. The Post Office Department and the railroads 
could just as well protect themselves by presentations made in the 
interim between the biennial periods and then by appeal to the 
courts, if that procedure were deemed by either to be necessary or 
desirable. 

No attempt is here made to present a bill stating in detail all the 
provisions necessary to make either of the two proposed plans work- 
able and effective. The Lloyd plan is believed to be an improvement 
over the present law. If a proper cost ascertainment can be made, 
this, it is believed, would be the more desirable. The Lorenz 
plan has not been studied sufficiently to make any recommenda- 
tion with regard to it. The writer has adopted the course he 
believes that it has been desired he should pursue and has worked 
independently of Mr. Lorenz as Mr. Lorenz has worked independ- 
ently of him. It is for this reason that Mr. Lorenz's plan has only 
been casually refered to, and such reference that has been made to it 
in this memorandum has been based only upon a page and a half 
memorandum he submitted to the writer almost at the very inception 
of our respective investigations of the subject matter hereof. 

Eespectfully submitted. 



TRANSPORTATION RATES, ETC., EOR GOVERNMENT-OWNED CARS. 

Under date of December 8 the chairman of the joint committee 
addressed a letter each to Hon. Hugh M. Smith, Commissioner Bureau 
of Fisheries; Hon. S. W. Stratton, Bureau of Standards; and Lion. 
J. A. Holmes, Director Bureau of Mines, requesting for the use of 
the joint committee information upon above heading, which letter 
reads as follows : 

Dear Sir: For the information of the Joint Committee on Postage on Second- 
Class Mail Matter and Compensation for the Transportation of Mail, will you 
kindly furnish me at your earliest convenience with the following data : 

(1) Number, weight, length, and material of your fish (or department) cars 
(as the case may be) owned by the Government. 

(2) Rates at which the Government pays the railroads for hauling said cars 
on estimated car-mile basis. 

(3) Whether the car-mile payment includes attendants on car; if not, what 
method the Government has for paying for attendants. 

On receipt of this letter will you kindly call up Branch 891 Capitol and notify 
Mr. Turner, secretary of this committee, as to when I may expect your written 
reply to the letter. 

Yours very truly. Jonathan Bourne, Jr., Chairman. 



RAILWAY MAIL PAY. 



969 



To this communication the Government officials above referred to 
replied, respectively, as follows : 

Department of Commerce, 

Bureau of Fisheries, 
Washington, December 9, 1913. 
Hon. Jonathan Bourne, Jr., 

United States Senate, Washington, D. G. 
Dear Sir : In reply to your letter of December 8, asking for certain informa- 
tion relative to the fish transportation cars of this bureau for the use of the 
Joint Committee on Postage on Second-Class Mail Matter and Compensation for 
the Transportation of Mail, I beg to advise you as follows : 

(1) The Bureau of Fisheries operates five wooden cars, weighing approxi- 
mately 100,000 pounds each. They have a body length of 60 feet and are 68 
feet from buffer to buffer. 

The bureau is about to construct two steel cars, which were authorized in 
the sundry civil bill for 1914, to take the place of two of the above, which will 
weigh about 150,000 pounds each and will be of the same dimensions as the 
present wooden cars. In the estimates submitted for the coming fiscal year 
there is an item providing for four more steel cars as, owing to present railroad 
conditions, it is highly desirable to discontinue entirely the use of wooden cars. 

(2) Each railroad establishes its own rate for hauling the bureau's cars and 
the rates vary greatly, as shown by the list inclosed herewith. Generally speak- 
ing, however, the railroads east of the Mississippi River charge 20 cents per 
mile, while west of the Mississippi, where the hauls are longer, the prevailing 
rate is 10 cents per mile. It is believed that most railroad companies realize 
the value of having the waters contiguous to their lines stocked with fish and 
have granted the bureau comparatively low rates. In Colorado and Michigan 
free transportation for the bureau's cars and messengers is usually furnished. 

(3) The mileage payment includes five attendants for each car. In Texas, 
however, there is a rate of 15 cents per mile for a car and crew Of four men, 
the car being returned to the initial point of departure. 

Very truly yours, 

• E. Lester Jones, 

Acting Commissioner. 

Rates for hauling Bureau of Fisheries cars. 



Name of railroad. 



Rate. 



Remarks. 



Ann Arbor R.R 

Atchison, Topeka & Santa Fe. 
Atlanta & West Point. 



Atlanta, Birmingham & Atlantic 

Atlantic Coast Line 

Baltimore & Ohio R.R 

Baltimore & Ohio Southwestern R. R. 
Bangor & Aroostook R. R 



Bloomsburg & Sullivan . 

Blue Ridge Ry 

Boston & Albany 

Boston & Maine R. R. . . 



Carolina, Clinchfield & Ohio 

Central of Georgia Ry 

Central Passenger Association, Chicago, 111. 

Chesapeake & Ohio Ry 

Central R. R. of New Jersey 

Central Vermont 



Charleston & Western Carolina. 

Chicago & Eastern Illinois 

Chicago & North Western 



Chicago, Burlington & Quincy 
Chicago Great Western 



20 cents per mile 

10 cents per mile 

20 cents per mile 

do 

do 

do 

do 

Intrastate, 10 cents per mile; 

interstate, 20 cents per 

mile. 

25 cents per mile 

20 cents per mile 

18 regular fares 

20 cents per mile, except in 

New Hampshire, where 

fares are also charged for 

men. 

20 cents per mile 

do 

do 

do 

do 

25 cents por mile and fares 

for crew. 

20 cents per mile 

do 

10 cents per mile and fares 

for men. 
10 cents per mile, unless fares 

of occupants amounts to 

more. 
10 cents per mile 



Minimum, $10. 

Do. 

Do. 

Do. 
Minimum, $15. 

Do. 



Minimum, $10. 
Minimum, $25. 
Minimum $15. 



Minimum $10. 
Do. 
Do. 



Minimum $12. 
Minimum $10. 



Car free when fish are planted 
along line of railroad. 



Fares for men over Dubuque 
bridge 



970 BAILWAY MAIL PAY. 

Rates for hauling Bureau of Fisheries cars — Continued. 



Name of railroad. 



Chicago, Indianapolis & Louisville. 
Chicago, Milwaukee & St. Paul 



Chicago, Peoria & St. Louis.. 
Chicago, Rock Island & Gulf. 



Chicago, Rock Island & Pacific 

Chicago, St Paul, Minneapolis & Omaha... 

Cumberland Valley 

Cincinnati, Hamilton & Dayton R. R 

Cleveland, Cincinnati, Chicago & St. Louis. 

Colorado & Southern 

Colorado Midland Ry 

Coudersport & Port Allegheny 

Delaware & Hudson Co 



Delaware, Lackawanna & Western 

Denver & Rio Grande 

Detroit & Mackinac 

Coal & Coke Co 

Duluth, South Shore & Atlantic 

El Paso & North Eastern and El Paso 
South Western. 

Erie Railroad 

Evansville & Terre Haute 

Fort Worth & Denver City 



Florida East Coast , 

Fort Worth <k Rio Grande. 



Galveston, Harrisonburg & San Antonio. 

Georgia, Florida & Alabama 

Georgetown & Western 

Georgia Northern Ry 

Georgia R . R 

Georgia Southern Florida 

Grand Rapids & Indiana Ry ' 

Grand Trunk 

Great Northern 



GreenBay & Western 

Gulf, Colorado & Santa Fee. 



Gulf & Ship Island R. R.. 

Hocking Valley Ry 

Houston & Texas Central . 



Houston East <t West Texas. 



Huntingdon & Broad Top. 
Illinois Central 



International & Great Northern. 
Iron Mountain & Greenbrier Ry . 



Kansas City, Mexico & Orient Ry. Co. of 
Texas. 

Kansas City Southern 

Lake Erie & Western 

Lake Shore & Michigan Southern 

Lehigh Valley Ry 

Little Kanawha R . R 

Louisville, Hendersonville & St. Louis 

Louisville & Nashville 



Macon & Birmingham 

Macon, Dublin & Savannah Ry. 
Maine Central Ry 



Manchester <k Oneida Ry 

Manistique Ry , 

Maricopa & Phoenix R. R. and Salt River 
Valley R. R. 

Michigan Central R. R . . .'. , 

Minneapolis & St. Louis 



20 cents per mile 

10 cents per mile and fare for 
each man. 

20 cents per mile 

10 cents per mile. In Texas, 
15 cents per mile for car 
and 4 men; return free. 

10 cents per mile 

Car free; full fare for men 

20 cents per mile 

do 

do 

10 cents per mile 

do 

20 cents per mile 

do 



do 

10 cents per mile. 

Free 

do 

20 cents per mile . 
Free 



20 cents per mile 

....do 

15 cents per mile in Texas., 
car and 4 men; return free. 

20 cents per mile 

15 cents per mile for car and 
4 men; return free. 

do 

20 cents per mile 



20 cents per mile 

do 

do 

Car free; fare for men. 

20 cents per mile 

do 



.do. 



10 cents per mile; in Texas, 
15 cents per mile for car 
and 4 men; return free. 

20 cents per mile 

....do 



15 cents per mile for car and 
4 messengers; return free. 

15 cents per mile for car and 
4 men; return free. 

20 cents per mile 

10 cents per mile north of 
Ohio River; 20 cents per 
mile south of Ohio River. 

15 cents per mile for car and 
4 men; return free. 

$4 round trip 



15 cents per mile, car and 4 
men; return free. 

10 cents per mile , 

20 cents per mile 

do 



20 cents per mile . 

do 

do 



Interstate, 20 cents per mile; 

intrastate, 10 cents per 

mile. 

20 cents per mile 

Free 

30 cents per mile and fare for 

men. 

20 cents per mile 

10 cents per mile 



Remarks. 



Car free when fish are planted 

along line of railroad- 
Minimum $10. 



Do. 



Minimum, $15; car and crew 
free when fish are planted 
along line of railroad. 



Minimum, $10. 



Do. 

Do. 

Do. 
Minimum, $25. 
Minimum, $10. 

Do. 

Do. 



10 cents per mile when flsh 
planted along line of rail- 
road. 

Minimum, $10. 



Minimum, $20.- 

Minimum, $10. 

Do. 

Minimum, $15. 
Minimum, $10. 



Do, 

Switching from depot to sid- 
ing near hatchery. 
Minimum, $10. 



Do. 

Do. 
Minimum, 10; bridge at Hen- 
dersonville, Ky., $4. 
Minimum, $10. 

Do. 
Minimum, $15. 



Minimum, $15. 
Free when fish are planted 
along line of railroad. 



RAILWAY MAIL PAY. 
Rates for hauling Bureau of Fisheries cars — Continued. 



971 



Name of railroad. 



Rate. 



Minneapolis, St. Paul & Sault Ste. Marie 10 fares when fish are not 

planted along line. 

Missouri, Kansas & Texas ! 15 cents per mile for car and 

4 men; return free. 

Missouri Pacific Ry 1\ cents per mile 

Mobile & Ohio 20 cents per mile 



Montana R. R 
Nashville, Chattanooga & St. Louis. .. 
New York Central & Hudson River R 
New York, New Haven & Hartford. . . 

Norfolk & Southern 

Norfolk & Western 



Northern Pacific Ry do 



Free. 

20 cents per mile . 

18 full fares 

20 cents per mile. 

do 

do 



Oregon Railway & Navigation Co 20 cents per mile 

Oregon Short Line ( do 

Pennsylvania Co do 

Pennsylvania Railroad i do 

Pere Marquette R. R do 



Philadelphia & Reading 

Queen & Crescent 

Quincy, Omaha & Kansas City R. R. 



Richmond, Fredericksburg & Potomac R . R . 
San Antonio & Aransas Pass 



Seaboard Air Line 

Rutland R. R 

Southern Indiana 

Southern Pacific, Atlantic System, Pacific 
System. 

Southern Ry 

Southern Ry . in Mississippi 

St. Louis & San Francisco 



St. Louis, San Francisco Ry. of Texas 



Texas Midland Ry 

St. Louis & Southwestern. 



St. Louis, Brownville & Mexico. 



Tallulah Falls Ry 

Terminal R. R. Assn. of St. Louis. 
Texas Central 



Texas & Pacific 

Texas & New Orleans 

Toledo, St. Louis & Western. 
Trinity & Brazos Valley 



Union Pacific Ry 

Vandalia line 

Virginia-Carolina Ry . Co . 
Virginia & Southwestern . 

Wabash R. R 

Washington Southern 

Western & Atlantic Ry . . 
Western Maryland R. R . . 
Western Ry. of Alabama. 
Wheeling & Lake Erie . . . 
Wichita Valley 



Wrightsville & Tennille 1 

Yazoo & Mississippi Valley R. R. 



25 cents per mile 

20 cents per mile 

25 cents per mile and fare for 

men. 

20 cents per mile 

15 cents per mile, car and 4 

men; return free. 

20 cents per mile 

25 cents per mile 

20 cents per mile 

do 



Remarks. 



.do. 
.do. 



20 cents per mile east of Mis- 
sissippi River; fares for 
men west of Mississippi 
River, except in State of 
Missouri, where regular 
tariff fare is charged for 
movements wholly with- 
in Missouri. 

15 cents per mile, car and 4 
men; return free. 

do 

Free in Texas, 15 cents per 
mile, car and 4 men; re- 
turn free. 

15 cents per mile, car and 4 
men; return free. 

Car free: fares for men. .". 



15 cents per mile, car and 4 

men; return free. 

do 

do 

20 cents per mile 

15 cents per mile, car and 4 

men; return free. 

20 cents per mile 

do 

do 

do 

do 

do 

do 

....do 

do 

do...'. 

15 cents per mile, car and 4 

men; return free. 

20 cents per mile 

do 



5 fares when fish are planted 

along line of railroad. 
Minimum, $10. 

Do. 
Do. 

Do. 
Minimum, $15. 

Minimum, $10. 
Do. ' 

Switching charges at Omaha 
from union depot to Chi- 
cago, Burlington & Quin- 
cy, $3. fc 

Free when fish are planted 
along line of railroad. 
Do. 

Minimum, $15. 
Do. 

Free when fish are planted 
along line of railroad or in 
Michigan. 

Minimum, $15. 

Minimum, $10. 



Do. 
Do. 



Do. 
Minimum, $15. 



Minimum, $10. 
Do. 
Do. 



Do 



Bridge toll, $4. 
Minimum $10. 

Do. 
Do. 

Do. 



Minimum, $15. 
Minimum, $10. 

Do. 

Do. 

Do. 

Do. 

Do. 

Do. 

Do. 
Do. 






972 RAILWAY MAIL PAY. 

Department of Commerce, 

Bureau of Standards, 
Washington, December 9, 1913. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail Matter and 
Compensation for the Transportation of Mail, United States Senate, 
Washington, D. C. 

Dear Sir: In reply to your letter of the 8th instant asking for information 
in regard to car or cars belonging to this bureau, we have to give the follow- 
ing information in answer to your several inquiries in the order asked : 

1. Number of cars, 1 ; weight empty, 49,800 pounds ; loaded, 173,000 pounds ; 
length, 40 feet 5 inches; material, steel and wood. 

2. No charges have yet been paid by the bureau for the transportation of 
this car, although several bills have been rendered on the basis of 8 cents per 
mile for moving the car, and also a bill from the New York, Susquehanna & 
Western Railroad for two short movements of the car at $25 per movement; 
the latter charges being for moving the car from one railroad scale to another 
in the vicinity of New York where a number of scales were tested for the 
customs service. The whole question of tariff for moving the car belonging to 
this bureau is now being considered by the American Railway Association, 
and none of the bills submitted will be paid until the negotiations with the 
American Railway Association have been concluded. At the present time#they 
are considering a proposition of moving the car between certain points in each 
State free of charge, and then charge 10 cents per mile for movement within 
the several States. 

3. The regular passenger rates have been paid for the three employees of the 
bureau who operate the car. The attendants themselves are paid from the 
special appropriation of $25,000 available July 1, 1913, for the purchase and 
operation of this car. 

The car referred to above was devised for the purpose of testing railroad 
track scales and usually carries eight 10,000-pound weights and sufficient other 
weights to make up 100,000 pounds in all, and also a six-wheeled truck for 
carrying the standard weights during the tests. The car is also equipped with 
an electrically operated special crane for handling the heavy weights and 
truck. 

If there is any additional information that you desire concerning this equip- 
ment we would be very glad to furnish it by letter, or, if you prefer it, by 
sending someone to see you who can explain in detail the object of the equip- 
ment and its design. 

Respectfully, S. W. Stratton, 

Director. 



Department of the Interior, 

Bureau of Mines, 

Office of the Director, 

Washington, December 9, 1913. 
Hon. Jonathan Bourne, Jr., 

United States Senate. 
My Dear Senator Bourne: In reply to your inquiry concerning the mine- 
rescue cars owned and operated by the Bureau of Mines, under the Department 
of the Interior, I respectfully submit the following : 

(1) The Bureau of Mines owns eight standard Pullman cars of the old 
wooden type, which have been remodeled to meet the needs of the bureau and 
to comply with the regulations of the railroad companies. 

(2) All the railroads in the United States with whom the question of trans- 
portation has been taken up have furnished free transportation to the Bureau 
of Mines cars in case of mine disasters, and with a few exceptions have fur- 
nished free transportation for the cars while engaged in educational and train- 
ing work. 

(3) Four employees of the bureau— a mining engineer, a foreman miner, a 
first-aid miner, and a cook (the latter also acts as porter)— are on these cars. 
These employees are paid by the Bureau of Mines. 

Should von desire a more detailed reply to your inquiries, furnishing the 
weight, length, etc., of the cars and the mimes of the railroads furnishing free 



BAIL WAY MAIL PAY. 973 

transportation, and of those who do not, I will be glad to compile this data for 
you and furnish it by the 11th instant. 

Respectfully, J. A. Holmes, 

Director. 



Decembeb 9, 1913. 
Hon. J. A. Holmes, 

Director Bureau of Mines, Washington, D. C. 
My Dear Me. Holmes : I desire to acknowledge and thank you for your com- 
munication of this morning, transmitted by special messenger, in response to 
my letter to you of yesterday relative to your department cars owned by the 
Government. 

I shall be pleased to receive the data referred to in the concluding paragraph 
of your letter, which you have so kindly offered to compile and submit on the 
11th instant. 

Yours very truly, Jonathan Boubne, Jr., 

Chairman. 



Department of the Interior, 

Bureau of Mines, 
Washington, December 11, 1913. 
Hon. Jonathan Bourne, Jr., 

United States Senate. 
My Dear Senator Bourne: In further reply to your letter of December 8, 
requesting certain information relative to the mine-rescue cars operated by the 
Bureau of Mines, attached hereto you will find the following data: 

(1) Names of railroads granting free haul; 

(2) Names of railroads charging for car haul ; 

(3) Number, weight, length, and material of cars; 

(4) Rates paid for haul of car and whether it includes attendants. 

Hoping you will find that this information answers your inquiries com- 
pletely and satisfactorily, I am, 

Respectfully, J. A. Holmes, 

Director. 

Railroads granting free haul to Bureau of Mines cars, including four attendants. 1 

[Calendar year 1913.] 

Arkansas Central Railroad. 

Atchison, Topeka & Santa Fe Railway Co. 

Alabama Great Southern. 

Bellefonte Central Railroad Co. 

Bessemer & Lake Erie Railroad. 

Buffalo, Rochester & Pittsburgh. 

Buffalo & Susquehanna. 

Butte, Anaconda & Pacific. 

Canon City & Cripple Creek. 

Carolina, Clinchfield & Ohio Railway. 

Chesapeake & Ohio. 

Chicago, Burlington & Quincy. 

Chicago & North Western. 

Chicago & Eastern Illinois. 

Chicago, Milwaukee & Puget Sound. 

Santa Fe. Raton & Eastern Railroad. 

Chicago, Milwaukee & St. Paul. 

Chicago, Terre Haute & Southeastern. 

Central Railroad of New Jersey. 

Cincinnati, New Orleans & Texas Pacific. 

Cincinnati Southern Railway. 

Colorado Midland. 

Colorado Springs & Cripple Creek. 

Coal & Coke Railway Co. 

X A11 other than four regular attendants to pay regular fares. 
49396—14 69 



974 KAILWAY MAIL PAY. 

Colorado & Southern Railway Co. 
Colorado & Wyoming Railway Co. 
Columbia & Puget Sound Railroad. 
Copper Range Railroad Co. 
Cumberland & Pennsylvania Railroad Co. 
Delaware & Hudson Co. 

Delaware, Lackawanna & Western Railroad. 
Detroit, Toledo & Ironton. 
Duluth & Iron Range Railroad Co. 
Duluth, Missabe & Northern Railway Co. 
Duluth, South Shore & Atlantic. 
El Paso & Southwestern System. 
Erie Railroad. 

Florence & Cripple Creek Railroad Co. 
Fort Smith & Western Railroad. 
Golden Circle Railroad. 
Great Northern Railroad. 
Hocking Valley Railway Co. 
Iowa Central. 
Kanawha & Michigan. 
Kansas City, Mexico & Orient Railway. 
Kansas City Southern Railway Co. 
Lackawanna & Wyoming Valley Railroad. 
Lake Superior & Ishpeming Railway Co. 
Lehigh Valley Railroad Co. 
Louisville, Henderson & St. Louis. 
Louisville & Nashville Railroad Co. 
Midland Terminal Railway Co. 
Midland Valley Railroad. 
Mineral Range Railroad Co. 
Mississippi River & Bonne Terre Railway . 
Missouri & North Arkansas Railroad. 
Missouri, Oklahoma & Gulf Railway. 
Mobile & Ohio. 

Montana, Wyoming & Southern. 
Munising, Marquette & Southeastern. 
Nashville, Chattanooga & St. Louis. 
New York, Ontario & Western. 
Northern Pacific Railroad. 
Norfolk & Western Railway Co. 
Oregon- Washington Railroad & Navigation Co. 
Philadelphia & Reading. 
Pittsburgh, Shawmut & Northern. 
Queen & Crescent Route. 
Quincy, Omaha & Kansas City. 
St. Louis & San Francisco. 
St. Louis, El Reno & Western. 
St. Louis, Rocky Mountain & Pacific. 
Salt Lake Route. 

San Pedro, Los Angeles & Salt Lake. 
Southern Railway in Mississippi. 
Tacoma Eastern Railroad. 
Tennessee Central Railroad. 
Toledo, Peoria & Western. 
Western Maryland. 
Western Pacific Railway Co. 
Wheeling & Lake Erie. 
Evansville & Terre Haute Railroad Co. 
Minneapolis & St. Louis Railroad Co. 

Minneapolis, St. Paul & Sault Ste Marie Railway Co. (over Gogebic & Cuyuna 
Range only). 

Missouri, Kansas & Texas Railway System. 

Southern Railway. 

Southern Indiana Railway Co. 

Union Pacific. 

Missouri Pacific. 



BATT.WAY MAIL PAY. 



975 



Railroads with whom special arrangements have oeen made for hauling Bureau 
of Mines cars with their four regular attendants. 



Central of Georgia Railway Co. 



Chicago Great Western Railroad Co. 

Chicago, Indianapolis & Louisville 
Railway Co 

Chicago, Rock Island & Pacific Rail- 
way Co 



Baltimore & Ohio 

Pennsylvania Railroad system. 
Illinois Central Railroad Co_— 
New York Central 



Wabash Railroad 

Monongahela Railroad. 

Denver & Rio Grande- 



Free in case of disaster. Other moves, 
car free but attendants to pay regular 
fare. 

They would not issue pass, but stated 
would decide each case on its merits. 

Free in case of disaster. 

Free in case of disaster; otherwise, tariff 
rates. Will give special consideration 
to other moves. 

Free in case of disaster ; otherwise, for 
25 party fares, minimum charge of $25. 

Free in case of disaster ; otherwise, for 25 
party fares, minimum charge of $25. 

Free in case of disaster; otherwise, tariff 
rate (18 full fares). 

Free in case of disaster; otherwise, for 
25 party fares, minimum charge of $25. 

Free in case of disaster. 

Free in case of disaster; otherwise, mini- 
mum number of full fares. 

Free in case of disaster. 



Railroads that refuse to haul Bureau of Mines rescue cars free of charge even 

in case of disaster. 

Denver, Northwestern & Pacific Railway Co. 
Oregon Short Line. 
Southern Utah Railroad Co. 
Castle Valley Railroad Co. 





Dimensions of mine-rescue cars. 










Car No. 




1 


2 


3 


4 


5 


6 


7 


8 


Length over all, 

bumper to bumper. 

Width of car 


Ft. in. 
73 7| 
9 lOf 

14 5f 


Ft. in. 
73 6 
9 8 

13 10 

150 

154 


Ft. in. 
73 4 
10 

14 8 


Ft. in. 
73 8 
. 9 11 

14 3 

48.35 

51.00 


Ft. in. 
73 10 
9 8% 

14 1 

40 

50 


Ft. in. 
72 6 
10 

13 6 J 


Ft. in. 
63 6 
10 

13 


Ft. in. 
73 6 
9 9 


Height of top of car 


13 8J 


Weight of car (net), 


Weight of car 
(loaded) tons.. 


46.7 


46.5 


49.9 


43.95 







i Estimated. 
The cars are all of wood other than the running gear and underpart of the floor. 

A Railway-Mail Pay Plan Stated in the Form of a Bill and 
Constructed on a Space Basis. 

Under date of October 3, 1913, Hon. John H. Bankhead referred 
to the joint committee a letter addressed to him, dated September 30, 
1913, from Hon. Stanley E. Bowdle ; together with a " Railway mail 

ay plan " attached, which letter, and plan are herewith submitted 

or the record, reading, respectively, as follows : 

House of Representatives, Washington. 
Hon. J. H. Bankhead, 

Chairman Committee on Post Offices and Post Roads, 

United States Senate. 

Dear Sir : I am inclosing a " Railway mail pay plan " of Mr. Fernando C. 
Hall, of 5 Le Roy Court, Cincinnati, Ohio, which he claims will effect a saving to 



1 



976 RAILWAY MAIL PAY. 

the Post Office Department the expense of weighing mails, the terminal expense 
at St. Louis, a large part of the expense of shipping mails by freight, as there 
are clays when the mails are light, and some of the supplies and blue-tag 
matter could be carried in the postal cars without additional expense. 

The rate is the average earnings for each foot of length of authorized space, 
for postal service on 2,411 mail routes representing over 178,000 miles of 
trackage. 

Trusting you will give this matter your high consideration, I am 
Yours, very truly, 

S. E. Bowdle. 

September 30, 1913. 

Railway Mail Pay Plan. 
F. C. Hall. 

Be it enacted by the Senate and House of Representatives of the United States 
of America in Congress assembled, That the Postmaster General shall readjust 
the pay to companies operating railroads, for the transportation and handling 
the mails, and furnishing the facilities connected therewith, not less frequently 
than once each fiscal year, commencing July first, nineteen hundred and four- 
teen, at a rate of pay per annum, payable quarterly of three and twenty-three 
hundredths mills per car-foot mile, which shall consist of twelve inches linear 
measure of the length of the space authorized in the car for the transportation 
and handling of the mails, without regard to height or width thereof, for each 
mile traveled. 

Railroad companies whose railroads were constructed in whole or in part by 
a land grant made by Congress, on condition that the mail should be trans- 
ported over their roads at such a price as Congress may direct, shall receive 
eighty per cent of the foregoing rate, for the service performed over said land- 
grant trackage. 

Adjustments shall be made by accounting systems of roads, and the com- 
pensation for the term shall be stated for all service covered by each system 
or road. 

The routes for a system or road may be stated for administrative purposes 
in such a manner as the Postmaster General may determine. 

He may order service over new or additional trackage or additional service 
on any railroad or system at any time he may deem necessary. Payment there- 
for to be made from the date of beginning of such service at the rate and in 
the manner provided for by this act. Service over property owned or con- 
trolled by a terminal company shall be considered service of the roads or 
systems using such property and not that of the terminal company. 

Railroad companies carrying the mails shall furnish all necessary facilities 
for caring for and handling them while in their custody. They shall furnish 
all cars or parts of cars used in the transportation and distribution of the 
mail and place them for advance distribution as directed by the supervising 
officer of the Railway Mail Service. They shall provide side, terminal, and 
direct transfer service, and all station and depot space and rooms for handling, 
distribution, and transfer of mails en route, and for offices and rooms for em- 
ployees of the postal service engaged in such transportation when ordered by 
the Postmaster General. 

Any railroad company shall carry mails on any train it operates and without 
extra charge therefor the persons in charge of the mails when on duty and 
traveling to and from duty, all duly accredited agents and officers of the Post 
Office Department and the postal service while traveling on official business, 
upon the exhibition of their credentials. 

All cars or parts of cars used for the Railway Mail Service shall be of such 
construction, style, length, and character and furnished and equipped in such 
manner as shall be required by the Postmaster General, and shall be con- 
structed, fitted up, maintained, heated, lighted, and cleaned by and at the ex- 
pense of the railroad companies. No payment shall be made for service by any 
railway post-office car which is not sound in material and construction and 
which is not equipped with sanitary drinking-water containers and toilet fa- 
cilities, nor unless such car is regularly and thoroughly cleaned. No pay for 
service shall be allowed for the operation of any wooden railway post-office car, 
unless constructed substantially in accordance with the most approved plans 
and specifications of the Post Office Department for such type of cars, nor for 
any wooden railway post-office car run in any train between adjoining steel or 



RAILWAY MAIL PAY. 977 

steel underframe cars or between an engine and steel or steel underframe car 
adjoining. No pay shall be allowed for any car or part of car used in the Rail- 
way Mail Service which is not constructed entirely of steel after July first nine- 
teen hundred and sixteen ; and all cars accepted for this service and contracted 
for by the railroad companies after the passage of this act shall be constructed 
of steel. The Postmaster General shall make deductions from the pay of the 
railroad companies on the basis of the value of the service computed on a car- 
foot-mile basis in all cases where the cars do not comply with the provisions of 
this act. 

The Postmaster General shall authorize the amount of space on each train 
on each railroad or system necessary for the transportation and distribution 
of the mails, and for the purpose of determining the amount of space he shall 
direct the division superintendents of the Railway Mail Service to have such 
measurements taken. Provided, That no payment shall be made for any un- 
authorized space or service unless the same shall be emergency service or 
when the volume of mail is too great to be contained in the authorized space, 
and the same is of necessity put in a baggage car; in such case the clerk in 
charge will see that the same is piled across the end of the car in as small space 
as possible and make a special report of the number of linear feet and mileage 
necessary to his division superintendent, who will certify the same to the gen- 
eral superintendent and he to the Second Assistant Postmaster General for 
credit and allowance at the car-foot-mile rate. 

Space for the transportation of mails on trains other than trains on which 
Railway Mail Service is maintained shall be authorized in the same manner, 
provided that where the amount of mail is small and the space authorized is 
half in width of car the pay for such space shall be at one-half the car-foot-mile 
rate. No additional payment shall be made when mail can not be delivered 
from a railway post-office train and the same is of necessity put off at an inter- 
mediate point to go forward on another train for delivery. In case of flood or- 
disaster causing interruption to the regular service the Postmaster General shall 
authorize the division superintendent of the Railway Mail Service in the dis- 
trict where such emergency exists to establish such emergency service as may- 
be necessary, and the same shall be paid for at the car-foot-mile rate for such 
time as said service was necessary to the company or system furnishing such 
service. 

No credit shall be given for space in cars devoted to the handling and trans- 
portation of the mail unless such space be authorized by the Postmaster Gen- 
eral or unless he shall determine its use made necessary by a specific 
authorization. 

In computing the car-foot miles, the mail service shall be charged in both 
directions for a line of railway post-office cars with the maximum space author- 
ized in either direction, provided no payment shall be made for dead-heading 
cars, for which service is authorized in one direction only. 

No payment shall be made to any railroad company or system for service not 
performed, and deductions shall be made at the car-foot-mile rate for the 
failure to perform any part of the authorized service. 

In case of loss or damage to the mails while in custody of a railroad com- 
pany or system such company shall reimburse the Post Office Department for 
the loss or damage so sustained. 

If any railroad company shall fail or refuse to provide cars or apartments 
in cars for the transportation and handling of the mails when required by the 
Postmaster General, or shall fail or refuse to construct, fit up, maintain, heat, 
light, and clean such cars and provide such appliances for use in case of acci- 
dent as may be required by the Postmaster General, it shall be fined such sum 
as shall, in the discretion of the Postmaster General, be deemed proper. 

The Postmaster General shall in all cases decide upon what trains and in 
what manner the mails shall be conveyed. Every railroad company carrying 
the mails shall carry on any train it operates all mailable matter directed to 
be carried thereon. If any railroad company shall fail or refuse to transport 
the mails when required by the Postmaster General upon any train or trains 
it operates, such company shall be fined such amount as may, in the discretion 
of the Postmaster General, be deemed proper. 

The Postmaster General is authorized to have the net inside measurements of 
space taken and to collect such other information by sworn employees of the 
Post Office Department as he may deem necessary, and to have such informa- 
tion stated and verified to him by such employees under such instructions as 
he may consider just to the Post Office Department and the railroad companies, 



978 RAILWAY MAIL PAY. 

to assist in the ascertainment of space used for the transportation and the 
handling of the mails on railroads, and to employ such special clerical and 
other assistance as shall be necessary to carry out the provisions of this act, 
and to rent quarters in Washington, District of Columbia, if necessary for the 
clerical force engaged thereon, and to pay for the same out of the appropria- 
tion for inland transportation of mails by railroad. 

The provisions of this act shall apply to service operated by railroad com- 
panies and partly by steamboats. 

It shall be unlawful for any railroad company to refuse to carry the mails 
at the rate of compensation fixed by law when and for the period required by 
the Postmaster General to do so, and for every such offense it shall be fined 
not exceeding $5,000. 

If any railroad company shall refuse to carry all mails in the manner pre- 
scribed by law, the Postmaster General shall apply for a receiver for such 
railroad company in any district court in the United States of America, which 
court shall grant a receiver, who shall operate said railroad in the manner 
prescribed by law. 

It shall be unlawful for any official or employee of any railroad company to 
in any manner interfere with the handling of the mails prescribed by law, and 
any person so doing for each offense shall be fined in any sum not exceeding 
$5,000, or imprisoned not more than five years, or both, at the discretion of 
the court. 

All laws or parts of laws inconsistent herewith are hereby repealed. 

ELECTRIC AND CABLE CAR ROUTES. 1 

The following letter, signed by Mr. M. C. Brush, chairman, and 
other members of a committee of the American Electric Kailway As- 
sociation, on " Compensation for carrying United States mails," 
transmitting carbon copy of a communication dated December 11, 
1913, signed by them and addressed to Hon. John A. Moon, chair- 
man House Committee on the Post Office and Post Eoads, same being 
responsive to a memorandum prepared by Hon. Joseph Stewart, 
Second Assistant Postmaster General, and submitted to the Joint 
Committee to Investigate Second-Class Mail Matter, etc., by the 
Postmaster General under date of July 25, 1913, in answer to a pro- 
posed bill " To equalize pay for mail service on electric and cable car 
routes," submitted by Mr. Henry S. Lyons on behalf of that asso- 
ciation, is presented : 

American Electric Railway Association, 

New York, N. Y., December 11, 1913. 

Hon. Jonathan Bourne, jr., 

Washington, D. C. 
Dear Sir : We beg to attach herewith carbon copy of letter written this day 
to Hon. John A. Moon, which is self-explanatory, and respectfully submit same 
to you for such consideration and assistance as you are able and may see fit 
to give us. 

We beg to take this opportunity to thank you for the consideration shown 
us by you and your committee in the past. 
Very respectfully, yours, 

M. C. Brush, 
Second Vice-President Boston Elevated Railway Co., Boston, Mass. 
Chairman for the Committee on Compensation for Carrying 

United States Mail. 
Members of committee.— H. A. Nicholl, general manager Union Traction Co. 
of Indiana, Anderson, Ind. ; J. K. Choate, vice president J. G. White Manage- 
ment Corporation, New York, N. Y. ; A. R. Piper, general freight agent, Brook- 
lyn Rapid Transit System, Brooklyn, N. Y.; P. N. Jones, general manager 
Pittsburgh Railways Co., Pittsburgh, Pa. 



1 For testimony of representatives of electric railway lines, see vol. 1, pp. 140 to 171, 
of the Hearings on Railway Mail Pay ; for bill and memorandum referred to in the text, 
see vol. 15, pp. 778 to 782, inclusive, of vol. 5 of the Hearings on Railway Mail Pay 



RAILWAY MAIL PAY. 979 

December 11. 1913. 
Hon. John A. Moon, Chairman, 

House Committee on Post Offices and Post Roads, 

United States Capitol, Washington, D. C. 

Dear Sir: We are advised by Mr. Henry S. Lyons, secretary of the Boston 
Elevated Railway Co., that in conversation with you and your committee last 
Friday, December 5, you stated that in the preparation of your report on appro- 
priations for the Post Office Department for the year from July 1, 1914, to June 
30, 1915, you would receive and consider briefs from both the company which he 
represented and from the committee on compensation for carrying United States 
mail of the American Electric Railway Association, provided these briefs were 
in your hands on Wednesday, December 10. We further understand that in 
conversation with you over the phone on Monday, December 8, you advised Mr. 
Lyons that if the report from the American Association was in your hands by 
Friday, December 12, it would be as satisfactory as though you had received it 
on the 10th. 

_ We understand that Mr. Lyons forwarded to you the brief of his company in 
time for you to have received same on Wednesday, the 10th instant, and imme- 
diately after your conversation with Mr. Lyons the committee of the American 
Association called a meeting, which has been held this day, and respectfully 
submits the following facts in regard to the lack of commensurate compensation 
for said companies in carrying United States mail : 

We respectfully call to your attention that this committee represents 470 
railway companies in the United States, with a total mileage of approximately 
34,380 miles, and with a capitalization approximating $3,438,000,000. 

In order that you may be informed of the progress of this matter for a con- 
siderable period past, we beg to state that for several years a committee repre- 
senting this association earnestly endeavored, through presentation of facts to 
the Post Office Department, to convince that department that the electric railway 
companies performing railway mail service were inadequately compensated. 

After earnest and continued effort along these lines, the committee finally, 
in May, 1912, appeared before your committee and endeavored to make clear 
to you their position, presenting to you at that time their communication of 
May 14, 1912, copy of which is attached herewith (Exhibit A). 

Shortly after this date, upon the appointment of the special commission for 
the purpose of investigating compensation for carrying United States mail, the 
committee representing our association appeared before said commission, of 
which Senator Bourne was chairman, and presented to them the situation in 
a manner identical with that which they had presented to you. Discussion at 
that time appears in " Hearing before Joint Committee on Postage on Second- 
Class Mail Matter and Compensation for the Transportation of Mails, Sixty- 
second Congress, third session," beginning page 140. 

At this time Senator Bourne submitted to our committee a copy of a bill 
prepared by the Post Office Department and requested that we either suggest 
such changes in this bill as we believed proper from our standpoint or else 
submit a substitute bill in lieu thereof. We found it impossible to so change 
the bill submitted as to make it applicable to our position and therefore sub- 
mitted to Senator Bourne, under date of February, 1913, a bill to equalize pay 
for mail service on electric and cable car routes. (Hearing before the Joint 
Committee on Postage on Second-Class Mail Matter and Compensation for the 
Transportation of Mails, May 14, 1913, No. 5, p. 778.) 

The bill submitted by our committee was referred to the Post Office Depart- 
ment, and criticism and comment on same was made by Joseph Stewart, Second 
Assistant Postmaster General. (Hearing before Joint Committee on Postage 
on Second-Class Mail Matter and Compensation for the Transportation of Mails, 
p. 780. Memorandum for the Postmaster General, Post Office Department, 
Washington, July 25, 1913.) 

In view of this comment by Second Assistant Postmaster General, we beg to 
submit the following : 

INDEPENDENT car service. 

First. As to the criticism of Second Assistant Postmaster General Stewart, we 
desire to state that his criticism is principally that the compensation to the 
carriers will be increased. As the subject of the bill is to give an increased 
compensation for carrying United States mail, it apparently has not failed in 
its purpose. As the present rate for independent cars is 1 cent per linear foot 



980 KAILWAY MAIL PAY. 

of inside measure, and as the proposed rate is 1£ cents, the Second Assistant 
Postmaster General is correct in his conclusion that the cost would be increased 
50 per cent, or approximately $198,331.43 per annum, as shown in paragraph 2 
of his criticism. Twenty-five per cent additional equipment must be held in 
reserve to allow for inspection, maintenance, and accident. 

Paragraph 16 of the criticism is correct. A minimum mileage of 30,000 per 
car for each car required to perform the service would undoubtedly in some 
instances cause a further increase in the cost, but the Second Assistant Post- 
master General fails to take into consideration in his criticism two salient 
features of this independent car service: 

(1) (a) The carrier, in order to perform the exacting service of the Post Office 
Department, must keep the equipment in the very best physical condition to 
avoid failures and delays. 

(&) Just how the Second Assistant Postmaster General arrives at the conclu- 
sion shown in paragraph 4, that " under normal conditions is from 200 to 500 
per cent," is not shown. If by normal condition he means the minimum pay 
condition of seventy-five hundredths of 1 cent, the increase to 1£ cents would 
be 100 per ecnt, which is somewhat less than 200 to 500 per cent, as stated by 
him. 

(c) A right of way must be accorded mail cars over all others. 

(d) To perform the service efficiently the best class, and therefore the highest- 
paid class, of operators must be assigned to the mail cars. 

Each of these items imposes expenses in excess of the expense incident to the 
operation of passenger cars — the prime object and duty of the carrier. 

(2) The service of carrying mail by electric or cable cars is a substitute in 
cities and interurban districts for wagon or automobile service. If the carriers 
discontinue the service by cars, what would have been the increase in cost due 
to wagon or auto service before the parcel-post law became effective, and what 
will be the increased cost of wagon service now that the parcel-post law is in 
effect? 

What will be the increase in cost in time and money at the post offices due to 
the " making up " and pouching at the post offices instead of in the cars while 
en route? 

The cost of wagon transportation as shown by the reports of the Postmaster 
General is approximately 30 cents per mile (without the facilities for "make 
up" and "pouching" accorded by car service), while the cost per mile for car 
service will be for a 16-foot car at li-cent rate but 24 cents and for a 20-foot 
car 30 cents per mile and for the proposed maximum cars, 30-foot, 45 cents. 
The capacity of a 16-foot car is equal to the largest wagon or automobile, and 
the 20 and 30 foot cars are proportionately larger. 

Detailed data as to the cost of equipment, depreciation, and operation have 
been furnished the chairman of committee on postage on second-class mail 
matter and compensation for transportation of mail by the Boston Elevated 
Railway Co. (see letter of Boston Elevated Railway Co. to Hon. Mr. Moon, 
Dec. 8, 1913) and the Brooklyn Heights Railroad Co. (Exhibit B), two of the 
carriers making the greatest mileage and under conditions which should make 
their operating expense as low, if not lower, than the expenses of smaller car- 
riers. These data show conclusively that the service of the roads is rendered 
to the United States Government at an actual money loss to the carrier. In 
these data no account is taken of the liability to loss due to accident to pedes- 
trians and general street traffic. The mail-car schedules are all shorter than 
the passenger schedules, and therefore require a greater speed and a conse- 
quent greater hazard to life and property, followed by a greater money loss in 
payment of damages. 

POUCH SERVICE. 

Second. Paragraph 8 of the criticism of the Second Assistant Postmaster 
General is a correct statement. 

Three pouches (maximum 50 lbs.) are the equivalent of the average pas- 
senger, 150 pounds, and the space occupied is somewhat greater. The passen- 
ger fare is 5 cents for a varying distance, therefore the compensation is not 
disproportionate for the service rendered. When the number of mail pouches 
in a consignment is increased, the carrier performs an increased service, and 
there should be an increased compensation paid. Business throughout the 
world is conducted upon this basis. 

The facilities afforded the Government in making deliveries by pouch service 
on passenger cars is of a character that can not readily be obtained by wagon 
service except at a materially increased expense. 



EAILWAY MAIL PAY. 981 

Paragraph 9 of the criticism of the Second Assistant Postmaster General 
complains that the proposed law is impracticable because the Post Office De- 
partment can not tell in advance what its expenses are to be. This, if correct, 
is unfortunate from the Post Office Department's standpoint, but should not be 
advanced as a reason for not properly compensating the carriers for the service 
they render. The Post Office Department used as its yardstick a mile of travel 
regardless of the bulk or weight. We ask that in using the yardstick of a 
mile of travel that a limitation of the bulk and weight be necessary for the 
protection of the carrier, particularly with the increased amount of mail being 
thrown upon the carrier due to the parcel-post law. There is one road in the 
far West that at times has such a bulk of mail matter thrown upon it for 
delivery under the pouch service that passengers can not get on the cars on 
account of the amount of mail. In several instances on the Brooklyn Heights 
Eailroad the amount of mail matter was so great as to prevent the motorman 
from properly operating his car, and thereby endangered the lives of every 
passenger on the car. It would be eminently unfair to expect the carrier 
to exclude the passengers and operate the car at a rate of 3 cents per mile. 

The intention of the bill is that each consignment, i. e., from A to B, A to C, 
A to D, B to C, B to D, and C to D be paid for at the rate of 5 cents per mile 
for the first three pouches within the limit of 5 miles; for each mile beyond 
the 5-mile limit, 3 cents per mile is charged for the consignment of 3 pouches. 
For each pouch in the consignment over 3 would require 1 cent per mile 
for its transportation. The word " consignment " can hardly be considered 
ambiguous, and the definition given in paragraph 10 of the criticism is correct. 
The pouches sent from A to B are tagged for B and is a consignment from 
A to B. The pouches sent from A to C are tagged for C, and is a consignment 
to C, and likewise a shipment from A to D. Knowing the definition of a con- 
signment, the Second Assistant Postmaster General must misunderstand the 
bill in stating that 9 pouches (consigned in groups of 3 to three individual 
points) could be construed as a single consignment of 9 pouches. 

The use of the word " all " is an error, and should be " each," to avoid pos- 
sible misinterpretation. 

The arguments as to the substitution of wagon service for pouch service on 
passenger cars is more pertinent than when used in connection with independ- 
ent car service. 

The Post Office Department makes a record of the number of pouches in 
each consignment of pouches now shipped and by taking up the proposition 
with the postmasters involved can ascertain the number and destination in 
this way. 

The record of any year can be used as the basis of estimate for the succeeding 
year. 

The suggestion of the Second Assistant Postmaster General in paragraph 14 
of his criticism should be followed and a provision providing that substantially 
the same degree of service is rendered. 

Paragraph 16 of the criticism is correct. The word " all " should be changed 
to " each." The carrier should be remunerated upon the basis of the equipment 
it is required to use in the service of the Government. 

As to paragraph 17 of the criticism, we are surprised to find that the carriers 
have been imposed upon to the extent of $232,000 in making side deliveries. 
Certainly a compensation of 3 cents per mile on pouch mail does not pay a car- 
rier if the carriers have to expend $232,000 in side deliveries when the total 
paid for pouch and independent mail service is but three times this amount. 

The proposition of the Post Office Department to pay the carriers on the basis 
of 6 per cent upon the capital invested is not believed to be a practicable propo- 
sition, as it is not believed that the Post Office Department and the carriers could 
ever agree upon the valuations involved. 

We therefore again respectively refer to the report of the committee, dated 
May 14, 1912, which states very briefly the position of the companies which this 
committee represents in regard to proper compensation for carrying mail, and 
which recommends the following rates: 

CLOSED POUCH CITY OR SUBURBAN SERVICE. 

From one to three pouches (inclusive), maximum weight 50 pounds per pouch, 
carried on passenger cars: For 2,000 miles or less, $150 per annum; for 2,000 
miles and up to 3,500 miles, $175 per annum. 






982 EAILWAY MAIL PAY. 

Over 3,500 miles, for each consignment moving 5 miles or less, 5 cents per 
mile ; each mile in excess of 5 miles, 3 cents per mile. 

All pouches in a consignment in excess of three, 1 cent per mile per pouch 
additional. 

Deliveries to and from the car to be made by the Post Office Department 

CLOSED POUCH INTERURBAN SERVICE. 

Maximum compensation paid steam railroads for like service. 

EAILWAY POST OFFICE SERVICE. 

For independent cars or compartments in cars: City service, \\ cents per 
linear foot of interior length per car mile; interurban service, maximum com- 
pensation paid steam railroads for like service. Minimum mileage either city 
or interurban service to be 30,000 miles per year per car required in service. 

The condition of the companies two years ago was onerous, and therefore 
as a result of the passage of the parcels-post law and the increased cost of 
labor and material, is now very much more so. A great many of the com- 
panies represented by this committee are considering, in justice to the inter- 
ests which they represent, the advisability of discontinuing their mail service; 
and of this number a few, we understand, have directly notified the postal 
department within the comparatively recent past of the discontinuance of all 
or a portion of their railway-mail service. 

It is eminently proper that the electric railway companies of the United 
States, occupying the unique position as they do, should be of inestimable value 
to the postal service and to the public, and it is the desire of these companies 
that they be given more of this work to perform, with the assurance from them 
to the postal department of their earnest cooperation in maintaining the high- 
est kind of efficiency to the service, but it is absolutely unfair and inequitable 
that they should be called upon to render this service, not only without a fair 
return, but absolutely at a loss. 

We therefore respectfully submit the above and earnestly urge your earnest 
and careful consideration of this appeal. 

Respectfully submitted. 

(Signed) M. C. Brush, 

Second Vice President Boston Elevated Railway Co., Boston, Mass., Chairman 
for the Committee on Compensation for Carrying United States Mail. 

Committee members: H. A. Nicholl, general manager Union Traction Co. of 
Indiana, Anderson, Ind. ; A. R. Piper, general freight agent Brooklyn Rapid 
Transit System, Brooklyn, N. Y. ; J. K. Choate, vice president J. G. White 
Management Corporation, New York, N. Y. ; P. N. Jones, general manager Pitts- 
burgh Railways Co., Pittsburgh, Pa. 



Exhibit A. 

Committee on Compensation for Carrying United States Mail of American 
Electric Railway Association. 

[Copy of report to Committee on the Post Offices and Post Roads.] 

Washington, D. C, May 14, 1912. 
To the Committee on the Post Office and Post Roads, United States House of 

Representatives, Eon. John A. Moon, Chairman, Washington, D. C. 

Gentlemen : The American Electric Railway Association, whose membership 
comprises the electric railways throughout the United States, has for its object 
the advancement of the art and the greater efficiency of the service which its 
members are ca^ed upon to render the public, and at the same time to foster 
the industry (with which the individual citizen comes in daily contact) as legiti- 
mate business enterprise, entitled to earn a fair return for the service it renders. 

With this in view, and in response to the general complaint of its member com- 
panies as to the inadequacy of the rates paid by the Government for the trans- 
portation of the United States mail on electric roads, the association created a 
committee on compensation for carrying United States mail, and charged it 



KAIL WAY MAIL PAY. 983 

with the duty of securing data from which to formulate rates that would be 
fair to the Government, and at the same time compensatory to the member com- 
panies. This the committee has done, and in recommending the rates has had 
in view that it is the duty of the member companies to perform this service at 
as low a rate as is consistent with the cost of same plus a reasonable profit. 

RECOMMENDATIONS. 

The executive committee of the association approved the recommendation of 
the committee and instructed it to present the matter to the governmenal 
authorities and endeavor to secure the enactment of such legislation as would 
authorize the postal authorities to put in effect the rates recommended for the 
transportation of United States mail on electric city and interurban lines, which 
are as follows : 

Closed pouch city or suburban service. — From one to three pouches (inclusive), 
maximum weight 50 pounds per pouch, carried on passenger cars: For 2,000 
miles or less, $150 per annum; for 2,000 miles and up to 3,500 miles, $175 per 
annum. Over 3,500 miles, for each consignment moving 5 miles or less, 5 cents 
per mile ; each mile in excess of 5 miles, 3 cents per mile. All pouches in a con- 
signment in excess of three, 1 cent per mile per pouch additional. Deliveries to 
and from the car to be made by the Post Office Department. 

Closed-pouch interurban service. — Maximum compensation paid steam rail- 
roads for like service. 

Railway Post Office Service. — For independent cars or compartments in cars : 
City service, 1£ cents per linear foot of interior length per car-mile ; interurban 
service, maximum compensation paid steam railroads for like service ; minimum 
mileage, either city or interurban service, to be 30,000 miles per year per car re- 
quired in service. 

PRESENT RATES. 

The present rates for the transportation of United States mail on electric and 
cable lines are, under authority of an act of Congress approved March 3, 1901, 
modified by an act of Congress approved May 27, 1908, and by similar acts each 
year to the present time, as follows: 

For closed-pouch service. — 2,000 miles or less, $150 per annum ; more than 
2,000 and not more than 3,500 miles, $175 per annum ; more than 3,500 and not 
more than 5,000 miles, $200 per annum; more than 5,000 and not more than 
8.333 miles, $250 per annum; more than 8,333 miles, 3 cents per mile run. 

As modified May 27, 1908, the Postmaster General in cases where the quantity 
of mail is large and the number of exchange points numerous may, in his discre- 
tion, authorize payment for closed-pouch service at the rate per mile not to ex- 
ceed one-third above the rate per mile now paid for closed-pouch service. 

For electric and cable railway postal car service. — For mail cars and compart- 
ment carrying the mail not to exceed 1 cent per linear foot per car mile traveled. 
The present rate for closed-pouch service is on the per-mile basis, without regard 
to distance or the quantity of mail matter to be transported, and where there are 
a number of deliveries to be made along a particular route the compensation is 
reckoned not on the mileage of each delivery, but only on the mileage over which 
the car or train travels. For illustration, suppose a route is 5 miles in length 
and two intermediate deliveries are to be made— five pouches at the first, four 
at the second, and two at the third or end of the route. The compensation 
would, at 3 cents per mile, be 15 cents, the same as if the two terminal pouches 
only had been carried. This works a great hardship on the carriers, and the 
hardship increases year by year as the communities grow and the intermediate 
deliveries become more numerous. It may appear to some that the cost of per- 
forming closed-pouch service on electric lines is small, if any. This is a mistake, 
as it takes time to take on and put off the pouches; it is often necessary en 
route from post office to destination to transfer the pouches from one car to 
another; the pouches occupy valuable space that could otherwise be occupied 
by passengers, express, or baggage, and the presence of pouches increases the 
liability to accidents. 

CONCLUSION. 

A summary of the whole must lead to the conclusion that by reason of carry- 
ing the United States mail the car hours necessary to maintain the service on 
the line is increased, space is occupied, and the hazard of operation is increased. 



984 RAILWAY MAIL PAY. 

Interurban electric lines at the present time reach nearly every city or town 
in all sections of the country, and could provide means for rapid and frequent 
mail deliveries. On these lines trains are usually operated every hour, and in 
some instances every half hour, and could advantageously be used for the car- 
riage of mail matter. If compensatory rates were established, these lines would 
be justified in further carrying the mails, thus giving better and more satisfac- 
tory service to the people of these communities than could otherwise possibly be 
given. 

The maximum rate of 1 cent per mile per linear foot of inside length now paid 
for independent mail-car service on electric roads is grossly inadequate, and is 
less than it costs the carriers to maintain the service. The transportation of 
mail by electric roads may be termed a special business, which forms a very 
small proportion of its entire business, but it requires special supervision and 
entails added responsibility. The postal authorities are exacting as to the serv- 
ice, requiring promptness of dispatch and delivery. Considering all the condi- 
tions, the electric railways, if they consult their best interest, must get increased 
compensation or discontinue the business of carrying the mails. 

It may be asked why the electric roads undertook to perform the service at 
rates which were not remunerative. The answer is : 

First. Many roads undertook to carry United States mail at unremunerative 
rates with the mistaken idea that it would help them in cases of labor trouble 
to keep their cars running. 

Second. Operating expenses formerly were less than they are at present, but 
the carriers have continued from year to year in the hope that the Government 
would recognize the value of the services rendered and increase the rates to an 
equitable basis. The electric carriers now realize that the business is unprofit- 
able and undesirable at the present rates, and ask that the Government equalize 
the existing rates paid for the different classes of mail transportation so that 
the electric lines can consistently obtain a reasonable proportion of the business 
on a fairly remunerative basis. 

The report of the Second Assistant Postmaster General for the year ending 
June 30, 1911, shows the total expenditure for steam railroad transportation is 
$50,910,261.68 and covers a mileage of 449,654,863.96, or at the rate of 11.32 
cents per mile. The total expenditure for electric and cable-car service was 
$688,952.20 and covered a mileage of 11,525,267.47, or at the rate of 5.91 cents 
per mile. For wagon service the expenditure was $1,643,332.70 and covered a 
mileage of 5,177,816.92, or at the rate of 31.73 cents per mile. This shows that 
while the mileage of the electric-car service was over twice as great as the 
wagon service, the expense was only 42 per cent as much; or, in other words, 
the wagon service cost over five times as much per mile as the electric-car service. 
The comparison with steam-railroad service shows a cost per mile twice as 
great as electric-car service. 

The electric railways want to perform the service of handling the mails, but 
most earnestly submit that for the service they should be paid a remunerative 
rate, and the rates herein suggested are not more. The electric line is the most 
economical method of handling the mail; the substitution of screen or motor 
wagons would cost four or five times as much, and at certain seasons of the 
year many of the remote suburbs could not be reached by this service. 

In conclusion we respectfully urge that such legislation be recommended as 
will authorize the Postmaster General to make effective the rates herein sug- 
gested for service performed by the electric railways in carrying the United 
States mail. 

Respectfully submitted. 

T. H. Tutwilee, Chairman, 
H. A. Nicholl, 

ALEXANDER R. PlPEB, 

Subcommittee of American Electric Railway Association, 

on Compensation for Carrying United States Mail. 



RAILWAY MAIL PAY. 985 

Exhibit B. 

Statement giving estimated cost of operation of mail cars on the Brooklyn 

Heights Railroad Go. 

[Eleven mail cars now owned, 9 in actual commission. Mileage operated year ending 
June 30, 1912, 235.393 miles.] 

Cents per 

car-mile. 

(a) Car investment, taxes, interest, and insurance 1. 122 

(0) Car house and shop facilities, taxes, interest, and insurance . 386 

(c) Power-station investment, taxes, interest, and insurance 

(d) Power-transmission investment, taxes, interest, and insurance 1.132 

(e) Track investment, taxes, interest, and insurance 2.714 

(el) Overhead investment .433 

(/) Cost of power, 1 including interest on power-station investment 2. 580 

(g) Wages of car crew 6.040 

(h) Maintenance of car bodies .560 

(i) Maintenance of car trucks . 400 

(/) Maintenance of track 1. 840 

(k) Wages of other transportation and car-service employees and other 

expenses 1, 870 

(1) Maintenance of line equipment, buildings, and electrical equipment 

of cars 1. 690 

(m) General expenses 2. 410 

(n) Taxes, other than property taxes included in items (a) to (e) 1.397 



Total 24.574 

Note. — These figures are exclusive of any charge for theoretical depreciation, 
supercession, or obsolescence, or any element of profit beyond the legal rate of 
interest. 
Approved. 

(Signed) Howabd Abel, Comptroller, 

(a) Car investment : 

Car body, including cost of equipping___ $1, 469. 00 

Vestibuling 123. 28 

2 W. H. No. 68 motors, at $375 750. 00 

2 K-ll controllers, at $130 260. 00 

1 Dupont truck 300.00 



2, 902. 28 
For 11 cars 31, 925. OS 

Taxes at $18.70 per $1,000 $597. 00 

Insurance at $4 per $1,000 127. 70 

6 per cent on investment 1, 915. 50 

2, 640. 20 

Cents per 
car mile. 
Investment charges per mile on mileage operated year 

ending June 30, 1912 1. 122 

(ft) Car-house investment and shop facilities: 

$1,000 per car $11, 000. 00 

Interest at 6 per cent $660. 00 

Taxes at $18.70 per $1,000 205. 70 

Insurance at $4 per $1,000 44. 00 

909. 70 
Per car mile (on mileage operated year ending June 30, 1912) . 386 

(c) Power-station investment (included in cost of power). 

(d) Power-transmission lines: 

Cost , '— $7, 095, 300. 00 

Mileage surface lines, 49,322,535. 

Interest at 6 per cent $425, 718. 00 

Taxes at $18.70 per $1,000 132, 682. 11 

558, 400. 11 
Per car mile (on mileage operated year ending June 30, 1912) 1.132 

1 Power purchased at switchboard of producer. 



986 RAILWAY MAIL PAY. 

(e) Track iu vestment (charges taken at the average cost 
per mile for the entire surface system) : 

542.602 miles, at $31,352 per mile $17, Oil, 657. 90 

Mileage surface lines, 49,322,535. 

iinterest at 6 per cent $1,020,699.47 

Taxes at $18.70 per $1,000 318, 118. 00 

1, 338, "817. 47 
Per car mile (on mileage operated year ending June 30, 1912) 2. 714 

(el) Overhead investment (charges taken 
at the average cost per mile for the entire 
surface system) : 

542.602 miles at $5,000 per mile $2,713,010.00 

Mileage surface lines, 49,322,535. 

Interest at 6 per cent $162,780.60 

Taxes at $18.70 per $1,000 50, 733. 29 

213, 513. 89 
Per car-mile (on mileage operated year ending June 30, 1912) . 433 

(/) Cost of power 2.58 

(g) Wages of car crews : 

Year ending June 30, 1912 $14,217.74 

Mail-car mileage, 235,393. % 

Cost per car-mile 6.04 

(h) Cost of maintenance of mail-car bodies 1,318.20 

Mail-car mileage, 235,393. 

Cost per car-mile .56 

(i) Cost of maintenance of car trucks 941.57 

Mail-car mileage, 235,393. 

Cost per car-mile .40 

(/) Cost of maintenance of tracks 4,331. 23 

Mail-car mileage, 235,393. 

Cost per car-mile 1. 84 

(k) Wages of other transportation and car-service employees and 
expenses : 

Superintendence of transportation .84 

Switchmen, couplers, flagmen, etc .35 

Car supplies . 21 

Car-house employees and expense . 27 

Wrecking expenses .01 

Cleaning and sanding track . 08 

Removal of snow, ice, and sand . 06 

Operation of signal and interlocking systems . 03 

Operation of telephone and telegraph systems . 02 



1.87 



(I) Maintenance of line equipment, buildings, and electrical 
equipment of cars, and miscellaneous equipment : 

Maintenance of line equipment . 28 

Maintenance of buildings .13 

Maintenance of electrical equipment of cars . 83 

Superintendent of equipment .05 

Miscellaneous equipment .40 



(m) General expenses: 

Salaries, office and general expenses . 44 

Law expenses . 10 

Pensions and gratuities .04 

Miscellaneous expenses . 25 

Injuries and damages 1-54 

Stationery and printing .04 



2.41 



(n) Taxes: 

Special franchise 200,930. 33 

Bridge tolls 60, 731. 48 

State tax on earnings 79, 444. 16 

Federal tax - 40,427.49 

381, 533. 46 
The JB. H. R. R. Co., total car revenue miles, 27,301,459. 

Cost of taxes per car mile . *• 3975 

Mail-car miles, 235,393. 

235.393 miles at 1.3975 cents, $3,289.62. 



Office of the Postmaster General, 

Washington, D. C, January 16, 1914> 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-class Mail Matter 
and Compensation for the Transportation of Mails, Congress of 
the United States, 
My Dear Mr. Chairman: 

I hand you herewith a statement prepared by the Second Assistant 
Postmaster General in review of the testimony taken before the joint 
committee, respecting compensation for the transportation of mails. 
Yours, very truly, 

A. S. Burleson, 
Postmaster General. 
986a 



A STATEMENT GET BEHALF OF THE POST OFFICE DEPART- 
MENT IN REVIEW OF THE TESTIMONY TAKEN BEFORE 
THE JOINT COMMITTEE, RESPECTING COMPENSATION 
FOR THE TRANSPORTATION OF MAILS. 

I. 
HOUSE DOCUMENT NO. 105 AND ITS FINDINGS. 

The inquiry, the results of which are stated in House Document 
No. 105, was begun and prosecuted under the provisions of the act 
of March 3, 1879, chapter 180, section 6 (20 Stats. L., 358), requiring 
the Postmaster General to request all railroad companies carrying the 
mails to furnish under seal such data relating to operating, receipts, 
and expenditures of such roads as may, in his judgment, be necessary 
to enable him to ascertain the cost of mail transportation and the 
proper compensation to be paid for the same, and to report to Con- 
gress, with such recommendation, founded upon the information 
obtained, as shall, in his opinion be just and equitable. 

The forms and instructions prepared by the department and sent 
to all railroad companies carrying the mails, requested detailed 
information as to facilities furnished or emploj^ed for mail, passenger, 
and express services. The forms required for each train run during 
a specified period, a statement as to the termini and distance of opera- 
tion, the frequency, the average speed, the number and size of railway 
post-office cars and apartment cars run, and the closed-pouch service 
performed; also the number and length of passenger cars, and of 
express cars, and of apartments for express run in such trains; also a 
statement of station service and station and terminal facilities fur- 
nished, and of personal transportation and supervision for the mail and 
express services. A statement was required for each road or system 
showing the train and car mileage, the total revenues of the passenger, 
express, and mail services, the total operating expenses, and the total 
passenger operating expenses. As to the passenger operating ex- 
penses, additional detailed information was requested with respect 
to each of the 116 primary accounts recognized by the Interstate Com- 
merce Commission, showing for each item the amounts assignable 
directly to the mail, express, passenger, and freight services, and the 
amounts of the remainders apportioned to the passenger service (in- 
cluding mail and express), and the basis for such apportionments. 
The original cost and the present value of railway post-office and mail- 
apartment cars was also covered. (See report of Second Assistant 
Postmaster General for 1910, pp. 15 and 16.) 

987 
49396—14 70 



988 BAILWAY MAIL PAY. 

The period from midnight, October 31, to midnight, November 30, 
1909, was selected by the department for which the information 
should be furnished. Some companies, however, prepared their 
reports from records kept in the months of December, 1909, and 
January, 1910. Reports were received from 430 companies, including 
practically all the large systems, and data were submitted for 2,778 
routes, a percentage of 83.95 of a total of 3,309 authorized railroad 
mail routes. The routes for which reports were received represent a 
mileage of length of 194,587.46 miles, or 88.95 per cent of a total 
authorized mileage of length of 218,746.71 miles. The transporta- 
tion pay for the fiscal year 1910 on the routes reporting was $41,870,- 
654.45, or 94.23 per cent of a total of $44,435,504.47. Of the expendi- 
ture for railway post-office cars the companies operating the routes 
reporting received $4,496,610.19, or 95.73 per cent of a total expendi- 
ture of $4,697,140.10. (See Report of Second Assistant Postmaster 
General for 1911, p. 17.) 

Under an authorization of an appropriation by Congress a special 
force of temporary employees was secured and was engaged under the 
direction of expert regular employees in verifying the reports and 
making the necessary computations. It was found that the reports 
were inaccurate and defective in many particulars, and the special 
force checked the operation of every train and corrected every inac- 
curacy or discrepancy found. Supplemental forms and inquiries 
were sent out where the information furnished was incomplete. (Id.) 

The completed work shows the relation between the operating 
expenses charged to each of the three classes of service and the amount 
of service performed in each class upon a unit basis as well as a com- 
parison between them. It shows the same relation on a unit basis 
between the revenue derived from the mail service and a comparison 
with the ascertained cost. 

Although the results obtained by the department have been 
assailed by the railroad companies' committee, they have neverthe- 
less shown that it is possible to approximately divide the total operat- 
ing expenses of the railroads between the passenger and freight 
services, respectively, and, further, to ascertain the space relation 
between passenger proper, express, and mail services, and assign to 
these several classes the direct expenses and apportion the unas- 
signed expenses upon the ratio of the space devoted to each of the 
three classes of service. Therefore, it has been possible to compare 
the expense to the railroad companies of performing the mail service 
with the revenue derived by the companies from it on a unit basis 
of service performed. 

Besides furnishing for the first time a reliable gauge by which to 
compare compensation paid railroads with the estimated cost to 
them of performing service crediting them with the full pro rata 
share of all operating expenses in which the mails participate, the 
inquiry has developed the fact that the present system of adjusting 
compensation for mail service results in a very unequal distribution 
of pay among the companies due to conditions which are not uni- 
formly represented in a weight basis of pay. 

On the face of the data properly checked and revised where 
erroneous it was shown that that part of the total operating ex- 
penses and taxes of the railroads which was charged to the mail 



EAILWAY MAIL PAY. 989 

service on the basis of its proportion of car space to the whole passen- 
ger-car space, with the addition of 6 per cent thereon, was, for the 
companies or systems reporting, for the year in question, in the aggre- 
gate $9,000,000 less than the mail revenue received from the Gov- 
ernment. 1 (House Doc. No. 105, p. 7.) 

It will be observed that this amount is stated as the approximate 
excess of revenue over cost of operating expenses and 6 per cent "for 
the companies or systems reporting." Unfortunately for the ac- 
curacy of the matter the letter of Postmaster General Hitchcock 
transmitting Document No. 105, differed from the letter of the Sec- 
ond Assistant Postmaster General in stating that "the committee 
estimates that through a readjustment of railway mail pay on the 
basis of cost with 6 per cent profit a saving to the Government could 
be made of about $9,000,000." 

It will be readily seen that this estimate upon the entire service is 
too low. The $9,000,000 estimate was based on Table 7 of the docu- 
ment referred to, which represented 175,922 miles of routes out of a 
total of 220,730 miles of railroad mail routes. The full amount may 
be estimated by applying the ratio between revenue and expense, 
taxes, and 6 per cent, as shown by Table 7. The operating expenses, 
taxes, and 6 per cent charged to mails, based on Table 7, are 78.6383 
per cent of the revenue shown by the same table to have been received 
from mails. The total revenue for the fiscal year 1910 wa? $49,302,217. 
Applying the per cent above named gives an estimated total of operat- 
ing expenses, taxes, and 6 per cent, of $38,770,425. This would leave 
a balance of $10,531, 792. 1 

The conclusions reached in the document were assailed by the rail- 
roads on the following main grounds, namely: 

That the $9,000,000 excess of revenue over expense does not take 
into consideration a return on value of property used; 

That the department's division of total operating expenses between 
freight and passenger services was made in a manner resulting in too 
small an apportionment of unassigned expenses to the passenger serv- 
ice, and consequently decreased the cost to the mail service; and 

That the department did not charge to the mail service "dead 
space" reported by the companies as having been run in connection 
with space used for the mails. 

These contentions will be severally examined hereinafter. 

II. 

THE CONCLUSION AS TO RAILROAD MAIL PAY. 
THE RAILROADS' CLAIMS AS TO UNDERPAYMENT. 

In submitting Document No. 105 Postmaster General Hitchcock 
made the following statement: 

Taken as a whole, it is shown that the railroad companies are receiving from the 
Government for transporting mails payments considerably in excess of the cost of 
such service. The committee estimates that through a readjustment of railway mail 
pay on the basis of cost with 6 per cent profit a saving to the Government could be 
made of about $9,000,000. 

1 This does not allow for certai charges hereinafter named. 



990 RAILWAY MAIL PAY. 

This statement was assailed by the railroads' committee in their 
document entitled "Mail Carrying Railways Underpaid/' set forth in 
full in the preliminary report, the specific objection being that the 
estimate above named was based upon apportionment to the mail 
service of cost and 6 per cent thereon without any allowance for a 
return on investment in property employed in conducting the mail 
service. 

In reply to this, Postmaster General Hitchcock submitted to the 
chairman of the joint committee, by letter of January 9, 1913, the 
following statement: 

That in addition to the operating expenses and taxes apportionable to the mail 
service and 6 per cent thereof, companies may be allowed such additional amounts, 
if any be necessary, as shall render the whole a proper proportion of a fair and rea- 
sonable return on the value of the property necessarily employed in connection with 
the mail service. (Preliminary report, p. 96.) 

It was pointed out by the Second Assistant Postmaster General at 
the hearing that this involved a duplication of 6 per cent interest on 
cost. This is stated to be so by Mr. Lorenz. (Hearings, p. 860.) 

In the "Memorandum on Behalf of the Post Office Department/' 
etc., in reply to the above statement by the railroads, the Second 
Assistant Postmaster General made a preliminary review of this con- 
tention of the railroads and a reply thereto. (Preliminary report, 
pp. 98, 99.) 

During the hearings the representatives of the railroads' committee 
undertook to charge against the mail service, in addition to operating 
expenses, taxes and 6 per cent thereon, an additional sum of 
$15,000,000, being approximately 6 per cent upon the share (assumed 
by them as 1.78 per cent based on per cent of revenue) of the mails 
in the value of the total property of the railroads of the United States, 
placed at $14,387,816,099, as reported by the railroad companies to 
the Interstate Commerce Commission in 1910. (Hearings, p. 15.) In 
presenting this the railroads assumed that the proportionate part 
which is devoted to the mail service bore the same relation to the 
total value of the property as the mail revenues bore to the total 
revenues of the companies, and that 6 per cent on that base was a 
proper charge against the mail service. From these premises, faulty 
though they are, as will be hereinafter shown, the conclusion was 
drawn that the railroads are underpaid $15,000,000, and this was 
arrived at without considering the $9,000,000 1 which was referred to 
by Postmaster General Hitchcock, which would have reduced the 
$15,000,000 to $6,000,000, or considering the further fact that there 
was a duplication of 6 per cent on operating expenses. This alleged 
underpayment has been set forth in documents printed and distributed 
widecast by the railroads' committee and reproduced in the press 
throughout the country. Further efforts were made on the part of 
the railroads' committee to show underpayment by making a com- 
parison between growth of postal revenues and railway mail pay, 
and also between growth of their railway traffic earnings and mail 
earnings (pp. 733, 734). The elements compared have no necessary 
relation with each other as has been shown in the hearings (pp. 655, 
659) and need no further comment here. 

1 This amount was for only the roads reporting, as stated hereinbefore. 






RAILWAY MAIL PAY. 991 

Finally, the railroads' committee contend in their brief that a 
proper understanding of Document No. 105 "demonstrates that these 
railways are actually underpaid" (p. 721). 

In his "Memorandum in Review of the Testimony," etc., Mr. 
Robert H. Turner, secretary to the joint committee, asserts that under 
existing law if the present system is to be continued the railroads are 
underpaid approximately $12,000,000 (p. 959). He further states 
that upon a consideration of Document No. 105 the railroads are 
apparently underpaid either $14,000,000 plus or .$9,000,000 plus, 
dependent upon whether 6 per cent or 4 per cent return is allowed on 
capital employed (pp. 960, 961, 962). 

THE DEPARTMENT'S REFUTATION OF CLAIMS OF UNDERPAYMENT. 

THE RAILROADS' PREMISES. 

In support of their claims the railroads' committee relies upon an 
argument, set forth on pages 721, 722, based upon Postmaster Gen- 
eral Hitchcock's statement that he would recommend an allowance, 
in addition to operating expenses, of such additional amounts, if any 
be necessary, as shall render the whole a proper proportion of a fair 
and reasonable return on the value of the property necessarily em- 
ployed in connection with the mail service, and the answers of the 
Second Assistant Postmaster General upon hypothetical questions 
concerning a 6 per cent allowance on the assumed total value of rail- 
road property of fourteen billion dollars. 

It will be noticed that Postmaster General Hitchcock did not in his 
letter concede or recommend an allowance of 6 per cent as a return 
upon the value of the property necessarily employed in connection 
with the mail service, but specifically stated that such additional 
amount might be allowed, if any be necessary, "as shall render the 
whole a proper proportion of a fair and reasonable return on the value 
of the property necessarily employed in connection with the mail 
service." 1 Nowhere in the testimony of the department's officers is 
there any concession that 6 per cent is a proper allowance to " render 
the whole a proper proportion of the fair and reasonable return on the 
value of the property," as set forth in Postmaster General Hitchcock's 
letter. Nowhere in the testimony of the Second Assistant Post- 
master General or that of any officer of the department is there any 
acceptance of the fourteen billion dollars as the proper valuation of 
the railroad property, or agreement that 1.78 per cent of the same is a 
proper part of the total valuation of railroad property to represent 
the " value of the property necessarily employed in connection with 
the mail service." The quotations from the testimony of the Second 
Assistant Postmaster General, set forth on pages above referred to, are 
partial and fragmentary and are used as part of an argument rather 
than as indicating the true views of that officer with respect to the 
points above mentioned. This is carried to the extreme in such 
paragraphs as the following: 

The effect of adding to the estimated payments shown in Document No. 105 the 
just allowance for return on invested capital thus conceded would be to increase the 
aggregate of those estimates beyond the present total payments. This is freely 
admitted by the Post Office Department (p. 721). 

1 Italics are those of writer of this brief. 



992 EAILWAY MAIL PAY. 

The department's position is clearly shown in the testimony and 
can not with justice be construed to support the above statement of 
the railroads' committee. The statement of the Second Assistant 
Postmaster General, regarding the matter, appearing on page 9 of 
the hearings, is as follows: 

Because, Senator, upon a further and more careful consideration of the subject we 
were convinced that the railroad companies were entitled to consideration for this 
additional element. We are not prepared to say what that should be. It is a very 
difficult question, and it involves the physical valuation or ascertainment of capital- 
ization and then the ascertainment of a fair proportion of that devoted to the mail 
service, and, furthermore, after you ascertain that, a determination of what rate per 
cent return thereon is due the companies for performing a public function for the 
United States. It is a difficult question, but we believe that that is an element which 
should enter into compensation to some extent, and having come to that conclusion, 
we submitted this amendment to our original plan. 

The further testimony in reply to Mr. Lloyd's questions on page 20 
of the hearings, cited by the railroads' committee and set forth in 
Mr. Turner's memorandum, shows clearly that the Second Assistant 
Postmaster General regarded the questions as purely hypothetical 
and particularly stated that the conclusions were true if the 'premises 
sliovld he granted, but in no part of his testimony did he grant the 
premises. 

The conclusions of both the railroads' committee and Mr. Turner 
are based upon the following assumptions: 

1. That the $14,387,816,099 reported to the Interstate Commerce 
Commission by the railroads is the true value of their properties; 

2. That the value of the railroad property necessarily employed 
in connection with the mail service is represented by 1.78 per cent of 
the total value of all railroad property, the per cent named being the 
per cent of mail revenue to the total operating revenues of the rail- 
roads; 

3. That the mail service should be charged with 6 per cent of such 
valuation; and 

4. That rates for mail service should be governed by the same 
principles as govern the making of rates for commercial business. 

MAIL REVENUE EXCEEDED IN 1910 A REASONABLE RATE ON COMMERCIAL BASIS, ASCER- 
TAINED PROM DATA AND RATIOS OF DOCUMENT NO. 105. 

The mail revenues received by the railroad companies for the fiscal 
year 1910 exceeded by a considerable amount the cost to the railroad 
companies of operation and taxes apportionable to the mail service, on 
the basis of Document No. 105, with an additional apportionment to 
such service of a pro rata share of all other expenses which are a 
charge against income and payable out of operating revenues. 

In making clear the basis for this statement the first three assump- 
tions will be discussed, followed by an apportionment to the mail, in 
addition to the cost of operation and taxes, of a share of other expenses 
which are a charge against income and payable out of operating rev- 
enues, thus treating the mail service in precisely the same manner 
as the business of the railroads is treated by themselves. 

With respect to the first assumption stated in the preceding sub- 
division, it may be said that while the amount of $14,387,816,099 is 
stated by the Interstate Commerce Commission's report as that 



EAILWAY MAIL PAY. 993 

which has been invested by the railroads of the country in road and 
equipment, the doubt of the commission as to the reliability of such 
estimates is very pronounced. In the advance rate cases (20 I. C. C. 
Report, 257) Commissioner Prouty says : 

Carriers are now required to state in their statistical returns to the commission the 
cost of their properties. If this amount were carefully kept it would show the money 
expended from the first in building and equipping the railroad. In point of fact this 
item is not reliable. 

Again, on page 258 of the same report, the following appears: 

Were it possible to determine the exact amount of money which has been put into 
these properties, the amount of return which has been paid up to the present time, the 
degree of prudence with which the property has been constructed and operated, 
certainly the investment would furnish a very satisfactory basis for arriving at an 
equitable return. But these facts never can be determined with accuracy. 

The commission, in passing upon the cases, makes the following 
statements (p. 305): 

We have been compelled to dispose of this case upon the evidence available. As 
previously noted, there is no testimony tending to show the cost of reproducing these 
properties. It is plain that a physical valuation would introduce into the calculation 
a new element which might lead to a different conclusion. The conclusion reached 
here extends, therefore, no further than the facts upon which it is based. 

The interest of the public ought not to depend upon a valuation made entirely by 
the owners of these properties, no matter how honestly the work may be prosecuted. 

In the case of the City of Spokane v. Northern Pacific Railway Co. 
(15, I. C. C. Rep., 399), in connection with a consideration of the 
money invested in the road, etc., the following paragraph occurs: 

It will be seen from the above statement that it is utterly impossible to know what 
amount of money has been actually expended in constructing the Northern Pacific 
properties up to the present time. Previous to September 1, 1896, the account which 
we have is entirely unreliable. It is impossible to say either what cash was invested 
or what return has been paid upon the investment. 

As further showing the difficulty involved in such estimates, the 
following statement in the case of Ames v. Union Pacific Railway Co. 
(64 Fed., 177), in regard to the value of railroad property, is made: 

It is not easy to always determine the value of railroad property, and if there is no 
other testimony in respect thereto than the amount of stock and bonds outstanding, 
or the construction account, it may be fairly assumed that one or other of these repre- 
sents it, and computation as to the compensatory quality of rates may be based upon 
such amounts. In the cases before us, however, there is abundant testimony that the 
cost of reproducing these roads is less than the amount of the stock and bond account, 
or the cost of construction, and that the present value of the property is not accurately 
represented by either the stocks and bonds, or the original construction account. 

In a paper entitled " Certain considerations in railway rate making," 
read by Hon. Balthasar H. Meyer, member of the Interstate Com- 
merce Commission, before the American Economic Association, 
December 29, 1913, the slight credit to be accorded reputed values of 
properties and their alleged relation to outstanding securities is 
discussed. 1 

1 Perhaps the most important single factor, now unknown, which will enter into the consideration of 
railway rates in the future is that of the value of the property. Theoretically, it has long been considered 
by commissions and courts, but in practice its application has been limited to isolated valuations or partial 
valuations made under different, if not mutually exclusive methods varying in degree of thoroughness and 
applied almost exclusively to meet allegations of confiscation of property. In the not distant future we 
may hope to know what the fair value or final value of our railway properties is, whatever these terms may 
be made to include. In the past attempt has been made to appeal to the volume and market value of 
outstanding securities with the view of having them considered as evidence of value to support a rate or 
rate structure under attack. In the future, after the valuations have been made, similar appeals can have 
little weight. (Railway Age Gazette, Jan. 9, 1914, p. 69.) 



994 RAILWAY MAIL PAY. 

In view of the fact that Congress has authorized the commission 
to make a physical valuation of the railroad property, as recom- 
mended by the commission, and the further fact that the commission 
considers the present railroad estimates of valuation as unreliable, 
the conclusion seems inevitable that no authentic calculation can be 
made which has for its basis the value of road and equipment as 
reported to the commission, or introduced into the hearings by the 
railroad companies. 

With respect to the second assumption it may be said that it is 
open to the objection that the revenue per cent is not a proper basis 
of division as it does not apportion the property according to the 
" value of the use." This is well stated by the Supreme Court in 
the Minnesota rate case, as follows: 

In support of this method it is said that a division of the value of the property 
according to gross earnings is a division according to the "value of the use" and there- 
fore proper. But it would seem to be clear that the value of the use is not shown by 
gross earnings. The gross earnings may be consumed by expenses leaving little or no 
profit. 

It is not asserted that the relation of expense to revenue is the same in both busi- 
nesses; on the contrary, it is insisted that it is widely different. * * * 

If the property is to be divided according to the value of the use, it is plain that the 
gross-earnings method is not an accurate measure of that value. 

For the purposes of estimate we have used hereinafter the per cent 
on which cost was apportioned, but this, though more than the rate 
used by the railroads, is open to a similar objection and is probably 
too high. 

With respect to the third assumption, it may be said that it is not 
necessary for the railroads of the country to realize 6 per cent upon 
the stated valuation of their property in order to pay other charges 
against income payable from operating revenues after meeting 
operating expenses and taxes. 

The fourth assumption will for convenience of presentation be 
considered hereinafter. 

The following is a statement, so far as the mail service is concerned, 
of the application of operating revenues to the payment of operating 
expenses and taxes and all the other charges against income which 
must be paid out of operating revenues upon a commercial basis. 
Even upon this basis it completely disproves the contentions of the 
railroads that they were underpaid. 

Operating revenues, and operating expenses and charges against income. 

Total operating revenues frail operations) for all railroads, as shown 
by the report of the Interstate Commerce Commission for 1910 
(Statistics of Railways, 1911, p. 53) $2, 750, 667, 435 

Total operating expenses (rail operations) of all rail- 
roads as shown by the same report $1, 822, 630, 433 

Accrued taxes (id.) 103,795,701 

Total 1, 926, 426, 134 

Remainder 824, 241, 301 



BAILWAY MAIL PAY. 99; 



out of which the following items of expense, as shown by the same report, chargeable 
against income and payable out of operating revenues (rail operations) must be paid, 
viz: 

Net rents accrued for lease of other 

roads » $2, 834, 991 

Hire of equipment, net debit balance . 1 15, 841, 144 

Joint facilities, net debit balance 1 11, 289, 579 

Miscellaneous rent debits 4, 499, 260 

Net interest accrued on funded debt. . l 370, 092, 222 

Other interest 16,520,342 

Extinguishment of discount on securi- 
ties 565, 337 

Sinking and redemption funds charge- 
able to income 5, 886, 977 

Other deductions 9,973,828 

Total $437, 503, 680 

Less total other income: 

Miscellaneous rent credits 6, 515, 218 

Separately operated property, net 
profits 2,278,720 

Net dividends receivable on stocks 
accrued or controlled l 28, 069, 039 

Net interest receivable on funded 
debt owned or controlled * 5, 964, 331 

Interest receivable on other securi- 
ties, loans, and accounts 30, 650, 925 

Miscellaneous income 9, 253, 557 

Total 82,731,790 

Balance 354, 771, 890 

Net dividends declared 1 293, 836, 863 

Appropriations for reserves 3, 581, 342 

297,418,205 

Total items of charge against income to be paid out of these 
revenues $652, 190, 095 

Leaving surplus of 172, 051, 206 

available for appropriation for additions and betterments, and new lines and exten- 
sions,, aggregating $58,906,952. 

However, this amount of $652,190,095 represents the entire railroad mileage of 
239,446 miles of lines. Table 7 of Document No. 105 represents 175,922 miles of 
railroad mail lines out of a total of 220,730 miles of railroad mail lines. It is necessary 
to reduce the amount by that part which represents miles of lines on which there is 
no mail service. A tabulation of the mileage, operating revenue, and operating 
expenses of such roads receiving $100,000 or over in revenues for 1910, made by the 
aid of the Interstate Commerce Commission reports for 1910 and 1911, shows mileage 
2,011, revenues $18,551,892, and operating expenses $11,368,027. The difference 
between these last-named amounts, $7,183,865, is net revenue. This subtracted 
from $652,190,095 leaves $645,006,230. This amount still includes the remaining 
lines (16,705 miles, being 18,716 less 2,011) on which there is no mail service. De- 
ducting the 2,011 miles from the 239,446 miles leaves 237,435 miles. Dividing this 
into the $645,006,230 and multiplying the quotient by 16,705 miles (the 18,716 less 
the 2,011) gives $45,370,780 as approximately representing the lines of railroad so 
included and on which no mail service is performed. This subtracted from 
$645,006,230 leaves $599,635,450 as the total of the items of charge, other than operating 
expenses and taxes, to be considered in connection with the mails. 

i The figures shown for this item represent the net remaining after intercorporate payments ^rere 
eliminated. 



996 RAILWAY MAIL PAY. 

According to Table 7, Document No. 105, the operating expenses and 
taxes apportioned to the passenger service were 29.21 per cent of the 
total, and those apportioned to the mails were 6.68 per cent of the 
passenger service; 29.21 per cent of $599,635,450 is $175,153,515, 
and 6.68 per cent of this is the amount above operating expenses 
and taxes which may be charged to the mails if they are to partici- 
pate in all these charges and at the pro rata based on Document 
No. 105 $11 , 700, 255 

Table 7 shows $2,682,797 as the operating expenses and taxes charged 
to the mail service for November, 1909. This raised to the amount 

for a year is 32, 193, 564 

However, Table 7 represents only 175,922 miles of railroad mail 
routes, the total of which is 220,730 miles. It is therefore necessary 
to ascertain approximately the operating expenses and taxes for the 
omitted mileage. 

Table 7 shows $137,355,150 as the total operating expenses and 
taxes for November, 1909. This raised to the amount for a year is 
$1,648,261,800. But Table 7 does not represent the full mileage 
of mail routes, and the full mileage of mail routes is less than the 
total railroad mileage represented in the total railroad operating 
expenses, as stated particularly above. 

Subtracting the $1,648,261,800 from the total operating expenses 
and taxes for all railroads of $1,926,426,134 leaves $278,164,334 as the 
operating expenses and taxes for all other miles of lines of railroads. 
63,524 miles. 

By the tabulation of railroads on which there is no mail service, 
as above mentioned, their mileage was found co be 2.011 and their 
operating expenses $11,368,027. These subtracted, respectively, 
from 63,524 miles and $278,164,334, leaves 61,513 miles and 
$266,796,307. 

This last-named amount, however, includes the 44,808 miles of mail 
routes not represented in Table 7, and in addition the difference 
between 44,808 and 61,513, on which no mails were carried. There- 
fore, it is necessary to ascertain the proportion represented by mail 
lines. Dividing $266,796,307 by 61,513 and multiplying the quo- 
tient by 44,808 gives $194,332,296 as approximately representing 
the lines of railroad on which mails were carried. 

29.21 per cent of $194,332,296 gives the passenger proportion, and 6.68 
per cent of the passenger gives, as the share to the mails 3, 791, 866 



This makes a total chargeable to the mail service on the basis followed 

of 47, 685, 685 

The total revenue received by the railroads for the fiscal year 1910, 
as shown by the report of the Second Assistant Postmaster General 
(p. 15, "Transportation and railway post-office cars combined"), was 49, 302, 217 

Being an excess over the apportioned cost of ' 1, 616, 532 

1 While it is true that for the fiscal year 1910 there was this surplus of revenue over the apportioned cost, 
any conclusion with respect to the relation of revenue and cost on this basis for a subsequent fiscal year 
must take into account the reduction in the fourth contract section by reason of the application of the new 
divisor which became effective in that section July 1, 1910. The new divisor had already become effective 
in the other sections. The rate of pay for railroad transportation which became effective on July 1, 1910, 
in the fourth contract section was ascertained to be 9.13 per cent less than it would have been if the old 
divisor instead of the new divisor had been used. If the divisor provided by Order No. 412 had been effec- 
tive in the fourth contract section at the preceding quadrennial readjustment (1906), that part of the pay 
for the fourth contract section which is represented in the $49,302,217. the total pay for the fiscal year 1910, 
would have been reduced $1,318,340 (9.13 per cent of $14,439,655), leavmg the amount $47,855,364, or $298,192 
in excess of apportioned cost. If we estimate that the apportioned cost increased from 1910 to 1913 in pro- 
portion as the mail revenue increased, the cost for the fiscal year 1913 would be expressed by $51,146,198. 
The revenue was $51,466,030, an excess of revenue over apportioned cost of $319,832. That this amount is 
too small will be evident from this fact, among others, that the total amount of railway post-office car 
facilities required by the department during the years subsequent to 1909 has been materially reduced. 
The annual rate of pay for railway post-office cars Nov. 30, 1909, was $4,689,094.29; the same for Nov. 30, 
1912, was $4,225,499.30, or a reduction of 9.88 per cent; and for June 30, 1913, it was $4,598,917.07, or a reduc- 
tion from 1909 of 1.92 per cent. The increase from Nov. 30, 1912, to June 30, 1913, was due primarily to the 
introduction of parcel post, most of which increase in car space was authorized after Mar. 1, 1913. The 
companies have been paid for the additional transportation service on account of parcel post at the rate of 
approximately $1,700,000 a year effective from July 1 ; 1913. This reduction in car pay means, of course, 
reduction in car facilities required. An accurate estimate of the effect of this on total apportioned cost 
can not be given at this time. It is noted, however, that the car-foot miles of railway post-office car service 
performed by all roads that reported space is 46.25 per cent of the whole car-foot miles of mail service on 
such roads (Table 6-F, Doc. No. 105). 



RAILWAY MAIL PAY. 997 

From the above analysis it is seen that the entire charges against 
income, above considered, in excess of the entire operating expenses 
and taxes, paid from operating revenue, namely, $652,190,095, is only 
4.53 per cent of $14,387,816,099. The railroads do not receive 6 per 
cent net on the reported valuation of property. That this is a well- 
known fact expressing the normal condition of returns on the capital- 
ization of American railroads is shown by the report of the Railroads' 
Securities Commission transmitted by the President to Congress 
December 11, 1911, and quoted by Mr. Howard Elliott in his work, 
The Truth About the Railroads, pages 254, 255, as follows: 

Neither the rate of return actually received on the par value of American railroad 
bonds and stocks to-day nor the security which can be offered for additional railroad 
investments in the future will make it easy to raise the needed amount of capital. 
The rates of interest and dividends to outstanding bonds and stocks of American 
railroads is not quite 4-£ per cent in each case. 

Why, then, should the railroads claim from the Government for 
carrying the mails, even on the basis of a commercial rate, 6 per cent 
on value of property employed, in addition to operating expenses and 
taxes ? The claim is unreasonable, as it is shown to be in excess of 
that which is necessary in their commercial business to pay operating 
expenses and taxes and other expenses chargeable against income and 
payable out of operating revenues. It is upon this basis that they 
have attempted to charge the department with a return which would 
show the deficiency in revenue which they have claimed before the 
joint committee and asserted in the public press. 

Attention is further called to the fact that the above apportion- 
ment of expenses (other than operating expenses) chargeable to oper- 
ating revenues is made to the mail service on the basis of 6.68 per 
cent of the passenger apportionment. Such a plan of apportionment 
makes the mail service participate in this ratio in all the pas- 
senger operating expenses included in the above account, in addi- 
tion to dividends. When it is remembered that these items cover 
the whole field of operating expenses chargeable to operating reve- 
nues for the maintenance and operation of the railroads, as well as 
interest on bonded indebtedness and dividends on capital invested 
in expensive terminal stations in large cities, it becomes evident that 
this charge against the mail service is too large. 1 It is impossible to 
say from data at hand how much it is in excess of a fair charge. The 
charge against the mail service on these accounts should not be 
greater than the fair value of the use of the property represented by 
them and which is employed in connection with the mail service. 
Neither the railroads nor the department have this information, but 
it is evident that it must be much smaller than the sum used in the 
above apportionment. 

1 A very great proportion of the physical value of railways is concentrated in their terminals in large 
cities. * * * These are often constructed with special consideration to the convenience of passenger 
traffic, and expressing architectural beauty. * * * The Pennsylvania Terminal in New York cost 
$115,000,000; the Grand Central Terminal (New York), $150,000,000; the Washington Terminal, $20,000,000; 
the Northwestern Terminal, at Chicago, $24,000,000; the Union Station at Kansas City, $40,000,000. 
(Government Ownership of Railways, Samuel O. Dunn, pp. 65, 216, 217.) 



998 RAILWAY MAIL PAY. 

WHAT SHALL BE THE GAUGE OF RAILROAD MAIL PAY? — SHALL IT BE A STRICTLY COM- 
MERCIAL RATE? 

It is demonstrated by the above analysis of the disposition of 
operating revenues that on the strictly commercial basis the railroads 
are overpaid in the aggregate. Whether they should receive a full 
commercial rate for the carriage of the mails is a question which must 
be decided as a matter of public policy and determined by Congress. 
As an aid to this determination the following considerations may 
be given weight, namely: 

1. The certainty, constancy, and homogeneity of traffic. 

2. The certainty and regularity of payment. 

3. Railroads are not built primarily to carry mails. 

4. The protection to their mail trains which railroads, as Govern- 
ment agencies, receive against unlawful acts in interference with or 
obstruction of the mails carried. 

5. The principle of public utility. 

(1) The certainty, constancy, and homogeneity of traffic. — It is pre- 
sumed that in fixing commercial rates railroad companies take into 
consideration such elements as certainty, constancy, and homo- 
geneity of the traffic and fix lower rates than they would for it under 
conditions where these elements are absent. Probably no other 
class of service is characterized by these elements in as great or greater 
degree. The mail service on a railroad route is certain and constant 
and practically always of the same character after establishment. 
Furthermore, mail traffic does not require an expensive force of agents 
and solicitors to secure business. It is a traffic that offers itself to 
the companies without solicitation and remains without urging or 
other consideration except good service. 

Upon the question of the importance to the railroads in rate making 
of a certain, constant, and homogeneous traffic, Prof. Henry C. 
Adams, professor of political economy, University of Michigan, in 
his testimony before the Commission to Investigate the Postal 
Service, Fifty-sixth Congress, second session, states as follows: 

In the first place, this traffic (mail) is a sure traffic to the railways. It is a steady- 
traffic ; and while it may be true that a heavier weight of mail passes from the seaboard 
on either side to the interior than in the opposite direction, it is, nevertheless, dis- 
tributed with a fair degree of equity. It does not vary from month to month in as 
great a degree as freight and passenger traffic, which enables the mail equipment of 
railways to be used more nearly to their full capacity than is the case in freight equip- 
ment and passenger equipment. 

In the second place, mail traffic is, from the railway point of view, a homogeneous 
traffic. (S. Doc, vol. 9, Railway Mail Pay, p. 236.) 

Upon this point Mr. Finley Acker testified before the same com- 
mission, as follows : 

The third factor relates to the character of the business, as to whether it is daily, 
occasional, or spasmodic, and the significance of this feature has not, in my judgment, 
received the serious consideration which its importance warrants. 

At certain seasons of the year both the passenger and freight business of the railroads 
is dull, and at such times they could well afford to offer unusually low rates, if such 
rates would create sufficient artificial business to fully employ their regular facilities. 
At other periods they are taxed to supply all the facilities demanded. 

If it were practicable to make arrangements with shippers to pay for a fixed quantity 
of freight 365 days in the year, what strong inducement would be offered? 

We get the practical idea of how much the railroads appreciate this steady form of 
traffic by the low rates they offer in their passenger service to those who will make a 
monthly or yearly contract. (S. Doc, vol. 9, Railway Mail Pay, p. 114.) 



BAILWAY MAIL PAY. 999 

The element which is present in the case of commutation rates 
granted by railroads to passengers is conspicuous in the mail traffic 
business. The Interstate Commerce Commission, in opinion No. 
1628, The Commutation Rate Case, decided June 21, 1911, traces the 
history and reason for commutation rates on railroads. The com- 
mission finds that this service stands by itself as a special and dis^- 
tinct kind of service for which the carrier may demand no more 
than a reasonable compensation. It is said that it no doubt origi- 
nated with the practice of the proprietor of a stage coach " having 
an established schedule between two towns which he must meet 
even though the coach be but half filled, would readily appreciate 
the small additional cost in picking up a traveler on the way and 
carrying him to town, and would not be slow in encouraging such 
travel by making special rates to those going daily to a nearby mar- 
ket or place of industry/' (21 I. C. C. Rep., 438.) This feature of 
transportation charge appears to have been established when steam 
transportation originated. The commission further say: 

This "made" or additional daily traffic, picked up as an incident to through traffic, 
could be carried without adding proportionately to the cost and came in time to be 
transported for that reason at a charge less than the normal cost for the one-way jour- 
ney. (Id., 438.) 

On page 440 of the same report, the commission say further: 

There can be little doubt that commuta'tion traffic was regarded originally as a 
mere incident to through traffic and was attractive because it could be handled at 
little additional cost to the carrier. Besides adding volume to the regular passenger 
traffic and thus tending materially to reduce the operating cost per passenger, it had 
the effect of substantially increasing the freight traffic. 

The fundamental reason for a lower rate is stated on page 442 of 
the same report, as follows: 

Unlike excursion traffic, commutation traffic is neither occasional nor sporadic, but 
on the contrary is characterized by an unusual regularity in volume; it may be accu- 
rately measured and provided for more readily than in the case of any other kind of 
passenger traffic. 

All the reasons stated for low rates for commutation service apply 
with equal force to the mail service. 

It is interesting to note that the commutation rate of $10.35 (id., 
445) given by the Central of New Jersey Railroad for a daily round 
trip a month for 40 miles is at the rate of 4.31 mills per passenger 
mile. With 50 passengers to the car this is equal to 21.5 cents per car- 
mile. On the basis of Document No. 105 it is shown that the rail- 
roads are receiving on the average 4.1 44 mills per car-foot mile, which 
is equal to 24.86 cents per car-mile for a 60-foot car, or 13 per cent 
more than the revenue for 50 commutation passengers. Further- 
more the element of liability for personal injury in the case of passen- 
ger traffic is proportionately very small in the mail service. 

The marked advantage to railroads offered by the mail service in 
the matter of the unvarying amount and regularity of service is 
shown by a comparison of the freight service. Railroads have not 
enough cars to meet the maximum freight requirements at times of 
heaviest business activity and need, but such cars as they have are 
often idle for want of business and because of uneconomical handling 
of equipment. This is in marked contrast with the conditions in the 
mail service. The traffic is comparatively stable and constant and is 
handled with a minimum equipment which is constantly in use. The 



1000 RAILWAY MAIL PAY. 

mail equipment, too, is confined to one road or system and is not in- 
terchanged in the manner that freight equipment is. The tracing 
and securing possession and use of its freight cars is a cause of heavy 
expense to railroads. Such expense is unnecessary with respect to 
mail cars. The maximum benefit is received by the company from 
its investment in mail cars. Concerning this feature of the freight 
business, Mr. Howard Elliott in his work "The Truth About The Kail- 
roads" states as follows: 

The most important service performed by the railways is the transportation of 
freight. Not everybody has to travel, but everybody must have food, clothing, 
shelter, and fuel, and nearly all of the food, clothing, shelter, and fuel of the people 
of this country is carried all or part of the way from producer to consumer in freight 
cars. The use that the railways make of their cars is, therefore, of the utmost impor- 
tance, not only to the railways but to the people. When a freight car is standing 
still it is doing no good to the railway or to the people, but the railways have had to 
pay for that car, and a part of their capital is invested in it. When it is standing still 
it is not earning anything on that capital, and as the capital of the railways is a part 
of the national wealth, the usefulness of the national wealth is impaired by the loss 
incurred through the idleness of the car. When a freight car is waiting to be loaded 
by a shipper, or when it is waiting to be unloaded by a consignee, that car is not in 
the service of the people, whose demand for transportation is now in excess of the capac- 
ity of the railways to supply. 

It would be a very happy condition if the railways always had enough cars, so that 
they could supply every shipper with an empty car whenever he wanted it and just 
as soon as he wanted it. They have not enough cars to meet this requirement at times 
of the heaviest business in the country, and it is not their fault that they have not. 
In fact, it would be an economic waste, taking the country as a whole, to have enough 
cars for the very highest amount of business; this would mean that many cars would 
be idle for several months of the year. There would be too much idle capital in such 
a plan. ("The Truth About The Railroads," pp. 77, 78, 79.) 

(2) The certainty and regularity of payment. — Not only is the traffic 
constant, practically unvarying in amount, and certain, but there is 
a certainty of payment for mail transportation. The compensation 
of railroad companies is fixed for specific amounts per annum, and 
does not vary materially until the next readjustment, or until some 
material change in the service requires the fixing of a new rate. 
Payments are made monthly by warrant on the Treasury. The 
railroads, therefore, know with a certainty the approximate amount 
which they will receive for this service, and when they will receive it, 
and can make their calculations accordingly. While the aggregate 
amount is small compared with the total operating revenues, it 
sometimes becomes of greater importance than its proportion in 
amount would suggest. For instance, during the days of financial 
depression in 1907 and 1908 the certain and regular payments made 
by the Post Office Department to the railroads of the country were 
relied upon by them as a great assistance. 

(3) Railroads are not built primarily to carry mails. — Eailroads are 
projected and built for the purpose of securing passenger and freight 
traffic. It is doubtful if the question of the carriage of the mails 
ever enters into the calculations of any railroad enterprise. After 
its construction the mail naturallv follows and the companies usually 
secure that business without solicitation. This is a strong argument 
in favor of treating the carriage of the mail as a by-product, and to 
charge it with a participation in all of the costs of the road is very 
liberal policy. 

(4) The protection of mail trains. — There is a special direct benefit 
to railroads from carrying the mails which they do not realize from 
ordinary traffic. This is th wntoction from the Federal Govern- 



RAILWAY MAIL PAY. 1001 

ment- which their mail trains receive against unlawful acts in inter- 
ference with or obstruction of the mails which they carry. The Gov- 
ernment does not take sides for or against a railroad in any contro- 
versy which it has with employees, but in the case of railroads, as well 
as of other governmental agencies employed in the transportation 
of the mails, it insists that mail trains shall not be interfered with, 
and persons who are guilty of overt acts for the purpose of obstruct- 
ing or delaying the mails are held responsible under Federal statutes. 

(5) The principle of public utility. — The principle of public utility 
is of special force in connection with the transportation of the mails 
by railroads. Whether it should influence the mail rate of pay is a 
question of public policy which must be determined by Congress. 

During the hearings the Second Assistant Postmaster General, in 
answering the question of the chairman as to what practice shall be 
taken into consideration in determining what rates of compensation 
should be paid, stated, among other things, as follows: 

' * * * Consider what it is worth to the railroad companies to carry the United 
States mails and what they owe the Government of the United States, what they owe 
the people, what they owe the country at large for the privilege of maintaining their 
corporate existence and receiving public grants of lands, rights of way, and perform- 
ing practically a monopoly of the transportation service of the country. Those things, 
I think, are very potent in the consideration of the subject, and I think very earnest 
consideration should be given to what the value of those intangible elements are and 
what you might call the fair commercial or business gauge of the service should be 
reduced by such an amount as would fairly represent those very material elements 
that are concerned in the matter. 

The principle of public utility is better expressed by Prof. Henry 
C. Adams, professor of political economy, University of Michigan, in 
his testimony before the Commission to Investigate the Postal Service, 
Fifty-sixth Congress, second session. He states it thus : 

If asked why public utility should be accepted as a controlling consideration in 
determining reasonable compensation, a complete answer would rest upon three 
points, as follows: First, because of the sovereign character of the postal service itself, 
which implies that its administration from beginning to end must be such as to safe- 
guard the enduring and the collective rather than the temporary and the personal 
interests of the people; second, because of the quasi-public character of the railways, 
which secures to the Government the right of regulating the charges for all classes of 
service according to the principle of public utility; and third, because of the different 
results that would follow the application of the political principle on the one hand 
and of the commercial principle on the other (p. 195). 

The railways undoubtedly have the right to insist, from their point of view, that 
the character of the facilities furnished for the mail service should be taken into 
account in fixing compensation, and the recognition of this right is involved in all 
that has been said relative to the commercial interpretation of "reasonable com- 
pensation." But, on the other hand, the Government has the right to insist that the 
transportation of mail is an essential social function; that it is imperative, not alone 
to the present advantage of the public, but to the healthful and permanent develop- 
ment of the State. It has the right openly, publicly, and without apology to put in 
practice, in the interest of the public at large, a rule universally acknowledged by 
railway men in the development of their property. A railway manager is willing, 
for example, to carry coal at a very low rate, even at the risk of incurring loss, because 
he knows that coal is potential in industrial development, and that what he loses on 
the coal traffic becomes for him a gain on the transportation of high-class freight, 
the product of the mills and factories which the'distribution of the coal renders possible. 
The railway manager adjusts his charges upon coal with a view to the development 
of industry in the territory contributing freight to his railway rather than according 
to the cost of transporting coal. 

The Fame line of reasoning is pertinent, even in a higher degree, to the transmission 
of intelligence, because the means of diffusing intelligence is an essential consideration 
of growth and development. As the distribution of coal, which is latent manufacture 



1002 BAILWAY MAIL PAY. 

ing power, is essential to the upbuilding of manufactories, so the diffusion of intelli- 
gence is a fundamental condition of all social and industrial evolution. The meaning 
of all this is evident. When the Government, in considering the question of compen- 
sation for carrying mail, finds it necessary to classify the mail service in the general 
schedule of services rendered, it will, if it accept the principle of public utility as the 
ruling consideration, conclude that the transportation of mail should be classed among 
those services which minister to the development of the process of production rather 
than to the satisfaction of wants through the transportation of the products. Of all 
things transported by rail intelligence is the most essential to social and economic 
advantage, and on this account is in the highest degree amenable to the consideration 
of public utility (p. 196). 

^* * * rpj^ position of this report is that the private interest in railway charges is 
limited to the claim that the gross revenue of railways should be adequate to cover 
operating expenses, fixed charges, and a fair return to stockholders; but this sum 
having been guaranteed, the manner in which this gross amount is collected from the 
shippers is a matter of public policy and not of private interest. 

* * * The application of the principle of public utility classifies mail transporta- 
tion with freight; it classifies it among the fundamental or social services of railways 
and it justifies an unusually low rate upon mail transportation, provided this is essen- 
tial to rendering the important service undertaken by the postal department, and pro- 
vided that by this adjustment the gross revenue to railways is not so far depressed as to 
deprive investors of property. (S. Doc, vol. 9, Railway Mail Pay, p. 197.) 

These quotations from Prof, Adams state the principle clearly. In 
brief, it is that the Postal Service has a sovereign character and its 
administration must be such as to safeguard the enduring and collec- 
tive, rather than the temporary and personal, interests of the people; 
that because of the quasi-public character of railways the Government 
has the right to regulate charges according to the principle of public 
utility. 

The railroads undoubtedly have the right to receive reasonable 
compensation for mail service, "but, on the other hand, the Govern- 
ment has the right to insist that the transportation of mail is an 
essential social function ; that it is imperative not alone to the present 
advantage of the public but to the healthful and permanent develop- 
ment of the State. It has the right openly, publicly, and without 
apology to put in practice, in the interest of the public at large, a 
rule universally acknowledged by railway men in the development of 
their property." Railways are willing to carry special commodities 
at very low rates, even at the risk of incurring loss, because they are 
potential in industrial development and the loss thus incurred be- 
comes a gain in the transportation of other commodities which the 
distribution of the one renders possible. In the same wajr the trans- 
mission of intelligence is an essential consideration in the growth and 
development of the country which sustains the railroad, and without 
which railroad construction and operation would be of small practical 
importance. Such transmission is amenable in the highest degree to 
the consideration of public utility and justifies an unusually low rate 
for mail transportation, provided that by this adjustment the gross 
revenue of railways is not so depressed as to deprive investors of 
property. That such depression would not result from any reason- 
able reduction from a commercial rate is apparent from a considera- 
tion of the very small per cent mail earnings are of the total oper- 
ating revenues of railways, constituting in 1910, even at the rates 
paid, only 1.78 per cent. 

No railroad of any importance could be successful in its operations 
without the regular, certain, and speedy transmission of the mails 
over its line. It is a truism which no one will controvert, that prac- 
tically all commercial and industrial enterprises, as well as social 



KAIL WAY MAIL PAY. 1003 

intercourse extending beyond the neighborhood, depend absolutely 
upon the mails. As the community thus primarily depends upon the 
mails, in a greater degree railroads so depend, as they must rely 
wholly upon the communities for whose business they are constructed 
and operated. It must, therefore, be apparent that no commodity 
transported is entitled to as great consideration in the matter of rate- 
making as the United States mails. 

If it be argued that any lowering in the rate for mail service must 
be met by an increase in other rates, it may be replied: (1) That this 
is true from a practical point of view only where the reduction is below 
" out-of-pocket" expenses; (2) that the same objection may be made 
against every correspondingly low rate on other commodities; and (3) 
that in the case of the mails if it were necessary to make up a defi- 
ciency from other rates approximately the same interests which receive 
the direct benefits of the mail service by the railroads would be those 
who would contribute to supplying such deficiency through other 
rates. 

Specific instances of lower than commercial rates for services which 
contribute to the prosperity of railroads or which are potential for 
business and prosperity in the communities which they serve may be 
found in the low rates given the Department of Commerce, Bureau of 
Fisheries, for the transportation of its fish cars. These rates range 
from 1\ to 30 cents per mile, principally 10, 15, and 20 cents, includ- 
ing five attendants for each car, generally. In regard to rates paid, 
the acting commissioner, among other statements, says: "It is 
believed that most railroad companies realize the value of having the 
waters contiguous to their lines stocked with fish, and have granted 
the bureau comparatively low rates." (Hearings, p. 969.) Again, 
the Director of the Bureau of Standards, Department of Commerce, 
with reference to the charges paid by the bureau for the transporta- 
tion of its car devised for the purpose of testing railroad track scales, 
states, among other facts, that no charges have yet been paid by the 
bureau for the transportation of this car, although several bills have 
been rendered on the basis of 8 cents a car-mile for moving the car, 
etc.; and, further, "the whole question of tariff for moving the car 
belonging to this bureau is now being considered by the American 
Railway Association, and none of the bills submitted will be paid until 
the negotiations with the American Railway Association have been 
concluded. At the present time they are considering the proposition 
of moving the car between certain points in each State free of charge, 
and then charging 10 cents per mile for movement within the several 
States." (Hearings., p. 972.) 

If it is of such consideration to the railroads to have the waters 
contiguous to their lines stocked with fish, how much more important 
is it to them to have the mails carried to all their patrons and insti- 
tutions of business upon whom they depend for their ver} r existence. 

In considering this principle in connection with the possible credit 
to the Government in the matter of mail rate, it should be remembered 
that any reasonable rate for mail service will be far in excess of the 
" out-of-pocket" expense. Even the pro rata share of general ex- 
penses assigned to the mail service on the basis of car-foot miles, as 
shown in Document 105, in addition to actual and direct expenses 
for that service, will be far above an actual "out-of-pocket cost. 
Such an apportionment includes a pro rata participation in expenses 

49396—14 71 



1004 RAILWAY MAIL PAY. 

which must continue whether the mails are carried or not, and such 
shares are contributions above actual " out-of-pocket " expense to 
general expenses of the railways. With even more force this may 
be said of any participation in dividends, interest on funded debt, 
etc. 

Attention is invited to the statements of Mr. Lorenz (Hearings, p. 
789) upon the subject of " out-of-pocket" costs and a comparison of 
them with " total operating expenses, taxes, and a fair return on invest- 
ment." In his letter on the subject, set forth on the page above 
referred to, he quotes the Interstate Commerce Commission as 
follows : 

However, it should be borne in mind that the costs as here figured include prac- 
tically all of the costs except return upon capital account. It has been roughly esti- 
mated that of the total costs only about 50 per cent are what may be termed out-of- 
pocket costs— that is, the cost of fuel, wages of crews, and repairs of locomotives and 
cars. The other 50 per cent is made up of salaries of general officers, way and structure 
account, etc., to which the carrier would be subject, whether or not the particular com- 
modity moves. In other words, when the carrier claims that the cost of moving the 
coal is 4 mills the actual outlay on the part of the carrier for the particular business 
is not much in excess of 2 mills. 

Anything above the out-of-pocket cost of handling is a contribution to general 
expenses, and to that extent tends to relieve rather than burden other traffic. (Opin- 
ion No. 2141, Louisville & Nashville Railroad Coal and Coke rates, decided Jan. 7, 
1913.) 

Concerning the question of out-of-pocket expenses to railroads on 
account of mail service, see discussion on pages 588, 589 of the hear- 
ings, and Mr. Lorenz's judgment, which stood undisputed at the 
hearings, to the following effect: 

There is no question but what Mr. Lloyd is correct. That is to say, there is hardly 
any contention on the part of the railroads that the mail revenue is not as great as 
the additional expense caused by the mail service. They are running the passenger 
trains anyhow, and the extra cost of carrying the mail cars is certainly not as great 
as the mail revenue. 

Whether these considerations above mentioned shall be given effect 
in fixing the rate for mail service by the railroads is a question, as 
stated above, of public policy, to be determined by Congress. If it 
be determined by Congress that they should be given weight and 
effect, it would seem that in view of all the advantages to the rail- 
roads and to the communities which they serve a material reduction 
below a commercial rate would be reasonable. In this connection 
Postmaster General Burleson says, in his annual report for 1913, 
pages 21 and 22: 

The determination of what shall be the basis for ascertaining a fair rate of compen- 
sation for carrying the mails is not free from difficulties. From a careful consideration 
of the subject it becomes evident that the carriage of the mails by the railroad com- 
panies for the Government can not be considered as of the same character of service 
as that performed by them as common carriers for the general public. The railroads 
have received certain benefits from the States from which they derive their corporate 
existence, and their interstate commerce is subject to the regulation of the Federal 
Government. Some of them have received substantial aid from the Federal Gov- 
ernment by grants of lands and otherwise. They are declared by law to be post roads. 
As mail carriers they are agencies of the Post Office Department and are performing 
a governmental function. The postal business is not carried on by the Government 
for profit but in furtherance of the constitutional power to establish post offices and 
post roads, under which it furnishes postal facilities to all of its citizens. The rail- 
roads, therefore, may not deal with the Government as they would with a shipper 
who uses their facilities as a common carrier for profit or for some special advantage. 
Furthermore, the general business which sustains a railroad is to a large extent depend- 
ent upon the mails and their certain and expeditious transportation, and the carriage 



BAILWAY MAIL PAY. 1005 

of the mails by the railroad contributes to its prosperity to an extent and in a manner 
which does not obtain for any other class of its business. From these and other con- 
siderations it follows that rates for carrying the mails on railroads should be less than 
those which might be fixed for commercial business. 

CCTST OF SERVICE AS A GUIDE IN DETERMINING FAIRNESS OF RATE UNDER COMMERCIAL 

PRINCIPLE. 

The plan of the inquiry made by the Post Office Department, the 
results of which are stated in Document No. 105, was to make an 
ascertainment of the cost to the railroads of conducting the mail 
service by dividing the total operating expenses of the passenger 
service (direct and apportioned) between the mail, express, and 
passenger services on a common unit basis of space devoted to these 
several services. Ihe principle was eminently fair to the railroads, 
because, although many general expenditures would continue to a 
large extent in the absence of the mail service, yet it was made to 
participate to the extent of its car-foot miles percentage in all which 
could have any relation to it. The idea of cost as a basis for rate 
making appears to be clearly contemplated by the statute of 1879, 
under which the inquiry was made. It authorizes the Postmaster 
General to require railroad companies to submit data relating to 
their operating receipts and expenditures as m.Sij be deemed necessary 
in his judgment "to enable him to ascertain the cost of mail trans- 
portation and the proper compensation to be paid for the same." 

There was considerable testimony by individual representatives of 
railroads questioning cost as a method of ascertaining the adequacy 
or inadequacy of rates, although others declared it to be a proper 
gauge for that purpose. Among the latter were Mr. Buckiand, of 
the New Haven, who said, "I think that the principle of additions 
to profits beyond operating cost and fair charges against the capital 
expenditures could be easily developed'' (Hearings, p. 275); Mr. 
Worthington, of the Southern Pacific, who said, "There is no reason 
why the adequacy of the pay as a whole can not be gauged in some way 
at an estimated cost, but I would not say that as a practical rate-mak- 
ing proposition" (p. 348); and Mr. Peabody, of the Santa Fe System, 
who said that on his system they use the cost to determine whether 
they are underpaid and that cost is a primary factor in determining 
the minimum rate (p. 646). 

Upon the subject of practicability of cost ascertainment, Mr. 
Turner, in his review of the evidence, states as follows: 

The department has attempted to fix a reasonable rate on such a basis. The rail- 
roads, on the other hand, have failed, as the testimony will disclose, even to make en 
effort to demonstrate the reasonableness or unreasonableness of a rate on such a basis. 
It is true, individual roads have figured out a cost basis not acceptable to or followed 
by other railroads, and only acceptable to them for their own purposes and not as a 
basis for railway-mail pay. Practically half of the roads seem to have a basis of account- 
ing by which they can determine whether they are over or under paid for carrying the 
mails. (Hearings, p. 924). 

The matter is aptly summarized by- Mr. Lorenz in his memorandum 
in review of the testimony thus: 

The testimony taken by the committee contains much concerning the difficulties 
of ascertaining the cost of the mail service to the railroads, but it is safe to soy that the 
hearings developed no method of testing the adequacy or inadequacy of railway-mail 
pay not resting, in the last analysis, upon some estimate of the cost of service. While 
cost may not be capable of that exact ascertainment which enables us to make it the 
sole determinant factor on which to base the rate of pay for each road, the usefulness 



1006 BAIL WAY MAIL PAY. 

of a cost estimate seems clear if used merely as a general guide to help us to decide 
whether the fifty-odd millions which the railroads receive from the Post Office Depart- 
ment constitutes an excessive payment or not. (Hearings, p. 878). 

_ Mr. Samuel O. Dunn, in his "The American Transportation Ques- 
tion/' discusses extensively the element of cost of the service as a 
factor in rate making (pp. 1 to 18, inclusive). On the general subject 
of cost he points out the inconsistency of the railroads in insisting 
that cost is not a factor, yet attempting to defend attacks on the 
rates by computations on cost, but deprecates the lack of uniform 
bases on which calculations have been made and their shifting and 
changing character as different cases arise or questions are presented 
in different courts. An instructive discrimination is also made 
between average total cost of the service and additional expense, 
which is well worth considering in connection with the carriage of 
the mails. In this connection he says : 

For the words "cost of service" do not always mean the same thing to him and 
others, or even to him at different times. If he is considering what is the very lowest 
rate he can afford to make, he thinks only of the additional expense that handling the 
additional traffic will cause. The additional cost of handling certain traffic may be 
but 4 mills per ton per mile; if the traffic manager can get it with a rate of 5 milJs and 
no more it is worth having at that rate. But if the road's average cost of handling 
all traffic is 8 mills, obviously he could not take all traffic for 5 mills. Since he must 
get an average of 8 mills he makes all traffic that can not pay that much pay as near it 
as it reasonably can, and_ then offsets the traffic which can not pay the average cost 
with traffic that is required to pay more than the average cost. (The American 
Transportation Question, p. 16.) 

In the paper entitled "Certain considerations in railroad rate 
making," supra, presented by Hon. Balthasar H. Meyer, a member 
of the Interstate Commerce Commission, before the American Eco- 
nomic Association, he discusses the elements, including that of cost 
of the service, which enter into rate making. He contends that it is 
a factor equally fundamental with the value-of-the-property factor, 
and although recognizing che difficulties and uncertainties involved 
pleads for the application of cost accounting to railroad transportation 
as an aid to proper rate making. 1 

Mr. Frank Hay Dixon, professor of economics at Dartmouth 
College, in discussing Mr. Meyer's paper, mentions the use of cost 
estimates by the railroads in their contention before this joint com- 
mittee for increase of mail rates. He says: 

Elaborate cost studies have been made from time to time, notably in the application 
now making to Congress for an increase in mail pay. (Railway Age Gazette, Jan. 9, 
1914, p. 72.) 

i A second factor equally fundamental with the value of the property factor, which I believe will be 
employed very much more in the future, is that of the cost of the service. A great variety of statistical 
analyses have heretofore been made, but systematic efforts directed toward the ascertainment of the 
approximate cost of the service have, generally "speaking, been strangely neglected. A small minority 
among those dealing with rate problems have long advocated it, but their plans have been thwarted by the 
skepticism and unwillingness of a persistent majority. There are those who have opposed the develop- 
ment of statistical investigations along the lines of cost because they assert the results are bound to be 
misleading and unreliable. Others confess a fear that information of that kind will be misused. Others 
declare that it will result in the establishment of rigid distance tariffs, with attendant chaos in the in- 
dustrial world. Still others maintain the view that the cost of the service has nothing to do with the rate 
either in general or in particular. The combined weight and influence of all these objectors has thus far 
been sufficient to obstruct substantial progress. 

It is a fact of common knowledge that so-called cost accounting has been applied to every important 
branch of industry except steam railway transportation. A prolific literature upon the subject has been 
produced within the last decade, and competent specialists in all branches of business are prepared to give 
these principles practical application. The railways themselves have made limited application of the 
principles of cost accounting to more than one-half of the railway mileage in the United States. They 
declare, however, that this has been done for internal corporate administrative purposes rather than with 
a view of assisting in the establishment of just and reasonable rates. The difficulties of separating operating 
expenses among the various branches of the railway business are as apparent as the benefits of the final 
results are clear to those who are willing to undertake the task. It is perfectly obvious that controversy 



RAILWAY MAIL PAY. 1007 

While in a strict cost-accounting system the subjection of the 
mail service to a cost ascertainment and a participation in payment of 
dividends, interest on funded debt, etc., as above indicated, upon a 
flat pro rata space basis is most informing, it must be conceded that it 
is a severe test for making a rate for such a specially conditioned 
commodity, and we should be careful that it be not given undue 
weight in support of a high rate. The general principle would appear 
to be useful as a guide in considering the adequacy or inadequacy of a 
rate for a commodity, the transportation of which is among the 
principal objects and functions of the railroad. But for the 
purpose of rate-making for so specially a conditioned business as 
mail service, which can be relinquished by the railroads without 
reducing their operating expenses proportionally with the consequent 
loss of revenue, it need not be given controlling weight to sustain 
high rates. The transportation of the mails is not the prime object 
of railroading. No railroad was ever built with the puipose in view 
of transporting the mails. Such transportation forms but a small 
part of their business, represented by only 1.78 per cent of the total 
revenue of all the roads of the country, although it contributes to 
the railroads' prosperity in much greater degree. Therefore, even if 
it were shown that in this complete participation on a flat pro rata space 
basis the railroads were receiving less than such aggregate estimated 
cost, it would be no sufficient argument for concluding that such rates 
were noncompensatory and that the railroads were underpaid. 

Apparently in line with this is the decision of the Interstate Com- 
merce Commission in Opinion No. 2408, in the cases of the express 
companies. The Great Northern Express Co. and the Great North- 
ern Railway Co. filed with the Interstate Commerce Commission 
tables which produced the results of an apportionment of railway 
operating expenses on three bases, namely, that "used by the prin- 
cipal carriers in the country/' that used by the Postmaster General 
in the preparation of the data published in House Document 105, 
and the " so-called Buell system/' for the purpose of showing that 
the proposed reduction in express rates would not produce a suffi- 
cient rate to the railroads. The Interstate Commerce Commission 
say as follows : 

The respondents have attempted to show that the proposed rates will not provide 
a reasonable return to the railroads, the position taken being that even the existing 
rates do not give adequate return to the railroads, in addition to the expenses of the 

respecting the apportionment of maintenance of way items, for instance, can never end. Is this, however, 
sufficient reason for refraining from undertaking a work which is so promising in beneficial results ? There 
exists surprising similarity in the methods employed by different railway companies in apportioning 
certain common or overhead expenses. This similarity appears to have been brought about without 
previous conference and agreement and is apparently the result of similar conclusions arrived at by men 
working at the same problem independently of one another. However, I am not suggesting that methods 
and rules which are now found to be common to several railway accounting departments are necessarily 
those which commissions should accept or prescribe. If cost accounting is not to be applied to railway 
transportation until every refinement has been settled by unanimous consent of the accountants, we shall 
never get anywhere. Institutional reforms are rarely effected from within, and the railway is no exception. 
If such a rule were to be applied to the assessment and collection of taxes, the government of every civilized 
country in the world would be obliged to cease its activities for want of revenue. 

A new system of express rates is about to be put into effect throughout the United States. It inaugurates 
a revolution in the conduct of the express business. It is a carefully considered experiment, the exact 
outcome of which no one can predict with full confidence. How will any one be able to draw a conclusion 
at the expiration of a definite period of time regarding the financial results of the operation of the express 
companies without approximating a segregation of the expenses incurred by the railroads on account of 
the express business. Railway mail pay is the object of periodical controversy. Does not that involve 
essentially the same fundamental accounting questions? Passenger rates are an issue in different States 
in various parts of the country. How can these controversies be properly and justly settled without some 
reference to the cost of conducting the passenger business? One might suppose that the railways in this 
country would fairly vie with one another in producing the most scientific cost data in regard to their 
respective operations which the best talent can compile. With a few conspicuous exceptions, the exact 
contrary is the fact. (Railway Age Gazette, Jan. 9, 1914, pp. 70, 71.) 



1008 



E AIL WAY MAIL PAY. 



express company and the expenses which the railroads have arbitrarily assigned for 
the purposes of this controversy to their express operations. This contention, how- 
ever, is based upon theories and assumptions to which the record gives no support 
Buch as the adoption of an arbitrary and theoretical basis for the apportionment of 
railroad expenses between passenger operations and freight operations, and the fur- 
ther adoption of a like basis for the allotment of passenger-train expenses between 
passenger service, baggage service, express service, and mail service. 

The conclusion which the commission is asked to reach upon these theoretical 
arguments would demand the condemnation as noncompensatory and burdensome 
to other traffic of a multitude of rates established by the railroads for transportation of 
property on passenger trains. It would also force a further conclusion that the pres- 
ent express rates would in many cases be subject to condemnation as unreasonably 
low, for the reason that the railroad's share of such rates is insufficient to meet the 
expenses thus arbitrarily apportioned and give a reasonable return on the property 
values which the railroads serving these respondents ask to have arbitrarily assigned 
to the express service. 

The commission rejected the statements, because they were based 
upon theories "to which the record gives no support. " Apparently 
the companies did not support by evidence the divisions submitted. 
This is sustained by an examination of their statement, in which 
they refer to the commission's familiarity with the different bases for 
the division of operating expenses, etc., which "precludes a detailed 
explanation of the basis of division of each item of expense.'' But 
the particular part relevant to the point under discussion here is the 
statament that the method "would demand the condemnation as 
noncompensatory and burdensome to other traffic, of a multitude of 
rates established by the railroads for transportation of property on 
passenger trains." This is clearly the position in which the railroads 
are in the present controversy with respect to their contention that 
this severe test adopted in Document 105 proves the mail business 
noncompensatory. 

COMPARISON BETWEEN DEPARTMENT'S ESTIMATE OE OPERATING EXPENSES, EXCLUD- 
ING TAXES, CHARGEABLE TO MALL SERVICE, AND COMPANIES' ESTIMATES OF SAME 
CHARGEABLE TO PASSENGER SERVICE. 

It is instructive to compare the department's ascertainment of the 
mail service's proportion of the operating expenses with the testimony 
of the representatives of the railroads as to cost of passenger service. 
By Table 7, Document No. 105, page 281, it is ascertained that the 
cost, including taxes, per car-foot mile made in the mail service was 
3.082 mills. This, equated to a 60-foot car basis, would be 18.492 
cents per car-foot mile. On page 882 of the hearings Mr. Lorenz 
ascertains from data in Table 3, Document No. 105, that the pas- 
senger-train car-mile operating expenses, excluding taxes, is 18.5 
cents, subject to the criticism of the railroads on grounds mentioned. 

The following table, compiled from Document No. 105, shows for 
the mail, express, and passenger services the relation of car-foot mile 
revenue; operating expenses and taxes: 



Service. 


Car-foot 
mileage 
ratios. 


Revenue 
per car- 
foot mile. 


Revenue 
per car- 
mile, 
60-foot car. 


Operating 
expenses 
and taxes 
per car- 
foot mile. 


Operating 
expenses 
and taxes 
per car- 
mile, 
60-foot car. 


Mail 


Per cent. 

7.09 

10.66 

82.25 

80. 66 


Mills. 
4.144 
3.865 
4.431 
4.519 


Cents. 
24.87 
23.19 
26.59 
27.11 


Mills. 
3.082 
3.107 
3.303 
3.368 


Cents. 
18.49 


Express 1 


i 18.64 


Passenger and dead space 


19.82 


Passenger without dead space 


20. 21 







1 Since this ascertainment the Interstate Commerce Commission has ordered material reductions in 
express rates from Feb. 1, 1914 which will reduce the unit revenues. 



EAILWAY MAIL PAY. 1009 

On page 882 Mr. Lorenz gives the result of the reports from 64 
railroads to the Interstate Commerce Commission in 1913, who re- 
ported a complete separation of their operating expenses as between 
freight and passenger services by methods, however, not uniform. 
The average operating expense per passenger-train-car mile for all 
these roads taken together for the year ended June 30, 1912, was 
19.41 cents. He thinks this is lower than it would have been if all 
roads had been included in the report. 

On page 887 he considers the reports of all railroads to the Inter- 
state Commerce Commission on the basis of the assumption that for 
the country as a whole the passenger service is not more profitable 
than the freight service, which he says is the same as saying that the 
percentage of expenses to revenues in the passenger service is not 
less than the percentage for all business together, and applying this 
expense percentage for all business, as officially reported, to the pas- 
senger revenues, he gets a minimum operating expense of 17.5 cents a 
passenger- train-car mile for the United States. He states that this is 
subject to the objections which he names on the page referred to and 
concludes that the passenger operating expense must be more. 

On pages 888, 889, 890, and 891 Mr. Lorenz reviews the ascertain- 
ments of costs of the representatives of several important systems, 
ranging from 17.52 to 28.42 cents per passenger-car mile and distin- 
guishes as to the reliabilit} 7 of the several estimates. 

Mr. Lorenz concludes triat uncertain as the testimony may be he 
thinks that 18 cents a passenger-car mile may be safely considered 
as the average operating expenses. It should be understood that 
these figures include only operating expenses. 

METHOD OF APPORTIONING UNASSIGNED EXPENSES BETWEEN FREIGHT AND 
PASSENGER SERVICES. 

The railroads complain that the department divided the total oper- 
ating expenses between the freight and passenger services by a method 
which resulted in too small an apportionment of unassigned expenses 
to the passenger service, and consequently decreased the cost of the 
mail service. 

This complaint is based upon the railroad committee's theory that 
such unassigned expenses should be divided between these two prin- 
cipal services on a re venue- train-mile age bads, the fairness of which 
the department insists can not be sustained. 

Upon this point the railroads' committee in their brief (Hearings, 
p. 728) allege that the testimony and discussion show that at present 
there is no generally accepted rule or formula for making the necessary 
assignments or estimating a close approximation of cost of any par- 
ticular service; that the Interstate Commerce Commission, after 
attempting such apportionment between passenger and freight serv- 
ices, abandoned the effort many years ago; that a subcommittee of 
the American Association of Railway Accountants resolved that no 
fixed rule can be devised for division of common expenses between 
freight and passenger. 

It is understood that the method used by the Interstate Commerce 
Commission, which was abandoned years ago, as mentioned by the 
railroads' committee, was largely the method of dividing unassigned 
expenses on revenue train-mileage, the basis which was urged by the 



1010 RAILWAY MAIL PAY. 

railroads during the hearings. Furthermore, the Interstate Commerce 
Commission has not abandoned the purpose of arriving at a satisfac- 
tory solution of the question. Upon this point Mr. Lorenz, in reply 
to a statement credited to Mr. Plant, of the Southern Railway, says: 

The reader would doubtless be misinformed if lie came to the conclusion from this 
statement that cost accounting is a closed book so far as the Interstate Commerce 
Commission is concerned. Numerous recent decisions of the commission indicate 
that they are paying attention to estimates of the cost of carrying specific commod- 
ities. The commission has recently issued a formal order requiring railroad companies 
to state the extent to which and the manner in which they are separating their operat- 
ing expenses between freight and passenger services, and, while this order does not 
commit the commission to any policy regarding the matter, it indicates at least that 
they are still open to conviction (p. 633). 

The conclusion reached in the resolution of the American railway 
accounting officers, above referred to, was effectually disposed of by 
Mr. Lorenz in his memorandum (pp. 632, 633), in which we find the 
following among other statements : 

Mr. Plant's paper is purely destructive. In place of the post-office method, which 
he attacks, he gives us absolutely nothing to put in place of it as a means of ascertain- 
ing what is a fair payment to the railroads for the service of carrying the mails. The 
statement may be ventured upon without fear of contradiction that neither he nor 
any other railroad representative can suggest a method of telling whether the railroads 
are overpaid or underpaid for this service and demonstrate its correctness without 
directly or indirectly making a "cost and use" estimate. 

The department fully agrees that division should not be made on 
any arbitrary basis, but that there should be some reason for the rule, 
and that such reason should approximate as nearly as practicable 
the element of use. For this reason we insist that the method advo- 
cated by the railroads' committee, namely, revenue train mileage, is 
too arbitrary and does not take into consideration the elements 
which Mr. Lorenz has pointed out. 

Although the railroad companies' brief appears to have waived 
general criticism of the method used by the department in dividing 
unassigned expenses between freight and passenger services, never- 
theless the criticism of the individual representatives of railroads 
before the joint committee was directed thereto and for this reason 
it is deemed proper to briefly speak here regarding it. The general 
principles governing the department's action are set forth in Document 
No. 105, as follows: 

In the determination of a basis for the apportionment of the remaining or non- 
assignable expenses of operation it was important that the method used be sound and 
equitable. The bases used by railroads for the distribution of nonassignable operating 
expenses are revenue train mileage, revenue car mileage, locomotive (including 
switching) mileage, the revenue, and the cost percentages of direct charge accounts. 
Revenue train mileage, the basis most frequently used by railroad companies, is 
referred to by the Wisconsin commission, in its decision, page 69, as follows: 

' ' The revenue train mile is the unit of work done in hauling trains between terminals, 
and it is the most direct unit of cost. That is, the passenger revenue train mileage is 
the most direct unit of those expenses which depend upon the same, and the freight 
revenue train mileage is the most direct unit of those expenses which depend upon 
this mileage. This is an important distinction, for the passenger train mileage differs 
materially in cost as well as in many other respects from the freight train mileage. * * * 
They evidently assume that passenger and freight train mileage stand for substantially 
the same thing, and that this is the proper unit of all expenses. Even a superficial 
analysis of the facts will show that this is not the case." 

The revenue car mileage is not a correct one for the division of expenses of large 
carriers because of the disparity existing between the weight and number of cars 
operated in the two classes of service. Locomotive (including switching) mileage 
is only applicable to a limited number of accounts, the charges to which depend upon 



RAILWAY MAIL PAY. 1011 

the locomotive movement. The revenue earned by the two classes of traffic is used 
as a basis for the division of operating expenses by many roads, but is not a correct 
basis. The direct charge cost percentage basis is a cost accounting method of appor- 
tioning expenses used by large manufacturing concerns, and is indorsed by expert 
accountants. In brief, the method consists in the determination of the known parts 
of the expenditures chargeable to the several departments or to the direct operations 
of manufacture and in apportioning the unknown parts of the expenditures to the 
several departments or operations in accordance with the cost ratios of the known 
expenditures. In the method followed by the department all of the bases referred 
to, with the exception of the revenue basis, were made use of where applicable. 

On pages 8, 9, 10, 11, 12/13, and 14 of Document No. 105 will be 
found a detailed statement of the manner in which the accounts were 
handled in making the divisions. 

The formulas there given are the result of the best thought and 
study of reliable authorities which could be found by the department's 
officers. 

As against this rational effort the railroads' committee present to 
ehe joint committee the more arbitrary method of dividing unassigned 
txpenses on the basis of revenue train miles. 

In support of their plan Mr. Peabody, of the Santa Fe System, pre- 
sented at the hearings (pp. 467 to 489, inclusive) several decisions 
relating to the use of revenue train mileage for the purpose of such 
division. He referred to the case of Trust Co. of America, complain- 
ant; Chicago, St. Louis & Peoria Railroad Co. of Illinois, defendant: 
in chancery, in the United States District Court for the Southern 
District of Illinois, claiming that the opinion of the court sustained 
the master and indorsed "unqualifiedly the train mile basis, " and that 
the only opponent among the witnesses to such basis was Mr. C. W, 
Hillman. 

In the first place, the master, as shown by the record of the case 
itself on page 48 of the hearings, did not so unqualifiedly indorse 
the plan, but instead, comparing it with the method used by Mr. 
Hillman, stated it w T as "admittedly inaccurate," but he accepted 
it as being only one yardstick instead of many yardsticks also 
inaccurate "and without other sanction than an individual opinion." 
He further stated that the weight of testimony in the case was in 
favor of the petitioners. 

It is thus seen that the master was forced to decide between the 
train-mileage system, supported by the testimony of a number of rail- 
road men and which, was opposed by the opinion of one, Mr. Hillman. 
The decision, therefore, was in favor of the weight of evidence. 

When the Minnesota rate case was considered by the Suprene 
Court of the United States that court did not pass upon the method of 
division between passenger and freight expenses. 

The decision in the lower court against the Hillman plan can have 
no weight before this joint committee unless it can be shown that 
his plan was substantially the plan of the Post Office Department 
used in preparation of House Document No. 105. This can not be 
done. As a matter of fact, the plan was substantially different from 
the department's plan. A careful review of his method employed in 
the division of those accounts, which coulel not be directly allocated, 
discloses the fact that while he follows the conclusions of the Wisconsin 
Railway Commission decision in Buell v. The Chicago, Milwaukee & 
St. Paul Railway Co. in certain accounts, he does not use the method 
adopted by the Post Office Department and presented by the 



1012 RAILWAY MAIL PAY. 

Wisconsin commission as upheld by the weight of opinion of the 
experts in railroad accounting, quoted on pages 97 and 98 of the 
report of the railroad commission of Wisconsin. 1 

The method adopted by the department , which is supported by 
the evidence in the Wisconsin commission decision, was based upon 
the known expenditures chargeable to train movement in conducting 
transportation; that is, the business of the railroad as a train unit. 
The result of the use of this basis in dividing the unassignable oper- 
ating expenses is to bring the passenger and freight expenses, respec- 
tively, into proportion with the known ratios of transportation costs 
of the respective services, instead of using a traffic estimate of service 
such as the revenue train mileage, or a weight arbitrary, such as that 
used by Mr. Hillman. 

As stated by the Wisconsin commission and quoted in House Docu- 
ment 105, on page 8, the revenue train mileage is a just basis for 
dividing the unassignable expenditures providing the relative cost 
of passenger and freight movement is the same; in other words, if 
the passenger and freight train mileage stand for substantially the 
same thing, it is a proper unit, but this is not the case. The proof 
of this fact is amply demonstrated in the reports of the railroads to 
the department for November, 1909, and as set forth in Exhibit A. 

The revenue train mileage as a basis having been urged upon the 
railroad companies by the railway mail pay committee, and the reports 
to the department showing conclusively that it was used extensively, 
if not exclusively, in separating the unassignable expenses, led to 
the investigation by the department as to its accuracy. The result 
proved that the assumption of the railway mail pay committee "that 
a passenger train-mile costs the same to run as a freight train-mile" 
was contrary to fact. This condition in the relation of passenger and 
freight traffic was the principal determining reason for the adoption 
by the department of a method which was capable of producing 
results more nearly approximating the correct relation between the 
actual known expenditures for the two classes of traffic. 

The principle involved in the department's division of expenses is 
stated by the Supreme Court of the United States in the Minnesota 
rate case to be the true principle upon which a division of values of 
properties should be made. 2 While this is said with reference to 
division of property values it is equally true in principle with reference 
to division of common expanses. 

Practical examples of the results in applying the revenue train-mile 
basis for division of all unassigned expenses will at once disclose its 
unreliability. These may be found in the memorandum hereto 
attached, marked "Exhibit A," entitled "Department's method in 

i Mr. Hillman used a method for ascertaining the proportion of the expenses for maintenance of way and 
Structures chargeable to passenger traffic which was based upon weight and mileage, according to a formula 
including car miles, car weight, weight of passengers, express and mail, and engine-ton mileage, and 
assuming an arbitrary of 300 pounds, representing one passenger and the factors of express and mail weight. 
This formula was used for dividing that part of the item involved in the wear on account of traffic. The 
portion of the item involving depreciation on account of weather he divided in pro ratio to the respective 
freight and passenger earnings. 

With the exception of two items, namely, ballast, and roadway and track, the proportions assigned by 
Mr. Hillman to traffic wear differ materially from that used by the department. However, in dividing 
the general expenses his method was identical with that of the department. In other words, Mr. Hillman 
used his own discretion in regard to the several percentages, both in regard to the proportion between traffic 
wear and weather and the proportion between freight and passenger for the accounts of maintenance of 
way and structures. The department followed the consensus of the opinion of the experts quoted by the 
Wisconsin commission. 

2 In support of this method it is said that a division of the value of the property according to gross earnings 
js a division according to the "value of the use," and therefor proper. But it would seem to be clear that 



RAILWAY MAIL PAY. 1013 

separating the unassignable operating expenses of railroad companies 
unjustly criticized by the railroads, who have offered no valid criti- 
cism of the actual apportionment made by the department." 

THE CHARGE OF SPACE TO THE MAIL SERVICE. 

In no part of the presentation of the railroads is there more error 
than in their brief concerning the question of "dead space" set forth 
on pages 722 and 723 of the hearings, where the following statements 
are found, namely : 

The Post Office Department now concedes that Document No. 105, through erro- 
neous treatment of so-called "dead space," underestimated the pay due the railways. 

The Post Office Department, in addition to admitting that Document No. 105 should 
be revised in order to make a reasonable allowance for a just return on invested capital, 
also concedes that the so-called "dead space" was erroneously treated, with the 
result of underestimating the compensation fairly due the railways. 

Messrs. Joseph Stewart, C. H. McBride, and A. N. Prentiss, for the Post^ Office 
Department, and Messrs. H. E. Mack, V. J. Bradley, and H. P. Thrall, for the railways, 
agreed upon the following, which was submitted to the joint committee under the date 
of March 15, 1913: 

"The differences between the car-foot mile earnings by the two calculations are due 
entirely to the fact that the Post Office Department, upon receipt of the data as to 
space from the railroads, made certain modifications therein, based upon the space 
deemed by the Post Office Department to be necessary for its purposes and upon its 
rules with respect to assigning other space reported by the companies as mail space, 
which resulted in a reassignment of the car-foot mile space to the different subdivi- 
sions of passenger-train service." (Testimony, p. 324.) 

The above specifically and by inference incorrectly states the facts. 
The Post Office Department did not by the letter referred to or at any 
other time concede that the "dead space" tabulated in Document 
105 and charged to the passenger service was erroneously treated 
with the result of underestimating the compensation fairly due the 
railways. The facts are simple and do not justify misunderstanding. 
The chairman of the joint committee requested representatives of 
the department and of the railroads, respectively, to consider the 
differences in the statements of revenue per car-foot mile received 
by the railroads from the mail service and from other passenger serv- 
ices, as computed by the department and the Committee on Railway 
Mail Pay, respectively, there being a difference between the two results. 
A committee consisting of the Second Assistant Postmaster General, 
Messrs. McBride and Prentiss for the Post Office Department, and 
Messrs. Mack, Bradley and Thrall, for the railroads, gave consideration 
to the matter and submitted a reply in writing to the effect that the 
difference between the two results reached by the two calculations 

the value of the use is not shown by gross earnings. The gross earnings may be consumed by expenses 
leaving little or no profit. 

It is not asserted that the relation of expense to revenue is the same in both businesses; on the contrary, 
it is insisted that it is widely different. 

If the property is to be divided according to the value of the use, it is plain that the gross earnings method 
is not an accurate measure of that value. 

* * * #'# * * 

When rates are in controversy it would seem to be necessary to find a basis for a division of the total 
value of the property independent of revenue, and this must be found in the use that is made of the property . 
It would seem that, after assigning to the passenger and freight departments, respectively, the property 
exclusively used in each, comparable use units might be found which would afford the basis for a reasonable 
division with respect to property used in common. 

It is sufficient to say that the method here adopted is not of a character to justify the court in basing upon 
it a finding that the fates are confiscatory. (Minnesota rate cases, 230 U. S., 459, 461.) 



1014 RAILWAY MAIL PAY. 

was "due entirely to the fact that the Post Office Department upon 
receipt of the data as to space from the railroads made certain modi- 
fications therein, based upon the space deemed by the Post Office De- 
partment to be necessary for its purposes and upon its rules with re- 
spect to assigning other space reported by the companies as mail 
space, which resulted in a reassignment of the car-foot mile space 
to the different subdivisions of the passenger-train service. " The 
full letter is set forth on page 324 of the hearings. There is nothing 
in the language used which will justify the conclusions that the Post 
Office Department's representatives conceded that the space so re- 

Eorted by the railroad companies and unchecked by the Post Office 
department as deemed "to be necessary for its purposes and upon 
its rules with respect to assigning other space reported by the com- 
panies as mail space" was the proper space to be used as representing 
the mail service. The purpose of the letter was merely to state to 
the chairman the reasons for the difference in the results obtained 
by the railroads' committee and the Post Office Department. This 
must be well known to the representatives of the railroads who 
signed the letter, for the representatives of the department declined 
to sign any reply until it was so worded as in their opinion would make 
it perfectly clear that no concession as to the correctness of the rail- 
roads' claims of erroneous assignment of space was made in the letter 
by the department. It is therefore difficult to understand why this 
statement is made in the brief of the railroads' committee. 

All arguments, therefore, based upon any assumed concession of 
the Post Office Department that the unchecked space as reported by 
the railroad companies for mails were correct must fall. 

For the above reasons the conclusion reached by Mr. Turner that 
the department and railroad representatives referred to "met and 
on March 15, 1913, reported that the earnings per car-foot mile in 
mail service were 3.37 mills and in passenger service 4.34 mills" is 
incorrect, and all the argument based by him upon the assumption 
made must be dismissed from consideration. (Hearings, p. 961.) 

Equally erroneous is the assumption made in the railroad com- 
mittee's brief (Hearings, p. 723) in this same connection, as follows: 

The foregoing shows that unless the modifications referred to were justified, addi- 
tions to the estimated payments under the proposed system would have to be made 
corresponding in extent to the erroneous changes. In his letter of January 9, 1913, 
already quoted from herein (hearings, p. 721 ), Postmaster General Hitchcock conceded, 
in effect, that these modifications ought not to have been made as to railway post- 
office cars, by saying — ■ 

"I am willing to recommend * * * that in computing the car-foot miles the 
mail service shall be charged in both directions for a line of railway post-office cars 
with the maximum space authorized in either direction." (Preliminary Report, p. 
96.) 

As a matter of fact the cases covered by Postmaster General Hitch- 
cock's letter are not such cases as are involved in the difference 
between the results reached by the railroads' committee and the 
officers of the Post Office Department. The language of Mr. Hitch- 
cock's letter is that he is willing to " recommend the following in 
connection" with the proposed plan submitted in House Document 
No. 105 for readjusting railroad mail pay, namely: "That in comput- 
ing car-foot miles the mail service shall be charged in both directions 
for a line of railway post office cars with the maximum space author- 
ized in either direction." 



KAILWAY MAIL PAY. 1015 

As will be seen hereinafter, this referred to' cases where because of 
a difference in the authorization of railway post office cars in the two 
directions a doubt had arisen as to whether under the new plan pro- 
posed the railroad companies would receive credit in both directions 
for the maximum space authorized in either direction. Its purpose 
was to remove all doubt upon this point and to agree that the rule 
should be written in the statute in order that it could not be ques- 
tioned. It was not an admission that the allowances made in Docu- 
ment 105 had been erroneous in such cases. A consideration of the 
rules followed by the department in tabulating space, set forth here- 
inafter, will make this entirely clear. 

Mr. Turner's conclusions on page 961 regarding dead space reported 
by the railroads as chargeable to mail service but charged against 
passenger service, made in connection w T ith quotations, is therefore 
erroneous. The inference to be drawn from the argument set forth 
is that the amount of car-foot miles named, which covers the haul of 
dead space, was admitted both by Mr. McBride and Mr. Hitchcock 
as having been erroneously charged to the passenger service. Mr. 
Hitchcock did not make any such admission, and it is only neces- 
sary to refer to his letter and to consider it in connection with what 
he said above and also in connection with the instructions of the 
department which governed the tabulation of space to make this 
entirely apparent. 

The opinion of Mr. Lorenz, as quoted on page 961 by Mr. Turner 
in connection with the dead space, I think, should be considered in 
connection with a misunderstanding apparently existing regarding 
what constitutes the dead space reported in Document No. 105. It 
would appear that he did not have in mind the instructions which 
governed the tabulation in accordance with which the railroad com- 
panies received credit for extra space in railway post-office cars where 
such operation was made necessary by the mail service, and could not 
have been aware of the fact that the larger part of the dead space 
represented railroad operations for the convenience of the railroad 
companies and only indirectly incidental to the mail service. 

It is pertinent to now inquire what space largely constitutes the 
item called "dead space" reported in Document No. 105 and how it 
was operated by the companies. In order to understand this it is 
first necessary to fully consider the instructions and rules adopted by 
the Post Office Department to check the reports of the railroad com- 
panies of space necessary for the mail service. These rules were as 
follows : 

Closed-pouch space. — The following basis for the estimate of the space in baggage 
cars devoted to mail service for closed pouches during the month of November, 1909, 
in connection with the railroad companies' reports, will be observed: 

For 100 pounds or less, allow 6 linear inches. 

For weights above 100 pounds and not exceeding 200 pounds, allow 10 linear inches. 

For weights above 200 pounds, allow 5 linear inches for each additional 100 pounds. 

The weight will be ascertained by multiplying the maximum number of pouches 
and sacks reported by the company as carried at any one time by the average weight 
of pouches and sacks as shown by the report of the General Superintendent, Railway 
Mail Service, upon the actual weighing for 10 days of closed pouches on express 
trains, namely, 20 pounds. 

Apartment car space. — Where the railroad reports cars longer than those authorized 
by the department, enter the authorized length in column 11, form 2601, and enter 
the excess space in an additional column to be headed " Linear feet of the cars — dead 



1016 EAILWAY MAIL PAY. 

space," and its car-foot mileage to be computed and entered in another additional 
column headed " Car-foot mileage— dead space." 

Railway post office car space. — Where the railroad company reports cars longer than 
those authorized by the department, the cases may be one of the following three 
characters: 

Full line authorized with maximum pay. — Where the space reported is greater than 
that authorized by the department, enter the authorized length in column 9, form 
2601, and the excess space in an additional column marked " Linear feet of cars — dead 
space" and compute the car-foot mileage on the dead space and enter it in another 
additional column, marked "Car-foot mileage — dead space." 

Agreement lines. — These cases are where the department authorizes a full line of 
cars (as, for instance, a 60-foot line), and the company operates such sized cars in both 
directions, but the department pays a rate equal to half the rate for a full line of the 
maximum length, plus one-half the rate for a full line of minimum length (as, for 
instance, pay equal to half a 60-foot plus half of a 50-foot or 40-foot line). In this case 
enter the length of the line, as authorized, in column 11, form 2601. 

Half lines.— These are cases where the authorizations are for specific half lines (as 
for instance, half line of 60-foot cars in one direction and half a line of 40-foot cars in 
the opposite direction). It is usual for the company to operate the maximum length 
of car in both directions. If, therefore, the company reports greater length than that 
authorized, enter the authorized length in column 11 and the surplus space reported, 
if any, in another column (additional), marked "Linear feet of cars — deadhead space" 
and compute the car-foot mileage upon the deadhead space and enter it in another 
additional column headed "Car-foot mileage — deadhead space." 

If a railway post-office car is reported deadhead and its running is necessary for the 
maintenance of the authorized car service, the space should be entered in the column 
"Linear feet of cars — deadhead space" and its car-foot mileage computed and entered 
in the column "Car-foot mileage — deadhead space." 

Milk car operated in passenger train. — Where a milk car is operated in a passenger 
train, the car space should be treated as passenger-car space. 

Railway post-office cars run beyond the points betvjeen which such service is duly author- 
ized and paid for. — Where a company reports the operation of a full railway post-office 
car beyond the points between which the line is duly authorized, give credit in col- 
umn 11 for the length of space necessary for apartment-car service, if any be necessary, 
for the extra distance for which the car is so operated and enter the surplus space in 
the column "Linear feet of cars — dead space" and carry the car-foot mileage for each 
to their appropriate columns. If no space is needed for apartment-car service over the 
extra distance run, enter the entire space reported for such distance in the column 
"Linear feet of cars — dead space" and carry out its car-foot mileage. 

The space ascertained to be "deadhead space" under the foregoing 
rules was charged to the mail service and formed a part of the car-foot 
mileage percentage for that service. 

It will be seen from the above : 

That for closed-pouch service liberal allowance of space was made. 

That the full amount of space authorized in apartment cars was 
allowed. When it is understood that the department does not pay 
anything additional for apartment-car space the conclusion naturally 
follows that space was not illiberally authorized. If the railroad 
companies, for their own convenience, chose to build apartments in 
cars longer than apartments are authorized and needed for the mail 
service, anticipating future needs and conserving future expense in- 
cident to possible changes, certainly the department should not be 
compelled to charge itself with this extra unneeded space. However, 
if there be cases where the authorization of apartment-car space is 
different in the two directions it would be proper to consider the claim 
for the maximum space just as allowance was made in such cases for 
full railway post-office cars. 

That for full railway post-office lines with maximum pay the space 
authorized by the department was allowed. If the company chose 
for its own convenience to run cars of a greater length than those 



BAILWAY MAIL PAY. 1017 

authorized, certainly the department should not be charged with the 
excess space. 

That for agreement lines of railway post-office cars credit was 
allowed for the full space on the line, although the department needed 
and paid for less space in one direction than in the other. 

That for half lines of railway post-office cars full credit was given 
for the maximum length in either direction — first, in mail space for 
the actual authorized length in each direction, and, second, in "dead- 
head space" for the surplus space run over that authorized, credited 
to "deadhead space" and transferred to the mail service. 

That for railway post-office cars run "deadhead" and necessary for 
the maintenance of the authorized car service full credit was given 
the companies for the space, the same being entered under "dead- 
head" and transferred to the mail service. 

That for railway post-office cars run beyond the points between 
which the service was duly authorized and paid for full credit was 
given for the necessary space thus carried by the full railway post- 
office car beyond its point of authorization if run as an authorized 
apartment car, and the surplus space in the full car so run was charged 
to "dead space," as such operation was purely for -the convenience of 
the railroad company, and the department should not be charged with 
the surplus. If no apartment-car service were necessary over the line 
beyond the authorized full railway post-office line, no credit was given 
the company, because the mail service was in no wise interested in such 
operation and it was not necessary for postal purposes. 

From the above it will be seen that the department was liberal in 
allowing space for full railway post-office car service and, furthermore, 
as above mentioned, had actually employed the rule in the preparation 
of Document No. 105, which Postmaster General Hitchcock stated in 
his letter he was willing to recommend be incorporated in the law. 

Notwithstanding this liberality of the department in crediting 
space the results obtained by the Post Office Department and those 
obtained by the railroad mail pay committee varied considerably, as 
hereinbefore mentioned. The reason for this is that the operations of 
the railroads were used by the railroad mail pay committee in making 
their computations without regard to the proper and equitable rules 
of the department, above mentioned, limiting credit for certain space. 
The railroad companies generally reported the space at the maximum 
of operating conditions, whether warranted by the needs of the mail 
service or not. An examination of the instructions of the various com- 
panies to their employees in regard to reporting closed-pouch space 
indicates that no matter what the size of the baggage car utilized, the 
mail service, even if the mail was very light in weight and quantity, 
was charged with unused space in the baggage err proportional to 
the amount carried. The rule of the department in regard to closed- 
pouch space was based upon measurements and tests made by officers 
of the department. From the rules regarding allowance of space for 
full railway post-office cars it will be seen that only in cases where 
the company operated cars of a greater length than authorized by the 
department and also where the companies, for their own purposes, 
operated lines beyond the authorized points was the surplus space so 
run directed to be charged to "dead space" and ultimately to passenger. 



1018 RAILWAY MAIL PAY. 

ANNUAL WEIGHINGS, SIDE AND TERMINAL SERVICE, AND APARTMENT CARS. 

Annual weighings. — The contention for annual weighings of mails 
upon which to make readjustments of railroad mail pay, the request 
by the railroads to be relieved of the performance of side and terminal 
services, and the request to be paid specifically for apartment car space 
as they are paid additionally for full cars are presented for considera- 
tion in two aspects: First, by the railroad companies as a part of their 
proposed plan for modification of existing law relating to compensa- 
tion; and, second, as elements which either entitle the companies 
to additional compensation for facilities furnished or necessitate 
undue expenditure compared with the revenue received. It is pro- 
posed here to consider them in their second aspect, leaving the first 
to be treated hereinafter when the railroads' proposed plan shall be 
under consideration. 

Regarding the contention for annual weighings, the railroads 
claim that readjustments based on the quadrennial weighings do not 
adequately compensate them for the increase in weight of mails dur- 
ing the four-year period. 

Mr. Lorenz names an estimate of $3,255,000 as covering this addi- 
tional claim and includes it in the total asked for by the railroads (Hear- 
ings, p. 868). Mr. Turner, in his memorandum, reviews the conten- 
tions of the railroads in this respect, suggests an estimate of $3,000,000 
as the consequent deficiency in railroad pay (Hearings, p. 912), 
and includes $2,900,000 as an item of underpayment (Hearings, 
p. 918). 

In answer to this it may be said that if the rate fixed on a quadren- 
nial weighing is not adequate to compensate for service for the four- 
year term, there would be merit in the railroads' contention. However, 
it has been shown hereinbefore that on the basis of Document No. 105 
and an additional liberal charge against the mail service for participa- 
tion in payments of dividends, interest on funded debt, etc., the aggre- 
gate animal payment to the railroads in 1910 exceeded the apportioned 
cost. Furthermore, and this is a fact which has not been heretofore 
presented, the compensation paid for the year 1910 was compared 
with the estimated cost of facilities representing a growth in the ser- 
vice of almost four years in the fourth contract section, of three years 
in the third contract section, of two years in the second contract sec- 
tion, and of about six months in the first contract section. The sig- 
nificance of this is at once apparent. The $49,000,000 compensation 
was composed of the pay for service in the fourth contract section 
fixed nearly four years prior to 1910; the pay for service in the third 
section fixed nearly three years prior; the pay for service in the second 
section fixed nearly two years prior; and the pay for service in the 
first section fixed less than a year prior; yet the cost of the service 
measured on space including the necessary growth in the several 
sections during these periods did not equal the amount of the pay 
fixed at the earlier dates. This shows clearly that the growth of the 
service during the quadrennial period is amply paid for under the 
existing plan. 

In view of these facts the claim for an annual weighing under ex- 
isting law appears to have no merit. 

Side and terminal service. — Regarding the request of the com- 
panies to be relieved of side and terminal services, so far as it affects 



EAILWAY MAIL PAY. 1019 

the question of the ascertainment of cost and therefore the adequacy 
of present pay, the following may be stated: 

The companies claim that this service is not reasonably a part of 
the railroad transportation service or of the service of a common car- 
rier. Except in some individual instances they do not submit any 
evidence as to the " out-of-pocket" expense to themselves in per- 
forming this service. It is well known that in most cases at small 
stations the railroad agent is required to carry the mails to and from 
the post office as a part of his regular duties and receives little or no 
additional compensation from the railroad company for it. On the 
other hand, it is true that at other more important places where the 
companies are required to perform the service they are obliged to 
expend a certain "out-of-pocket" amount for the service, and on 
small short lines this amount proves to be a considerable part of the 
compensation received for the carriage of the mails. 

Mr. Lorenz names an estimate of $1,000,000 as covering this addi- 
tional amount and includes it in the total asked for by the railroads 
(Hearings, p. 868). Mr. Turner, in his memorandum (Hearings, pp. 
914 and 915), estimates the cost to the railroads of approximately 
$500,000, and includes this amount in his computation of under- 
payment to the railroads (Hearings, p. 918). The department has 
estimated in 1909 that it would cost approximately $4,373,000 for 
it to take up and perforin this service. 

In reply to this, it may be said that, so far as existing law is con- 
cerned, the railroads are amply paid in the aggregate for this service. 
The testimony has not been discriminating in this respect, and it has 
from time to time been stated by the railroads that no allowance was 
made for side and terminal service. This is incorrect. The fact is 
that in the cost ascertainment the mails participated on the basis of 
car-foot miles in every expenditure for messengers, porters, and 
station service in which the mails were concerned, excepting where the 
specific amounts expended for the mail service were reported, in which 
cases such specific amounts were allowed. A full statement as to 
these credits and the manner in which they were given and the reasons 
therefor are set forth on page 104 of the preliminary report. 

It is, therefore, evident that inasmuch as the pay exceeded the cost 
and proper charges against the mails, as hereinbefore stated, no addi- 
tional amounts should be allowed for side and terminal service under 
existing law. 

The history of the requirement that railroad companies shall pro- 
vide for side and terminal service where the department does not make 
other provision runs back into the days when the principal mail trans- 
portation service was performed on star routes instead of railroads. 
The rule with reference to this service was applied to railroad service, 
and after the law of 1873 was still continued. The Court of Claims 
thereafter held that Congress had taken that service into consideration 
when they established the rates of 1873. (Hearings, p. 17.) 

Apartment cars. — Regarding the recjuest for specific additional 
payment for apartment cars, the railroads claim that they should 
receive specific additional pay for such space on the same basis as they 
now receive pay for full railway post-office cars. Mr. Lorenz esti- 
mates the annual pay for apartments on the basis of car-foot mileage 
shown in Document 105 as $3,690,140, and includes this in his esti- 
mated amount necessary for "correcting the inconsistencies in the 

49396—14 72 



1020 RAILWAY MAIL PAY. 

present law in the manner asked for by the railroads. " (Hearings, 
p. 868.) Mr. Turner estimates the amount as $3,700,000, and in- 
cludes it in the total which he submits as the amount of underpay- 
ment under existing law. (Hearings, pp. 916, 917, and 918.) 

in regard to this contention it may be said, as in the two cases 
above mentioned, that it is without merit as an argument to show 
underpayment under present law. It seems to have been overlooked 
in commenting upon the facts and the evidence that the ascertain- 
ment of cost made by the department includes every possible credit 
which could be claimed for apartment-car service, assuming that 
such space was properly represented in the statistics of Document 
105. In other words, the apartment-car service participated in the 
apportionment of cost and other charges against operating revenues 
in exactly the same manner and to the same pro rata extent as the 
full railway post office cars did, and all other space used for the 
transportation of mails. It is apparent, therefore, that there is no 
merit in the contention that the railroads are underpaid on account 
of apartment-car service. 

It is interesting to note that the theory of the statute of 1873 
(afterwards K. 3., 4002) is that the rates of pay therein fixed were 
intended to fully cover the facilities furnished in apartment cars. 
That law provides that the Postmaster General is authorized and 
directed to readjust compensation to railroad companies upon the 
conditions and at the rates named, the first condition being "that 
the mails shall be conveyed with due frequency and speed; and 
that sufficient and suitable room, fixtures, and furniture, in a 
car or apartment properly lighted and warmed, shall be provided 
f or * *. * (railway postal clerks) to accompany and distribute 
the mails/' 

THE LAW OF MARCH 2, 1907, AND POSTMASTER GENERAL'S ORDER NO. 412 OP JUNE 7, 

1907. 

An argument is presented for the railroads in the memorandum 
prepared for them by Mr. H. T. Newcomb, statistician (Hearings, pp 
59 et seq.), that because the Wolcott commission reported in 1901 
that the prices paid the railroads for transporting the mails were not 
excessive the reductions made by Congress in 1907 and that resulting 
from the Executive order known as the "divisor order" in the same 
year, together with other reductions resulting from changes in the 
service, have decreased the rates of railroad transportation below a 
fair level. 

The fundamental error in this is in the assumption that all inquiries 
subsequent to 1901 must necessarily be controlled, so far as the con- 
clusion is concerned, by the finding of the Wolcott commission. It 
ignores the present inquiry and the radical differences between the 
methods followed upon the two occasions. If it be shown that in 
1909 the pay to railroads was excessive what possible bearing upon 
the case can a previous finding in 1901 have? 

Furthermore, the reductions which he has mentioned are not all 
reductions in pay without corresponding reduction in service require- 
ments or such reductions as the railroads themselves regard as unwar- 
ranted from a commercial point of view. For instance, on pages 97 
and 98 of the hearings, he refers to the administi ative policy of pro- 



RAILWAY MAIL PAY. 1021 

curing equalized rates where there are competing lines, one of which 
is shorter or cheaper than the other. 

The rate given the department under these conditions is purely 
voluntary on the part of the railroad, and no one can doubt that it 
regards the rate as fully remunerative, or it would not retain the 
mails, as the department stands ready to divert them to the cheaper 
line if the carrying company does not wish to carry them. Again, 
on page 100, he mentions the withdrawal of payments for special 
facilities, but does not mention the fact that the companies furnishing 
the trains to the South, for which this special subsidy was paid, 
withdrew its fast trains because they did not longer wish to maintain 
the schedules and voluntarily relinquished the subsidy. On pages 100 
and 101 he mentions the withdrawal of envelopes, postal cards, and 
mail equipment from the mails, but in this case does mention the fact 
that this was coincident with a reduction in mail service required. If 
they do not carry these articles in the mails, how can it be said that 
railroad pay for service rendered has been reduced because of their 
withdrawal, or how does it increase the cost of service rendered 
except on the theory that mail service is a by-product of railroad 
business? Furthermore, all these articles were carried by the com- 
panies in freight trains at regular freight rates, and all companies are 
anxious to receive the business and spend time and money in soliciting 
it. On page 101 he mentions the forwarding of periodicals by freight. 
These articles were withdrawn from the passenger service and were 
carried in the fast-freight service of the companies. Again, it must 
be asked how it can be said that railroad pay for service rendered has 
been reduced because of their withdrawal, or how the cost has been 
increased thereby, unless, as mentioned above, it be on the theory 
that the mail service is a by-product and the withdrawal did not 
reduce the expense, but did reduce the surplus from it. On the 
other hand, they receive full and adequate pay at freight rates for 
carrying the same articles in freight trains, and all companies are 
anxious to have the business. All these items so mentioned are 
represented in his total of over $8,000,000 "reductions," set forth by 
him in the table on page 101, excepting a money value for the with- 
drawing of periodicals. 

He further mentions two reductions in pay which do not involve 
a reduction in service, namely, that by the act of March 2, 1907, 
and that effected by order No. 412. So far as the reductions effected 
by these two measures are concerned, they are wholly irrelevant to 
the question before the joint committee for the reason, as stated 
above, that the premise upon which they are advanced, namely, 
the conclusive effect of the finding of the Wolcott commission, can 
not be considered. 

However, as the question of the divisor has been introduced, 
though unnecessarily, I think, it seems necessary to inform the 
joint committee respecting the principle involved in order that 
there may be no prejudice arise from the remarks of Mr. Newcomb 
regarding it on page 99 and of Mr. Turner on pages 917 and 958. 

When the law of 1873 became effective, the six-day-a-week rail- 
road mail routes predominated over the seven-da} r -a-week railroad 
mail routes, both as to aggregate compensation and aggregate mile- 
age of routes. Prior to 1907 it was the practice of the department to 
weigh the mails for not less than 35 or 105 days and to divide the 



1022 KAIL WAY MAIL PAY. 

total weights for all the weighings by the number of week days in 
the weighing period, the result thus secured being considered the 
average weight of mails per day carried. This process produced a 
higher average than the true mathematical average daily weight. 
It produced an average for each day of 313 days in the year instead 
of for each day of 365 days in the year. It appears to have been a 
concession to the predominating feature of railroad mail service at 
the time the practice was inaugurated, and the same divisor was 
used for the seven-day routes apparently for the reason that to 
have used a divisor of seven days in the week for these routes would 
have penalized the seven-day route carrying the same amount of 
mail as a six-day route by producing for a seven-day route a lower 
average daily weight, and consequently a lower rate of pay. 

This condition continued until 1884, when Postmaster General 
Gresham issued what is known as Order No. 44, of September 18, 
1884, which directed that on routes performing service seven days in 
the week the whole number of days the mails are weighed should be 
used as a divisor, thus cresting a divisor of a multiple of seven days 
in the week for seven-day routes and leaving the old divisor of a 
multiple of six days in the week as a divisor for six-day routes. This 
order continued in force until January 16, 1885, though no weighings 
occurred in the meantime. It created two different divisors, one to 
apply to six-day routes and another to apply to seven-day routes, 
and would have worked inequitably to the seven-day routes as above 
mentioned. 

By order of January 16, 1885, Postmaster General Hatton revoked 
the order of September 18, 1884, leaving in force the practice begun 
in 1873, which continued until 1907. Between the date of the 
issuance of Order No. 44 and its revocation Mr. Hatton submitted an 
inquiry to the Attorney General, setting forth a specific example of a 
division of the same weights on both classes of routes by the same 
divisor and asked whether that process was the correct one. The 
Attorney General did not have before him any proposition to make 
the divisor a multiple of seven instead of six, as was afterwards done 
by Order No. 412. Naturally he said that the method detailed in 
Mr. Hatton's letter was the correct one. The rationale of the letter 
submitting the question concerned itself with the principle of using 
the same divisor in all cases. The question of the use of a multiple 
of seven instead of a multiple of six was not presented. 

This condition continued until March 2, 1907, when Postmaster 
General Cortelyou issued an order, known as No. 165, of that date, 
directing that in obtaining the average weight per day the whole 
number of days the mails are weighed shall be used as a divisor. It 
will be observed that the effect of this was to restore the order of 
1884 and to necessitate the use of a divisor of multiples of six days 
in the week for six-day routes and a multiple of seven days in the 
week for seven-day routes, which would have resulted in the same 
inequality as to the seven-day routes as above mentioned. 

To correct this Postmaster General Meyer issued his order of 
June 7, 1907, No. 412, which directed that the average weight per 
day shall be obtained by using the whole number of days included in 
the weighing period as a divisor, which rule has continued in force to 
the present time. The effect of it is to require a divisor of a multiple 
of seven days in the week (or, in other words, the whole number of 



RAILWAY MAIL PAY. 1023 

days in the weighing period) for both the six-day and seven-day 
routes and, furthermore, not only to produce an exact mathematical 
average for every day in the year of 365 days, but to do the same 
even justice between the two classes of routes that the old divisor 
accomplished. 

In order that the use of the several divisors may be more readily 
understood the following graphic examples are given : 

Effect of old divisor. 

Six-day-a-week route. 

pounds 
30 ) 60,000 ( 2,000 pounds average. 

Seven-day-a-week route. 

pounds 
30 ) 60,000 ( 2,000 pounds average. 

Producing in each case an average for 313 days in a year of 365 
days. 

Effect of Order No. 44 (of 1884) and No. 165 (of 1907). 

Six-day-a-week route. 

pounds 
30_) 60,000 ( 2,000 pounds average. 

Producing an average for 313 days in a year of 365 days. 

Seven-day-a-week route, 
pounds 
35_) 60,000 ( 1,714 pounds average. 

Producing an average for 365 days in a year of 365 days. 

The rate for this average daily weight would be less than the rate 
for the 2,000 pounds on the six-day-a-week route, although the same 
aggregate weight would be carried and a more frequent service 
rendered . 

Effect of new divisor (Order No. 412). 

Six-day-a-week-route. 
pounds 
35J 60,000 ( 1,714 pounds average. 

Seven-day-a-week route, 
pounds 
35 ) 60,000 ( 1,174 pounds average. 

Producing in each case an average for 365 days in a year of 365 
days, and the average being the same for both classes of routes. 

A further correction should be noted in regard to a statement made 
by Mr. Turner on page 958 that Postmaster General Hatton, in a 
" Documentary History of the Railway Mail Service," transmitted to 
the Senate, strongly condemned an order similar to one which was 
issued and afterwards known as order No. 412. It is probably true 
that Postmaster General Hatton favored the six-day divisor. It is 
not true that order No. 44, which he revoked, was the same as order 
No. 412, for, as pointed out above, order No. 44 made a distinction 
between the two classes of routes and would have worked an injustice 



1024 RAILWAY MAIL PAY. 

to the seven-day routes, while order No. 412 treats them on the 
same basis and works no inequity. Neither is it correct that Mr. 
Hatton condemned the principle of order No. 412 in the documentary 
history referred to. The document was a compilation of historical 
facts relating to the development of the Railway Mail Service, pre- 
pared by an inferior officer as a matter of information for his superior, 
and among many other subjects contained reference to the then cur- 
rent argument in support of the six-day divisor; and its transmission 
to the Senate was made for the purpose of having it printed, as shown 
by the correspondence printed in the volume itself. 

The justification for the application of the new divisor prescribed 
by Order 412 is found in a consideration of the conditions existing in 
the service in 1907 compared with those existing in the service in 
1873. At the time of the passage of the act of 1873 there were in 
operation throughout the United States 781 railroad mail routes. 
On 684 of such routes the mails were carried on six days in the week, 
and on 97 of such routes the mails were carried every day in the 
week. The annual rate of compensation paid by the Government 
to the railroads for carrying the mails on the 6-day routes was ap- 
proximately $4,703,543, and such rate of compensation paid on the 
seven-day routes was approximately $2,553,653. The aggregate 
mileage of the six-day routes was approximately 48,444 miles, and 
of the seven-day routes approximately 15,013 miles. (Table B, 
Annual Report, Postmaster General, for 1873.) In 1907, at the 
time Order No. 412 was promulgated, there were in operation through- 
out the United States about 1,394 six-day routes, and about 1,604 
seven-day routes. The annual rate of compensation on the routes 
of the first-named class being approximately $3,253,305, and on the 
routes of the second class approximately $41,817,100, and the aggre- 
gate mileage of the six-day routes about 48,705 miles, and of the 
seven-day routes about 153,596 miles. (Table B, Annual Reports, 
Second Assistant Postmaster General, for 1904, 1905, 1906, and 1907.) 

From this statement it will be readily seen that vast changes had 
occurred during the period from 1873 to 1907; that in 1873 the six- 
day routes represented a very large proportion of the pay for railroad 
mail service and a very large proportion of the mileage of route, while 
in 1907 the conditions were completely reversed — the seven-day routes 
represented a very large proportion of the transportation pay for rail- 
road mail service and also the very large proportion of the mileage of 
routes. The old divisor put into effect m 1873 was an appropriate 
exercise of discretion of the Postmaster General in recognizing m the 
service at large the predominance of the six-day service upon rail- 
roads, and the application of the same divisor to the seven-day routes 
compensated them (in a degree comparative with service on the six- 
day routes) for the superior service performed by them. For exactly 
similar reasons the adoption of the new divisor prescribed bv order 
412 was a recognition of the complete reversal of the conditions in 
the railroad mail service throughout the country, in which the seven- 
day routes had taken the place, in predominance, of the six-day 
routes. The service of the entire country had evolved from a basis 
of six days in the week to practically a daily service the whole year 
around. Only approximately $3,000,000 out of the $45,000,000 ^ of 
pay went to the six-day routes, and only approximately 48,000 miles 
out of the 200,000 miles of railroad mail routes operated six days only 



BAIL WAY MAIL PAY. 1025 

in the week. In the exercise of his sound discretion it was appropriate 
and proper that the Postmaster General should adopt and apply to 
the new conditions the mathematically exact divisor which produced 
the true average for every _ day in the year, and thus end the recogni- 
tion of a condition of service which had ceased to exist. 

This is not deemed the proper forum to discuss the legality of order 
No. 412. The railroads have taken the matter into court. The cases 
are pending in the Court of Claims, one of which has been decided 
favorably to the railroads, but it is still pending on the motion of the 
Government to amend the findings of fact and a motion for a rehear- 
ing on assignments of errors of law. It is expected that the rehearing 
will occur in a short time and that ultimately the Supreme Court of 
the United States will be asked to pass upon the question. 

However, if the railroad's contention should be conceded by the 
joint committee, or if they should finally prevail in court, and it should 
be decided that Order No. 412 is illegal and should not have been 
applied, then the difference shown in this statement between revenue 
and apportioned cost will be increased by the annual reduction in 
railroad mail transportation nay effected by the application of the 
new divisor. This is stated in the report of the Second Assistant 
Postmaster General for the fiscal year 1910 as $4,941,940 for the four 
contract sections for the fiscal year 1911. This would be increased 
during the subsequent years and at the present time would be at 
least $5,000,000 per annum. . 

III. 

THE PRESENT PLAN OF ADJUSTMENT OF RAILROAD MAIL PAY. 

At present railroad mail pay is provided for and adjusted upon the 
basis of the average daily weights carried over the several established 
railroad routes, and an additional amount is allowable for railway 
post-office cars when the space for distribution purposes equals or 
exceeds 40 feet in the car. Space for distribution purposes in apart- 
ment cars — that is, space less than 40 feet — is not compensated for 
in addition to the pay for the weight of mails. There are, therefore, 
under present law two different methods of pay for service, which 
cover three different conditions in the service. That is, there is pay 
for weight under all circumstances; there is additional pay for space, 
40 feet and more, in cars; and there is pay for weight only in cases 
where apartments less than 40 feet in cars are furnished. 

The laws respecting pay for transportation of mail on railroad 
routes and for railway post-office cars are set forth on pages 19 and 
20 of Document No. 105. 

Readjustments are made under the law allowing pay for average 
daily weights upon weighings in each contract section not less fre- 

?[u entry than one in every four years. The country is divided into 
our contract sections, all quadrennial contracts for the several classes 
of services, together with the railroad service, expiring in each con- 
tract section at the same time. The weighings of mails on the rail- 
road routes occur successively in the several contract sections. Hence 
there is a weighing every year in the whole service, although but one 
every four years in any particular section. Upon the weights of mails 
for each route obtained during the weighing period the average daily 



1026 RAILWAY MAIL PAY. 

weight carried over its whole length is computed, and the pay per 
annum is fixed according to the schedule of rates provided by law. 
The order readjusts the pay for the contract term of four years, 
subject to future orders and fines and deductions. 

The statute fixing the pay for railroad transportation based on 
average daily weights provides certain conditions precedent to entitle 
the companies to full pay, one of which is that sufficient and suitable 
room, fixtures, and furniture in a car or apartment properly lighted 
and warmed shall be provided for railway postal clerks to accom- 
pany and distribute the mails. Consequently no additional pay is 
authorized for space to distribute the mails in apartment cars 30 feet 
or less in length. 

The additional pay allowed for full railway post-office cars of 40 
feet or more in length is ordered at the rates fixed by statute and the 
regulations of the department upon the needs of the service, as ascer- 
tained and reported by the field officers of the service and finally 
accepted by the officers of the department, in accordance with the 
postal regulations governing such authorizations. 

Further information respecting the present law may be found in 
Mr. Lorenz's memorandum, pages 852 et seq., and in Mr. Turner's 
respecting rates, on pages 907, 908, and 909. 

In the consideration of the present plan of providing rates for 
service, the query has been noted both by Mr. Lorenz (Hearings, p. 
857) and Mr. Turner (Hearings, p. 906) as to why a proportionate 
rate under the law of 1873 was not made for apartment cars, or space 
less than that authorized in full railway post-office cars 40 feet or 
more in length. The thought that this omission has no foundation 
in the conditions of the service is no doubt further suggested by the 
sentence in Postmaster General Hitchcock's letter transmitting Docu- 
ment No. 105 to the effect that " this distinction is a purely arbitrary 
one and without any logical reason for its existence." 

As a matter of fact there is a reason in the conditions of the service 
which no doubt led Congress in 1873, when that law was framed, to 
omit a specific rate for apartment cars, and I believe this fact to be 
that apartment-car space is invariably furnished the department in a 
baggage or other car which is run in the train for the railroad's own 
purposes, and the distinction was properly made in favor of special 
payment for cars 40 feec or more in length because such requirement 
necassitated the placing of an additional car in the train, no part of 
which was allowed to be used by the company. Attention is called to 
the history of the legislation set forth by the Second Assistant Post- 
master General on page 107 of the preliminary report. This has been 
cited by Mr. Turner in his memorandum. Mr. Lorenz has submitted 
specifications of the defects in the present law, as viewed by him. 
(Hearings, pp. 854 to 858, inclusive.) 

THE SUGGESTED PLANS OF ADJUSTING RAILROAD MAIL PAY. 

THE COST AND SPACE BASIS. 

The plan for readjusting railroad mail pay suggested by Postmaster 
General Hitchcock in Document No. 105, and his subsequent letter 
to the chairman of the joint committee of January 9, 1913, is set out 



E AIL WAY MAIL PAY. 1027 

in full on pages 4 and 5 of said document and on page 96 of the 
preliminary report. In brief it may be summarized as follows : 

Summary.— The Postmaster General shall require companies operating railroads by 
steam, electricity, or other motive power carrying the mails to furnish not less fre- 
quently than once in each fiscal year information relating to the service, operation, 
receipts, and expenditures for a period of not less than 30 days, to be designated by 
him, to enable him to ascertain the cost to the companies of carrying the mails and 
the proper compensation to be paid for the service. Upon these data he shall deter- 
mine the cost to each railroad company for carrying the mails on its respective road 
er roads and for this service is authorized to credit, assign, and apportion the revenues 
and expenses of railroad companies in such manner as he shall deem fair and equitable 
to ascertain as near as practicable such cost. The primary separation, however, of 
operating expenses between freight and passenger services shall be made by the 
Interstate Commerce Commission. The Interstate Commerce Commission shall 
review the findings of the Postmaster General and affirm, modify, or revise them in 
any case where a company shall object to his method of crediting, assigning, or appor- 
tioning the revenues and expenses and file such objection with the Postmaster Gen- 
tral within a specified time. 

In charging mail service with its space in passenger trains it shall be charged in 
both directions with the maximum car space for railway post-office purposes authorized 
in either direction. 

No credit shall be given for space in cars devoted to the distribution of the mails 
unless such space be authorized by the Postmaster General or unless he shall deter- 
mine that its use is made necessary by a specific authorization. 

Upon his findings the Postmaster General is authorized to readjust the pay to the 
companies not less frequently than once in each year at a rate of compensation per 
annum not exceeding the cost to the companies of carrying the mail and 6 per cent of 
such cost, and in addition to such operating expenses and taxes apportionable to the 
mail service to allow such additional amounts as may be necessary as shall render 
the whole a proper proportion of a fair and reasonable return on the value of the 
property necessarily employed in connection with the mail service. A minimum 
rate of not exceeding $25 per mile per annum is fixed. 

Land-grant roads shall receive not exceeding the cost to them of performing the 
service . 

Information shall be furnished by the roads and adjustments made by the depart- 
ment as nearly as practicable by accounting systems. 

Additional service during the term for which adjustment is made may be authorized 
without additional compensation during such teim. 

Service may be ordered over new or additional trackage during a term and payment 
made for the remainder of the term on statistics for the first 30 days of service at not 
exceeding the average rate per car-foot mile for the system or road ascertained at the 
regular adjustment. Entire discontinuance of service over trackage included in the 
adjustment or thereafter added shall be deducted for. New service over trackage 
of a company not operating service under a regular adjustment may be authorized and 
paid for at not exceeding 842.75 per mile of trackage per annum for the remainder of 
the term. 

The provisions of present law regarding the construction and sanitary condition of 
cars; the furnishing of cars; the carriage of mails upon all trains selected by the Post- 
master General with the persons in charge of the same; for fines and deductions, etc., 
are retained and suitable provisions for carrying out the provisions of the act are in- 
cluded. It is further provided that it shall be unlawful for any railroad company 
i o refuse to carry the mails at rates of compensation fixed by law when required by the 
Postmaster General, and a fine is provided for such refusal. 

The following objections were urged at the hearings by the repre- 
sentatives of the railroads: 

Mr. Peters, of the Long Island Railroad, admitted that by the 
space measure of service " a fairly reasonable comparison of the cost of 
a passenger train and its distribution between the passenger, the ex- 
press, and the mail can be made, but for purposes of comparison 
only," and claimed that: 

This measure, however, does not represent all the sendee that is performed in com- 
pleting the transportation for which each class of sendee pays. 



1028 RAILWAY MAIL PAY. 

In support of this he points out certain differences between the 
services rendered the passenger, express, and mail business. (Hear- 
ings, pp. 43 and 44.) 

This objection appears to overlook the fact that on an approved 
system of cost ascertainment the special services performed exclus- 
sively for any one branch would be charged directly to it where it 
could be separated from other items of like expense, and that the 
space ratio would be applied to the unassigned expenses in which the 
service participated. 

He offers the further objection that the space basis plan which has 
been proposed would result in practically 795 rates of pay for the 795 
railroads. (Hearings, p. 44.) 

Under the present law there are 3,409 different adjusted rates of 
pay per mile per annum; that is to say, one for every route, as the law 
provides that the pay shall be adjusted according to schedule rates on 
the average daily weight carried over the individual route. This neces- 
sitates the ascertainment of a rate for every route. These rates vary 
for a ton-mile from $1.49 on an average daily weight of 211 pounds 
.or less to 5.76 cents on routes carrying 48,000 pounds or more average 
daily weight. 

Mr. Bradley, of the Pennsylvania Railroad, claims that there is no 
invariable relation between car space and the mail tonnage trans- 
ported, but that while it is true there is no constant or exact propor- 
tion between bulk of mail carried and its attendant car space for 
distribution and storage, yet there is an approximate relation if the 
u working mail" is differentiated from the " through mail," and he 
thinks that the weights of mails are important prudential considera- 
tions to the department's officers and useful statistics for information 
of Congress and the Interstate Commerce Commission. (Hearings, 
p. 626.) 

The department does not overlook the value of statistical informa- 
tion. So far as weight as an administrative check is concerned it is 
of very slight value. Railway post-office car space is authorized not 
primarily with respect to the weight of mails carried in the car, but 
with respect to the space needed for distribution purposes. 

Mr. Logan, of the Grand Trunk Railway System, thinks the space 
basis would not be a fair basis to all alike (Hearings, p. 530), but 
admits that so far as his system is concerned it probably would be as 
just and fair as the weight basis. It appears that Mr. Logan thinks 
it would be satisfactory to his system if the rate were satisfactory, 
because they carry a light tonnage compared with the space occupied. 
He also mentions weight plus space as particularly desirable for 
parcel post, and states that this rule is observed by express compa- 
nies and also by steamship companies in fixing rates. (Hearings, 
p. 548.) 

Mr. Worthington, of the Southern Pacific System, states that the 
greatest objection to the space basis is that it places in the hands of the 
Postmaster General the regulation of the compensation to the rail- 
roads, and thinks that because the Government is the shipper the 
results would not be as fair to the railroads as under a weight basis. 
He further says that the Government would expect to pay the same 
rate per foot whether the service performed covered a full car or only 
a fraction of a car, and that in the latter case in freight service con- 
sideration is given to the less-than-carload lot in fixing the rate. 
Further, that space is not the sole consideration in fixing rates on 



RAILWAY MAIL PAY. ' 1029 

other classes of railroad transportation, and that weight is the prin- 
cipal factor, although space is also taken into account in fixing rates 
in freight service on bulky commodities. (Hearings, p. 351.) 

So far as the objection against reposing in the Postmaster General 
the power to regulate the rate is concerned, it can have no valid force. 
The Postmaster General and those under his direction must neces- 
sarily have complete control of the service which shall be required of 
the railroad companies. If such service is measured by an automatic 
gauge of weights, the railroads claim there will be no dispute. If 
such service is to be measured by the space by which the department 
requires to properly and economically conduct the service, there can 
be no valid objection on the part of the railroads to the authorization 
of that space being wholly within the control of the Postmaster Gen- 
eral. The department alone, and not the railroad companies, must 
be the judge of what the service needs. 

So much for general objections found in the record. There are 
others which will now be considered that relate more particularly 
to the administration of the service. These may be mentioned 
briefly, as follows : 

Mr. Albright, of the Atlantic Coast Line, states that aside from 
other considerations — 

It seems impossible to regulate the assignment of space in especially equipped cars 
for the postal service. * * * The present practices of the Post Office Department 
with respect to 40-foot and 50-foot allowances in 60-foot equipment is an illustration 
of the difficulty which would confront us, not only in full railway post-office cars, but 
in apartment cars as well, under rates based on space. (Hearings, p. 254.) 

Mr. Bradley, of the Pennsylvania Railroad System, says among 
other things: 

But when the rate of pay is not fixed by the railroad company and when experience 
has shown that the officials of the Post Office Department do not see the same space 
for payment that the railroad officials find necessary for operation, and when experi- 
ence has shown that the Post Office Department even now alters its allowances on 
R. P. 0. car space at frequent intervals, reducing operations on 30 days' notice or 
even less, it is natural that a strong preference should be expressed for the more stable 
factor — weight of mail transported — which is less subject to mere opinion. (Hearings, 
p. 626.) 

Mr. Mack, of the Missouri Pacific System, thinks that the adoption 
of the space basis would relegate the gauge of pay to the mere judg- 
ment of the officials of the service, and that this judgment would be 
liable to be influenced against the interests of the railroads for 
reasons stated by him. (Hearings, pp. 301 and 302.) 

Mr. Rowan, of the New York Central, urges as objection, among 
other things, that it places in the hands of the Postmaster General 
the power of adjusting pay, and that constant friction would result 
between the Post Office Department and the railroads as to the 
amount of space used. (Hearings, p. 579.) 

These objections against the administration of a space basis are 
often advanced in connection with the general statement that car 
authorizations under the present system represent about 10 per cent 
of the total pay and weight represents about the remaining 90 per 
cent of the pay received by the railroads for mail service, the inference 
being that if Congress adopted the space basis, the alleged difficulties 
arising out of contentions between the railroads and the department 
about authorizations would be increased approximately tenfold. 



1030 RAILWAY MAIL PAY. 

This argument rests upon a false premise. The per cent of com- 
pensation paid the railroads for cars being purely an additional rate 
above the weight rate does not correctly represent the per cent of 
authorized mail space under the present law. From Table 5J, 
House Document No. 105, it will be seen that the per cent of car-foot 
mileage represented by railway post-office car space was 46.249, for 
storage space 10.127, for apartment-car space 30.080, for closed- 
pouch space 2.821, and for deadhead space 1.723. Therefore, over 
46 per cent of the entire space devoted to the mail service is now the 
subject of authorization under the same kind of administrative 
supervision as is provided for in the proposed plan. Furthermore, 
over 10 per cent of the space which is devoted to storage and over 
39 per cent of the space which is devoted to apartment cars is 
subject to the same general plan of authorization — that is to say, 
they represent space required and authorized by the Post Office 
Department, but they differ from space authorized for full railway 

Eost-office cars in that no additional specific compensation is carried 
y the authorizations. Consequently, over 85 per cent of the space 
now is subject to authorization or requirement by the department 
for the purposes of railway post-office car service. Therefore, in 
discussing the probable effect from an administrative point of view 
of basing pay on space instead of the present system, the space now 
authorized should not be referred to as 10 per cent (representing 
merely additional extra pay for cars above weight pay), but as 85 
per cent, representing the actual percentage of space, which is now 
the subject of direct authorization or requirement by the department. 
Furthermore, it is over the authorizations for 46 per cent of service 
represented by the space-mileage that the controversies arise to 
which reference has been made in the testimony. 

This brings us to a consideration of the objections of the railroads. 
Why do controversies arise? They arise in three general classes of 
cases: (1) Where the railroad company contends that the needs of 
the mail service are greater than can be accommodated in a 30-foot 
apartment car, and therefore require the allowance of the additional 
compensation for a 40-foot car, (2) where the railroad company con- 
tends that the requirements of the service necessitate a greater 
authorization in full cars run than that admitted by the officers of 
the department, and (3) where the space needed in full cars, in the 
opinion of the officers of the department, is less than the authoriza- 
tion and necessitates a reduction. In many of these cases the rail- 
road company is for its own operating convenience running a full 
railway post-office car in lieu of an apartment car, or where full 
railway post-office car service is authorized the company is running a 
larger size car than the car needed and authorized by the department. 
The controversies therefore referred to and dwelt on with such 
emphasis by the representatives of the companies are merely con- 
tentions on the part of the representatives of the railroad com- 
panies that the needs for space in the distribution of mails on trains 
are greater than that decided upon by the officers of the service. 
The officers of the service are in all these instances conserving the 
interests of the Government and carefully weighing the claims of the 
railroad companies for additional pay. It would seem that if any 
objection were to be considered in this connection, such objection 



RAILWAY MAIL PA Y. 1031 

must come from the department; the department has not offered 
the joint committee any objection on this score. Furthermore, it 
must be admitted that the administration of the service devolves 
wholly upon the Post Office Department and not upon the railroad 
companies, and that the decision as to the facilities needed rests 
entirely with the department's officers. It would seem that the 
railroads can have no valid objection to the action of the depart- 
ment's officers in authorizing space either under the present system 
or the proposed system, excepting in those cases where the companies 
run, for their own convenience, a larger car than that authorized 
and needed and used by the department without receiving pay for 
the whole space used. 

Under the present system of authorizing railway post-office car 
space, the matter is under constant supervision which requires the 
lines to be inspected frequently by the officers in the field and period- 
ical reports made thereon. If the department is using more space 
than is paid for, the matter promptly becomes one for investigation 
and the authorization is made at the earliest date that those responsi- 
ble for the expenditure of the appropriation can become satisfied 
that the space is actually needed and used. There is no question 
in my mind that under the general system of authorizing space 
and with a proper supervision and constant checking of the require- 
ments with the authorizations, injustice would not result to either 
the Government or the railroad companies as a permanent condition 
and all inequalities would tend to be promptly adjusted in the usual 
course of business. 

THE STANDARD UNIT SUGGESTION. 

This is a space-basis proposition. The standard unit suggestion is 
the designation given by Mr. Lorenz to the idea advanced by Congress- 
man Lloyd at the hearings that there might be three standard units 
for cars to be authorized by the department, namely, 15, 30, and 60 
feet, in addition to closed-pouch service. 

Mr. Lorenz has discussed the merits and demerits of the proposi- 
tion on pages 861, 862, and 863 of the hearings. He believes the 
suggestion has merit in directing attention specifically to "one of 
the most perplexing difficulties in the administrative details for any 
plan that uses space either in part or entirety" (p. 861). This dif- 
ficulty, in brief, is the effort to make the car space "needed," the car 
space "used," and the car space "furnished" approximately identical. 
He thinks that if standard units were adopted, as Mr. Lloyd suggests, 
the railroads would build that size only and the department would 
ask for that size only and this would tend to bring more nearly 
together what the department would ask for and what the railroads 
would furnish (p. 862). 

We now have standard units of 40-foot, 50-foot, and 60-foot cars, 
and yet the railroad companies have not in late years built many 
cars less than 60 feet in length, preferring to build larger cars for 
their own operating purposes and also because they are willing to 
furnish the additional space above the 40 feet and 50 feet needed 
until greater needs shall arise by growth of service rather than to build 
smaller cars and abandon them for larger ones to meet the growing 



1032 RAILWAY MAIL PAY. 

needs. This mainly results from the fact that the requirement of 40 
feet or more space necessitates the placing of an additional car in 
the train. In other words the railroad companies apparently could 
not furnish apartment space of such lengths to advantage, nor would 
the department accept and pay for these dimensions of space except 
in a car devoted entiiely to mail purposes, although in recent years 
40-foot space has been accepted in 70-foot cars. On the other hand 
apartment space 30 feet or less may be partitioned off for mail uses 
in the baggage car run by the company for its own purposes. Where 
a car some part of which can be used by the company is concerned, 
it is apparent that the necessity or advisability of designating spe- 
cific units varying widely in linear extent does not exist. This is 
made evident by an examination of the table showing apartment-car 
space of different lengths in the service set forth by Mr. Lorenz on 
page 862. The variation between the different sizes langes from 3 
to 5 feet. This is no disadvantage to the railroad companies. In 
fact it may prove a distinct advantage to them as well as to the 
department, because the nearer the approach is made to furnishing 
the space required by the department the more economical is the 
utilization of the remaining space by the company for its own 
purposes. 

Upon careful analysis it will be seen that the plan proposed by Mr. 
Lloyd will not have the effect of removing the causes for controversy 
between the railroads and the department over the amount of space 
needed, in the car for mail service, excepting in so far as it is affected 
by the reduction of the number of units of different sizes. There will 
be the same cause for controversy over what unit shall be authorized. 
It will be noticed, however, that a material reduction in the number 
of units, thereby increasing the difference in linear length of space to 
be furnished, will mitigate against the interests of the department, 
because it will often result in the necessity for authorizing greater 
space than that needed. For instance, with no unit between 30 and 
60 feet the postal necessity for anything over 30 feet would require 
a 60-foot authorization, whereas with the existing units of 40 and 50 
feet the department has the advantage of saving 20 feet and 10 feet, 
respectively, when it is not needed. It would therefore seem to be 
desirable to have more units than are provided for in this suggestion 
and to make a distinction between the extent of variation in cars used 
wholly by the department and in those some part of which may be 
used by the companies. 

As this plan appears to be more or less involved in the Lorenz plan 
(weight, space, and distance) a further discussion of its principles 
will be reserved until views are submitted upon that plan. 

WEIGHT, SPACE, AND DISTANCE — THE LORENZ PLAN. 

In an endeavor to supply the elements which in Mr. Lorenz's 
opinion the straight-space plan omits, he has submitted on pages 
868 to 876, inclusive, a plan based upon a consideration of three ele- 
ments — weight, space, and distance. 

The department is not immediately prepared to discuss this plan. 
Earnest consideration is being given it, and at the earliest possible 
day our views regarding it in connection with further suggestions 
with reference to the space basis will be submitted. 



BAILWAY MAIL PAY. 1033 



THE PERCENTAGE METHOD. 



The percentage plan would allow the railroads a stated per cent 
of the postal revenues as compensation. My opinion is that such 
a plan is without merit. The principal reasons therefor are stated 
in the testimony (p. 655) and are summarized and supplemented by 
Mr. Lorenz on pages 863 and 864 of the hearings. 

THE PLAN OP SENATOR JOHN W. WEEKS. 

In substance the suggestion of Senator Weeks is that a director 
of posts be appointed to make contracts with railroad companies, 
subject to appeal to the Interstate Commerce Commission. 
Mr. Lorenz has discussed the plan on pages 864 and 865 and Mr. 
Turner on pages 942 and 943. The objections to the plan are con- 
sidered in these discussions. It would seem to present serious 
administrative difficulties and uncertainties. In the administration 
of the service the present tendency on the part of railroads is to 
insist on higher pay than that now allowed under the statutes, and 
some even threaten to discontinue the service in case demands are 
not met. It would seem to be inadvisable to eliminate statutory 
support of the department in matters of rates for a business that 
is strictly governmental, notwithstanding the proposed recourse to 
the Interstate Commerce Commission. 

THE PLAN OP HON. DAVID J. LEWIS. 

Mr. Lewis's plan is set forth on pages 696 to 698, inclusive, of the 
hearings. Mr. Lorenz has discussed it on page 865, and Mr. Turner 
on pages 945 to 947, inclusive. The essential features are as follows: 

(1) The weighing of parcels with notation of zones of destination 
where railroad transportation is involved and the ascertainment of 
total ton-miles of such transportation. These ton-miles are to be 
multiplied by the rate, say 5 cents, and the gross sum paid to the 
railroads upon car-foot mileage of mail service performed by the 
roads, respectively. 

This would require reports from offices on railroads and from 
offices dispatching direct to railroad trains, aggregating in number 
40,000, if one report were made by the postmaster for the whole 
period of weighing. If the report extended over considerable time 
reports would necessarily be required by weeks at least, which would 
increase the number greatly. The tabulation and computations of 
this mass of figures would be a considerable undertaking, but not 
insuperable. It would be tDpen to the objection that the reports 
from many postmasters would likely be unreliable, and the depart- 
ment would have no means of checking them. In an inquiry upon 
the results of which such laige payments are to be directly based, it 
would be of the utmost importance to secure correct reports of all 
matter mailed on trains, and if this be left to postmasters exclusively 
there would be possibility of error and no check against irregularity. 

(2) The plan provides for paying for first, second, and third class 
railway-going mail upon the basis of $43.65 per ton. There must be 
a weighing at the post office of all such mail for railroad transporta- 
tion. These weights are to be totaled into tons for the entire coun- 
try to give the gross amount of railway service rendered the ordinary 



1034 EAILWAY MAIL PAY. 

mail, and this total is to be multiplied by the ton rate to give the 
total fund payable to the railroads for this branch of the service. 
This total is to be distributed as in the other case on the basis of 
car-foot miles of postal service performed by the several companies. 

The same criticism regarding the weighings, reports, and tabula- 
tions as made in the case of parcels applies equally to this class. 

The fundamental difficulty regarding the scheme of distribution of 
these funds is that it presupposes that mails of both classes will be 
carried in the same proportion by all railroads. This is net so ; there 
will be a great variation. There would not necessarily be any inti- 
mate relation between the mails actually carried by a railroad and 
the pay received on this basis. The rate paid on a mileage unit 
should be directly related to the service performed by that unit. 

THE PEABODY PLAN. 

The Peabody plan is discussed by Mr. Lorenz on page 866 and by 
Mr. Turner on pages 943 and 944. 

The plan is subject to serious objection. It turns the matter of 
rate over to the Interstate Commerce Commission and places the 
burden on the Post Office Department of going to court to prove the 
rate unjust if it has objection to it. This would practically force 
every case into that forum for determination and demoralize the 
administration of the service. 

THE BUCKLAND PLAN. 

This is discussed by Mr. Lorenz on page 866 and by Mr. Turner on 
pages 937 to 942, inclusive. 

Mr. Buckland accepts the cost basis, including the principles of 
additions for fair charges against capital expenditures. The man- 
ner of determining the rate, however, is essentially different from 
the department's plan. On the one side it attempts to specifically 
guarantee by statute "a reasonable remuneration for any services 
performed/' and on the other hand requires the Postmaster General 
to pay such remuneration equal to the cost and the fair return, as 
above indicated. Any difference between the Postmaster General 
and any railroad company as to the amount of such remuneration 
is to be determined by the Interstate Commerce Commission. 

This plan has the principal defects of being unspecific as to rates 
of pay and of placing the burden on the Postmaster General of 
fixing every rate at such an amount as shall be held by the Interstate 
Commerce Commission or, ultimately, the courts, to be reasonable 
remuneration. This seems to invite endless controversy and litiga- 
tion over the rates fixed. 

THE PROPOSALS OP THE RAILROADS. 

The railroads' committee offered no constructive plan aside from 
proposals for certain changes in existing legislation. Their plan is 
to retain the present system of readjustments based on average 
daily weights carried and to extend the scope of additional payment 
for railway post-office car space so as to cover apartment cars, as 
well as full railway post-office cars. They also desire to be relieved 
pf side and terminal service, or urge that they be specially and ade- 



BAIL WAY MAIL PAY. 1035 

quately compensated for the same if they continue its performance. 
They also ask for annual weighings. 

With reference to the effect upon compensation which these three 
elements have, it may be said that it will necessarily be accounted for 
in any system which uses cost as a guide for fixing rates. Therefore, 
in any proposed plans to supersede the present one these objections 
urged by the companies to the present law, if they be valid, will be 
properly met. 

If the present system be continued, it can not be concluded, from 
the showing hereinbefore made with reference to compensation and 
cost that any additional compensation should be allowed for any one of 
these items, or that the companies should be relieved of side and ter- 
minal service or given annual weighings without appropriate reduc- 
tions in the present rates of pay. As to the reasons for this conclu- 
sion, attention is invited to the showing as to revenue and cost, and 
what is further said under the headings " Annual weighings," "Side 
and terminal service," and " Apartment cars," supra. 

However, if the present system is to continue some changes should 
be made regarding side and terminal service, so as to relieve short lines 
with small pay, supplying a number of post offices along their route, 
from expense disproportionate to the revenue received. 

Joseph Stewakt, 
Second Assistant Postmaster General. 

Exhibit A. 

THE DEPARTMENT'S METHOD IN SEPARATING THE UNASSIGNABLE OPERATING EXPENSES 
OP RAILROAD COMPANIES UNJUSTLY CRITICIZED BY THE RAILROAD COMPANIES, WHO 
HAVE OFFERED NO VALID CRITICISM OF THE ACTUAL APPORTIONMENT MADE BY THE 
DEPARTMENT. 

[Prepared by Mr. Albert N. Prentiss.] 

In the hearings before the joint congressional committee the testimony of certain 
representatives of the railroads criticized the method utilized by the department in 
separating those items of operating expenses which were not, or could not, for various 
reasons, be allocated directly to either the passenger or freight service. These criti- 
cisms may be summarized as follows: 

1. It is claimed by the railroads that the department should not have made use of 
the report of the Railroad Commission of Wisconsin in the so-called ' 'Buell case, ' ' as the 
method therein employed produces a passenger cost that is lowest or considerably less 
than that produced by the use of the revenue train mileage as a general basis for 
separating the unassignable expenses. 

2. The department is criticized for attempting to make such a separation at all, and 
it is claimed that the data furnished by the railroad companies as separated by them 
should have been accepted without question. _ 

3. It is claimed, also, that the department did not use the basis for dividing operating 
costs set forth in the "Buell case," but used its own method while claiming to use 
the "Buell" method. 

Early in the investigation the question of providing for a division of the unassignable 
operating expenses of the mail-carrying railroads was forced upon the department by 
the action of certain railroad representatives, at a conference held in Washington, 
D. C, on October 22, 1909, when the following resolutions were adopted: 

"1. Resolved, That the Committee on Railway Mail Pay be requested to use its in- 
fluence with the American railways to induce them to fill out their reports to the 
Post Office Department in accordance with the recommendations of this meeting ; and 
be it further 

"2. Resolved, That the railroads here represented cooperate fully with the Com- 
mittee on Railway Mail Pay, and that their reports to the Post Office Department on 
the above forms be forwarded in duplicate to Mr. Julius Kruttschnitt, chairman of the 
Committee on Railway Mail Pay, room 401, Grand Central Station, Chicago, 111., with 
the request that after collating the same, the originals be returned to the roads for 

49396—14 73 



1036 RAILWAY MAIL PAY. 

transmission to the Post Office Department, and the duplicates retained by the said 
committee for their assistance in their work; and be it further 

"3. Resolved, That the Committee on Railway Mail Pay be requested to send each 
of the railroads here represented a copy of the summary of the replies by all the rail- 
roads." 

Among other recommendations forwarded to the mail-carrying roads, in accordance 
with the above resolutions, there appears the follc":ing (the italics are the writer's): 

"As to assignable expenses, select those which under the interstate-commerce classi- 
fication are confined exclusively to passenger service. 

"Leave out of consideration expenses which under the interstate-commerce classi- 
fication are confined exclusively to freight service. 

"Take the remaining operating expenses and apportion them to passenger and 
freight service on basis of train mileage, assuming for this purpose that a passenger train- 
mile costs the same to run as a freight train-mile. 

"Add the assignable passenger expenses to the other expenses estimated in order 
to get the total. It is recommended that this basis be uniformly used in ascertaining 
the "total passenger operating expense (covering all passenger and baggage, express, 
and mail service)." 

The reports received by the department from the railroads indicated that a large 
majority of the companies separated the unassignable operating expenses on the basis of 
the revenue train-mileage in accordance with the recommendation of the committee. 
An example of the result obtained by this method, if applied tc all accounts not al- 
located, was shown in the first reports of the Chicago & North Western Railway Co., 
which gave only 14 per cent of the operating expenses as assignable directly to either 
passenger or freight service, and resulted in a passenger proportion of all expenses of 
41 per cent. A second report, and correspondence with the company relative thereto, 
revealed actual assigned expenses, or such as could be divided upon a working basis 
other than revenue train-mileage, of 42 per cent instead of 14 per cent, with a very 
much reduced passenger expense ratio (37 per cent instead of 41 per cent). The com- 
pany used the revenue train-mileage ratio of 44.83 per cent for dividing all the remain- 
ing costs, notwithstanding the passenger part of the assigned expenses was only 27.97 per 
cent. Upon dividing, according to the department's method, that portion of the 
operating expenses which was not allocated, a passenger operating cost of 33.37 per 
cent of the total operating expenses was obtained. 

The above example is only one of many which support my statement on page 490 
of the hearings, which reads: 

"In the proportion that expenses between passenger and freight are allocated, the 
expenses divided to passenger decrease; that is, if you divide on the basis of train 
mileage, and then begin to apply the allocated expenses to any road, the passenger 
expenses begin to decrease, showing that the train-mileage basis is not the proper 
ratio." 

In view of the foregoing, and considering the evidence and opinions of experts, and 
the facts shown in the reports of the railroad companies to the department cl emonstrating 
that the revenue train- mileage basis for all unassignable items was a method arbitrary 
in character, illogical in effect, and producing a gross inflation of passenger operating 
costs on many roads, it was proved beyond question that the assumption above quoted 
"that a passenger train mile costs the same to run as a freight train mile " was in general 
application contrary to fact. Nevertheless, this method of separating the operating 
expenses was the only one urged upon the railroads of the country by the railway mail 
pay committee as indicated by the resolutions above quoted. Whether or not the use 
of the " Buell " basis produced the lowest passenger cost obtainable by any method, as 
claimed by Mr. Peabody on page 466 of the hearings, it is certainly a fact that the use 
of revenue train-mileage for this purpose gave, in almost every instance^ a higher 
passenger operating cost than was warranted by the actual cost relationship in rail- 
road expenditures. 

The basis used by the department is explained in House Document No. 105, on 
page 8. The following paragraph indicates the position of the department in regard 
to the utilization of the Wisconsin commission report: 

"In determining the method of separating the operating expenses to the passenger 
and freight traffic the suggestions and deductions of the railroad commission of Wis- 
consin set forth in its decision in the case of A. E. Buell v. The Chicago, Milwaukee 
& St. Paul Railway Co., decided February 16, 1907, have been made use of, and with 
the exceptions hereinafter noted the several items of operating expenditures have been 
divided in accordance with the conclusions reached in that decision." 

The exceptions referred to in the above quotation embraced principally the 
accounts which were incorporated in the Interstate Commerce Commission classifi- 
cation of railroad accounts at a date subsequent to the Wisconsin commission decision. 



RAILWAY MAIL PAY. 1037 

The "Buell case" furnishes one of the best examples of investigation that has come 
before the department in regard to the question of account separations. The method 
there advocated based the division of the unassignable expenditures upon the known 
costs chargeable to train movement in conducting transportation as well as upon the 
revenue train mile arbitrary. Those accounts wherein the relative cost of passenger 
and freight movement is the same are divided on the basis of the traffic arbitrary or 
revenue train mileage, but those accounts, or parts of accounts, which depend en- 
tirely upon expenditure for the two classes of service are divided upon their cost 
relationship in some form. The business of a railroad is based upon the train as a 
unit, and the relative cost of train movement is more closely connected with the cost 
of operating certain other departments of railroad business than any traffic arbitrary. 

The revenue train-mileage as a basis having been urged upon the railroad com- 
panies by the railway mail pay committee, and the reports of the department showing 
conclusively that it had been extensively used in separating the unassignable ex- 
penses, the department was forced, in the face of the facts before it, to utilize a basis 
which was recognized by competent authorities and accounting usage to be more 
accurate in its results. 

That the department should not have attempted to make such a separation at all 
but should have accepted the data furnished by the railroad companies without 
question is a criticism which has already been answered. In this connection Mr. 
V. J. Bradley says, in his statement, published in the hearings on page 425, refer- 
ring to the report of the Pennsylvania Railroad Co.: 

"Consequently the company would be fully warranted in concluding that in this 
particular inquiry its statement of passenger train expenses should have been accepted 
by the Post Office Department because of the greater experience of its officers in 
dealing with such matters and their greater intimacy with the financial and oper- 
ating factors involved than could possibly be possessed by those in the Postal Serv- 
ice who were designated to give this subject their study and consideration. Fur- 
ther, the company's method of between 40 and 50 years' duration was at least neu- 
tral as to this particular inquiry, while a special and peculiar method, such as that 
used by the Post Office Department, devised for this inquiry, would need to be 
closely scrutinized." 

That the basis used by the department is not open to the criticism above indi- 
cated will be made apparent also from the comparative tables hereinafter shown, 
demonstrating that the use of the revenue train mileage by the railroad companies, 
in their separations of the unassignable expenses, was not warranted by the known 
cost data for passenger and freight services in their possession. 

That the department did not use the basis set forth in the "Buell case," but used 
its own method while claiming to use the Buell method, is another criticism 
which can not be entertained in view of the statement made in House Document 
No. 105, which has been quoted. The suggestions, deductions, and opinions of the 
Wisconsin commission, as set forth in the case, were made the basis of the depart- 
ment's method. The commission was passing upon the account separations for one 
railroad company in that case and not for all roads. The department endeavored 
to adhere to the principles laid down, but not to the specific results in the case and 
adopted that general method of apportionment which was uniform in application, 
and thus of statistical value. 

That each class of traffic should bear its own share of the expense of road operation 
is referred to by Mr. W. A. Worthington, of the Southern Pacific Co., when he says, 
on page 330: 

"I think that the railroads should, wherever practicable, receive from any class of 
traffic revenue sufficient to cover its proper share of all the operating expenses and the 
fixed charges, for the reason that if they do not it means that the other classes of traffic 
will have to bear that burden; in other words, the shippers of freight are really paying 
more than their share as compared with traffic received from passenger trains." 

If true, is not the proposition here presented applicable to the subject of a division 
in rates between different roads? Should not the shipper or passenger pay a revenue 
sufficient to compensate each road proportionately, the rate to include the cost of 
operation plus a reasonable percentage of profit? The cost basis adopted by the depart- 
ment is objected to by the railroad representatives generally for the reason that a 
large percentage of the operating expenses must be arbitrarily apportioned, but at 
the same time they submit cost estimates based upon revenue train-mileage appor- 
tionments in support of their testimony. 

In explanation of the method used by the department in dividing the expenses it 
should be stated that the "direct charge " accounts do not represent all of the passen- 
ger and freight expenses which are directly assignable to each class, but are only those 



1038 



KAIL WAY MAIL PAY. 



charges reflecting the actual transportation business of the road, and include accounts, 
in some instances, not directly allocated. As explained in House Document No. 105, 
page 8— 

"The whole or a large percentage of the expenditures covered by the foregoing 
(direct charge) accounts was assigned directly to passenger or freight traffic by the 
companies generally. Those accounts named in the table not so assigned for any 
reason were separated by the department in accordance with the character of the 
particular account in question. The ratios of the total passenger and total freight 
costs so obtained were used as the direct charge basis of apportionment for the non- 
assignable expenses." 

Heavier freight traffic on freight trains results in greater cost per train-mile and 
more freight revenues, but does not increase the train mileage. The same may be 
said of passenger trains but not with equal force, as the nature of the traffic places 
a limit upon the load. The factor of density is reflected in cost, not in train mileage. 
Those accounts not directly dependent on train movement would be incorrectly 
divided on a basis of revenue train-mileage. The use of the "direct charge" basis 
for such accounts has the effect of bringing the passenger and freight costs into pro- 
portion with the known ratios of transportation costs for the respective services, 
and in harmony with the train unit of cost which is produced by density of traffic. 
Therefore the "direct charge" or train cost ratios are equitable for a division of 
many accounts under maintenance of way and structures, and reflect the actual 
conditions more accurately than the use of revenue train mileage ratios exclusively. 
When to the "direct charge" ratios is added the' factor of traffic represented by the 
revenue train -mileage, there is produced a result which stands for actual cost con- 
ditions, including traffic density, and traffic movement (including speed and fre- 
quency). To illustrate the difficulties encountered by the department, and the results 
obtained by the use of the department method in comparison with that of the railroad 
companies, comparative statements follow showing the apportionment of expenses 
for certain railway companies as reported to the department and as computed and 
published in House Document No. 105, with a detailed consideration thereof: 



Statement showing for the Atchison, Topeka & Santa FeRy. Co. the percentages of oper- 
ating expenditures directly assigned on reports to department, the percentages which 
could have been so assigned, and the unapportioned balance. 



Item. 



Per cent of the several items to the 
total operating expenses, showing 
relative weights of account sepa- 
rations. 



Assigned 
or directly 
separated. 



Accounts 

which 
company 
could have 
shown as 
allocated. 



Balance to 
be appor- 
tioned. 



Total expenses for maintenance of way and structures. 

Total expenses for maintenance of equipment 

Total traffic expenses 

Total transportation expenses 

Total general expenses 



Total of items. 



Per cent. 
ii.68 

"i.55 



Per cent. 

10." 06 

39.38 




13.23 



49.44 



37.33 



The sum of the percentage total of all items equals 100 per cent. 



KAILWAY MAIL PAY. 



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1040 BAILWAY MAIL PAY. 

Referring to the table (p. 1038) and the method described in the hearings on page 
460 by Mr. Peabody, representing the Santa Fe system, it is manifest that the Atch- 
ison, Topeka & Santa Fe Railway, for statistical purposes, was actually assigning 
more than 62.67 per cent of the total operating expenses to the passenger and freight 
services, although this company reported an assignment to the department of only 
13.23 per cent. The departmental Form 2608 requested this data from the company 
in detail. Mr. Peabody, on page 459 of the hearings, etc., says: 

"We sent you our formula, which was very elaborate and complete, which takes 
up every account separately and first assigns every expense to the exact operation 
of the road on which that expense was incurred, dividing it between main and branch 
lines and between divisions." 

This statement of the method used by the Sante Fe system was not received at 
the department. It was requested of the company in a special communication, but 
was not furnished. (See testimony, p. 512 of the hearings.) 

As to the method employed by the company in separating the unallocated expenses, 
a glance at the statement on p. 1039 reveals the reason for the difference in the com- 
pany's figures and those of the department. The inaccuracy of a revenue train- 
mile basis for account separations of the unassignable expenses and the very ^reat 
accuracy with which the' department was able to secure a just and equitable division 
is demonstrated, notwithstanding the fact that 87 per cent of the total expenses were 
required to be apportioned. It was in the power of the company to have furnished 
the department data with approximately 62 per cent of the expenses directly assigned 
to either passenger or freight traffic. A comparison of the percentages for mainte- 
nance of way and structures and general expenses shows that by the use of the revenue 
train-mileage ratios by the company (which charged 45.92 per cent to the passenger 
service) a considerably greater expense is imposed upon the passenger service than 
it is justly entitled to, in view of the actual expense ratio for this service of only 16.99 
per cent. The apportionment of maintenance of equipment, traffic, and transpor- 
tation expenses by the company and by the department, are practically in agree- 
ment, but the separation to passenger of the equipment and transportation expenses, 
aggregating 60 per cent of the operating expenses, is only a trifle over 30 per cent as 
divided by the department, while the revenue train-mile basis used by the company 
is 45.92 per cent, which accounts for the large amount added to these items by the 
company and was due to the use of this method of apportionment. 

As to the method employed by the department for account separations, the table 
on p. 1039 gives a striking illustration of its practicability for the purpose. The 
resulting figures for over 60 per cent of the operating expenses as divided by the 
department are practically the same as those reported by the company. 

The fact that railroad companies generally use a revenue train-mileage basis for 
apportionment of the unassignable expenses, and the further fact that certain courts 
have, for various reasons, held that the weight of evidence justified their decisions in 
favor of testimony based upon a revenue train-mileage apportionment for railroad 
operating expense accounts, can not justly be claimed a proof of the accuracy of this 
method. The exceptions are so few, in practice, that it may be set down as a maxim 
that the ratios of revenue train-mileage are not in proportion to the cost of train move- 
ment and operation, and can only be considered as a basis for dividing that account 
which depends on traffic alone and when no other factor enters into the consideration 
of the item. 

The statement of Mr. Peabody, on page 489 of the hearings, is quoted as follows: 

"The revenue train-mileage comes very close to the result reached by ours. If we 
should apply the revenue train-mileage to our figures we would not vary 2 per cent 
from our figures, but we wish to get actual figures so far as we can for our own purpose 
of operation. We do not make this division for the sake of going into court or any- 
thing of that sort." 

Upon reference to the comparative statement above it may be seen that the appli- 
cation of the revenue train-mileage ratio of 45.92 per cent to the apportioning of the 
unassigned expenses would result in a passenger cost at least 8.93 per cent higher 
than was reported to the department by the company, which amount is shown to be 
between 5 and 10 per cent above the ratio for the known cost of passenger traffic. The 
statement of Mr. Peabody does not seem to be justified by the facts presented. 



RAILWAY MAIL PAY. 



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1042 BAILWAY MAIL PAY. 

The difference in passenger operating cost between the figures presented by the 
company and those computed by the department is shown by the above table. 

The passenger operating cost assigned directly to that service for maintenance of 
equipment items and the items of tiansportation expense produced passenger ratios 
of 30.36 per cent and 26.52 per cent, respectively. The company apportioned the 
remaining items of these accounts on a basis which produced passenger ratios of 38.06 
per cent and 39.25 per cent, respectively. The passenger total cost was further in- 
creased at a rate above the known cost ratios by the use of bases which produced 
39.18 per cent for maintenance of way and structures, 40.20 per cent for traffic, and 
40.05 for general expenses. 

Reference to the column for "Apportioned passenger service expenses by the depart- 
ment" will show that the average passenger ratio of apportionment was 31.78 per 
cent, which was 2.35 per cent above the passenger ratio for assigned or known passen- 
ger cost, namely, 29.43 per cent. 

Of the total operating expenses, 74.52 per cent were apportioned by the company 
on a basis which charged the passenger service with 39.11 per cent thereof. The 
increase in the ratio of apportionment for passenger traffic was 9.68 per cent above the 
known passenger ratio, or an increase of approximately 25 per cent. No reason is 
given for this inflation of passenger cost, and thus the department is placed in the 
position of either accepting as correct a passenger charge of known inaccuracy or 
substituting therefor an equitable basis of apportionment. No criticism of the deci- 
sion made by the department appears warranted. 

Mr. Robert S. Logan, representing the Grand Trunk System, states in his testimony, 
page 533 of the hearings, that his road is underpaid for mail service about 40 per cent. 
The statement which he submits is shown on page 562 of the hearings. 

Detailed information in regard to the ascertainment of the item for passenger oper- 
ating expenses shown to be $2,191,070.70, or 45.36 per cent of the total operating 
expenses, namely, $4,829,960.62, is lacking, but upon reference to the Interstate 
Commerce Commission statistical report there is found a passenger revenue train-mile 
ratio of 47.40 per cent. The use of revenue train mileage as a basis of dividing the 
unassignable operating expenses is thus indicated, which it has been shown is inac- 
curate and out of proportion to the known cost relation of passenger and freight traffic 
and density thereof. 

The result of the investigation into operations of the company for November 1909 is 
shown by House Document 105, at page 275, and indicates a gain to the road of 
$4,409.86 for mail service for that month. Deducting from this amount the mail pro- 

Eortion of the interest on funded debt, hire of equipment, etc., computed on same 
asis, amounting to $3,166.60, there is left a gain to the company on mail service of 
$1,243.26 per month, or $14,919.12 per annum, this amount covering the cost of all 
operations, taxes, interest, and hire of equipment. Mr. Logan, in his statement on 
page 562 of the hearings, shows a corresponding loss of $101,669.34 per annum. 

In view of the facts presented, the statement of Mr. Logan that his road is underpaid 
40 per cent for services rendered in the transportation of the mails should be sup- 
ported by more detailed information both in regard to cost and space chargeable to 
the mail service. 






RAILWAY MAIL PAY. 



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1044 RAILWAY MAIL PAY. 

Mr. W. C. Wishart, statistician for the New York Central Lines, in his testimony, on 
page 602 of the hearings, referring to the data for that road published in House Docu- 
ment 105, says: 

"On the basis of assignment made by the New York Central & Hudson River Rail- 
road Co. the passenger service, as distinguished from freight, is charged with only 38.4 
per cent of the operating expenses and taxes — $2,350,596.86 out of $6,121,071.49 — and 
in the department's computation this is further reduced to only 34.3 per cent of the 
amount assigned to operating expenses and taxes, but during the year 1909 the total 
number of revenue train miles in the two branches of service was divided in the pro- 
portion of 54.3 per cent for passenger trains and 45.7 per cent for freight trains. Still 
this change, coupled with the lowered percentage of mail space, makes the difference 
between a very profitable business and one that barely pays operating expenses and 
taxes and nothing for interest upon the necessary investment." 

In explanation of the revenue train-mile percentage ratios for passenger and freight 
traffic here stated for the year 1909, namely, passenger 54.3 rcer cent and freight 45.7 
per cent, there should be shown the revenue train-mileage ratios furnished the depart- 
ment by the company upon written request, which were 51.50 per cent and 48.50 per 
cent, respectively. 

In connection with the above table, Mr. Wishart's statement, on page 603 of the 
hearings, should be quoted, which reads as follows: 

' ' It does not appear that the department has available the data upon which to base 
the important deductions it sought to make." 

The department requested, in a special communication to the company, to be fur- 
nished with the data in regard to the amounts actually assigned to passenger and 
freight service. This was refused by the company on the ground that it would entail 
considerable labor and expense. 

That the actual expenditures for both classes of traffic were and are matters of record 
with the company was not denied. From the nature of the case, therefore, it is not 
possible to analyze the method used by the company for a separation of the unassigna- 
ble expenses, but whatever method was adopted tended to greatly increase the cost to 
passenger traffic. By referring to the statement above, that part of the maintenance- 
of-way and structures accounts assigned directly to passenger service shows a ratio of 
26.04 per cent, and the apportionment of the remainder of the same accounts, on a 
revenue train mileage basis, gave 51.51 per cent. 

The assignment and apportionment of the items for maintenance of equipment was 
in the ratio of 31.24 per cent to passenger, but the repair accounts, comprising the large 
percentage of this division of expenses, shows a passenger ratio of only 18.46 per cent, 
which is an actu?l cost ratio based on separate accounts according to the Interstate 
Commerce Commission classification. 

The transportation expenses as assigned and apportioned by the company and the 
department produce almost identical ratios, namely, 35.50 per cent by the company 
and 34.77 per cent by the department. However, the items for road enginemen, fuel 
for road locomotives, and road trainmen, the three largest accounts in this division, 
show an assignment to passenger at the ratio of 37.34 per cent. The traffic expenses 
show an assignment at the ratio of 37.92 per cent, and the equipment repair accounts 
have a p?ssenger ratio of 18.46 per cent. The total items named, aggregating over 
one-third of the total operating expenses, produce a passenger ratio of only 30.90 per 
cent. By use of the revenue train mileage ratios the company divided the remaining 
items on a sufficiently higher percentage to produce a passenger service ratio for all 
expenses of 34.74 per cent. The department's method produced 31.89 per cent. 

On page 602 of the hearings, Mr. Wishart states: 

"It has not been possible to determine exactly what is meant by 'direct charge 
accounts' as used in the department's compilations. Of the 116 operating accounts 
established by the Interstate Commerce Commission, there are only 14 or 15 which may 
be justly termed 'direct charge ac^mm+s.'" 

A description of what is meant by the term "direct charge" appears on pages 8 and 
9 of House Document No. 105, and requires no further explanation, but the deduc- 
tions drawn by him in regard to the department's method of separating certain 
primary accounts require explanation. 

His testimony, on page 602 of the hearings, follows: 

"For example, the New York Central & Hudson River Railroad reported as ex- 
pense for ties in the month of November, 1909, $152,238.87, of which $730.17 were 
assigned by the company to passenger business, presumably because during that 
month there happened tobe applied to passenger tracks, ties of that cost. The balance 
was distributed by the company on the basis of the relative number of revenue-train 
miles in the two branches of the service. Under the rule of the department, however, 
two-third« ^ this unassigned expense follows what are called the direct charge 



RAILWAY MAIL PAY. 1045 

accounts and only one-third is divided on the basis of revenue train miles. It ap- 
pears, therefore, that two-thirds of $151,593.70 was distributed to passenger and 
and freight business on the basis of the ratio that the amounts charged to two groups 
of a very few freight only and passenger only accounts of small magnitude bear to 
each other." 

The account for "ties" was handled by the department in accordance with the 
method described for this primary account in House Document No. 105. The passen- 
ger portion directly assignable as reported by the company was $730.57 and the 
passenger part of the unassignable expense was reported as $75,209.80, making a total 
passenger cost for this item~on the company basis of $75,940.37, or 49.88 per cent of 
the total of the item. 

The department assigned to passenger the amount reported by the company as 
stated, $730.57, and in separating the unassignable portion charged passenger traffic 
with 51.50 per cent (revenue train-mileage passenger ratio) of one-third, and 32.29 
per cent (the "direct charge" passenger ratio) of two-thirds, making the passenger 
apportioned amount $56,501.04, and the total passenger charge for this item $57,231.61, 
or 37.60 per cent of the total of the item. 

The department's method of dividing the account in question reduced the pas- 
senger charge as computed by the company by 12.28 per cent, or $18,708.76, for the 
item. The relative passenger and freight cost for station service and trains moving 
over the ties was the principal factor considered and applied to two-thirds of the 
unassignable portion of the item, the factors considered having direct relation to the 
cost of traffic and operation of the road. 

The items entering into the "direct charge" accounts comprise 35 per cent of the 
total operating expenses, which items can be directly assigned by nearly all roads. 
In the reports of many companies the per cent was considerably higher. By reference 
to House Document No. 105, at page 8, it will be found that the "direct charge " items 
are exclusively train movement costs, so that Mr. Wishart's statement that the "direct 
charge " accounts are of small magnitude is due to his misunderstanding of the method 
used by the department. 

The combined "direct charge" cost ratio for passenger service was found to be 
only 32.29 per cent and the maintenance of way and structures passenger ratio of 
assigned or actual cost was only 26.04 per cent, and yet the unassignable part of the 
item of ties, in common with all other items or parts of items not assignable, was 
divided by the company on the basis of 51.50 per cent for passenger revenue train- 
mileage. 

The ratio used by the company for apportionment to passenger service of the main- 
tenance of way and.structures was stated by them as 51.50 per cent, and the tabular 
statement above shows that approximately 26 per cent of the assignable expenses 
were chargeable to passenger service, so that the difference, or approximately 25.50 
per cent, represents an increase of 100 per cent in the ratio used by the company over 
the ratio of the actual known expenses for maintenance of way and structures. The 
increase in ratio for the " ties " account was considerably higher. 

Referring to the remark of Mr. Max O. Lorenz, assistant statistician of the Interstate 
Commerce Commission, on page 607 of the hearings, commenting on the result of the 
apportionment for the New York Central & Hudson River Railroad Co., he stated: 

"If they worked out about a third, it may be that their results are not so absurd, 
because my contention is that the train-mile method assigns the maximum proportion 
to passenger service, because the train-mile is something different in the two services." 

The result of the apportionment of maintenance of way and structures produced a 
passenger ratio of cost of approximately 38 per cent. The same data computed by 
the company produced a passenger ratio of 49.60 per cent, only 2 per cent less than 
the revenue train-mileage ratio, which is a palpable inflation of passenger cost. 



1046 



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RAILWAY MAIL FAY. 



1047 



" The passenger revenue train-mileage per cent reported to the department by the 
company was 44 per cent, upon which the company based its apportionment of the 
large part of the unassignable accounts. Locomotive mileage ratios were also used 
for dividing certain items. 

In making its first report of revenue and expenses to the department, on the Form 
2603, the company submitted certain amounts as assigned expenses directly charge- 
able to passenger traffic aggregating $1,765,854.86, but upon the supplemental report 
of operating expenses on Form 2608 there was assigned to passenger service only 
$76,627.23. In the first instance accounts amounting to 71.77 per cent of the total 
operating expenses were assigned, while on the form which called for the detailed 
assignment and apportionment by primary accounts only 53.16 per cent of the total 
operating expenses was assigned to passenger and freight traffic. 

An analysis of the two reports shows that in the first report the proportion of known 
passenger cost was 27.10 per cent and in the subsequent report the passenger propor- 
tion of known cost was only 1.58 per cent, and when corrected by the department 
from company data previously reported was increased to only 17.26 per cent. 

By reference to the above table these figures will be shown in comparative tabula- 
tion, and also the percentages of apportionment for both passenger and freight service 
resulting from the company's method. In its first report the company apportionment 
results show 38.15 per cent charged against passenger traffic, which should be com- 
pared with the passenger per cent of cost actually assigned of 27.10 per cent, showing 
an increase of 11 .05 per cent above the ratio of known cost. Turning to the data reported 
on the supplemental report (Form 2808) it is readily seen that many items stated as 
assignable in the first report were subsequently reported as apportionable, increasing 
the proportion charged to passenger traffic to 62.72 per cent, considerably higher 
than the revenue train mileage passenger ratio of 44 per cent. Without attempting 
to deduce a reason for the action of the company in this connection, it is sufficient 
to evidence the difficulties thrown in the pathway of the department in its effort to 
secure a true statement of passenger operating cost. 

A glance at the results secured by the department based on the method of apportion- 
ment as described in House Document No. 105, indicates that the ratios secured thereby 
are closely related to the actual cost conditions of passenger and freight operations. 

The passenger apportionment resulted in a percentage of 31.91 per cent, comparable 
with the passenger percentage of known cost reported by the company of 27.10 per 
cent and the revenue train mileage of 44 per cent. The actual cost of locomotive and 
train cars repairs and train service including yard expenses chargeable to passenger 
service from the figures furnished by the company and taken by the department with 
practically no correction or deviation gives a "direct charge" percentage ratio for 
passenger traffic of only 22.65 per cent, yet the company in its report to the department 
shows a passenger ratio for the total apportionment of 38.15 per cent, due almost entirely 
to the use of revenue train mileage as a basis for dividing the unassignable costs. 

As the greatest difference in passenger cost between the company results and that 
secured by the department, is in regard to the respective methods employed in 
handling the maintenance of way and structures accounts, a short comparative tabu- 
lation will make clear the reason therefor. 

Division of expenses as separated to passenger and freight traffic for maintenance of way 
and structures accounts, reported by the Pennsylvania Railroad Co. on Forms 2603 and 
and as allocated by the department, based on all data reported by the company. 





Reported by company. 




Computed by depart- 
ment, based on com- 


Item. 


Form 2603. 


Form 2608. 


pany reports. 




Amount. 


Per cent. 


Amount. 


Per cent. 


Amount. 


Per cent. 


Total assigned 


0) 




C 1 ) 




$186,758.73 




Per cent of total assigned to total of 
all items 






15.90 




$30,418.34 
0) 


16.29 


$33. 89 
156,340.38 


0.02 
99.98 


30,418.34 
156,340.38 


16.29 


Assigned to freight 


83.71 




C 1 ) 




(>) 




987, 758. 42 




Per cent of total apportioned to 




84.10 


Apportioned to passenger 


398, 150. 85 
0) 


40.31 


426,922.85 
0) 


41.97 


242, 415. 26 
745,343.16 


24.54 


Apportioned to freight 


75.46 


Total passenger 


428,569.19 
C 1 ) 


36.49 


426,956.74 
(») 


36.36 


272,833.60 
901,683.54 


23.23 


Total freight 


76.77 


Total maintenance of way and 
structures items 


C 1 ) 




1,174,517.14 


100. 00 


1 
1,174,517.14 











Item not reported by company. 



1048 RAILWAY MAIL PAY. 

The total passenger cost of maintenance of way and structures was stated by the 
company on Form 2603 to be $428,569.19 and on Form 2608 as $426,956.74, or 36.49 
per cent and 36.36 per cent, respectively, of the total for all items. The latter amount 
is $154,123.14 more than is shown on the above table for the department's figure, or 
an increase of 56.50 per cent. The passenger ratio of 36.49 per cent is an increase 
over the ratio for the actually assigned items (Form 2608) of 124 per cent, and is only 
7.51 per cent less than the revenue-train-mileage ratio of 44 per cent. 

The department would have accepted the data reported by the company without 
question, as suggested by Mr. Bradley in his testimony on page 425 of the hearings, 
had the factor of revenue train-mileage been supplemented by a cost factor relating 
to actual operations. This is in answer also to his following statement on the same 
page referring to the method used by the department, which reads: 

The fact that it produces uniformly lower expenses for the passenger-train service 
(and consequently for the mail service on passenger trains) would not lead one to 
conclude that it was adopted for its abstract qualities regardless of its concrete results." 

The fact that the company has used the revenue-train-mileage basis of apportion- 
ment for 40 years reflects little credit upon its validity for the purpose, in view of the 
preponderance of evidence against it and with special reference to its use for the separa- 
tion of the accounts above considered. When only 22.56 per cent of the cost of loco- 
motive and train operation is shown by the company's own figures to be chargeable to 
passenger traffic, the use exclusively of a traffic ratio for account separations of 44 per 
cent passenger revenue train-mileage is certainly not justified for any other reason than 
its antiquity. 

On page 430 of the hearings the total passenger earnings per car-foot mile is shown 
for the Pennsylvania Railroad Co. to be 4.765 mills. Dividing the total passenger 
cost, as reported by the company on page 424, namely, $2,743,857.49, by the total 
passenger-train car-foot mileage given on page 427 (667,951,848 car-foot miles), there 
results a passenger cost per car-foot mile of 4.047 mills. Corresponding figures (H. 
Doc. 105, Table 7) on the department basis produce: 

Passenger revenue per car-foot mile, 4.758 mills. 

Passenger cost per car-foot mile, 3.035 mills. 

The company data and bases produce a gain in passenger service of only 0.718 of a 
mill per car-foot mile, which is not sufficient to cover the passenger proportion of 
fixed annual interest charges, while on the basis used by the department the passenger 
service shows a gain-of 1.733 mills per car-foot mile, which produces a gain warranting 
the extensive passenger service and the expenditures for superb station facilities. 

Mr. W. W. Safford, general mail and express agent, Seaboard Air Line Railway Co., 
gives, in his testimony on page 138 of the hearing, a "comparative cost and revenue 
table for mail service for the year 1912 by various methods of apportionment." In 
this statement he shows that a great diversity of results are obtained by various 
methods of division of operating expenses between passenger and freight service. 
He attempts to prove that, given a desired result, it can be reached by. applying the 
required method. However, on page 137, referring to the revenue train mileage as a 
basis of apportionment, Mr. Safford testifies as follows: 

' ' It has been and it is generally accepted by railroads as the best and most acceptable 
method, but it is not accepted by accounting officers as an absolute proposition, and it 
is in question now as between the methods used by the Postmaster General and the 
methods used by the railroads in order to have a uniform method and to present uniform 
figures to the Postmaster Genera], so that there might not be a great many different 
opinions about this thing. The railroads already, in making their segregation of 
expenses, use the revenue-train-mile basis in their assignment of expenses to passenger- 
train service, and that has been most frequently used and perhaps is the best because 
it represents more nearly the use of the property." 

And, again, on page 139, he says (the italics are the writer's): 

"I furthermore want to state that I am not an expert accountant. I am deducing 
these things from figures that I get from expert accountants, and I would not like to go 
into the question of railroad accounting, because there are men so very much more 
competent to do that than I. 

"I will say this for the department: The modification of the Buell system, which 
they used in part, was favorable to the railroads. They seem to have been trying to 
get at something fair from their point of view." 

Mr. J. H. Bowman, certified public accountant, testifying for the New York, New 
Haven & Hartford Railroad Co., on page 280, compares the division of expenses by the 
department and by himself. The results of his work in assigning and apportioning the 
operating expenses of the New York, New Haven & Hartford Railroad differ from the 
department's results by only 2 per cent. This is due to two causes: First, the fact that 
he had access to the detailed information which was not furnished to the department; 



BAILWAY MAIL PAY. 1049 

and second, to the use of a basis differing somewhat from that used by the department 
in its division of operating costs. He states that he used a method substantially the 
same, but differing for certain particular accounts. 

It is not claimed that the department's method of account separations is the best 
that could be devised, but it is firmly held that traffic is only the means by which the 
railroad business is conducted and not the result thereof, which is represented by the 
revenue and cost produced by transportation. It seems most probable from the 
testimony of the advocates of the revenue train mileage as a basis en bloc for separating 
the unassignable costs, that usage and precedent have argued with greater weight than 
equity and accuracy of results. 

Accuracy in the results and equity of method have been striven for by the depart- 
ment in the consideration and compilation of the cost data of the mail-carrying rail- 
roads. No valid criticism has been made of the method used, and no better method 
has been suggested in the published testimony. 

The results published in Table 7, House Document No. 105, secured by the applica- 
tion of the department's method have not been criticised, nor has the accuracy of the 
computations been questioned. 



Post Office Department, 
Office of the Postmaster General,, 
Washington, D. C, February 12, 1914. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-Class Mail 
Matter and Compensation for the Transportation of Mails, 
Congress of the United States. 
My Dear Mr. Chairman : I have the honor to hand you herewith 
a further report by the Second Assistant Postmaster General upon 
the plans for regulating railroad mail service, providing for and 
readjusting compensation therefor, which have been submitted to 
your joint committee. Accompanying the same is a tentative draft 
of suggestions for recommendation for legislation and regulation of 
railroad mail service and compensation therefor, which I approve, 
and of which I earnestly recommend your favorable consideration. 
Yours, very truly, 

A. S. Burleson, 

Postmaster General. 

Post Office Department, 
Second Assistant Postmaster General, 

Washington, February 12, 1914. 
Hon. A. S. Burleson, 

Postmaster General. 
Sir: In my statement of January 16, 1914, on behalf of the Post 
Office Department in review of the testimony taken before the joint 
committee respecting compensation for the transportation of mails, I 
discussed the several plans for readjusting compensation for railroad 
mail service which have been submitted to the joint committee. Those 
plans which combined the main elements of a space basis were men- 
tioned as the plan of the department, the plan of Hon. James T. 
Lloyd, and the plan of Mr. Max O. Lorenz. At the time the state- 
ment above referred to was submitted I had not had sufficient oppor- 
tunity to consider the Lorenz plan to pass an opinion upon it. I have 
since, however, given this plan, in connection with the other space 
plans, very careful and thorough consideration and submit herewith 
a tentative draft of suggestions for recommendation for legislation 
and regulation of railroad mail service and compensation therefor. 
This draft embodies my conclusions with respect to the various fea- 
tures of the several plans heretofore submitted. These are, briefly 
described, as follows : 

49396—14 74 1051 



1052 RAILWAY MAIL PAY. 

The Postmaster General is authorized and directed to readjust com- 
pensation for railroad mail service from July 1, 1914, to state railroad 
mail routes from that date and thereafter as he may deem proper, 
and to establish on any route any one or more of the several classes 
of service provided for. 

Provision is made for five classes of service, namely, full railway 
post-office car mail service, apartment railway post-office, car mail 
service, storage-car mail service, closed-pouch mail service, and side, 
terminal, and transfer mail service. These several classes of mail 
service are described in the draft submitted. 

This provision differs from the department's original plan, as well 
as from the Lloyd and Lorenz plans in recognizing a distinction be- 
tween these several postal- facilities. This becomes especially im- 
portant in the consideration of rates of pay. Furthermore, the 
standard sizes of cars provided for are greater in number and there- 
fore are graded with less difference in length between them than be- 
tween the sizes suggested by the Lloyd and Lorenz plans. This will 
be a distinct advantage to the department, as I have pointed out in 
my statement above referred to, and will be no disadvantage to the 
railroad companies, because they conform to the standard sizes now 
recognized in the service. 

Provision is made for payment at different rates for each of the 
five classes of service. The rates for full and apartment railway 
post-office cars and storage cars are determined on the basis of the 
average revenue per passenger car mile for the railroads of the 
United States, as reported by the Interstate Commerce Commission, 
with suitable reduction therefrom to compensate for the difference in 
the character of services and for considerations mentioned in my 
statement. The acceptance of this basis follows the suggestion of 
the Lorenz plan and abandons the plan of direct ascertainment of 
cost for each individual route as proposed in the department's origi- 
nal plan accompanying document No. 105. This is fully justified 
by the results of the department's investigation and the findings 
published in document No. 105, which enabled a safe comparison 
between revenues received by railroad companies and expenditures 
made for unit of service for passenger and mail services. It is 
further warranted by a general supervision of passenger rates by 
legislative bodies. 

The rates determined for full and apartment railway post-office 
car mail service and storage-car mail service consist of two elements : 
(1) A rate for a car-foot mile of service equated to a 60-foot car, 
and (2) an initial and a terminal rate. The latter in turn consist 
of two elements, namely, (1) a charge for loading and unloading 
mails at the initial point or terminal point of the car run, and (2) 
a charge for switching, lighting, heating, cleaning the mail cars, etc. 
In the constitution of such rates in this manner the Lorenz plan is 
followed. 

The rates determined for the line charge; that is, for the car-foot 
mile of service, differ as they recognize the differences in the char- 
acter of car equipment furnished, but do not differ with respect to 
the average loads carried in the cars. In these two respects the plan 
differs from the Lorenz plan and it is believed is a distinct improve- 
ment thereon. It is important to recognize the difference in the cost 
to the railroad companies of furnishing a full car wholly for the 



RAILWAY MAIL PAY. 1053 

use of the Post Office Department and that of furnishing an apart- 
ment in a car which the railroad company must run for its own 
convenience. It is also important to recognize a difference between 
wooden and steel apartment cars and to pay a higher rate for the 
superior character of equipment, thus conserving safety of human 
life and encouraging the introduction of steel apartment cars. It 
was found upon a careful consideration of the matter that the 
average load of mail in a working car is of little value in determining 
a rate to be paid, for the reason that the average load is a small 
factor in determining the authorized space necessary for the dis- 
tribution of mails in transit. Furthermore, if a handling charge is 
recognized at the initial and terminal points of a car run the small 
additional tonnage represented by the variation in the weights of 
mails in working cars of 60-ton weight is inappreciable in cost of 
operation. This feature therefore was rejected. 

In applying the line charge provision is made for computing the 
car miles of full and apartment railway post-office cars at the maxi- 
mum space authorized in either direction of a round-trip car run, 
unless otherwise mutually agreed upon, and for computing the car 
miles of storage cars at the maximum space authorized in either di- 
rection of a round-trip car run, unless the car be used by the com- 
pany in the return movement or it be otherwise mutually agreed upon. 

The rates for initial and terminal' charge consist of the two ele- 
ments above stated, one of which will be a constant, and the other — 
the charge for loading and unloading — will be a variant. The con- 
stant terminal rates provided are not exceeding $1.45 for full railway 
post-office car service, $1.40 for apartment railway post-office car 
service, and $1.30 for storage-car service, which apply at each termi- 
nal of a car run of a 60-foot car with pro rata thereof for cars of 
lesser or greater length. The variant loading and unloading charge 
is fixed at not exceeding 12 cents for the first 2,000 pounds or less 
and 12 cents for each additional 2,000 pounds of the average weight 
of mail loaded and unloaded at the initial and terminal of a car run. 
The terminal rate and the loading and unloading rate together make 
total payments of $3.62 for each one-way trip of a 60-foot full, rail- 
way post-office car with a load of 3 tons on at the initial and off at the 
terminal of the run: $3.52 per trip in the apartment car service; and 
$3.32 per trip in the storage-car service for equivalent load and serv- 
ice. The study that we have been able to make of this question leads 
to the conclusion that the rates named in the bill are a fair charge 
for the services involved, which, when applied with the line rate, 
adequately and very properly furnish a suitable declension in the 
total rate between a charge for a short haul and a charge for a long 
haul. 

Provision is made for paying for closed-pouch mail service on 
routes upon which closed-pouch service only is performed, at not ex- 
ceeding 95 per cent of the rates of compensation provided by ex- 
isting law for average daily weights of mail carried over the whole 
route. On routes upon which apartment railway post-office car and 
closed-pouch services are performed, at not exceeding $20 per mile 
per annum for each 2,000 pounds average daily weight of mails car- 
ried, and at pro rata of such rate of compensation for each 100 
pounds of average daily weights greater or less than 2,000 pounds; 
and on routes upon which full railway post-office car and closed- 



1054 RAILWAY MAIL PAY. 

pouch services or full railway post-office car, apartment car, and 
closed-pouch services are performed, at not exceeding $19 per mile 
per annum for each 2,000 pounds average daily weight of mails car- 
ried, and at pro rata of such rate of compensation for each 100 
pounds of average daily weights greater or less than 2,000 pounds, 
the average daily weights to be ascertained in every case by the actual 
weighing of the mails as elsewhere provided in the bill. Closed- 
pouch mail service, although performed on a large number of small 
routes, represents a very small part of railroad mail pay. The serv- 
ice is of a simple character, consisting merely of carrying the 
pouch and sack mail in the baggage car in the care of the railroad 
employee and of receiving and delivering it from the door of the car 
at the stations en route. These receipts and deliveries are generally 
small in number and light in weight. After careful consideration of 
its character, I have not been able to find a better method of paying 
for this than upon the basis of the average daily weight. As to rate 
of compensation, it is provided that on routes upon which closed- 
pouch service only is performed, it shall be at not exceeding 95 per 
cent of existing rates. 

The relief of the companies from the performance of side and 
terminal service will remove a burden from these small lines which 
will receive at these rates ample compensation for a service con- 
sisting merely in receiving the mail in the car, carrying it, and de- 
livering it from the door. Inasmuch as the cost to the railroads of 
performing side and terminal service, as stated by them in the pre- 
liminary report of the commission (p. 14), is about 5 per cent of 
the mail revenue received by them, it is believed that a reduction of 5 
per cent from the present mail rates is warranted. On routes upon 
which apartment railway post-office car and closed-pouch services are 
performed and on those upon which full railway post-office car and 
closed-pouch services or full railway post-office car, apartment rail- 
way post-office car, and closed-pouch services are performed the 
rates provided are approximately the rates per ton provided by 
existing law for average daily weights from 5,000 to 48,000 pounds 
on the first class of routes named and for average daily weights 
of over 48,000 pounds on the second class of routes named. It 
is believed that these rates will result in the companies receiving 
somewhat smaller compensation than at present for the closed- 
pouch service on the classes of routes affected, which appears to be 
proper in view of the relief from side and terminal messenger serv- 
ice to be afforded. The reduction in the rate is a proper recognition 
of this change in the conditions of the performance of service. In 
recommending this method of adjustment the suggestion differs from 
the Lorenz plan. 

Provision is made for taking over the side, terminal, and transfer 
mail service by the department and thereby relieving the companies of 
this service, which they contend is not strictly railroad transportation, 
and is a source of continual controversy. In the provision the Post- 
master General is given the power to contract with postmasters of 
post offices of the third and fourth classes to perform the service and 
with railroad companies operating the lines to perform any or all of 
the service thereon. This will be a distinct advantage, and result 
in economies by securing much lower rates for the service than is 
otherwise possible. 



RAILWAY MAIL PAY. 1055 

The present provision with respect to land-grant railroads is con- 
tinued. 

Suitable provision is made for new and additional service and for 
paying for all regularly authorized service as it is performed, for 
making deductions for service not performed or discontinued, and 
for suitable fines in cases of refusal to provide cars and facilities. 

All of the existing provisions with reference to the construction, 
furnishing, maintaining, and the sanitation of mail cars, the opera- 
tion of wooden cars between steel or steel underframe cars, and the 
conversion of wooden full railway post-office cars into steel cars are 
continued. In addition the Postmaster General is allowed in cases 
of emergency and in cases where the necessities of the service require 
it to provide for service by full railway post-office cars of other than 
steel or steel underframe construction and pay suitable rate therefor. 

Provision is made for requiring railroad companies to furnish 
all suitable facilities for caring for and handling mails while in their 
custody, for furnishing cars or parts of cars and placing them in 
stations, and for furnishing suitable space and rooms in stations for 
the handling, distribution, and transfer of mails in transit, etc. 

The present provisions with respect to carrying persons in the 
custody of the mails and when on duty and traveling to and from 
duty and for carrying duly accredited agents and officers of the 
Post Office Department and the Postal Service while traveling on 
official business are continued. 

The existing authority in the Postmaster General to decide upon 
what trains and in what manner the mails shall be conveyed is con- 
tinued. 

Provision is made for not disturbing the practice of transporting 
periodicals in fast freight trains at freight rates. 

The Postmaster General is given the power to request information 
from the Interstate Commerce Commission as to revenue received 
bjr railroad companies from express companies for services rend- 
ered in the transportation of express matter and to provide for the 
transportation of mail matter other than first-class matter at rates 
not exceeding those so ascertained. He is also given authority to 
petition the Interstate Commerce Commission for the determina- 
tion of a postal car-load rate for transportation of mail matter of 
the fourth class and periodicals, and to provide for their trans- 
portation, when practicable, at such rates. He is also authorized 
to distinguish between the several classes of mail matter, and pro- 
vide for less frequent dispatches of third and fourth classes and 
periodicals when lower rates or other economies may be secured 
thereby Avithout material detriment to the service. _ These are im- 
portant provisions and will render material economies possible. 

Provision is made for the return to the mails for the utilization 
of car space paid for and not needed for the mails of empty equip- 
ment and supplies. This is an important provision and will effect 
large economy by saving freight now paid for the transportation 
of empty mail bags in the direction in which empty storage cars 
now move. This is possible because the great bulk of the mail with 
equipment moves outward from large centers and not inward, while 
the empty equipment must be brought back to these centers. There- 
fore, the empty storage cars which convey the mails outward can 
be utilized to return the equipment to points where it is needed. 



1056 RAILWAY MAIL PAY. 

Provision is made for taking the weights of mails on railroad 
mail routes, and for making computations of the average loads of 
the several classes of cars, etc., for statistical and administrative 
purposes at the discretion of the Postmaster General. 

The rates provided for are maximum rates; that is, they are 
provided for at not exceeding amounts named in the statute. In 
this respect the draft follows the provision of existing law, and 
this is desirable and necessary for a proper administration of the 
service. 

Other minor provisions of existing law are continued. 

It is made unlawful for any railroad company to refuse to per- 
form mail service at the rates of compensation provided by law 
when required by the Postmaster General, and a penalty for refusal 
is fixed. 

The rates provided for in the draft submitted are somewhat lower 
than the rates provided for in the Lorenz plan. It is believed, how- 
ever, that they provide adequate compensation for the service per- 
formed under the conditions of performance. In this connection 
attention is called to the fact that Mr. Lorenz's rates were intended 
to slightly increase the aggregate compensation, and were also 
predicated upon the theory that the increases in the average loads 
warranted increases in the specific rates. In these regards it is 
fair to say that Mr. Lorenz's plan was submitted before my state- 
ment of January 16, 1914, was prepared and submitted to the joint 
committee, in which I show conclusively that the railroad com- 
panies under present rates are not underpaid for the services per- 
formed, and, further, his differentiation in rates for different average 
loads was suggested before it was pointed out by the department 
with definiteness that this element is of slight importance in au- 
thorizing space or in fixing a rate. Furthermore, it has been shown 
in my statement referred to that under existing rates the railroad 
companies are compensated for the side and terminal services, which, 
under the proposed plan, the department will assume. These and 
other considerations set forth in my statement warranting a lower 
than a commercial rate fully justify a material reduction. Not- 
withstanding this it is believed that the rates fixed in the draft 
submitted herewith are commercial rates as compared with rates 
fixed by the railroad companies for other services. 

The plan itself, in my opinion, embodies the desirable features of 
the plans submitted to the joint committee and those which, upon 
further consideration and study, have been determined upon by this 
office. It is a great improvement over the existing laws and provides 
for full and exact payment for all services rendered. In this respect 
it will accomplish what the present plan does not — that is, an equita- 
ble distribution of railroad mail pay among the railroad carriers in 
accordance with the services performed for the Government. For 
the department it affords a plan embodying the maximum oppor- 
tunities for economical as well as satisfactory administration and 
conduct of the railroad mail transportation service. As to all con- 
cerned it is a just, equitable, and scientific plan of dealing with the 
subject. I earnestly recommend your approval of the same. 
Respectfully, 

Joseph Stewart, 
Second Assistant Postmaster General. 



RAILWAY MAIL PAY. 1057 

A TENTATIVE DRAFT OF SUGGESTIONS FOR RECOMMENDATION FOR LEGISLA- 
TION AND REGULATION OF RAILROAD MAIL SERVICE AND COMPENSATION 
THEREFOR. 

The Postmaster General is authorized and directed to readjust the 
compensation to be paid to railroad companies from July first, nine- 
teen hundred and fourteen, for the transportation and handling of 
the mails and furnishing facilities and services in connection there- 
with upon the conditions and at the rates hereinafter provided. 

The Postmaster General may authorize railroad mail service and 
may state railroad mail routes from July first, nineteen hundred and 
fourteen, and thereafter, in such manner as he may deem proper. 
Any one or more of the classes of service hereinafter described and 
provided for may^be authorized on a stated route. 

Service herein provided for shall be of five classes, namely, full 
railway post office car mail service, apartment railway post office car 
mail service, storage car mail service, closed-pouch mail service, and 
side, terminal, and transfer mail service. 

Full railway post office car mail service shall be service by cars 
forty feet or more in length constructed, fitted up, and maintained 
for the distribution of mails on trains. Four standard sizes of full 
railway post-office cars may be authorized and paid for, namely, cars 
forty feet, fifty feet, sixty feet, and seventy feet in length. 

Apartment railway post office car mail service shall be service by 
apartments less than forty feet in length in cars constructed and fitted 
up and maintained for the distribution of mails on trains, Five 
standard sizes of apartment railway post office cars may be authorized 
and paid for, namely, apartments ten feet, fifteen feet, twenty feet, 
twenty-five feet, and thirty feet in length. 

Storage-car mail service shall be service by cars used for . the 
storage and carriage of mails in transit other than by full and apart- 
ment railway post-office cars. Four standard sizes of storage cars 
may be authorized and paid for, namely, cars forty feet, fifty feet, 
sixty feet, and seventy feet in length : Provided, That less than forty 
feet of storage space may be authorized in baggage cars on trains 
upon which "full railway post-office cars or apartment railway post- 
office cars are not operated. 

Service by full and apartment railway post-office cars and storage 
cars shall include the carriage therein of all mail matter, equipment, 
and supplies for the mail service and the employees of the Postal 
Service or Post Office Department, as shall be directed by the Post- 
master General to be so carried. 

Closed-pouch mail service shall be the transportation and handling 
by railroad employees of mails on trains on which full or apartment 
railway post-office cars are not authorized, except as hereinbefore 
provided. 

Side, terminal, and transfer mail service shall be the transporta- 
tion of mails between railroad stations and post offices supplied 
therefrom and between railroad stations. 

The Postmaster General shall, from July first, nineteen hundred 
and fourteen, restate the service upon the several routes as authorized 
under this act by making such authorizations of service of the several 
classes hereinbefore described as he may deem necessary and pay 



1058 RAILWAY MAIL PAY. 

for the service performed in accordance therewith at not exceeding 
the following rates, namely: 

For full railway post-office car mail service at not exceeding 20 
cents for each mile of service by a sixty-foot car or its equivalent in 
authorized car space. 

In addition thereto he may allow not exceeding $1.45 as an initial 
rate and the same as a terminal rate for each one-way trip of a sixty- 
foot car, or a prorata part thereof for a car of less length, and not 
exceeding 12 cents for the first two thousand pounds or less, and 12 
cents for each additional two thousand pounds of the average weight 
of mails loaded or unloaded at initial and terminal of each car run. 
For apartment railway post-office car mail service at not exceeding 
18 cents for each mile of service by the equivalent in authorized 
space of a sixty-foot car if the car be other than of steel construction, 
and 19 cents for each mile of service by the equivalent in authorized 
space of a sixty-foot car if the car be of steel construction. 

In addition thereto he may allow not exceeding $1.40 as an initial 
rate and the same as a terminal rate for each one-way trip of the 
equivalent in authorized space of a sixty-foot car, prorated to the 
authorized space, and not exceeding 12 cents for the first two thou- 
sand pounds or less and 12 cents for each additional two thousand 
pounds of the average weight of mails loaded and unloaded at initial 
and terminal of each car run. 

For storage car mail service at not exceeding 18 cents for each 
mile of service by a sixty-foot car or its equivalent in authorized 
space. 

In addition thereto he may allow not exceeding $1.30 as an initial 
rate and the same as a terminal rate for each one-way trip of a 
sixty-foot car or a pro rata part thereof for a car of less authorized 
length, and not exceeding 12 cents for the first two thousand pounds 
or less and 12 cents for each additional two thousand pounds of the 
average weight of mails loaded or unloaded at initial and terminal 
of each car run. 

For closed-pouch service, on routes upon which closed-pouch 
service only is performed, at not exceeding ninety-five percentum 
of the rates of compensation provided by existing law for average 
daily weights of mail carried over the whole route; on routes upon 
which apartment railway post-office car and closed-pouch services 
are performed, at not exceeding $20 per mile per annum for each 
two thousand pounds average daily weight of mails carried, and at 
pro rata of such rate of compensation for each one hundred pounds 
of average daily weight greater or less than two thousand pounds; 
and on routes upon which full railway post-office car and closed- 
pouch services or full railway post-office car, apartment-car, and 
closed-pouch services are performed, at not exceeding $19 per mile 
per annum for each two thousand pounds average daily weight of 
mails carried, and at pro rata of such rate of compensation for each 
one hundred pounds of average daily weights greater or less than 
two thousand pounds, the average daily weights to be ascertained in 
every case by the actual weighing of the mails. 

For side, terminal, and transfer mail service the Postmaster Gen- 
eral is authorized to provide, in his discretion, by regulation screen 
or other wagon, automobile, or mail messenger service under exist- 
ing law, or to contract with the railroad company, after advertise- 



RAILWAY MAIL PAY. 1059 

ment, for the performance of any or all service on its route. 
Postmasters at post offices of the third and fourth classes shall be 
eligible as contractors for this service. 

Railroad companies whose railroads were constructed in whole 
or in part by a land grant made by Congress, on the condition that 
the mails should be transported over their roads at such price as 
Congress should by law direct, shall receive only eighty per centum 
of the compensation otherwise authorized by this act, excepting for 
side, terminal, and transfer mail service. 

The initial and terminal rates provided for herein shall cover ex- 
penses of loading and unloading mails, switching, lighting, heating, 
cleaning mail cars, and all other expenses incidental to station 
service and required by the Postmaster General in connection with 
the mails that are not included in the car-mile rate. It shall be 
fixed upon the consideration of two elements, namely : First, loading 
and unloading mails, and, second, all other services rendered. For 
loading and unloading mails it shall not exceed 12 cents per ton, 
and for the remainder of the rate the allowance for full railway 
post-office cars, apartment railway post-office cars, and storage cars 
shall be varied in accordance with the approximate difference in 
their respective cost of construction and maintenance. 

For the purpose of ascertaining the average weight of closed-pouch 
mails per day upon which to adjust compensation, the Postmaster 
General is authorized and directed to have such mails carried on the 
several routes weighed by the employees of the Post Office Depart- 
ment for such a number of successive days, not less than thirty-five, 
at such times after July first, nineteen hundred and fourteen, as he 
may direct, and not less frequently than once in every year thereafter, 
the result to be stated and certified in such form and manner as he 
may direct. In computing the average weight of mails per day 
carried on a railroad route, the whole number of days included in 
the weighing period shall be used as a divisor. The expenses of taking 
the weights of mails and the compensation to tabulators and clerks 
employed in connection with the weighings, for assistance in com- 
pleting computations, and of rental ; if necessary, in Washington, 
District of Columbia, shall be paid out of the appropriation for 
inland transportation by railroad routes. 

In computing the car miles of the full railway post-office cars and 
apartment railway post-office cars the maximum space authorized 
in either direction of a round-trip car run shall be regarded as the 
space to be computed in both directions, unless otherwise mutually 
agreed upon. 

In computing the car miles of storage cars, the maximum space 
authorized in either direction of a round-trip car run shall be re- 
garded as the space to be computed in both directions, unless the car 
be used by the company in the return movement, or otherwise mutu- 
ally agreed upon. 

New service and additional service may be authorized at not ex- 
ceeding the rates herein provided, and service may be reduced or 
discontinued with pro rata reductions in pay, as the needs of the 
Postal Service may require : Provided, That no additional pay shall 
be allowed for additional closed-pouch service on established routes 
until the next regular readjustment of pay therefor on such routes, 



1060 RAILWAY MAIL PAY. 

and no additional pay shall be allowed for additional car service unless 
specifically authorized by the Postmaster General. 

All cars or parts of cars used for the railroad mail service shall be 
of such construction, style, length, and character, and furnished in 
such manner as shall be required by the Postmaster General, and 
shall be constructed, fitted up, maintained, heated, lighted, and 
cleaned by and at the expense of the railroad companies. No pay 
shall be allowed for service by any railway post-office car which is not 
sound in material and construction, and which is not equipped with 
sanitary drinking-water containers and toilet facilities, nor unless 
such car is regularly and thoroughly cleaned. No pay shall be 
allowed for service by any wooden full railway post-office car unless 
constructed substantially in accordance with the most approved plans 
and specifications of the Post Office Department for such type of 
cars, nor for service by any wooden full railway post-office car run 
in any train between adjoining steel cars, or between the engine 
and a steel car adjoining. After the first of July, nineteen hundred 
and seventeen, the Postmaster General shall not approve or allow to 
be used, or pay for service by any full railway post-office car not con- 
structed of steel or steel underframe, or equally indestructible material, 
and not less than twenty- five per centum of the full railway post- 
office cars of a railroad company not conforming to these provisions 
on August twenty-fourth, nineteen hundred and twelve, shall be 
replaced with cars constructed of steel annually after June, nineteen 
hundred and thirteen; and all full railway post-office cars accepted 
for this service and contracted for by the railroad companies here- 
after shall be constructed of steel. In cases of emergency and in 
cases where the necessities of the service require it the Postmaster 
General may provide for service by full railway post-office cars of 
other than steel or steel underframe construction, and fix therefor 
such rate of compensation within the maximum herein provided as 
shall give consideration to the inferior character of construction, and 
the railroad companies shall furnish service by such cars at such 
rates so fixed. 

Service over property owned or controlled by another company or 
a terminal company shall be considered service of the railroad com- 
pany using such property and not that of the other or terminal 
company : Provided, That service over a land-grant road shall be paid 
for as herein provided. 

Eailroad companies carrying the mails shall furnish all necessary 
facilities for caring for and handling them while in their custody. 
The}^ shall furnish all cars or parts of cars used in the transporta- 
tion and distribution of the mails, except as is herein otherwise pro- 
vided, and place them in stations before the departure of trains at 
such times and when required to do so. They shall provide station 
space and rooms for handling, distribution, and transfer of mails in 
transit, and for offices and rooms for the employees of the Postal 
Service engaged in such transportation, when required by the Post- 
master General. 

Every railroad company carrying the mails shall carry on any 
train it operates and without extra charge therefor the persons in 
charge of the mails, and when on duty and traveling to and from 
duty, and all duly accredited agents and officers of the Post Office 



RAILWAY MAIL PAY. 1061 

Department and the Postal Service, while traveling on official busi- 
ness, upon the exhibition of their credentials. 

If any railroad company carrying the mails shall fail or refuse 
to provide cars or apartments in cars for distribution purposes when 
required by the Postmaster General, or shall fail or refuse to con- 
struct, fit up, maintain, heat, light, and clean such cars and pro- 
vide such appliances for use in case of accident as may be required 
by the Postmaster General, it shall be fined such sum as may, in the 
discretion of the Postmaster General, be deemed proper. 

The Postmaster General shall in all cases decide upon what trains 
and in what manner the mails shall be conveyed. Every railroad 
company carrying the mails shall carry on any train it operates and 
with due speed all mailable matter, equipment, and supplies directed 
to be carried thereon. If any such railroad company shall fail or 
refuse to transport the mails, equipment, and supplies when required 
by the Postmaster General on airy train or trains it operates, such 
company shall be fined such amount as may in the discretion of the 
Postmaster General be deemed proper. 

The Postmaster General may make deductions from the pay of rail- 
road companies carrying the mails under the provisions of this act 
for reduction in service or in frequency of service where, in his judg- 
ment, the importance of the facilities withdrawn or reduced requires 
it and impose fines upon them for delinquencies. He may deduct 
the price of the value of the service in cases where it is not performed, 
and not exceeding three times its value if the failure be occasioned 
by the fault of the railroad company. 

The provisions of this act shall apply t-o service operated by rail- 
road companies, partly by railroad, and partly by steamboats. 

The provisions of this act respecting the rates of compensation shall 
not apply to mails conveyed under special arrangement in freight 
trains, for which rates not exceeding the usual and just freight 
rates may be paid, in accordance with the classifications and tariffs 
approved by the Interstate Commerce Commission. 

Railroad companies carrying the mails shall submit under oath, 
when and in such forms as may be required by the Postmaster 
General, evidence as to the performance of service. 

The Postmaster General is authorized to have such weights of 
mails taken and ascertainments of needed space made and to collect 
such information by employees of the Post Office Department as he 
may deem necessary, and to have the same stated and verified to him 
by them under such instructions as he may consider just to the 
Post Office Department and the railroad companies, and to employ 
such clerical and other assistance as shall be necessary to carry out 
the provisions of this act, and to rent quarters in Washington, Dis- 
trict of Columbia, if necessary, for the clerical force engaged there- 
on, and to pay for the same out of the appropriation for inland trans- 
portation by railroad routes. 

The Postmaster General shall, from time to time, request informa- 
tion from the Interstate Commerce Commission as to the revenue 
received by railroad companies from express companies for services 
rendered in the transportation of express matter, and may, in his 
discretion, arrange for the transportation of mail matter other than 
of the first class at rates not exceeding those so ascertained and re- 



1062 BAILWAY MAIL PAY. 

ported to him, and it shall be the duty of the railroad companies 
to carry such mail matter at such rates fixed by the Postmaster 
General. 

The Postmaster General is authorized, in his discretion, to petition 
the Interstate Commerce Commission for the determination of a 
postal carload or less than carload rate for transportation of mail 
matter of the fourth class and periodicals, and may provide for and 
authorize such transportation, when practicable, at such rates, and it 
shall be the duty of the railroad companies to provide and perform 
such service at such rates and on the conditions prescribed by the 
Postmaster General. 

The Postmaster General may, in his discretion, distinguish be- 
tween the several classes of mail matter and provide for less frequent 
dispatches of mail matter of the third and fourth classes and periodi- 
cals, when lower rates for transportation or other economies may be 
secured thereby without material detriment to the service. 

The Postmaster General is authorized to return to the mails, when 
practicable for the utilization of car space paid for and not needed 
for the mails, postal cards, stamped envelopes, newspaper wrappers^ 
empty mail bags, furniture, equipment, and other supplies for the 
Postal Service, theretofore withdrawn from the mails as provided 
by law and transported by freight or express, and thereafter trans- 
port them in the railway post-office cars and storage cars herein 
provided for. 

The Postmaster General in cases of emergency between October 
first and April first of any year, may hereafter return to the mails 
empty mail bags and other equipment theretofore withdrawn there- 
from as required by law, and where such return requires additional 
authorization of car space under the provisions of this act, to pay 
for the transportation thereof as provided for herein out of the 
appropriation for inland transportation by railroad routes. 

The Postmaster General may have the weights of mail taken on 
railroad-mail routes, and computations of the average loads of the 
several classes of cars and other computations for statistical and ad- 
ministrative purposes made at such times as he may elect, and pay the 
expense thereof out of the appropriation for inland transportation 
by railroad routes. 

It shall be unlawful for any railroad company to refuse to perform 
mail service at the rates of compensation provided by law when and 
for the period required by the Postmaster General so to do, and for 
every such offense it shall be fined not exceeding $5,000. 

All laws or parts of laws inconsistent herewith are hereby re- 
pealed. 



RAILWAY MAIL PAY 



THURSDAY, FEBRUARY 26, 1914. 

Joint Committee on Second-Class Mail Matter, etc. 

Washington, D. C. 

The joint committee met at the call of the chairman at 10 o'clock 
a. m. 

Present, Senators Bankhead and Weeks and Representatives 
Lloyd and Tut tie. 

Mr. Llo^d presided as acting chairman. 

The Chairman. As I understand, Mr. Peters would rather make 
his statement and after that we may ask any questions we desire. 
Is that correct, Mr. Peters ? 

Mr. Peters. Yes, sir. 

STATEMENT, UNDER OATH, OF MR. RALPH PETERS. 

Mr. Peters. Mr. Chairman, we have not had as much time as we 
should have liked to complete this statement. The Post Office De- 
partment had, I believe, from June until early in January to submit 
their statement which is contained in volume 7 of the hearings. As 
soon as that volume was printed and distributed and we had time 
to study it, we got to work preparing an answer to it. This statement 
has been the work of the railway mail pay committee, representing 
the railroads, finally dressed into shape by a subcommittee. 

Mr. Stewart. And does the record show whom this paper is pre- 
sented for? 

Mr. Peters. This is presented on behalf of the railway mail pay 
committee representing the railroads. 

Mr. Stewart. Does the railway mail pay committee at this 
time represent the same railroads in this paper that they have repre- 
sented in former papers ? 

Mr. Peters. Yes. The statement as prepared, is as follows: 

STATEMENT OF THE RAILROADS CARRYING THE UNITED STATES MAIL, 
SETTING FORTH TO THE JOINT CONGRESSIONAL COMMITTEE (ON 
POSTAGE ON SECOND-CLASS MAIL MATTER AND COMPENSATION FOR 
THE TRANSPORTATION OF THE MAILS) THE CONTINUED USE BY THE 
SECOND ASSISTANT POSTMASTER GENERAL IN HIS BRIEF (HEARINGS 
NO. 7) OF JANUARY 16, 1914, OF THE INCORRECT RATIOS AND AS- 
SUMPTIONS FOUNDED UPON POSTMASTER GENERAL HITCHCOCK'S 
STATEMENT IN HOUSE DOCUMENT NO. 105. 

Despite the hearings and testimony before the joint congressional 
committee during the past year, the results of which have been pub- 
lished in the preliminary report and in volumes Nos. 1 to 6, inclusive, 
the Second Assistant Postmaster General, in his brief of January 16 

1063 



1064 RAILWAY MAIL PAY. 

(vol. No. 7), traverses the whole subject and still adheres to the old 
ratios, and consequently reaches results which are not, we submit, 
supported by any rational analysis of the facts as brought out in the 
testimony. 

It has been shown that in the institution of the inquiry, the results 
of which were published in House Document No. 105, as well as in the 
development of it and in the final statement of results, the officials of 
the Post Office Department showed a lack of acquaintance with the 
proper method of pursuing the inquiry, a lack of familiarity with the 
factors employed, and a lack of appreciation of the financial elements 
which had to be dealt with. It is also evident that there was a lack 
of knowledge on their part as to the origin of the inquiry. 

Although several congressional committees have studied and re- 
ported upon the subject of railway mail pay, there was only one com- 
mission which recommended that the pay be based upon the cost to 
the railroad company of performing the service and that the measure 
of such pay be the amount of car space devoted to the use of the 
mails. This was the Hubbard Commission, appointed by the Presi- 
dent of the United States under the act of July 12, 1S76. This com- 
mission made a very thorough investigation covering a period of 
almost two years. It visited all of the principal cities, conferred with 
railroad managers and other representative business men, and took a 
large amount of valuable testimony. Its reports, contained in Mis- 
cellaneous Document No. 20 of the Forty-fourth Congress and Miscel- 
laneous Document No. 14 of the Forty-fifth Congress, comprise over 
700 pages of testimony. That committee submitted, in tabular form, 
an estimate of the cost of performing the service per linear foot of 
train space, this being based upon detailed information obtained from 
113 railroads, covering about 50 per cent. of the transportation service 
of the country. Two reports were submitted to Congress, on April 1 
and April 5, 1878. The first, the minority report, recommended 
''that the Postmaster General shall once in every four years, or 
oftener, ascertain the average cost of running a linear foot of pas- 
senger train on the plan herein recommended and what percentage 
should be added thereto to give a fair profit to the railroads." 

Congress did not enact legislation in compliance with the report of 
the Hubbard commission, but in the following year, March 3, 1879, 
passed the law requiring the Postmaster General to request all rail- 
road companies carrying the mails to furnish under seal such data 
relating to operating, receipts, and expenditures of such roads as was 
in his judgment necessary to enable him to ascertain the cost of mail 
transportation and the proper compensation to be paid for the same, 
and to report to Congress with such recommendations founded upon 
the information obtained as would in his opinion be just and equitable. 

It was not until 30 years later, viz, on August 12, 1911, that the 
Post Office Department submitted the required report. This was 
subsequently published as House Document No. 105, which appeared 
in December, 1911. 

In the hearings, volume No. 1, of January 28, 1913, page 28, the 
Second Assistant Postmaster General, says: 

I notice since I was speaking this afternoon my attention has been called to a 
memorandum which I made in 1907, when the matter came up in the department. 
This memorandum is addressed to the. Second Assistant Postmaster General, signed 
by myself as Superintendent of the Division of Railway Adjustment, and contains 



EAILWAY MAIL PAY. 1065 

excerpts from the reports of previous "Commissions who have studied the question 
and all of whom have reported in favor of a space basis, and one recommends the 
basis for pay the same as is recommended in Document No. 105, a fact of which I was 
not consciously aware. That is, they believed the pay to the railroads should be the 
cost of the service aud a fair per cent of that cost. They did not take into considera- 
tion this question of capitalization at all, and I do not notice that any of these com- 
missions have taken that into consideration. 

It is only necessary to turn over two pages (i. e., to page 32, hearings 
No. 1) to consult one of the excerpts, this being a quotation from the 
minority report of the Hubbard commission of 1878, to see that the 
question of capitalization was fully considered by the Hubbard com- 
mission in the following paragraph: 

That to give a fair compensation, 13 per cent should be deducted for station and 
other expenses, and to the remainder 45 per cent should be added to the expenses 
for profit. These sums will yield on the average 6.2 mills per linear foot, or nearly 
the same compensation according to the cost of service that the railroads receive from 
the remaining business on the passenger trains. 

This formula would produce an amount of railway mail pay 
equivalent to 126 per cent of the operating expenses. 

The majority report of the Hubbard commission offered a different 
formula, although of the same general character, resulting in an 
amount of railway mail pay equal to 140 per cent of the operating 
expenses. 

It is therefore perfectly clear that the Hubbard commission made 
the first study of the cost system, as a basis for railway mail pay, and 
fully contemplated a fair return on the capital investment. It is 
unfortunate that the Post Office Department was not consciously 
aware of these important facts. 

The incompleteness and the inaccuracy oi Document No. Wo. — The 
Post Office Department commenced preparations for this inquiry 
in the year 1906 and, therefore, were engaged upon it for five years 
before Document No. 105 was published. The preliminary forms 
for ascertaining the daily conditions of service were prepared by 
the Post Office Department after many conferences with railroad 
officials, which helped greatly toward making these blank forms 
practicable to obtain the information sought. The forms and 
inquiries were sent to the railroad companies on September 28,1909, 
to obtain the information for the month of November, 1909. Soon 
thereafter, October 12, 1909, the railroads appointed the committee 
on railway mail pay, representing 282 railroads, with 208,000 miles 
of line, for the purpose of preventing misunderstanding relative to 
the method to be used in securing and tabulating the data, and to 
insure uniformity in the basis of compilation, so that comparisons 
subsequently made would be trustworthy. It was learned by this 
committee that the department's intention was simpty to call for 
the information from comparatively few railroads. The railroad 
committee suggested to the department that the inquiry, to be 
valuabls, should extend to all of the railroads. This suggestion 
was accepted by the department, but it rejected the offer for further 
cooperation during the progress of the. work, and the railroad com- 
mittee was, therefore, obliged to gather duplicate information as 
far as they were able in order to have some check upon the correct- 
ness of the returns in what they knew would prove a very intricate 
and complicated piece of work. 



1066 EAILWAY MAIL PAY. 

In hearings No. 7, page 988, it is said: 

The period from midnight, October 31, to midnight, November 30, 1909, was 
selected by the department for which the information should be furnished. Some 
companies, however, prepared their reports from records kept in the months of 
Deeember, 1909, and January, 1910. 

This omits to explain the reason why some of the companies sub- 
mitted reports for December or January, instead of November, as 
specified by the department. It was due to the fact that when 
the department accepted the suggestion of the railroad committee 
that the inquiry be made general, the notifications sent out by the 
department to the railway companies not already notified were 
received too late to make preparations to gather the current informa- 
tion for the month of November, and it was, therefore, necessary 
to gather it during either December or January. It should be 
understood that much of the information called for by the depart- 
ment is not regularly compiled by the railroads in their routine of 
business. As a matter of fact, however, the great bulk of the data 
in Document No. 105 is for the month of November. 

The Second Assistant Postmaster General, on page 5, hearings No. 
1, mentions the month of November as having been considered a fair 
average for the year. 

It might be suggested that as November includes two holidays, i. e., 
election day and Thanksgiving Day, as well as four Sundays, there are 
only 24 working days in the month, and it would ordinarily be con- 
sidered in some respects a month rather below the average. 

On page 988, the fourth paragraph says: 

Although the results obtained by the department have been assailed by the railroad 
companies' committee, they have, nevertheless shown that it is possible to approxi- 
mately divide the total operating expenses of the railroads between passenger and 
freight services, respectively. 

This statement implies that Document No. 105 shows for the first 
time the possibility of approximately dividing the total operating 
expenses of the railroads between the passenger and freight services, 
respectively. When it is pointed out in rebuttal that this division 
of expenses between the freight and passenger services has been made 
by many of the railroads for a great many years, it will be apparent 
that this is another important fact of which some of the officers of the 
department have not been consciously aware. The Pennsylvania 
Railroad Co. has made this division of expenses and published the 
results in its annual report since 1864, 50 years ago. The Atchison, 
Topeka & Santa Fe Railway Co. has pursued its present method of 
dividing the expenses for over 12 years past. 

The Interstate Commerce Commission soon after its creation in 
1887 adopted a rule which was contained in its book of instructions 
for the guide nee of railway carriers in making their annual reports, 
which reads as follows : 

All expenses which are naturally chargeable to either freight or passenger traffic 
should be entered in their respective columns; expenses which are not naturally 
chargeable to either traffic should be apportioned on a mileage basis, making the 
division as between freight and passenger traffic in the proportion which the freight 
and passenger train mileage bears to the total mileage of trains earning revenue. 

This rule, however, was discontinued after 1893, because the com- 
mission found that, generally speaking, not more than one-half the 
items of operating expenses could be assigned to the passenger service 



RAILWAY MAIL PAY. 1067 

or to the freight service and also because the average cost per ton per 
mile or per passenger per mile obtained by the basis of such com- 
putation was rarely used by the commissioners in judging of fair rates. 

It should, therefore, be quite evident that the process of dividing 
expenses between freight and passenger service has been employed for 
a great many years, and was even required by a rule of the Interstate 
Commerce Commission over 25 years ago, and at that time the Inter- 
state Commerce Commission gave its countenance to the method of 
dividing the common expenses on the basis of the number of revenue 
train-miles in either the passenger or freight service. 

The same paragraph, page 988, continues: 

And, further, to ascertain the space relation between passenger proper, express, and 
mail services, and assign to these several classes the direct expenses and apportion 
the unassigned expenses upon the ratio of the space devoted to each of the three classes 
of service. 

It is plainly intimated in this statement that the department has 
found it possible in Document No. 105 to assign to the passenger, 
express, and mail services the direct expenses chargeable to each. It 
is only necessary to turn to page 280 of Document No. 105 and to note 
the fact that the department in the grand total shows a total charge 
of railroad operating expenses and taxes against the mail service of 
$2,682,797 for the month of November, of which there was directly 
chargeable (see sixth column) only $21,993, or less than 1 per cent. 
The direct expense to the railroads of performing side and terminal 
service for the mails would alone be far greater than this direct charge 
which the department credited to the railroads of the entire country. 

The following appears in the fifth paragraph, page 988: 

Besides furnishing for the first time a reliable gauge by which to compare compensa- 
tion paid railroads with the estimated cost to them of performing service crediting them 
with the full pro rata share of all operating expenses in which the mails participate, 
the inquiry has developed the fact that the present system of adjusting compensation 
for mail service results in a very unequal distribution of pay among the companies 
due to conditions which are not uniformly represented in a weight basis of pay. 

Whether a "reliable gauge " would have been developed if the in- 
quiry had been properly made may be subject for debate. But the 
omission of essential data, the incorrect treatment of other data, and 
the illogical conclusions arrived at, as demonstrated in the hearings, 
have destroyed its value and utterly preclude its acceptance as a 
"reliable gauge. ' ; The railroads have reasons to regret this fact, 
because they started in 1909 in a spirit of sincere cooperation with the 
Post Office Department, and, notwithstanding the rejection of their 
offers of assistance, endeavoreel to make a satisfactory response, 
although this entaileel an expense of approximately one-quarter of a 
million elollars, or fully ten times as much as the Post Office Depart- 
ment expended for the purpose. It will be remembered that the law 
of March 3. 1879, while mandatory upon Postmaster General Hitch- 
cock anel his predecessors, was not mandatory so far as the railroad 
carriers were concerned. Consequently, all of their action to assist 
in the determination of this important question was voluntary. 

When the paragraph above cited attributes inequalities in pay to 
the weight basis which discloses an impression that the important 
railroads are overpaid and the short fines are underpaid, it is perti- 
nent to inquire how it is that Table 7 of Document No. 105 displays 
a large number of the short line roads as making a profit of several 

49396—14 75 



1068 BAIL WAY MAIL PAY. 

hundred per cent, and in some cases over 2,000 per cent. The Sharps- 
vine Railroad Co., which has a mail revenue of $60.95 a month, is 
shown as making a profit of 2,182 per cent, and the Shreveport, 
Houston & Gulf Railroad Co., which has a mail revenue of $32.06 a 
month, as making a profit of 2,918 per cent. It would seem to any 
prudent mind that if the work had been carried out intelligently that 
such absurd deductions as those just cited would arouse suspicion 
in the minds of those supervising the work and lead to a verification 
for the discovery and correction of the errors. The fact that these 
illogical results were accepted and published is a convincing demon- 
stration that the officers of the department were either unable for 
lack of time to study the results produced in the prosecution of the 
work or else were not sufficiently familiar with the conditions of the 
service to appreciate the significance of such revelations. 

In the succeeding paragraphs, on pages 988 and 989, it is stated 
that on the face of the data " properly checked and revised" it was 
shown that the railroad expenses chargeable to the mail service, 
plus 6 per cent, would have aggregated $9,000,000 less than the mail 
revenue received by the railroads from the Government, and then 
remarks that if Postmaster General Hitchcock had not made an 
unfortunate inaccuracy of statement the overpay of the railroads 
would really have been stated as $10,531,792. 

The railroads have submitted testimony (notably in vol. 5, pp. 
732-734) of underpayment of at least $15,000,000 a year. A state- 
ment is annexed hereto (Exhibit A) showing that if the figures of 
Document No. 105 were worked out upon the correct ratios there 
would be revealed an underpayment of $10,900,000 on the operating 
expenses and taxes alone without any allowance af 6 per cent interest 
thereon, or any allowance for capital cost. If interest were allowed 
at 6 per cent on the railroad property used in the performance of the 
mail service, the amount of underpavment would be increased to 
nearly $38,000,000 for the fiscal year 1910. 

The first chapter concludes on page 989, with the following 
observations : 

The conclusions reached in the document were assailed by the railroads on the 
following main grounds, namely: 

That the 19,000,000 excess of revenue over expense does not take into considera- 
tion a return on value of property used; 

That the department's division of total operating expenses between freight and 
passenger services was made in a manner resulting in too small an apportionment of 
unassigned expenses to the passenger service, and consequently decreased the cost 
to the mail service; and 

That the department did not charge to the mail service "dead space" reported by 
the companies as having been run in connection with space used for the mails. 

This is far from being an adequate summary of the objections 
which the railroads promptly pointed out in the make-un and con- 
clusions of Document No. 105. In volume 1 of the hearings, page 
65, is published a letter from Mr. J. Kruttschnitt, chairman of the 
Committee on Railway Mail Pay, addressed to the Speaker of the 
House of Representatives, under date of December 20, 1911, a few 
days after Document No. 105 was published. This letter calls 
attention to House Document No. 105, and then makes the following 
statements : 

This report has been so recently made public that there has not been sufficient 
time for its detailed examination and analysis, but such scrutiny as has already 



RAILWAY MAIL PAY. 1069 

been possible, discloses that the data submitted are incomplete, the figures distorted, 
the presentation unfair, and the conclusions illogical and unwarranted. Among other 
things, it is grossly unjust to the railroads in that: 

1. Data submitted by the railroads at the request of the Post Office Department, 
which are essential to a complete understanding of the subject, have been withheld 
and suppressed. 

2. The Postmaster General has arbitrarily transferred to the passenger service 
much of the so-called "dead" space in mail cars, although this space could not be 
utilized as passenger space, thus improperly increasing the apparent car-foot miles 
of passenger service and correspondingly decreasing the car-foot miles of mail service. 

3. The Postmaster General has apportioned expenses incurred for the joint purposes 
of the passenger and freight services between these services in accordance with a 
method never accepted by anyone with practical experience in railway accounting 
or operation. * * * 

4. The Postmaster General has wholly overlooked the fact that a large part of the 
cost incurred by the railways in carrying the mails consists of interest on the capital 
they employ. By ignoring all capital expenses, confining his attention to mere 
operating cost, and proposing to return to the railways only the amount of these oper- 
ating costs, plus 6 per cent, he urges a method which if applied generally to all their 
business would render every railroad at once bankrupt. 

It will thus be seen from the statement just quoted, as well as 
from the specifications given several times in the hearings, that it 
was not merely some of the conclusions that were criticized and 
assailed, but the integrity of the document itself. Document No. 
105 did not publish the items of revenue received by railroad com- 
panies from passenger or express business so that Congress could 
make a comparison between these and the revenue from mail trans- 
portation. There was no publication of the expenses at railroad 
stations or of terminal service, or of personal transportation of 
officers and employees of the Post Office Department, although this 
information was furnished to the Postmaster General. Neither was 
there a statement of the full extent of the car space as originally 
reported by the railroad companies to the Postmaster General as 
being devoted to passenger, mail, and express service. A certain 
portion of the mail spaeo reported was characterized by the Post 
Office Department as "dead" space, but another portion was cast 
back into the passenger column without being recorded and pub- 
lished. The modification by the Post Office Department of the 
figures originally submitted, which the department alludes to as 
" corrections'' and which the railroad representatives allude to as 
" distortions/' were made entirely upon the opinion of the postal 
officials without consultation with the railroad companies and with- 
out sufficient regard to the actual facts or the operating conditions. 

The only allusion that is made in the above quotation to this 
serious charge of incomplete presentation and rearrangement of the 
figures contrary to their original significance, is contained in the 
third paragraph of his summary, where he indicates that the railroad 
companies complained "that the department did not charge to the 
mail service 'dead space' repotted by the companies as having been 
run in connection with space used for the mails." 

This is not a correct statement at all. The railroad companies did 
not report any "dead space" whatsoever. If they had been called 
upon to report "dead space" in the mail service they should also 
have been called upon to report the so-called "dead space" in passen- 
ger service and express serviee, in which the proportion is greater. 
Statistics have been quoted to show that the average passenger car in 
operation carries only 16 or 17 passengers out of a total capacity for, 



1070 



RAILWAY MAIL PAY. 



perhaps, 50 passengers. Therefore, there would be about two-thirds 
of the passenger-car space that could be denominated "dead space" 
if such characterization were permissible in a statistical inquiry of 
this kind. So also in the express service, it is probable that one- 
half of the total car space assigned to the express service is not 
actually occupied by express matter and so could be described as 
"dead space." It is not unlikely that the Second Assistant Post- 
master General and his colleagues were not consciously aware of 
this important fact when Document No. 105 was in course of prepa- 
ration or when it was published. But the hearings of the past year 
before the joint congressional committee have furnished useful 
illumination upon this phase of the sub] ect, and it would be extremely 
gratifying if the department in its brief of January 16, 1914, had 
shown a willingness to admit an error which is now obvious to every- 
one. 

If it is possible that any doubts still remain regarding this question, 
they should be dispelled by the following diagram and accompanying 
text: 

Diagram of a typical passenger train 

AS REPORTED BY THE RAILROADS 



Passenger— 80.01% 


Mail 
9.32% 


Express 
10.67% 









AS STATED BY POST OFFICE DEPARTMENT IN DOCUMENT NO. 105 

.„ ...,,„ Dead Mail Express 

Passenger-80.01% 2-69% 6 M% 10 f 62% 



As intimated above it is the belief that the proportion of un- 
occupied space in the passenger service and express service is greater 
than is the unoccupied space in the mail service on passenger trains, 
but without making a full claim in this respect, let us observe the 
effect of killing the same proportion of space in the passenger and 
express services which the Post Office Department undertook to do 
in Document No. 105 for the mail service. 

Using for the passenger and express services the same percentage 
of "dead" space which the Post Office Department allotted to the 
mail service— 28.86 per cent (2.69-5-9.32 = 28.86)— will show the 
apportionment of "live" and "dead" space to each class of service. 



Passenger— 56.92 



Mail Express 
6.68$ 2.69c; 7.54$ 3.08^ 




Live Dead Live Dead 



If the space in the train is reapportioned on the basis which the 
"live" space in each class bears to the total "live" space, the result 
will be seen in the following diagram: 



Passenger— 80.01', 



Ma 

9.39% 



Express 

10.60% 



RAILWAY MAIL PAT. 1071 

It will be noted that after apportioning the whole train by the 
same method as that used by the Post Office Department in allotting 
"Dead" space to the mail service the per cent of space occupied by 
the mail is 9.39 per cent as against 6.68 per cent allowed by the Post 
Office Department and 9.32 per cent reported by the railroads. 

This subject may be dismissed by quoting the judgment of the 
associate statistician of the Interstate Commerce Commission in 
hearings, volume 3, page 514: 

The Chairman. I would like to ask Mr. Lorenz his view as to the fairness of elimi- 
nation of credit for dead space and the application of that, as a debit, to the passenger 
service given, the desideratum being ascertainment between the passenger service 
and the mail service or the relative compensation for both. 

Mr. Lorenz. I can not see how there can be two opinions. It seems to me just aa 
you can not operate a freight service without hauling empty freight cars, and just as 
you can not operate passenger service without hauling empty space, you can not 
operate mail service without hauling empty space, and in comparing the various 
departments, either on cost or revenue basis, you should include all of the space used 
and unused which is hauled in connection with that service, and I can not under- 
stand, therefore, why on this particular point the Post Office Department should 
have rejected the dead space from the mails and put it in the passenger service. It 
seems to me that there they made a clear error. 

The question of underpayment in 1910.— On pages 991-994, hear- 
ings, No. 7, certain statements are reviewed relating to the claims of 
the railroads that instead of being overpaid $9,000,000 in the year 
1910 they were underpaid at least $15,000,000, and that part of this 
result should come from an allowance of interest on the proportion 
of railroad property used in the mail service, which factor had been 
overlooked in Document No. 105. 

Following this, on pages 994-996, there is displayed a calculation 
which purports to ascertain the charge to the mail service by consider- 
ing the application of operating revenues to the payment of operating 
expenses and taxes, and all the other charges against income which 
must be paid out of operating revenues upon a commercial basis for 
the year 1910, including ihis comment: 

Even upon this basis it completely disproves the contentions of the railroads that 
they were underpaid. 

An examination of this statement (p. 994) headed "Operating 
revenues, and operating expenses and charges against income," 
shows a number of discrepancies and erroneous assumptions. The 
most important criticism affects the very basis of the calculation, 
namely, the use by the Pest Office Department of its own ratio for 
the division of railroad operating expenses and the Post Office De- 
partment's own ratio for the proportion of train space devoted to 
the mails, these being precisely the same as the department em- 
ployed in Document No. 105. This fact is disclosed on page 996, 
where it appears that the proportion of operating expenses and taxes 
assigned to passenger train service is 29.21 per cent, and the pro- 
portion of these accepted by the Post Office Department as charge- 
able to the mail service on the space basis is 6.68 per cent. 

The first ratio, 29.21 per cent, rests upon the untenable assump- 
tion that it is the right or privilege of the Post Office Department to 
divide the entire train operating expenses of all the railroads carry- 
ing the mails so as to determine what proportion should be assigned 
to the freight service and what proportion should be assigned 
to the passenger train service. This assumption carries w T ith it the 



1072 RAILWAY MAIL PAY. 

implication that the officers of the Post Office Department are more 
competent to perform this difficult and technical division than the 
railroad officers whose lives have been devoted to the study of the 
problem. 

The railroads in making the division of expenses for November, 
1909, as between freight service and passenger service, followed the 
customary method of dividing the unassigned expenses in propor- 
tion to the revenue train-miles in either service. This was the method 
approved by the Interstate Commerce Commission for several years. 
The Post Office Department method used in Document No. 105, 
and again used in this calculation which we are considering, is their 
own special method, devised for use in the preparation of Document 
No. 105. The Post Office Department method assigns 29.21 per 
cent of the total expenses to the passenger train service. The rail- 
road method was not worked out by the Post Office Department and 
was not published in Document No. 105 in association with its own 
results, so as to reveal to Congress the difference between the two 
systems. A recent estimate from data originally obtained by the 
committee on railway mail pay would indicate that the railroad 
percentage for passenger train expenses in November, 1909. for 
176.000 miles (approximately the same mileage as shown in Table 7, 
Document No. 105) would be about 34.42 per cent. 

The importance of the distinction will be appreciated when it is 
noted that if the difference between these two percentages 
(34.42 — 29.21 = 5.21) is applied to the total operating expenses 
and taxes for the fiscal year 1910, viz, $1,926,426,134, it would 
make a difference in money of over $100,000,000 in the amount 
chargeable to passenger train service. 

The space ratio used by the Post Office Department in Table 7. 
Document No. 105, to determine its share of the passenger train 
operating expenses and taxes was 6.68 per cent. This was lower 
than the mail space which they accepted on page 269, viz, 7.18 per 
cent. Further, it is shown in the same document that 8.81 per cent 
was reported, and there is reason to believe that the department's 
own figures if correctly compiled would show that 8.96 per cent, or 
practically 9 per cent, was reported. The railroad committee's 
computation for 176.000 miles shows that 9.32 per cent of the pas- 
senger train space was devoted to the mails. It was disclosed in the 
hearings that the Post Office Department had thrown out a great 
deal of car space necessarily used in the operation of the mail service 
and considered it as "dead space" without making a similar compu- 
tation for the same class of unoccupied space in the passenger or 
express services. It is believed that everybody outside of the Post 
Office Department, and many within the Post Office Department, 
consider that this was a clear error, and it is, therefore, difficult to 
understand the mental viewpoint of the Second Assistant Postmaster 
General when he again uses this ratio of 6.68 per cent with no expla- 
nation whatever. 

The difference between the two sets of ratios when applied to the 
income account on pages 994-996 is as follows: 

Railroad ratio 34.42 per centX9.32 per cent=3.21 per cent. 

Post Office Department ratio 29.21 per centX.6.68 per cent=1.95 per cent. 



KAIL WAY MAIL PAY. 1073 

Without assuming any responsibility, of course, for the first large 
amount quoted on page 996, viz, $599,635,450, we will show that by 
merely substituting the railroads' percentages for those used by the 
department the result will be an underpa^rment of , over $29,000,000 
instead of an overpayment of $1,616,532. 

Illustration No. 1, Using Eailroad Percentage for Passenger Train 
Expenses and Eailroad Percentage for Mail Car Space (Quotation from 
page 996, revised as explained): 

According to Table 7, Document No. 105, the operating 
expenses and taxes apportioned to the passenger 
service were 2£M£1 $4.1$ per cent of the total, and 
those apportioned to the mails were %t%& 9.32 per 
cent of the passenger service; £9r3i 34-4® per cent of 
$599,635,450 is $175,15 g T 54& $206,394,522, and %S& 
9.32 per cent of this is the amount above operating ex- 
penses and taxes which may be charged to the mails 
if they are to participate in all these charges and at $19, 235, 969 
the pro rata based on Document No. 105 $ 11, 7 0, 255 

Table 7 shows $%€8%W $4406,503 as the operating 
expenses and taxes charged to the mail service for 
November, 1909. This raised to the amount for a 52,878,036 
year is____ — — — — — — — — — — — — wij ryo^ odi 

However, Table 7 represents only 175,922 miles of railroad mail 
routes, the total of which is 220,730 miles. It is therefore necessary 
to ascertain approximately the operating expenses and taxes for the 
omitted mileage. 

Table 7 shows $137,355,150 as the total operating expenses and 
taxes for November, 1909. This raised to the amount for a year is 
$1,648,261,800. But Table 7 does not represent the full mileage of 
mail routes, and the full mileage of mail routes is less than the total 
railroad mileage represented in the total railroad operating expenses, 
as stated particularly above. 

Subtracting the $1,648,261,800 from the total operating expenses 
and taxes ^for all railroads of $1,926,426,134 leaves $278,164,334 as 
the operating expenses and taxes for all other miles of lines of railroad 
63,524 miles. 

By the tabulation of railroads on which there is no mail service, as 
above mentioned, their mileage was found to be 2,011 and their 
operating expenses $11,368,027. These subtracted, respectively, 
from 63,524 miles and $278,164,334, leaves 61,513 miles and 
$266,796,307. 

This last-named amount, however, includes the 44,808 miles of mail 
routes not represented in Table 7, and in addition the difference be- 
tween 44,808 and 61,513, on which no mails were carried. There- 
fore, it is necessary to ascertain the proportion represented by mail 
lines. Dividing $266,796,307 by 61,513 and multiplying the quo- 
tient by 44,808 gives $194,332,296 as approximately representing 
the lines of railroad on which mails were carried. 



1074 KAIL WAY MAIL PAY. 

29t3± 3442 per cent of $194,332,296 gives the passenger 
proportion, and %■&& 9.32 per cent of the passenger 
gives, as the share to the mails $6, 233. 071 

&R- 7 01 Rfifi 

, W&^ Ti»ij OUT7 

This makes a total chargeable to the mail service on the 

basis followed of 78, 347, 076 

The total revenue received by the railroads for the fis- 
cal year 1910, as shown by the Report of the Second 
Assistant Postmaster General (p. 15, " Transporta- 
tion and railway post-office cars combined"), was__ _ 49, 302, 217 

Being an-ex-e^ss-eve? a deficit below the appor- 
tioned cost of 29,0M,859 

We thus find that the use of the railroad factors show a deficit of 
$29,044,859 instead of the excess of $1,616,532 claimed by the Post 
Office Department. 

It will be interesting to observe what the effect would be of rework- 
ing this same calculation by using mixed factors, those of the railroads 
and those of the Post Office Department in conjunction with each 
other. 

Illustration No. 2. — Ii the statement on page 996 were revised by 
using the Post Office Department percentage for passenger- train 
cost, 29.21, with the railroad percentage for mail-car space, 9.32, 
the last line would be restated as follows: 

Being an-exeess-ever- a deficit below the apportioned $17, 229, 305 
cost of H-gig-gga 

Here again we find that the result is a disclosure of a deficit of 
$17,229,305 instead of an excess of $1,616,532 estimated by the 
Post Office Department. 

A further illustration may now be brought forward to reveal the 
result of reworking the calculation on the basis of using the railroad 
percentage for passenger-train expenses with the Post Office De- 
partment percentage for mail-car space. 

Illustration No. 3. — If the statement on page 996 were revised by 
using the railroad percentage for passenger-train expenses, 34.42, 
with the Post Office Department percentage for mail-car space, 6.68, 
the last line would be restated as follows: 

Being an— exeess-ever a deficit below the apportioned $6, 852, 841 
costof $1, 61 6, 5 3 2 

To recapitulate the several illustrations in comparison with the 
original statement of the Post Office Department: 

Original statement by Post Office Department, page 996, using Post 
Office Department percentage for dividing train expenses and Post 
Office Department percentage for mail-car space: 

Excess $1,616,532 

Illustration No. 1.— Using railroad percentages for both factors: 

Deficit 29, 044, 859 

Illustration No. 2. — Experimental use of Post Office Department per- 
centage for train expenses in conjunction with, railroad percentage for 
mail-car space : 

Deficit 17 y 229, 305 



RAILWAY MAIL PAY. 1075 

Illustration No. 3. — Using railroad percentage for dividing train expenses 
and experimental use of Post Office Department percentage for mail- 
car space : 
Deficit §6,852,841 

These two important factors (1) the correct ratio in the division of 
railroad opeiating expenses; and (2) the correct percentage of car 
space to be charged against the postal service, are of supreme con- 
sequence in arriving as a correct conclus ; on as to underpay or overpay 
from the statistics obtained for November, 1909, for the inquiry, the 
results of which were imperfectly published in Document No. 105. 
It is believed that the demonstration offered by the railroads in regard 
to the proportion of car space chargeable to the postal service is abso- 
lutely unassailable. 

It is further believed that no one would seriously contend that the 
officers of the Post Office Department, even though fully competent 
to understand and apply the statistics of postal business to postal 
operations, would from that fact be equally competent to render 
similar service in the field of railroad statistics and railroad operations, 
with which they must in the nature of things be entirely unacquainted, 
Yet, if the officials of the Post Office Department had shown marked 
and unusual ability in dealing with and applying postal statistics, they 
would have at least demonstrated qualifications worthy of respect 
although even then their unfamiliarity with the railroad fiela of 
investigation might prove a fatal handicap. 

Our attention has been called to an earnest effort made by the Post 
Office Department in the year 1911 to explain for the benefit of the 
Hughes commission the proportion of postal expenditures chargeable 
against second-class mail matter. This commission, it will be re- 
membered, was appointed by President Taft in response t j an act of 
Congress, and consisted of the Hon. Charles E. Hughes, Associate 
Judge of the Supreme Court of the United States, Mr. A. Lawrence 
Lowell, president of Harvard University, and Mr. H. A. Wheeler, 
president of the Association of Commerce of the City of Chicago. 

The Hughes commission in its report of February 2, 1312, under 
the head of ''General Post Office Service," discusses in detail the 
futile efforts of the Post Office Department to make a satisfactory 
apportionment of the expenses of the " General Post Office Service." 
It appears that the original statements submitted by the depart- 
ment to the commission were revised again and again to meet the 
repeated criticisms director! against them, with the final result that 
the distinguished commission entirely rejected the great item of 
" General Post Office Service" expenses amounting to over 
$80,000,000 a year, or 40 per cent of the entire postal expenditures 
at that time, because it could not satisfy itself that the estimates 
were trustworthy. This incident is not referred to for the purpose 
of discrediting the enterprise or industry of the postal officials. It 
is quite likely that, remembering the difficulties of their task, they 
performed a relatively creditable piece of work, but it may be fairly 
contended that when they found that their efforts in their own 
familiar field were not sufficiently convincing to satisfy the Hughes 
commission, they would have been justified in entertaining some 
doubt in regard to the propriety of urging that then estimate of the 
proper division of railroad expenses should supersede the estimates 
of experienced railroad officials and railroad accountants. 



1076 EAILWAY MAIL PAY. 

It may not be deemed offensive, since it is a matter of public 
record, to point out that this statistical uncertainty in the Post Ofhce 
Department extends to postal subjects of more fundamental impor- 
tance than the assignment of a proportion of expenses to second- 
class mail matter. Only recently the announcement of one admin- 
istration regarding a surplus existing at the end of the fiscal year was 
revised by the succeeding administration so that a deficit was made 
to appear for the same year. 

We therefors see no good reason for modifying or reducing our 
claim that the railroads carrying the mails in 1909 were underpaid 
at least $15,000,000, and we note with sincere approval a substantial 
concurrence in this opinion as expressed after careful investigation 
by Messrs. Lorenz and Turner in their very able review of the hearings 
published in volume No. 6. 

Shall the gauge of railroad mail fay he a strictly commercial rate? — 
On pages 998-1001 there is allusion to certain advantages which it is 
claimed that the railroads enjoy in carrying the United States mails 
from the intrinsic character of the traffic, from the incidental benefits 
of participating in a national mail service, and from the principle of 
public utility. 

As regards the intrinsic character of the mail traffic, it seems hardly 
necessary to discuss the " certain t} r , constancy, and homogeneity of 
traffic/' The testimony submitted to the joint congressional com- 
mittee abounds in disclosures of the varying quantity of mail pre- 
sented for shipment, the difference in the volume outbound as com- 
pared with inbound, the necessity for providing at all times for 
maximum conditions, and a failure subjecting the railway carrier 
to fines. With particular reference to "homogeneity," a great deal 
might be said to the contrary, even as regards the conditions as 
existing previous to January 1, 1913, but since that date the parcel 
post has been established with the widest possible diversity in the 
character of the traffic, including the bulky, the perishable, and the 
most fragile character of manufactures and products. 

The certainty and regularity of payment is not distinguishable in 
comparison with the ordinary commercial transactions of the rail- 
roads. In fact, the payments are so largely within the discretion 
of the Postmaster General as to amounts, through the "not exceed- 
ing" clause in the law, are so subject to fines and deductions, and 
subject to so much deliberation and verification before settlement 
as to be in marked contrast with payments received for passenger 
and freight business which are practically simultaneous with the 
transaction. 

As regards the protection of mail trains, the principle of public 
utility and suggestions incident thereto, we quote from the summing 
up of the committee on railway mail pay to the joint congressional 
committee, under date of June 26, 1913, volume No. 5, page 730: 

Some general ideas advanced from time to time during the hearings call for a few 
words in conclusion. 

One of these ideas is that the mail service, being a governmental function, ought to 
be performed for less than what would be a reasonable compensation for a similar 
service performed for persons other than the Government. The first observation on 
this idea is that no such principle is applied to anybody else. Any individual who 
works for the Government is paid for his services and in a great many instances he is 
paid more than he would be paid if he were performing similar service for a private 
employer. Again, it is a fundamental principle of the Constitutions, both Federal 
and State, that property shall not be taken for public use without just compensation. 



BAIL WAY MAIL PAY. 1077 

If a tract of land is condemned in order to obtain a site for a post office, the owner is 
entitled to the fair value of the land, notwithstanding the fact that it is to be used to 
promote the Postal Service. It is also a well-founded constitutional principle that to 
take the use of property without just compensation is the same as taking the property 
itself without just compensation. The Government could not appropriate the entire 
use of a railway to governmental service without making a fair compensation therefor; 
and likewise there is no basis for its appropriating a part of the use of a railway to the 
governmental service without making a fair compensation therefor. Again, in addi- 
tion to these controlling constitutional principles, there can be no justifiable political 
or economic basis for the idea that the people who use the mails shall do so at the 
expense of the passengers and shippers who use the railways; and in the last analysis 
any inadequacy in the compensation made to the railways by the Government for the 
carriage of the mails must be made up by the railways in the charges imposed upon 
shippers of freight and upon passengers. This observation becomes even more obvious 
in connection with the recently established parcel post, which is principally used by 
merchants in the conduct of their ordinary business. Why should the man who 
ships by freight pay for the transportation service of the other man who ships by parcel 
post? There may be plausible arguments for a plan of taxing the entire people "through 
the ordinary forms of governmental taxation in order to provide for the transportation 
by the Government of letters at less than cost; but there can be no pretext for com- 
pelling individuals who use transportation in other forms to pay for transportation for 
letters. 

Another of these ideas is that the railway transportation of mail is a mere incident 
or by-product, and on that ground not entitled to full compensation. Certainly the 
passenger service as a whole is not a mere incident or a by-product and as a whole 
ought to yield, as far as possible, an adequate compensation for the property devoted 
to that use and for the services performed in that use. Yet there is no part of the 
passenger service which is of greater importance to the general public than the mail 
service. There is no part of the passenger service which imposes greater demands 
upon the railways for speed and certainty of operation of their passenger trains than is 
imposed by the mail service. Certainly a service which is of such paramount impor- 
tance to the public, and of such an exacting and costly nature from the standpoint of 
the railway, can not in any proper sense be regarded as a mere incident or by-product. 

Another way in which the idea here discussed is sometimes suggested is that if 
we assume that the railways did not carry the mail, the railway cost would be but 
little less than it is at present. Such an assumption is utterly inconsistent with the 
existence of the Post Office Department under present conditions. The railroads 
could exist without the Postal Service, but the Postal Service could not exist, in any 
modern sense of the term, without the railways. An assumption which is thus incon- 
sistent with the very nature of the Post Office Department ought not to be indulged for 
the purpose of depriving the railways of a just compensation for carrying the mails. 

The further idea has been advanced that on account of carrying the mails the rail- 
ways enjoy the power of eminent domain and the protection of the Government in 
case of strikes, and that therefore they should carry the mail for less than what would 
be a full compensation therefor. The same reasons would apply equally to all other 
carrying functions of the railways. They enjoy the power of eminent domain because 
they are common carriers of passengers and freight and they enjoy the protection of the 
Federal Government because they are instrumentalities of commerce among the 
States. If these are reasons for their being paid less than full compensation for their 
services, the reduction of compensation can not be restricted to the mails. If the 
power of eminent domain and the governmental protection operated as an excuse for 
giving the railways less than just compensation, then there would be no inducement 
whatever for anybody to invest his capital in the construction and operation of railways. 

The railways owe to the public and to every member of the public the duty to 
transport all passengers and all commodities seeking their services efficiently and 
safely and at just and reasonable rates. This is the highest of obligations, and the 
sum of their obligations to the individual members of the public is their obligation to 
the Government. They owe no obligation to the State which is separate or apart 
from, or independent of, or inconsistent with their obligations to individual applicants 
for their services. They can have no obligation to the people's Government which 
could require them, except when necessary, to the public defense, to discriminate in 
rates in favor of traffic offered by the Government when, in order to offset such un- 
necessary discrimination, they would be compelled to collect higher charges from 
some members of the public and upon other traffic. Words better adapted to the 
assertion of this principle could not be chosen than those used to express it by the 
Joint Commission to Investigate the Postal Service which reported in 1901. We 
quote: • 



1078 RAILWAY MAIL PAY. 

" It seems to the commission that not only justice and good conscience, but also 
the efficiency of the Postal Service and the best interests of the country demand that 
the railway mail pay shall be so clearly fair and reasonable than while on the one 
hand the Government shall receive a full quid pro quo for its expenditures and the 
Public Treasury be not subjected to an improper drain upon its funds, yet on the 
other hand the Railway Mail Service shall bear its due proportion of the expenses 
incurred by the railroads in the maintenance of their organization and business, as 
well as in the operation of their mail trains." (S. Doc. No. 89, 59th Cong., 2d sess., 
p. 10.) 

Cost of service as a guide in determining fairness of rate under com- 
mercial principle. — To the remarks which are made under this head 
(p. 1005), a very brief response will suffice. It has not been ques- 
tioned that under suitable circumstances an approximate ascertain- 
ment of cost may be arrived at to serve as a useful guide to measure 
relative efficiency, to regulate expenditures, and to some degree estab- 
lish approximately the rate below which unmistakable loss would 
ensue. 

The limitations and imperfections of the question in the present 
stage of the science of railroad statistics are suggested in the following 
quotations. 

The letter from the committee on railway mail pay addressed to the 
Hon. Jonathan Bourne, jr., chairman of the joint congressional com- 
mittee, under date of October 3, 1912 (preliminary report, p. 8), 
contains the following: 

The ascertainment of the cost to a railroad of conducting the mail service is neces- 
sarily very largely a matter of judgment and opinion, because a large proportion of the 
total operating expenses are expenses common to the freight and passenger traffic and 
can # only be approximately apportioned, and there are various formulas existing for 
such* apportionment. It would not be right or proper to intrust to the Post Office 
Department the discretion of selecting the formulas by which to ascertain these costs, 
because the Post Office Department has an obvious interest at stake, its object always 
being to reduce the railroad pay to a minimum. 

The estimated cost of a specific service is not a proper basis for fixing rates for trans- 
portation of any commodity. The railroads are entitled to receive a full and fair return 
for the value of the service performed, and the ascertainment of cost of such service is 
principally of value as a protection against the establishment of confiscatory rates. 

The following quotations from Dr. Lorcnz's statement in hearings 
No. 6, page 860, are also pertinent: 

A strong objection is that the cost is to be ascertained separately for each road and 
made the sole criterion of the rate on that road. 

Cost is an important guide to what is a reasonable rate, as will be discussed more 
fully later, but as a matter of principle it would be wrong to pay every road according 
to cost, because this would be rewarding inefficiency or extravagance and penalizing 
efficiency. 

Page 878 : 

While cost may not be capable of that exact ascertainment which enables us to 
make it the sole determinant factor on which to base the rate of pay for each road, 
the usefulness of a cost estimate seems clear if used merely as a general guide to help 
us to decide whether the fifty-odd millions which the railroads receive from the Post 
Office Department constitute an excessive payment or not. 

Page 892 : 

Let it be understood that in view of the undeveloped state of railroad cost account- 
ing, we can hardly consider the cost data submitted as giving a persuasive and definite 
answer to what is a fair rate. But they tend to support the conclusion to be derived 
from a study of the average car-mile earnings in passenger trains. 

The charge of space to the mail service. — Under this caption, on 
pages 1013-1017, there is a discussion of J:he changes made by the 



RAILWAY MAIL PAY. 1079 

department in preparing the information contained in Document 
No. 105 as to the mail space reported by the railroad companies as 
having been actually operated, and says on page 1014: 

All arguments, therefore, based upon any assumed concession of the Post Office 
Department that the unchecked space as reported by the railroad companies for 
mails were correct must fall. 

Throughout the discussion frequent allusions are made to mail- 
car space operated by the railroad company "for its own conveni- 
ence' ' whenever the rules for the acceptance of mail-car space fail to 
take cognizance of the operating conditions, In other words, the 
space which the department considered to be beyond its immediate 
necessities was necessarily operated in order to supply the space 
which the department admitted it needed. For example, if a 60- 
foot car is needed westbound and the department believes that it 
needs only 30 feet eastbound, it is manifest that the railroad com- 
pany must return the 60 feet of space eastbound in order to supply 
it to the department for the next trip westbound. This phase of the 
matter has been very carefully covered above in the discussion of 
so-called deael space, setting forth the illogical treatment of the 
subject by the department in Document No. 105. 

On pages 1015-1016 there is a quotation of the Post Office Depart- 
ment rules which were issued for the purpose of tabulating the 
information as to car space for Document No. 105. 

It should be pointed out that in this list of rules there is no recog- 
nition whatever of mail-storage ears, although these are very im- 
portant part of the postal equipment and constituted over 10 per 
cent of the car-foot miles tabulated in Document No, 105. 

Under the head of " Closed-pouch space 7 ' (p. 1015), the rule 
described will be found to allow 50 inches of linear space for 1,000 
pounds of mail. Now a 60-foot car would contain 720 inches, and 
according to the rule just cputed would carry 14,400 pounds of mail. 
This is a high average load for a storage car to carry in actual practice 
and this means a car in which the entire space is devoted to tne mails 
and the mails are loaded to the full capacity of the car. On the con- 
trary, the closed-pouch service is the retail phase of mail transporta- 
tion, consisting usually of a few pouches or sacks in . the baggage 
apartment and is entitled to be measured on the retail principle 
rather than on the wholesale principle. The department's rule bore 
very heavily and unjustly on the short-line railroads, and was probably 
a strong influence in enabling the department to reach the conclusion 
that some of these poorly paid short railroads were really earning 
over 2,000 per cent profit on their present mail revenue. 

Yet, in spite of all this, on page 1016, it is said : 

That for closed-pouch service liberal allowance of space was made. 

Apartment-car space. — On page 1016 this appears: 

That the full amount of space authorized in apartment cars was allowed. 

The fact is that apartment-car space is not " authorized" by the 
department in the sense that that term is really employed. Inas- 
much as the companies are not paid for the space occupied, it would 
be natural to suppose that they would furnish as little of it to the 
department as they could. On the contrary, the demands of the 
department for the same reason would tend to exceed its necessities. 



1080 RAILWAY MAIL PAY. 

The fact that- the department's standard plans for mail apartments 
call for apartments of 6 feet, 8 feet, 10 feet, 12 feet, 15 feet, 20 feet, 25 
feet, and 30 feet would require a railroad company to keep a large 
assortment of different-size mail apartments if it undertook to meet 
precisely the current needs of the Postal Service, and also the changing 
sizes required by the increased volume of mail from year to year. It 
is a simple and inexpensive proceeding for the department to indicate 
that it needs a mail apartment 5 feet larger or 5 feet smaller than the 
railroad company has in stock, especially when it is not required by 
law to pay for the space or to pay for the alteration; but to the rail- 
road company it means reconstructing the interior of the car, changing 
the dimensions of the postal furniture, and, probably, the framing of 
the car to accommodate the changed location of the doors and win- 
dows. This entails a considerable outlay and has created the policy 
on many roads of providing mail apartments of such length and with 
such interior facilities as will fully care for the postal business on the 
maximum day and the heaviest period of the year with perhaps some 
consideration of growth in the near future. The department, in its 
current practice, seems to be oblivious of these facts, and instances can 
be quoted where the Railway Mail Service demands a 12-foot apart- 
ment in one direction and a 20-foot apartment in the other on one set 
of trains and 6 feet in one direction and 1 feet in the other on another 
set of trains. These are only illustrations of numerous variations of 
this sort. 

Inasmuch as there has never been specific pay for mail apartment- 
car space and, therefore, since the interest of every railroad company 
would be to provide barely what the Postal Service absolutely needed, 
only modified by the unavoidable and controlling operating condi- 
tions, it does not seem necessary to argue further that a full allow- 
ance for all apartment-car space reported by the railroads should 
have been made in Document No. 105. 

Full railway post-office cars. — In this case the Post Office Depart- 
ment came nearest to recognizing the actual conditions, but even 
here, by ignoring the necessity for uniform standards, disallowances 
of car space were made. On pages 1016-1017 it is said: 

If the company chose for its own convenience to run cars of a greater length than 
those authorized, certainly the department should not be charged with the excess 
space. 

A full response to this fallacious doctrine has already been made. 
In current practice the department's rules for payment for full 
R. P. O. cars are at variance with each other. In Document No. 105 
the department undertook in the case of full R. P. O. cars to credit 
the company with the full space for the round-trip movement, accord- 
ing to the authorization in the heavy direction, but in the actual 
operation of the service this is not done. By referring to section 
1334, Postal Laws and Regulations, paragraph C, the department's 
rule prescribes : 

Where the needs of the Postal Service require 40 feet of car space for railway post- 
office purposes in one direction, but less than 40 feet in the opposite direction, a line 
of 40-foot cars may be authorized. 

This rule clearly recognizes the justice of paying for the round trip 
in accordance with the authorization in the heaviest direction. On 
the contrary, many cases can be cited where a 60-foot authorization 



RAILWAY MAIL PAY. 1081 

in the heavy direction is matched by a 40-foot authorization in the 
reverse direction. 

Another rule of the department, section 1334, paragraph F, shows 
an entire lack of perception of the equities involved. This prescribes : 

Where a line of 60-foot cars is authorized and paid for, and the needs of the service 
require additional space but do not warrant the authorization of an additional line of 
40-foct cars, the railroad company may be required to furnish apartment space. 

This would mean that the railroad company must operate an addi- 
tional car in order to supply the mail apartment car as a tender to the 
full E. P. O. car without any additional pay notwithstanding the fact 
that the company itself has no use for the sapce in the extra car not 
occupied by the mail apartment and would probably be obliged to 
return this car deadhead in the opposite direction. It is understood 
that heavy fines have been imposed upon companies which showed a 
disinclination to submit to this condition. 

Mail storage cars. — These cars, constituting an important part of 
the mail-car space reported in Document No. 105, are not mentioned 
specifically as having been treated in accordance with a precise rule 
of procedure. It is almost invariably the case that these cars are 
returned empty in the light direction. A large amount of such space 
absolutely necessary under operating conditions was dissallowed by 
the Post Office Department, and the impropriety of the department's 
action has already been fully described in the discussion of so-called 
"dead space/' but is again alluded to here because of there being no 
mention of these cars either in the rules quoted by the department 
on pages 1015-1016 or in the discussion which is devoted to the 
subject. However, the department concludes on page 1017: 

Notwithstanding this liberality of the department in crediting space, the results 
obtained by the Post Office Department and those obtained by the railroad mail pay 
committee varied considerably, as hereinbefore mentioned. 

Annual weighings, side and terminal service, and apartment cars — 
Annual weighings. — We quote from page 1018, fourth paragraph: 

* * * If the rate fixed on a quadrennial weighing is not adequate to compensate 
for service for the four-year term, there would be merit in the railroads' contention. 
However, it has been shown hereinbefore that on the basis of Document No. 105 and 
an additional liberal charge against the mail service for participation in payments o 
dividends, interest on funded debt, etc., the aggregate annual payment to the rail 
roads in 1910 exceeded the apportioned cost. 

As the railroads have plainly demonstrated that they were heavily 
underpaid for carrying the mails in 1910, it is evident that a more 
frequent weighing in connection with a constantly growing traffic is 
a decidedly appropriate method in conjunction with other reforms of 
remedying the inadequacy. 

Dr. Lorenz, in volume No. 6, page 868, estimates, on figures fur- 
nished by the Post Office Department, that an annual weighing 
would result in additional pay to the railroad companies of $3,255,000 
for the additional work performed, although in this he takes no 
account of the fact that the ton-mile . rate would decline with the 
increased weight. The law of 1 873 required that the mails be weighed 
not less frequently than every four years, and left the discretion of 
more frequent weighings to the Postmaster General. For many 
years following the passage of that law it was the practice of the 
department to take the weights every four years on the side lines 
where the mail tons were light, and every }'ear or two on the heavy 



1082 KAIL WAY MAIL PAY. 

lines where increased growth was more noticeable and burdensome. 
In recent years, however, the department has changed the practice 
and as a rule has taken the weights only every fourth year. 

It is a well known fact that the tonnage increases constantly and 
it is merely a business-like proposal to ask that the adjustment of the 
account be made more frequently than every four years, especially 
since the introduction of the parcel post. 

As a case in point : the present Postmaster General has announced 
officially that he expects the parcel post traffic next year to amount 
to 600,000,000 parcels, of which a large proportion will undoubtedly 
be transported by the railroads. If the conditions were reversed and 
these parcels were withdrawn from the mails, and the Postmaster 
General failed to order a weighing to protect the interest of the 
Government, he would certainly be subject to severe criticism. 

Side and terminal service. — On pages 1018-1019, it is argued that 
the delivery of the mails to and from the post offices by the railroad 
companies is not a subject for relief, because Document No. 105 has 
shown that the railroads are already overpaid. The railroad testi- 
mony, to the contrary, disposes of this idea. 

In addition to this it has been uniformly held by all commissious, 
congressional and otherwise, that have studied the subject of mail 
transportation that the railroads should be relieved of this service, 
and many of the Postmasters General and other postal officers have 
expressed opinions to the same effect. There is a small concession to 
this opinion on page 1035: 

* * * Some changes should be made regarding side and terminal service, so as to 
relieve short lines with small pay, supplying a number of post offices along their route, 
from expense disproportionate to the revenue received. 

Apartment cars. — On pages 1019-1020 the denial of allowance of pay 
for mail apartment cars rests on the repeated contention that the 
railroads were overpaid in 1909. The testimony of the railroads 
entirely refuting the conclusions of Document No. 105, have, of 
course, withdrawn all support to this claim. 

In the letter of former Postmaster General Hitchcock of August 12, 
1911, transmitting the report that was subsequently printed as Docu- 
ment No. 105, the following is contained: 

No additional compensation is allowed for space for distribution purposes occupying 
less than 40 feet of the car length. This distinction is a purely arbitrary one and 
without any logical reason for its existence. It affords a striking example of the 
unscientific and unbusinesslike methods now followed in adjusting railway mail pay. 

Notwithstanding this opinion, the statement on page 1026 throws 
doubt upon it by suggesting that — 

As a matter of fact, there is a reason in the conditions of the service which no doubt 
led Congress in 1873, when that law was framed, to omit a specific rate for apartment 
cars, and I believe this fact to be that apartment-car space is invariably furnished the 
department in a baggage or other car which is run in the train for the railroad's own 
purposes. 

A further study of the subject is convincing that Mr. Hitchcock's 
remarks are true as relating to the existing conditions of the year 
1914 as distinguished from the conditions in 1873, 41 years ago. 
The rates prescribed in the law of 1873 were much higher than the 
now existing rates, and can be said to have made fair provision for 
mail apartment car space on the then existing frequency of six round 
rips a week. The great increase in the frequency of mail apartment 



KAIL WAY MAIL PAY. 1083 

car service since that time would make the original rates inadequate 
to-day. 

While it may be true in some cases that the mail apartment occu- 
pies a portion of a car which the railroad would nevertheless run for 
its other tr affic, there are many cases where the car would not be run 
at all except to provide the mail apartment for the postal service 
which necessarily involves the operation of an additional car in the 
train. 

In regard to the last three items, i. e., "Annual weighings/' "Side 
and terminal service/' and "Apartment cars/' the main contention 
of the department is that no specific remedial measures are needed 
because the gross amount of railroad mail pay according to the con- 
clusions reached in Document No. 105 indicated that the railroads 
were overpaid. It is hardly necessary to repeat that that conclusion 
is dependent upon the use of the Post Office Department percentages 
for division of train expenses and for proportion of mail car space 
which have been thoroughly discussed and disposed of. 

The law of March 2, 1907, and Postmaster General's order No. 412, 
of June 7, 1907. — It is perhaps unnecessary to make any lengthy 
response to the remarks under this heading which appear on pages 
1020-1025, except to express the belief so far as the act of March 2, 
1907, is concerned that the action of Congress at that time in reduc- 
ing the rates for mail transportation and for R. P. O. cars was not 
justified by the then existing conditions, and if an investigation had 
been held it is not likely that Congress would have taken such action. 

The "Divisor" order of the Postmaster General, under date of 
June 7, 1907, has already been submitted to judicial review, with the 
result that the Court of Claims has decided in favor of the railroads. 
The discussion by the Second Assistant Postmaster General is largely 
on the mathematical phases of the question, and there is one phrase 
in italics on page 1023 which is almost as imperfect as any of the 
mathematical practices described in Document No. 105. This is 
where, in describing the process of dividing the total weight for the 
weighing period which is customarily for 105 days by the total 
number of days in the weighing period (105), it is asserted that this 
would produce an " exact mathematical average for every day in the 
year of 365 days." 

It hardly seems necessary to point out that the only way to obtain 
such a result would be to weigh the mails for 365 days. 

Conclusion. — The remainder of the department's statement deals 
in a descriptive way with the various plans of adjusting railway-mail 
pay, and states its objec tions to them, and will not be taken up for 
analytical consideration and criticism. The committee on railway- 
mail pay having studied this question for several years past in con- 
nection with the inquiry of November, 1909, and having had con- 
siderable experience in dealing with transportation problems, have 
been able, in a professional spirit, to appreciate the. natural genius 
exhibited bv those who constructed the scale of rates contained in 
the law of 1873. 

It would have been a source of satisfaction to have read a more 
appreciative and a more extensive description of the basic merits of 
the law of 1873 than is contained in volume 7, on pages 1025 and 
1026. The law was admirably adapted to the conditions as they 
existed in 1873, with the exception that the full R. P. O. cars which 

49396—14 76 



1084 RAILWAY MAIL PAY. 

had then been recently introduced were not accorded an adequate 
rate of pay. However, this affected relatively only a small per- 
centage of the total amount of pay at that time. 

Since 1873 the conditions of service have greatly changed; the 
volume of tonnage transported has increased enormously, and this 
has probably been the cause of the successive reductions in the scale 
of pay by congressional and departmental action. On the other 
hand, the increased frequency in mail-train service and the great 
development in the distribution of mails en route, with correspond- 
ing increase in facilities provided! by the railroads, have not been 
fairly considered in conjunction with the increased tonnage. 

Notwithstanding this, the intrinsic merit of the weight scale as set 
forth in the law of 1873 is by all means the best and most secure 
foundation for the adjustment of rates both for the Government and 
for the railroads. 

The statement made on page 1034, reading — 

The railroads' committee offered no constructive plan aside from proposals for cer- 
tain changes in existing legislation — 

might be thought to convey the inference that the recommendations 
of the committee on railway mail pay were lacking in affirmative 
proposals through insufficient study of the subject or through dis- 
regard of the conclusions arrived at by others who have investigated 
the subject, some of whom have proposed that space rather than 
weight should be the measure of the pay to be allowed. 

Any such inference would do serious injustice to the earnest con- 
sideration that has been given to this subject by those on the railroad 
side who have had the privilege of studying it. The committee on 
railway mail pay selected and recommended those features of amend- 
ment which are most important to be dealt with hi order to correct 
the inequalities which have arisen either through successive horizontal 
reductions in pay or through changes in the conditions of the service. 

These recommendations, as submitted on October 3, 1912, in a 
letter to the chairman, were as follows: 

1. For the repeal of the act of March 2, 1907. 

2. For annual weighings and a definite and just method for ascertaining daily 
average weights. 

3. For pay for apartment cars on some basis that will compensate for the service. 

4. For a fair allowance to the railroads for side and terminal messenger service which 
they perform for the Post Office Department according to the value of this service to 
the Post Office Department. 

5. That all rates of pay should be definite and not subject to the discretion of the 
officers of the Post Office Department. 

The railroad committee throughout its existence has not failed to 
give the most thorough consideration to the proposal that space rather 
than weight be made the measure of the service rendered, but is 
absolutely convinced by its consideration of the subject that any 
such plan would be dangerous to the Government and unsatisfactory 
to the railroads', principally because of the large amount of discretion 
the adjustment would leave to the officers of the department. This 
conclusion is not inconsistent with the deepest faith in the honesty 
of the departmental officers, but recognizes the disadvantages of 
their position under our political form of Government and the oppor- 
tunities which would present themselves for serious irregularities. 

The growth of the Republic has brought about a vast concentra- 
tion of public business at the National Capital, and while it is the 



KAILWAY MAIL PAY. 



1085 



expectation that when discretion is allowed under a law it shall be 
exercised by the chief ofhcer of the department, it is a physical im- 
possibility for him to personally examine the cases hi order to exer- 
cise this discretion, and it is likewise physically impossible for this 
important duty to be performed by the chief officers under his con- 
trol. The result is that an important question such as this would 
rest upon the opinions of hundreds of subordinate officials and the 
possibilities are uncomfortable to contemplate. 

There would be frequent occasions for misunderstand ing and irri- 
tation. These would lead inevitably toward a lack of cooperation 
which should always exist between two national indus trial estab- 
lishments, such as the railroads on the one hand and the Postal Service 
on the other. 

Committee ox Railway Mail Pay, 

Representing 264 railroads, carrying mails over 218,000 miles of line. 
Ralph Peters, Chairman. 

SUPPLEMENT. 

Present conditions (1913) compared with 1909. — When using esti- 
mates of expenses per car mile chargeable to mall based on the special 
statistics of November, 1909, the fact should be considered that 
since that time railway expenses per unit ot service have greatly 
increased. A statement is attached showing for about 90 per cent of 
the railroads of the United States, the operating revenues and expenses 
per mile of road lor the calendar years 1909 (which, of course, includes 
November, 1909) to 1913, inclusive. This shows that since 1909. 
operating expenses have increased 29.6 per cent, and taxes 34.6 
per cent, while net revenue, after deducting operating expenses and 
taxes, decreased 6.9 per cent, despite an increase of 17.6 per cent in 
operating revenue. The annual rate of railway mail pay per mile of 
mail routes, according to the 1913 annual report of the Second 
Assistant Postmaster General, was on June 30, 1909, $229, and only 
$225 on June 30, 1913, or a decrease of 1.8 per cent, notwithstanding 
the greater service because of the inauguration of the parcel post, 
and the great increase in railway expenses. 

Operating results by calendar years on railways of United States. 





1909 


1910 


1911 


1912 


1913 


Per cent of 
increase or 
decrease, 
1913 over 
1909. 


Mileage 


210,047 


213,347 


224, 64S 


220,058 


223,078 


+ 6.2 






Operating re \ enue 


$11,673 

57,640 


$12, 524 

$8, 534 


§11,954 

SS176 


§13,287 
$9, 139 


$13, 723 

89,771 


+17.6 


Operating expenses 


+29.6 






Net 


$4,034 


$3,991 


S3, 778 


S4,14S 


33,952 


- 2.0 






Ratio 


65.5 

$433 

$3,615 

$229 


-68.1 

$483 

§3,512 

$223 


66 

S487 
$3,297 

$227 


68.7 

8545 

$3,009 

$224 


71.2 

$583 

$3,364 

$225 


+ 8.7 


Taxes 


+34.6 




— 6.9 


Annual rate of railway mail pay per 
mile of mail routes on June 30./ 









Authority.— Published reports of Bureau of Railway Economics, Washington, D. C, and 1913 Annual 
Report of Second Assistant Postmasler General. 



1086 



KAILWAY MAIL PAY. 



Exhibit A. 

AN ESTIMATE AS TO THE AMOUNT OF RAILWAY MAIL PAY WHICH WOULD BE ALLOWED 
ACCORDING TO THE MODIFIED PLAN OF POSTMASTER GENERAL HITCHCOCK, PRE- 
SENTED IN THE PRELIMINARY REPORT OF THE JOINT CONGRESSIONAL COMMITTEE 
(PP. 109-111). 

Any estimate must be based upon the footing of Table 7, Document 105, this being 
the only statement submitted by Mr. Hitchcock undertaking to show the financial 
results in detail. That table, however, is incomplete. It represents only 80.44 per 
cent of the total length and 88.11 per cent of the total pay. 



Length of railway mail routes miles. . 

Railway mail pay, including R. P. O dollars. . 



Total. 



218,7-17 
49, 132, 644 



Table 7. 



175,922 
43,293,277 



Per cent 

in 
Table 7. 



80.44 
88. 11 



In making the estimate, the factors to be dealt with, successively, are these four: 

First. What were the total operating expenses (including taxes), for both freight 
and passenger service of the railroads shown in Table 7? 

Second. How much of that total amount should be charged to the passenger train 
service? 

Third. What proportion of the second item should be charged to the mail service? 

Fourth. What additional amount should be allowed to cover the cost of the capital 
invested? 

First item, total operating expenses. — There would be no question for dispute here. 
If the department has made no clerical errors, we can accept for this item the total 
given on page 280. Total operating expenses and taxes for the month of November, 
1909, $137,355,150. 

Second item, passenger train expenses. — Here there is a very serious difference. 
The department, using its own method, assigns about 29 per cent, or $40,121,647. 
We can not tell precisely what the railroad's result would be without reworking 
all the original reports and these are not available, and the work would be very expen- 
sive, but it has been estimated that for the group of railroads shown in Table 7 the 
result would be 34.42 per cent, or say $47,000,000 as against the department's esti- 
mate of $40,000,000. 

Mr. Hitchcock, in his revised plan, relinquished his claim to be allowed to make 
this division and was willing that the Interstate Commerce Commission should do 
it. As the Interstate Commerce Commission has no standard formula for the pur- 
pose, it can only be surmised that their decision would be closer to the railroad com- 
panies' estimate than to the Post Office Department estimate. 

Third item, passenger train expenses chargeable to mail service. — After deciding whether 
the amount in item 2 should be $40,000,000 or $47,000,000 for the month of November, 
1909, we next seek to ascertain what portion of this amount should be charged to the 
mail service, on the basis of the percentage of car space in all passenger train service, 
devoted to the United States mails. 

The Post Office Department, in Document No. 105, pages 269-270, accepted 7.18 per 
cent, but admits that 8.81 per cent was reported. It is understood that about 20,000,- 
000 car-foot miles in the closed -pouch service was cast out without being published, 
and this would raise the total to 8.96. The railroads' own computation was 9.32 per 
cent. (Hearings No. 1, p. 52.) 

Mr. Hitchcock's revised plan does not reconcile these divergencies, and vet a dif- 
ference of 2 per cent when applied to $47,000,000 would mean a difference of $940,000 
a month or $11,280,000 a year. 

It must be noted also that in Table 7 the department did not use its lowest space 
percentage (7.18), but one still lower (6.68 per cent). 

Fourth item, capital cost. — This essential factor had been overlooked by the Post 
Office Department in its original proposals. In the revised plan it is said "the com- 
panies may be allowed such additional amounts, if any be necessary, as shall render 
the whole" a proper proportion of a fair and reasonable return on the value of the 
property necessarily employed in connection with the mail service." As the phrase 
is not mandatory, the Postmaster General would be authorized to grant or withhold 
millions of dollars a year, upon his discretion instead of upon a specific law of Congress. 



RAILWAY MAIL PAY. 



1087 



It would be quite impracticable to make an estimate of any amount that could rest 
securely upon the phrases quoted above. 

We may calculate the use of the railroad property by the mail service in the ratio 
that the operating expenses (and taxes) applicable to the mail service bear to the total 
operating expenses, and upon the amount ascertained, charge interest at 6 per cent. 

The Post Office Department, in Table 7, published the total expenses of certain 
railroads as $137,355,150 of which it accepts $2,682,798 as its own proportion or 1.95 
per cent. 

The railroads, on the same amount, $137,355,150 would charge the mail service 
with $4,406,503, or 3.21 per cent. 

Taking the net capitalization of the railroads as $14,000,000,000 (the report of the 
Interstate Commerce Commission for 1910, page 52, gives the amount as $14,338,575,- 
940), we find the proportion chargeable to the mail Service to be — 

Post Office Department, Table 7, 1.95 per cent $273,000,000 

Railroad calculation, 3.21 per cent 449, 400, 000 

The interest on these amounts would be — 



At 4 per cent. 



At 6 per cent. 



For$273,G00,000. 
For $449,400,000. 



$10,920,000 
17,976,000 



$16,380,000 
26,964,000 



Comparative statement based on Table No. 7, House Document No. 105, covering 88.11 
per cent of total railway mail pay for 1909-10. 



Post Office 
Department. 



Railroad 
companies. 



An average 
of the two. 



First item: 

Total operating expenses and taxes tor month of Novem- 
ber, 1909 : 

Second item: 

Passenger-train expenses and taxes for month of Novem- 
ber, 1909 

Third item, passenger-train expenses and taxes chargeable to 
mail service: 

"a"'— Month of November, 1909 

"b "—Annual basis 

"c"— Raised from 88.11 per cent to 100 per cent to cover 

all mail routes 

Fourth item: 

Net capital ($14,000,000,000) covering roadbed, rails, en- 
gines, cars, stations, terminals, and other facilities, 

chargeable to mail service 

"a" — Interest on net capital at 6 per cent chargeable to 

mail service 

"b"— Interest on net capital at 4 per cent chargeable to 
mail service 



$137,355,150 i $137,355,150 

At 29.21 per ct.AtS4.42 per ct. 
$40,121,647 j -$47,280,083 

At 6. 68 per ct.' At 9.32 per ct. 
$2,682,798 | $4,406,503 
32,193,576 52,878,036 

36,537,936 60,013,660 



All. 95 per ct. At 3.21 per ct. 

$273,000,000 $449,400,000 

16,380,000 26,964,000 

10,920,000 17,976,000 



$137,355,150 
43,' 



,700,5 



544, 650 
535, 806 



48,275,798 



361, 

21 , 
14, 



200,000 
672,000 
448,000 



RECAPITULATION. 



Total cost chargeable to mail service: 

"a" — Operating expenses and taxes 


$36,537,936 
16,380,000 


$60, 013, 660 
26,964,000 


$48,275,798 
21,672,000 


"a " — Interest on net capital at 6 per cent 






Total 


52,917,936 


86/977, 660 


69, 947, 798 






" b " — Operating expenses arid taxes 


36, 537, 936 
10,920,000 


60, 013, 660 
17,976,000 


'48,275,798 
14,448,000 


" b " — Interest on net capital at 4 per cent 




Total 


47,457,936 
49, 132, 644 


77, 989, 660 
49, 132, 644 


62,723,798 
49, 132, C44 


Total pay— Mail pay, vear 1910 




Annual surplus or deficit. 

"a"— Interest at 6 per cent 


3,785,292 
1, 674, 708 


37,845,016 
28, 857, 016 


20,815,154 
13,591,154 


"b" — Interest at 4 per cent 





It will be noticed that the railroad calculation, up to and including the third item, 
reveals an underpayment, of SI 0,900,000 without counting the capital cost. It also 
seems evident that Postmaster General Hitchcock could not assume to demonstrate 



1088 RAILWAY MAIL PAY. 

overpayment, except by introducing his own method of dividing the total railroad 
expenses, by reducing to the lowest minimum the car space devoted to the mails and 
by arguing against any participation in a fair return upon the property. 
January 23, 1914. (Revised Feb. 16, 1914.) 

The Chairman. Gentlemen, how many are there who want to make 
a statement or who want to take part in the examination that may 
be made ? 

Mr. Peters. I think Mr. Bradley, Mr. Scott, Mr; Baldwin, Mr. 
Mack, Mr. Searle, Mr. Wishart, and Mr. SafTord might be sworn. 

The Chairman. Gentlemen, if you will all stand up, everyone who 
desires to or feels free to ask questions, 1 will swear you. We want 
to have a full, free, and general discussion of this matter. 

Thereupon the following gentlemen were sworn by the chairman: 
Representing the railway mail pay committee — 

Mr. Ralph Peters, president, Long Island Railroad Co. 

Mr. W. W. Baldwin, vice president, Chicago, Burlington & 

Quincy Railroad Co. 
Mr. John A. Drake, secretary and treasurer, Short Line Rail- 
road Association. 
Mr. V. J. Bradley, general supervisor of mail traffic, Pennsyl- 
vania Lines. 
Mr. S. C. Scott, vice presidents' assistant, Pennsylvania Lines. 
Mr. A. H. Rowan, assistant to vice president, New York Cen- 
tral Lines. 
Mr. W. C. Wishart, statistician, New York Central Lines. 
Mr. C. A. Searle, manager mail traffic, Rock Island Lines. 
Mr. H. E. Mack, manager mail traffic, Missouri Pacific Railway. 
Mr. J. P. Lindsay, manager mail traffic, Atchison, Topeka & 

Santa Fe Railway. 
Mr. W. W. SafTord, general mail and express agent, Seaboard 

Air Line Railway. 
Mr. H. L. Fairfield, supervisor of mails, Illinois Central Rail- 
road Co. 
Mr. F. A. Campbell, traveling agent, transportation depart- 
ment, Norfolk & Western Railway. 
Mr. R. H. Snead, manager of express traffic, Chesapeake & Ohio 

Railway. 
Mr. Guy Adams, manager mail traffic, Union Pacific. 
Mr. E. L. Duncan, manager mail traffic, Chicago & Eastern 
Illinois Railroad. 
Representing Post Office Department— 

Hon. Joseph Stewart, Second Assistant Postmaster General. 
Mr. C. H. McBride, Superintendent Division of Railway Adjust- 
ments', Post Office Department. 
Mr. A. N. Prentiss, clerk, Post Office Department. 
Mr. George A. Bandel, Assistant Superintendent Division of 
Railway Adjustments, Post Office Department. 

Mr. M. O. Lorenz, associate statistician, Interstate Commerce Com- 
mission. 

The Chairman. Mr. Peters, on the first page of the statement 
which you have submitted you refer to the preliminary report. What 
do you mean by that ? 



RAILWAY MAIL PAY. 1089 

Mr. Peters. That is the blue book of your hearings, issued by 
your chairman. That has always been called "The preliminary 
report/' and following that came volume 1 of the proceedings. 

The Chairman. Do you take the position that November is not a 
fair month'in which to make an investigation ? 

Mr. Peters. Yes; I think it has been shown by the testimony of 
different members submitted during the hearings that that was not a 
fair month. Attention was called to the fact that there were two 
holidays and four Sundays in the month of November. 

The Chairman. What month in the year would be a fair month, if 
November is not ? 

Mr. Peters. I think October, or perhaps May. 

The Chairman. Is there more traffic in October or less than in 
November ? 

Mr. Peters. I feel, as a rule, traffic is a little heavier in October. 

Senator Bankhead. As I understand, the difference between 
October and November, there are two holidays in November ? 

Mr. Peters. That had some effect on the conclusion. 

The Chairman. Mr. Bradley asks whether anv month would be 
fair? 

Mr. Peters. I hardly think it would. To get at the real situation 
I think the statistics should be compiled for an entire year. 

The Chairman. Do you think that the month of November is an 
average month of the twelve ? 

Mr. Peters. I doubt if you can say any one month is an average 
month of the twelve. 

The Chairman. Both May and October have 31 days in each 
month ? 

Dr. Lorenz. I have the exact figures of revenues by months in the 
passenger train service of that year and I find that the average for 
the year was 50.3 millions, the revenues for November were 49.4 
millions, as close almost as any month, except December, which was 
50.6 millions, and June, 50.8 millions. That was in the passenger 
department alone. In the total operating revenues November is not 
quite as representative a month as it is in the passenger department 
alone. 

The Chairman. Have you the figures there? 

Dr. Lorenz. The total operating revenues for November were 
248,000,000, as against an average of 217,000,000 for the year. 

Mr. Baldwin. Would not that tend to throw a larger proportion 
of the distribution of expenses on to the passenger service ? 

Dr. Lorenz. I should think a larger proportion to the freight, 
would it not? If the freight business is relatively heavier, and if 
the department used the method of dividing the common expenses 
according to the assigned expenses, it would tend, would it not, to 
make the proportion of expense chargeable to freight a little heavier ? 

Senator Weeks. Do you know whether that is a fair average for 
other years % 

Dr. Lorenz. No, sir; I could rot 'say. I think it is hazardous to 
base conclusions upon any one month, but for that particular year 
I do not think November was su°h a bar] month to take. 

Mr. Scott, If I might be permitted to make a suggestion, I might 
say that I am a little more familiar with the Pennsylvania "Railroad 
than the general figures. During the month of November, as I 



1090 RAILWAY MAIL PAY. 

recall it, the passenger earnings were about $25,000 in excess of the 
average for the other months in the year. The freight earnings were 
$1,300,000 in excess of the other months of the year. Where these 
two proportions between the two classes of service are thrown out 
of joint, as compared with the average for the year, that basis of 
apportioning expenses puts to one service or the other an unusual 
proportion for that particular month. I do not think there is any 
month in the year that could be taken as a typical month for the 
operations of a railroad. The traffic changes very much at different 
periods of the year. 

The Chairman. If any one month is taken, do you think November 
would be an average month ? 

Mr. Scott. It might be one year and not in another. I do not think 
anybody could say that without a very careful analysis of all the 
figures. 

The Chairman. You know that July would not be a fair month ? 

Mr. Scott. It would be unfair because in July we have a very 
heavy passenger business and sometimes a very light freight business. 
On some roads, however, we have a heavy freight business; for 
instance, on the roads carrying coal to and ore from the Lakes. 

Mr. Wishart. I would like to say for the New York Central that 
1909 was not a representative year, because in that year we were 
recovering from the panic, revenues were low and expenses were 
very low because we had clipped them following the panic of 1907. 

The Chairman. That would be applicable to all kinds of service 
and to all seasons of the year. 

Mr. Wishart. I do not know that it would. I do not think the 
proportion of the expenses which were abnormally low would be 
representative. 

The Chairman. Is it not true the country had recovered more from 
the panic in November than it had in the earlier part of the year? 

Mr. Wishart. No; for if we were using the fiscal year, November 
would be the early part of that year. 

The Chairman. In other words, November of the calendar year is 
getting about as far away from the panic as you could in that par- 
ticular calendar year ? 

Mr. Wishart. Yes; that is true; but we did not feel the full effect 
of the panic in 1908. 

The Chairman. But you were recovering from it in 1909 ? 

Mr. Mack. I think, on the question of expenses, the classification 
of expenses would be different and the apportionment of the expenses 
would be different in November, perhaps, as compared with other 
months. I think Mr. Scott is more familiar with that particular 
phase than I am, but, as I recall, that was one of the points of the 
difference in November, the character of the expenses and the basis 
of the apportionment made as not a fairly representative month. 
Is that correct, Mr. Scott ? 

Mr. Scott. The conditions in 1909 were different from what they 
are to-day; that is, the railroads were in the habit, up to about the 
close of 1909 or sometime in 1910, of adopting a program, which we call 
the amount of rails, ties, and bridges that were put in during the year. 
We apportioned these to our expenses on the monthly basis with the 
idea of closing out the expenditures for the year in the first 10 months; 
therefore, that left the charge for November and December in that 



EAILWAY MAIL PAT. 1091 

year very light. I am only speaking with relation to our own lines 
and I do not know what the general practice was. Those months 
would not receive their fair proportion of the heavy charges for main- 
tenance during that year. Since then those charges have been ap- 
portioned to thcentire 12 months' period and probably in the present 
year, or some other year than 1909, November would have gotten a 
more fair proportion of its charges. 

The Chairman. Are there any other questions on that particular 
feature ? 

Mr. Stewart. I would like to ask whether any road which is rep- 
resented by the railway-mail pay committee made any objection to 
the selection of the month of November at the time it was made ? 

Mr. Peters. I do not think so. I do not remember of any objec- 
tion. 

Senator Weeks. When was it made? 

Mr. Stewart. In the fall of 1909. 

Senator Weeks. When was the month of November originally 
selected ? 

Mr. Peters. Some time after the October meeting. 

Mr. Stewart. It must have been before the October meeting. 
We had a joint meeting of the officials of the department and the 
officers of the railroad companies interested. 

Mr. Scott. Was not the month of November selected because 
it was the most available month after the form was agreed upon ? 

Mr. Stewart. I think so. 

Mr. Scott. None of the railroads knew for what purpose the figures 
were going to be used and they did not know until after Document 
105 came out? 

Mr. Stewart. I beg your pardon. We were consulting with all 
the representatives of the railroads both as to the matter which was 
to be submitted on the forms in accordance with our instructions and 
they were fully acquainted with the premises. As a matter of fact, 
as I recall it now, I think our original purpose was to select October 
but neither the department nor the railroads could get ready for it in 
October and we then agreed on November. 

Mr. Peters. December would be abnormal on account of the holi- 
day business in that month and could not be selected. 

The Chairman. As I understand, the department and the rail- 
roads had no serious objection to November; it was about as repre- 
sentative a month as any month could be ? 

Mr. Bradley. The condition, I would say, would be this: No single 
month of the year can be regarded as representative in all respects, 
and any conclusions derived from a single month's statistics should 
be scrutinized very carefully. 

The Chairman. As I understand your statement here, } T ou take 
practically the same position now on the division of expenses between 
passenger service, freight service, mail service, and express service 
that you took in your original answer to Document 105 ? 

Mr. Peters. Yes; that is the case'. 

The Chairman. And that there is now the same difference between 
you and the department that there was when you made your state- 
ment before? 



1092 RAILWAY MAIL PAY. 

Mr. Peters. To sum it up, it is the difference in the percentages 
resulting from the methods used in the distribution of expenses and 
in the distribution of the space. 

The Chairman. On the question of overpayment or underpay- 
ment, I understand you take the same position that you originally 
did, excepting that you have reached a conclusion that there was a 
greater underpayment than $15,090,000 if you received reasonable 
compensation for the service rendered. Is that right? 

Mr. Peters. I think we showed that in our full analytical reply to 
Document 105. The figures varied according to the different per- 
centages that were worked out. 

The Chairman. In other words, your idea is now, as it was when 
you made the original statement representing the railroads, that 
the railroad companies are underpaid instead of overpaid, and the 
amount of underpayment is as much as $15,000,000? 

Mr. Peters. Yes. 

The Chairman. Your position with reference to dead space is the 
position that was taken by the railroad companies in the former 
statement ? 

Mr. Peters. That is true. 

The Chairman. And there is no difference in your position on 
that, and there seems to be but very little difference so far as the 
Post Office Department is concerned, so that there is the same dif- 
ference between the Post Office Department and the railroad com- 
panies on the question of dead space that has existed all along ? 

Mr. Peters. Yes. 

Mr. Bradley. Might I suggest a thought there? I think the dif- 
ference comes from this thought: That the Post Office Department, 
in making this inquiry, felt that it was their duty to the Govern- 
ment to only accept the space which they believed was actually 
needed for the direct purposes of the mails, overlooking, I think, 
the fact that in conducting this inquiry they were occupying a 
judicial position; they were taking note of the passenger and express 
service, and they should have made similar allowances in those serv- 
ices for what they did in the mails. I think that was a disadvantage, 
and that this investigation could have been more safely made by a 
neutral body. 

Mr. Stewart. Mr. Chairman, upon that point we are not asking 
the railway mail pay committee to make any apologies for the Post 
Office Department. The Post Office Department does not need 
any apologies, neither does its officers, nor do we ask anybody to 
explain the results of Document 105, or our conclusions reached from 
using the statistics there. 

The Chairman. Just before you begin, Gen. Stewart, I want you 
gentlemen to feel free, any one of you, to ask Gen. Stewart any 
question you please. 

Mr. Stewart. I can not allow to go unnoticed this repetition of the 
statement which has been reiterated here that the Post Office Depart- 
ment had an ulterior purpose to reduce the pay of the railroad com- 
panies by reducing the assignment of space, and even though it may 
be indirectly insinuated in the remarks of Mr. Bradley, I still challenge 
it in the form in which it is presented this morning. As a matter of 
fact, we were not under stress or under any assumed obligations to 



RAILWAY MAIL PAY. 1093 

consider these railroad statistics in any manner other than in a 
judicial frame of mind. We did not consider ourselves bound to 
reduce the allotted space to the mail service. We did not consider 
ourselves under obligation to schedule the space submitted by the 
railroad companies upon the basis of the actual space needed for the 
transactions of the mail business without regard to other considera- 
tions, and that statement has been made so many times in the face 
of our repeated denials and the documentary evidence, that I now 
feel it incumbent upon me to bring it to the attention of the com- 
mission again in this most emphatic manner. 

I want to call your attention to what I have stated specifically 
upon [hose points in my brief on pages 1013 and following, and par- 
ticularly upon page 1016, where I set out in detail the rules for the 
allowance of that extra space in the full-car service, where they run 
the cars and the movement was necessarily incidental to the mail 
service. That constitutes a large part of the claim that we did not 
allow -hem for dead space. The space we scheduled as "'deadhead 
space," and they got credit for it. The "dead space/' about which 
so much has been said and about which so little seems to be under- 
stood, was the space which we determined to be dead space after 
having examined the data submitted and found that it had no neces- 
sary relation to the mail service. This comprised such cases, among 
others, as where a railroad company would run a 60-foot car be3 r ond 
the terminus of its authorized run, the dead space had no relation 
to the mail service and we should not pay for it. Where they run 
a 60 or a 40 foot car to fill in a requisition for a 30-foot apartment 
car, instead of furnishing a 30-foot apartment car. they prefer to 
run the full car and charge us for the full space when we did not 
need it and did not ask for it, those items are items of dead space 
that we have scheduled as dead space and which the department 
and the Government should not pay for. 

The Chairman. I want to ask you, in making your computation, 
is the statement that has been made more than once, to the effect 
that you called for a 60-foot car one way and a 40-foot car on the 
same road the other way, true ? 

Mr. Stew t art. Yes. That is an agreement line. It may be two 
half lines or it may be an agreement line; but, Mr. Chairman, in those 
cases the instructions required that the company be allowed the full 
60-foot space in each direction. 

The Chairman. That was the point I w r as trying to get at. You 
allow them for that space ? 

Mr. Stewart. Yes; it was our purpose to do so in this Document 
105. T shall call particular attention to the manner in which this 
paper of the railroads has been prepared when I file a statement in 
reply to it, which I hope the commission will give me a few days to do. 
There is a difference between the practice of authorizing cars and the 
practice which we followed in scheduling the space in Document 105. 
I believe this railway mail pay committee knows that that distinc- 
tion exists and yet they did not point it out hi this brief. 

One further point which was mentioned by Mr: Bradley, is the 
question as to whether the department, having rejected what we call 
dead space in the mail service, should not have rejected what the 
railroad company calls dead space in the passenger service. That 



1094 RAILWAY MAIL PAY. 

appears to be plausible, but I think — and I urge it upon your con- 
sideration — that there is a fallacy at the base of this for this reason: 
That the Post Office Department and the railroad companies are not 
on a parity in this matter. The railroad companies are conducting 
a general railroad business, they must have maximum equipment, 
they must have all the facilities for conducting such a service. If they 
operate dead space in connection with their passenger service, that is 
a loss of their own. Every foot of dead space in the passenger car 
represents some appropriate item or proportion of expense in oper- 
ating the railroad. Who is paying that expense? Who is respon- 
sible for it ? The railroad companies, and not the Post Office Depart- 
ment. It would be unscientific, in my judgment, and very unfair 
to the Post Office Department, the express company, if you please, 
or any other shipper, to say that in order to apportion the expenses to 
the mail service, the express service, or to some other shipper, that 
before you do that you must count out all dead space in passenger 
service. It seems to me the statement upon its face carries its own 
refutation, its own condemnation. That has been repeated so many 
times and I think it is so fundamentally fallacious that I want to 
impress it upon the attention of the commission that any such method 
of that kind would be both unscientific and unfair. 

Mr. Peters. You ask who is paying the expense of that dead space. 
You say that there is all sorts of dead space in the passenger service, 
and it is all part of the railroad operation and the railroad is paying 
the expense. It is not the railroad that is paying the expense, but it 
is the user of the railroad. The user of the railroad is the shipper of 
freight or the payer of individual personal transportation, or the 
shipper by express or the shipper by mail. The dead space inci- 
dental to each one of those services must be charged up to the service 
to ascertain the exact accurate proportionate cost of expense for 
conducting that part of the service. You can not attempt in any 
other way to divide your space and analyze the cost of each par- 
ticular expense on the basis of car-foot mile or space on the trains, 
without apportioning to each one the live and the dead space belong- 
ing to each one. 

Mr. Stewart. The principle you announce is very true, and we 
only differ in its application. We took all the dead space, so called, 
which we could distinguish as "deadhead space " — that is, the space 
which was dead and which was necessarily used in connection with 
our service — and charged it to mail service. 

Mr. Peters. Did you? 

Mr. Stewart. It was only that space we did not need and did not 
require and which was run for the convenience of the railroad com- 
panies, and not necessarily incidental to the mail service, that we 
placed in the other column, "dead space," and charged it to the rail- 
road companies. Now, coming to your other proposition, theoret- 
ically you are right that dead space necessarily incident to the several 
services should be charged up to the respective services; but that is 
not what you gentlemen want to do. In your diagram heie you 
denominate dead passenger space and give it a percentage of 23.09 
per cent of the entire space, and what do you want to do with that ? 
You do not want to charge that up to the pat" ons of your passenger 
service? No; you are going to cut that out entirely and th ow the 



RAILWAY MAIL PAY. 1095 

proportional part of the 23 per cent onto the mail service, if I under- 
stood you correctly. 

Mr. Wishart. You just pointed out it is more than 50 per cent 
of the passenger space. It seems to me you are taking the same 
position for the Post Office Department as a passenger would who 
would say, "I will not pay the regular fare, but I will only pay for 
one-sixtieth part of the cost of operating the passenger car/' leaving 
out the fact that the railroad must carry some empty space. 

Mr. Stewart. The examples are not comparable. You are run- 
ning the rail oad. You furnish the equipment, and you must pay the 
expenses of that equipment. We are not running the railroad, but 
we are asking you for a certain equipment. We ask you for a certain 
amount of space in the passenger train which is necessary for the 
transaction of our business. You give us more than we need, and you 
want to charge us with that additional cost. 

Senator Weeks. Do they always give you more than you need? 

Mr. Stewart. Not always. 

Senator Weeks. Would it be a practical thing to give you exactly 
what you need on every train every day ? 

Mr. Stewart. Approximately so, with this exception: Where the 
movement requires the return car of a larger dimension, it would 
not always be practical for them to furnish a smaller apartment or a 
smaller car; but bear in mind that we took into consideration that 
state of facts, and in regard to the full-car service we gave instruction 
to give them full credit for the entire length of the car. 

Senator Weeks. Is it not- always true that the amount of mail 
carried in one direction is greater than in another, and therefore there 
must be more vacant space on one part of the trip than on the other ? 
Would you contend that that return space which is not used should 
be furnished without pay by the railroads ? 

Mr. Stewart. No; in our plan which we have proposed here we 
are proposing to give them credit for the return space; and in Docu- 
ment 105, in considering the full-car movement, we gave them, as I 
understand, credit for that return space. 

Mr. Bradley. What proportion of that dead space was included 
in that allowance? What proportion of the total dead space was 
included in the full railway post-office alowance? 

Mr. Stewart. I do not recall. 

Mr. Bradley. In the case of the Pennsylvania Railroad it was 
6 per cent. 

Dr. Lorenz. Perhaps I can lurnish the figures on that point ? The 
deadhead space the department allowed was 1.7 per cent of the total 
mail space. The dead space that they disallowed was about 22 per 
cent of that same sum. 

Mr. Tuttle. In the case of this example cited at page 38, where 
a 60-foot car is needed westbound and the department only needs a 
40-foot car eastbourid, what has been the practice of the department 
iu cases of that kind ? 

Mr. Stewart. Under Document 105, or under the practice of the 
department? 

Mr. Tuttle. Under the practice of the department? 

Mr. Stewart. The practice of the department is to authorize an 
agreement line with pay equal to the pay of a 60-foot car in one 
direction plus the pay of a 40-foot car in the other direction, if agreed 



1096 RAILWAY MAIL PAY. 

to. There are a number of eases, however, where half lines are in 
existence, apparently inaugurated under a tacit agreement many 
years ago and which still continue to be paid for as half lines, the 
companies not having refused to furnish the cars, but run them for 
that pay. If the company should refuse to furnish a car and run it 
at half-line pay, that is, pay for the car in one direction, the depart- 
ment would authorize a full line. 

Senator Weeks. According to the figures which Dr. Lorenz has 
just read, you have allowed something like a little less than 2 per cent 
of the mail space to be counted as used and have eliminated about 
22 per cent. How did you arrive at the amount of vacant space that 
you are willing to pay for? 

Mr. Stewart. On full car lines the rules are fully set forth on 
page 1016 of my brief and they practically allow the railroad com- 
panies for the excess space in all cases of authorized lines where the 
returning of the car is necessary for the conduct of the service. 
Regarding apartment car lines the rule is set forth on page 1015. 
"Where the railroad reports cars longer than those authorized by the 
department, enter the authorized length ixi column 11, Form 2601, and 
enter the excess space in an additional column to be headed 'Linear 
feet of the cars — dead space,' and its car-foot mileage to" be com- 
puted and entered in another additional column headed ' Car-foot 
mileage — dead space/" and that was charged to the railroad com- 
panies. 

Senator Weeks. Let me take a concrete case. Suppose there were 
1 00 tons of mail shipped out of New York City to-day over the New 
York Central Railroad going west, and to carry that 100 tons it 
required 10 cars. Those cars have to be brought back, and suppose, 
on their return trip, they only brought half as much mail. Would 
you pay for the whole space on the return trip ? 

Mr. Stewart. Yes, sir; where the cars are authorized. 

Senator Weeks. Would you, under this arrangement which you 
instance in that report? 

Mr. Stewart. I think we would. 

Mr. Bradley. Senator Weeks, in the illustration he submits, evi- 
dently had in mind storage cars. It is my recollection that Document 
105 would not have allowed for the five empty cars returning. 

Mr. Stewart. It is possible, in connection with the storage cars, 
we would not have allowed for the return movement of the car 
unless it was used by the department, but in that connection it must 
be remembered that the railroad companies have the privilege of 
using these storage cars ; that the department, unless it takes the use 
of it, has no jurisdiction over the car at all, and that in many cases 
the companies do use the cars in return movements. 

Senator Weeks. Suppose conditions were such that they could not 
make any use of them ? 

Mr. Stewart. We have proposed, under our plan of bill, to pay 
the company for that return movement. 

Mr. Peters. How about Document 105? 

Mr. Mack. The dead space includes the return of the storage cars, 
as I understand. Part of the dead space that is in question includes 
the return movement of the storage cars. 

Mr. Stewart. If they were not used. 



BAIL WAY MAIL PAY. 1097 

Mr. Mack. We have an illustration on the Missouri Pacific of the 
fast mail. We carried at that time a Pennsylvania storage car from 
New York to Kansas City. The return space was not included in the 
allowed space by the department, but it was embraced in the dead 
space which is in dispute and as we go further along I will be glad to 
illustrate the actual application of the department's figures to our 
service between St. Louis and Kansas City and between St. Louis 
and Texarkana, two lines where I have the space which we reported 
and the space which the department allowed, and space which they 
included as deadhead space and the space included as dead space, 
and it will show that part of the return movement of the railway 
post-office cars as well as the return movement of the storage cars, 
was embraced in dead space. 

Senator Weeks. You might give that concrete illustration. 

Mr. Safford. We had, at that time, as I recall, two lines, one a 
60-foot authorization southbound and a 40-foot authorization north- 
bound. The other, I think, had a 40-foot authorization in both 
directions and, as a matter of fact, we operated 60-foot cars. Those 
cars were fully loaded southbound, but not fully loaded going north. 
It appears from the figures in Document No. 105, that the extra 
loading which occupied all the space southbound was credited to 
the storage space, but the northbound movement of those cars pro- 
vides for their return southbound and it is charged to dead space 
and not to deadhead space, so that, in that case, it was not regarded 
as deadhead movement, but as a dead space. 

Mr. Stewart. What was the authorization ? 

Mr. Safford. Sixty feet in one direction and 40 in the other. 

Mr. Stewart. They came back as apartment cars ? 

Mr. Safford. No; they came back as full R. P. O. cars in north- 
bound movements. As I recall your instructions, if we could show 
that that space was fully used in the opposite direction, we are credited 
with it. In the case of an authorization of greater length in one 
direction than the other with the postal car — not the storage car — 
unless you could show on those returns that the space in excess of the 
authorization was actually used for mail purposes, no allowance was 
made by the department. Here is a concrete case, and it does not 
show proper credit to the return movement, but shows it charged to 
dead space; but the full use of the car southbound, notwithstanding 
its authorization of 40 feet, was credited to storage space as it was 
used for that purpose. 

Mr. Stewart. I want right there to read the rule regarding the 
agreement Hues and the half lines, which I assume will cover Mi*. 
Safford's case. I can not take up here the results stated in Document 
105 and analyze them with reference to the reports that, are on file, 
which are the basis of the document. I can go to the department 
and do that, however. The results stated in Document 105 are 
intended to be the results obtained by the application of these rules, 
and, so far as I know, they are. There may be instances where it is 
possible the rule might not have been actually applied, but I do not 
know that that is actually the case. 

Mr. Baldwin. You speak in the case of storage cars that the pay- 
ment for the return movement may depend upon the question of 
whether the car was used by the Government or by the company. 
Who decides that question ? Is that passed upon at the time by an 



1098 RAILWAY MAIL PAY. 

inspector of your department, is it a matter of evidence? Suppose 
it was partly used, suppose it might l:e used in a slight manner? Is 
it a subject of dispute or investigation and when will it be decided 
and who decides ? That is a large item of space. • 

Mr. Stewart. What land of a case are you proposing? 

Mr. Baldwin. The case that you suggested, that in storage cars 
the return movement is called dead space according as it is used by 
the department or by the railroad. "Use" is a very loose term and 
somebody has to decide how much use you mean, when it is to be 
deckled and is that one of those things that is open to dispute? 
That affects the whole space basis very seriously. 

Mr. Stewart. We had before us two classes of reports, one from 
the railroad companies and one from our field officers. In addition 
to that we had our actual authorization as shown on the books of 
the department and we used all that data to reach a result. 

Mr. Baldwin. You decide it, do you? 

Mr. Stewart. We used them all. 

Mr. Baldwin. Who decided that question as to whether the car 
is used or not? 

Mr. Stewart. You say "decides." What do you mean — at this 
time ? 

Mr. Baldwin. Yes; every day. 

Mr. Stewart. The Railway Mail Service would decide that, because 
they have to use the car — because they know of the use of the car? 

The Chairman. You mean the superintendent of the division ? 

Mr. Stewart. The superintendent of the division. 

Mr. Mack. Gen. Stewart says with regard to whether the car was 
used or not. I would like to ask about the reports from the Post 
Office Department. Were those reports based upon actual observa- 
tions during the period of statistics ? 

Mr. Stewart. Based on the actual operation. 

Mr. Mack. During the period of statistics ? 

Mr. Stewart. Yes. Now, in regard to the closed-pouch service, 
as it affects this question of dead space, and to show the commission 
how unfair, as it appears to me, the contention of these gentlemen is 
in charging to the Government what they call dead space, I want to 
call your attention to their instruction, which this same railway mail 
pay committee gave all the railroad companies with reference to 
reporting dead space in connection with closed-pouch service, and I 
read from what I said of the instructions on page 102 of what is 
known as the preliminary report: "The railroad companies, generally, 
reported the space used by the mails at the maximum of operating 
conditions, whether warranted by the needs of the mail service or not." 

Now, I pause there and say there can not be a possible question on 
that point. It is true that every railroad company reported every 
foot of space at the maximum run, whether it was needed by the 
department or not. It was their duty to report all tram service, for 
we could not have had a complete report of train operations without 
it, but when the reports came to us it was our duty to determine how 
much of that train service was run in connection with the mail service. 
To continue: "An examination of the instructions of the various 
companies to their employees in regard to reporting closed-pouch 
space, indicates that no matter what the size of the baggage car 
utilized, the mail service, even if the mail was very light in weight 



RAILWAY MAIL PAY. 1099 

and quantity, was charged with unused space in the baggage car pro- 

Eortional to the amount carried." If we had only two pouches in a 
aggage car and they had two trunks and two express packages, we 
would get one-third of the baggage car on that report, provided the 
pouches, trunks, and packages occupied the same amount of live 
space respectively. Two pouches is taken only to show proportion 
to other articles. (There was a maximum amount of space fixed for 
that number.) It is only necessary to state that fact to show how 
unfair that was to the Government. 

Senator Weeks. If the Government used one-third of the space in 
the car that was occupied, why is it unfair to the Government ? 

Mr. Stewart. But the Government did not use the space. 

Senator Weeks. As I understood the statement you made, there 
were two trunks, two packages of express, and two pouches of mail, 
and that is all there was in the car ? 

Mr. Stewart. Yes. 

Senator Weeks. Then, the Government used one-third of the 
space that w^as actually used, did it not ? 

Mr. Stewart. I think not. We did not control the operation of 
that car. 

Senator Weeks. Did not the Government use one-third of the space 
that was actually used by any one ? 

Mr. Stewart. I do not think so. We used the space that was 
properly allotted to the two pouches of mail. How can it be said 
we used a third of the car to carry the pouches of mail ? 

The Chairman. You would not say the express company used a 
third of it? 

Mr. Stewart. No. 

The Chairman. You would not say the railroad company used a 
third of it for the baggage car ? 

Mr. Prentiss. They paid for it. 

Senator Weeks. Who? 

Mr. Prentiss. The passengers on the train. 

Senator Weeks. Then why should not the Government pay for 
the mail ? 

Mr. Prentiss. Because they put the mail there, and they were not 
obliged to. 

Senator Weeks. There is nothing in that proposition, if I under- 
stand it. Somebody has to pay for this space and either the pas- 
senger, freight, mail, or express has to pay for it and if the Govern- 
ment uses one-third of the space actually used in the car, that it is 
necessary to run, then the Government ought to pay one-third of 
the expense. 

Mr. Stewart. Mr. Prentiss has said that the passengers pay for 
that space; that is, their fares pay for it. 

The Chairman. That is all right. You charge that one-third in 
which the baggage is found to the passenger service; there are only 
two trunks there, but the passengers have to pay for the whole space. 
Here is the express, and the express'occupies one-third of it and they 
must pay for one-third; but, as a matter of fact, they have only two 
parkages there. 

Mr. Mack. With regard to the express service, the understanding 
was that the express service participated in the same division as the 
mail in the railroad reports of space. So that although the rail- 

49396—14 77 



1100 RAILWAY MAIL PAY. 

roads reported correctly, the department cut out nearly all the mail 
space in such cases and charged to dead space. 

The Chairman. It seems to me, according to your statement of 
two trunks, two express packages, and two pouches of mail, there 
ought to be an equal division. 

Mr. Bradley. Might I suggest that the closed-pouch service, 
according to the department's own figures, was only 2.82 per cent of 
the total mail space reported by the document 105. While it is 
well enough to quote it for illustrative purposes, it is of very small 
consequence affecting the results. 

Senator Weeks. Mr. Chairman, I think Mr. Stewart has, through 
his entire analysis of this question, put the Government on a different 
basis from other users of the railroad, and, in my judgment, that is 
where he may be wrong. I think he is wrong now. I do not think 
the Government has any superior right over the passenger as to space. 
The passenger rate is made by the Interstate Commerce Commission, 
and it is supposed to be a rate that will pay for the passenger's trans- 

?ortation and furnish space for the baggage if all the space were used, 
t seems to me the Government is on all fours with that proposition, 
because the Government might use a space which is furnished if there 
were mail enough offered for that purpose, but it does not prevent the 
necessity, from the railroads' standpoint, of the Government paying 
for that service. 

Mr. Stewart. The passenger in the passenger car not only pays his 
fare for his passage in the car, but he pays for the proper amount of 
space in the baggage car for his baggage, whether he uses it or not. 

Mr. Peters. That is likewise true of the dining car and the observa- 
tion car. 

Mr. Stewart. There is no analogy in my mind between the two 
cases. We have nothing in the passenger car; we have no right there 
and we have no mail there. We have not paid for anything in the 
passenger car. 

Senator Weeks. Neither has the express company. 

Mr. Stewart. I am not speaking for the express company; what- 
ever arrangement there may be between the railroad company and the 
express company, I can not answer for them. However, as to the 
mail service, I can not see any justice whatever in charging up the full 
space of a baggage car to the mail service, passenger service, and the 
express service on the basis of what happens to be in that car at the 
time. If the Government was running the railroad and we were re- 
sponsible for that car, I think we would be responsible for everything 
we put in it and there might be some more justice in the contention 
that everything that was in that car, whether the car were a third full, 
half full, or wholly full, should participate in the total expenses of the 
car. But that is not the situation here. The railroad company is 
conducting the service independently of the Government, and we 
simply go to the railroad company and ask for certain facilities for the 
transportation of the mails. If on the closed-pouch train we have 
only a few pouches to dispatch, I do not think that after mature con 
sideration any of you will come to the conclusion that the Government 
ought to pay for a third or a half of a car just on account of the con- 
ditions that will differ from day to day as to the contents of the car 
and over which the department has no control except as to mail 
matter. 



RAILWAY MAIL PAY. 1101 

Mr. Peters. Do you not think the Government should pay for part 
of the aisle way and the space necessary to get that pouch to the door 
and put it out ? 

Mr. Stewart. Yes; I think so, and we allowed for that. 

Mr. Peters. We could not see where you allowed for it. 

Mr. Stewart. We believed we did in the amount of space we 
allowed. On the weight basis we allowed for the space the pouch 
would occupy. 

Mr. Peters. You allowed 6 inches for 200 pounds. 

Mr. Stewart. For 100 pounds. 

Mr. Mack. That would be, for instance, in this case, 6 inches of 
the linear length of the car instead of one-third. 

Mr. Stewart. For 100 pounds. 

Mr. Mack. I am speaking now, for instance, of the illustration of 
two pouches, which would be 6 linear inches only in the car allowed 
to the mail. 

Mr. Stewart. The rules we adopted in regard to that are set out 
on page 1015. It reads as follows: 

Closed-pouch space. — The following basis for the estimate of the space in baggage 
cars devoted to mail service for closed pouches during the month of November, 1909, 
in connection with the railroad companies' reports, will be observed: 

For 100 pounds or less, allow 6 linear inches. 

For weights above 100 pounds and not exceeding 200 pounds, allow ]0 linear inches. 

For weights above 200 pounds, allow 5 linear inches for each additional 100 pounds. 

The weight will be ascertained by multiplying the maximum number of pouches 
and sacks reported by the company as carried at any one time by the average weight 
of pouches and sacks as shown by the report of the General Superintendent, Railway 
Mail Service, upon the actual weighing for 10 days of closed pouches on express trains, 
namely, 20 pounds. 

Mr. Bradley. It seems to me the distinction is in the attitude of 
the Post Office Department toward the railroad at one time and at 
another. If Gen. Stewart, as a representative of the Post Office 
Department, were going to ask for a rate on the movement of mail 
as a shipper would, he would have a right to point out what space 
he would need, but the railroad company would then make the rate 
and would also take into consideration the incidental space which 
would necessarily have to be operated. In this case, however, it was 
an ascertainment of cost, a judicial process, and, nevertheless, I think 
the Post Office Department considered itself as a shipper. 

Mr. Scott. Taking the illustration of the baggage car with the two 
pouches of mail, two packages of express, and two trunks, the rail- 
road companies would have no fault to find if the entire unused space 
in that car had been eliminated and the calculation based upon the 
actual use of space. That would have been perfectly satisfactory 
to us. The fact is that the space was measured for the amount that 
was occupied by the mail, express, and the baggage and the empty 
space proportioned on the basis of square feet used. If there are two 
trunks in there, the space occupied was counted for that as so much 
in calculating the dead space. 

Mr. Stewart. Mr. Chairman, I arose only to reply to Mr. Bradley's 
suggestion and I have done so. I do not want to continue the desul- 
tory discussion if you want to take up other features. 

Mr. Mack. With regard to the dead space, this is, of course, a vital 
matter in the determination of the question of overpay or underpay, 
and perhaps some actual illustration of the use of the space would be 



1102 RAILWAY MAIL PAY. 

illuminating. For instance, on the Iron Mountain we run a train out 
of St. Louis, No. 3, with two 60-foot cars; one of them was allowed 
at 60-foot and one allowed at 40-foot, the authorized space, and in 
that car 15 feet of the space was allowed for storage, upon the judg- 
ment or opinion of some of the officers of the Railway-Mail Service. 
There was an overflow of mail in the baggage car of 9 feet of space. 
The department eliminated and ignored the space that was occupied 
in the baggage car and 5 feet of the space that was used in the out- 
bound trip of that car, making 14 feet of dead space. On the return 
run of that car the department did not allow for any space at all, 
although the car was necessarily returned as an empty car. In the 
case of the evening train out of St. Louis they pursued the same course. 
In the case of the fast mail train they allowed full space outbound, 
but on the return movement they disallowed 20 feet of the return 
space in the car, on the theory that it was not occupied; 20 feet was 
charged to dead space. So, throughout, we find that experience. On 
the Missouri Pacific we find an exactly similar situation, the return 
movement is not credited on the basis of the actual use of the space 
outbound, either as to full railway post-office cars or as to storage 
cars. On the fast mail train, westbound, we reported 312 feet of 
space. The department allowed 100 feet of space deadhead, but 
charged 92 feet of the space as dead space, although we had to re- 
turn that space, some oi which was in full postal cars and some of 
it in storage cars — 60 feet in the storage car. That will demonstrate 
that the practice was not in accordance with the illustration of Mr. 
Stewart. 

Mr. Stewart. I do not think you can say that without analyzing 
the report that we have on file. It is manifestly impossible to reach 
a reliable conclusion by bringing your papers in here and reading data 
from them without comparing them with the department's files and 
ascertaining the reasons for the action taken in the department's case. 
I would be glad to go over that with you personally at some time in 
the future. 

Mr. Mack. These figures I got from the department, and I only 
wanted to illustrate the point that the practice was not actually in 
accordance with Gen. Stewart's information that the return space 
was based on outbound trips. 

Mr. Stewart. Undoubtedly there were good reasons for disallow- 
ing that space as deadhead space. That, however, will only be dis- 
closed by the papers themselves. At another time I will have the 
papers examined and submit a statement on this case. 

Mr. Mack. I think the matter is so vital, because it is the dead- 
space proposition that really determines the question of underpay 
or overpay, and I think the cases show for themselves that if we used 
the car in one direction that same car had to come back with the same 
space — not 15 or 20 feet less — and it should not properly have been 
classified by the department as it was, dead space. 

Mr. Fairfield. I think that there is one case that illustrates that 
more clearly than any other, and that is the case of the Union Pacific. 
The westbound mails occupy from 75 to 78 per cent of the total mail. 
They operate from three to four storage cars every day westbound, 
full 60-foot cars, and the department allowed the space westbound. 
I state, as a fact, that they did not allow any space whatever for the 



EAILWAY MAIL PAY. 1103 

return movement of those cars, which were returned empty in every 
case. 

The Chairman. How do you know that ? 

Mr. Fairfield. From a comparison of the figures and the facts as 
we know them. We have no use for the cars eastbound. We have 
to take three and four storage cars eastbound. 

The Chairman. How do you know that in their computations ? 

Mr. Fairfield. Because a comparison of the figures shows in their 
statement. 

The Chairman. They say, however, that they have figures of their 
own and they were not necessarily governed bv figures in Document 
105. 

Mr. Stewart. Hardly that. I do not mean to say that. 

The Chairman. Then I want to get that straight, because that is 
important. You intimate that Mr. Mack's statement is incorrect 
because he did not have your figures ? 

Mr. Stewart. I do not know what papers he has there. 

Mr. Mack. While we were working on the joint committee, in order 
to determine just what the absolute dead space was, we ascertained 
on these two routes exactly what it was so that we could get some 
idea of what the department had classified as dead space, and, of 
course, the only way to determine the question was, as we suggested 
to Senator Bourne at that time, to make an actual compilation and 
comparison with respect to every route and every train. Now, if 
this is a fair illustration of what was disallowed as dead space, there 
is not a foot of space that was classed as dead space on these two 
routes for which there was any justification whatever. 

Mr. Stewart. That is your conclusion. I have not gone into our 
papers at the department. 

Mr. Mack. I think it shows on its face. 

Mr. Stewart. I hardly think you could draw a conclusion from 
that. 

Mr. Baldwin. Do you not claim the right to absolutely decide 
that question in case of difference ? Certainly, under your bill, you 
claim to have absolute power to decide that yourself against the 
railroads ? 

Mr. Stewart. Under this provision we are suggesting to the 
commission ? 

Necessarily the department would have to have the determination 
of the space it uses. 

Mr. Bradley. I think the case that Mr. Fairfield brought up was 
due to the fact that in the list of rules which Gen. Stewart read as 
having guided the department clerks in tabulating information, the 
storage cars are not mentioned. 

Mr. Fairfield. The point I wanted to bring out was the company 
had to run a large number of storage cars westbound and had to 
bring them back. That space was not charged to the mail service, 
but charged to dead space and to the passenger service. 

Mr. Stewart. Did you use the cars in the return movement ? 

Mr. Fairfield. No, sir. 

Mr. Stewart. They were storage cars ? 

Mr. Fairfield. They were storage cars. 

Mr. Mack. With regard to apartment cars, I had one test case. I 
do not know whether this illustrates the general practice, because we 



1104 BAILWAY MAIL PAY. 

did not have the opportunity of checking over each particular route 
and each particular train, but I found on the Denver & Rio Grande, 
out of Pueblo, as I recall, we had a 30-foot car and the allowance 
for the return trip was a 15-foot car instead of 30-foot as we took out, 
based upon the authorization of the Railway Mail Service that that 
was all they needed coming back. Of course, we had to bring back 
the same car we took out and the same space. Am I correct? I 
think Mr. Prentiss gave me those figures. Whether that illustrates 
the general condition, I am not sure, but I think it would be illuminat- 
ing, if my statement is correct, to show the general practice with 
regard to the apartment car. 

Mr. Prentiss. I think what I endeavored to show for you from the 
figures of the department, was the difference between the figures 
actually rendered by the company and the figures taken by the de- 
partment. That is all that was intended to be shown. There were 
certain relationships there which the department considered, which 
were not shown in your table. It is simply a statement of facts. 

Mr. Mack. But it is correct with the apartment car service, the 
return space was not authorized to equal the outbound space ? 

Mr. Prentiss. I do not remember the exact instance. 

Mr. Mack. It is a very important factor because there is so much 
of the apartment car space, and if that is true, it would make a great 
difference in the question of underpay or overpay ? 

Senator Weeks. Taking those figures that Dr. Lorenz submitted 
as to the amount of space allowed, suppose the entire vacant space 
was paid for; how much money would it take, Mr. Stewart ? 

Mr. Stewart. I really do not know. I do not think we have made 
that calculation. 

Mr. Mack. In case that principle were applied throughout, that 
would put us on the basis of the joint committee figures of 3.37 mills 
and 4.34 mills per car-foot mile; and I can give you the figures based 
upon 189,760 miles of railway, which would show under pay of 
$13,190,724; but for the full mileage which existed, which was 16 
per cent more — 226,071 miles — the underpay would have been 
$15,301,293. 

Mr. Safford. I was going to state in order to support the gentleman 
who referred to the unequal movement allowed with regard to mail 
apartment cars, the current schedule of mail trains, dated January 
20, 1914, published by authority of the department, shows that they 
are still pursuing that practice; that is to say, they show a car of one 
size operated in one direction, a car of another size operated in 
another direction by a corresponding train. The table I have before 
me shows a 20-foot car in one direction, 12-foot car in the other, 
and on another train a 10-foot car in one direction and 6-foot car in 
another, and that runs all through this schedule of mail trains, and 
it illustrates the fact that at least some officers of the department 
still have that idea in mind, and they probably got their idea from the 
practice pursued in the compilation of Document 105. 

Mr. Stewart. Document 105 did not change any practices of the 
department at all. 

Mr. Safford. Here is the illustration. 

Mr. Stewart. I am familiar with the illustration, but are those 
the same cars in each case ? 

Mr. Safford. The same cars; yes. 



RAILWAY MAIL PAY. 1105 

Mr. Stewaet. It would have to be for the same round trip or the 
illustration would not have any weight. 

Mr. Baldwin. Are there any 6-foot apartment cars? 

Mr. Stewart. I do not know whether there are any actually 
operated. The smallest size recognized is 9 feet. 

Mr. Baldwin. Those cars are not 6-foot cars? 

Mr. Safford. No, sir; those cars are 30-foot steel cars. 

Mr. Baldwin. And 6 feet is allowed? 

Mr. Stewart. There is no formal authorization for an apartment 
under 40 feet. 

The Chairman. Do any of you gentlemen want to make any further 
statement on volume No. 7? 

Mr. Peters. Mr. Chairman, I want to say just this: We might talk 
to doomsday over Document 105 and volume 7. Volume 7 is a 
reiteration of the belief of the department in the correctness of Docu- 
ument 105. Our statement here is a reiteration of what we have 
submitted heretofore, that Document 105 is unreliable. Mr. Stewart 
is so clever an advocate and he is so sincere and earnest in supporting 
his view that he is not going to yield. We feel the same way; we feel 
that we have been misrepresented; we feel that the facts have been 
incorrectly shown and improper deductions drawn, and that we are 
constantly being put before the public as taking what does not belong 
to us, when we sincerely believe and know that we are not paid prop- 
erly for the service performed, and we have been sustained in our 
position by a fair and disinterested expert who has heard all the evi- 
dence, and that is Dr. Lorenz. Dr. Lorenz reaches practically the 
conclusion that we do. We are ready to rest our case on the state- 
ments in volume 6. You may go on and discuss this thing for 
months, but you will not get any nearer, because we will not sur- 
render our position and we can not. 

The Chairman. If you were shown that your position was wrong 
you would give up ? 

Mr. Peters. Dr. Lorenz has shown our position is right. The 
statement here as to the deadhead mileage, 22 per cent of the total 
car-foot miles furnished in connection with the mail service as re- 
ported by the railroads, is thrown out and shown in here as dead 
space. There was only 1.72 per cent of the mail space that was dead- 
head space and that they allow. All of these facts have been fully 
analyzed by Dr. Lorenz and he draws a different conclusion from 
Mr. Stewart and he practically coincides, from different lines of 
reasoning, with the conclusions of the railroads. We are ready to 
leave our case in your hands. 

Mr. Stewart. In regard to that, may I say one word? Dr. Lorenz 
is here; I can not speak for him, but Mr. Peters seems to think that 
he can speak for him. I think it fair, although Dr. Lorenz has not 
said so, that when he made that statement, which the railway mail 
pay committee has put in this brief, and it has been referred to by 
Mr. Turner and others, Dr. Lorenz certainly had not heard the ex- 
planation the department gave in regard to dead space. I say I will 
not speak for Dr. Lorenz, but surely how coulcl Dr. Lorenz pass 
judgment upon a case until he had all the facts before him ? I sub- 
mit that inquiry. 

Mr. Wishart. As to the New York Central lines, whether or not 
document 105 proves that we were underpaid" or overpaid in 1909, 



1106 RAILWAY MAIL PAY. 

I want to say there has been a great change in conditions since that 
year, because we have proved in the rate cases, or attempted to 
prove, that the operating expenses have gone up out of all proportion 
to increase of business since that year. 

Senator Weeks. You say in this statement which you have sub- 
mitted to-day that gross revenue has increased 17 per cent and operat- 
ing expenses have increased 29 per cent. 

Mr. Wishart. I say they have grown out of all proportion to 
business. This is a 10-year statement prepared for the advance 
rate case, it is a consolidated statement for the New York Central 
lines, and I thought it might be of interest to the committee to know 
to what extent the mail revenue has decreased on all those 13,000 
miles of road. We have here, comparing 1913 with 1904, for instance, 
$208,000,000 of freight revenue against $126,000,000 in 1904, 
$72,000,000 passenger revenue against $47,000,000 in 1904, and 
$5,900,000 against $6,200,000 mail revenue. I do not think with 
the growth of the business of the country anyone could doubt 
that the mail also has increased. Express revenues have increased 
from $5,200,000 to $10,200,000. 

Mr. Mack. I would like to put into the record at this point this 
brief statement, that from 1908 to 1912, five years inclusive, the 
postal revenues increased $63,159,007, and during the same period 
there was a decrease in the mail pay of $305,787. The Government 
practically had that $63,000,000 worth of revenue without the pay- 
ment of one cent for the transportation of the mails which produced 
that revenue. 

Mr, Stewart. You do not mean to say we did not pay you for all 
you transported ? You got pay for all you transported for us ? 

Mr. Mack. We did not receive one cent additional compensation 
for the handling of a business for which the Government collected 
from the people $63,159,007. 

Mr. Stewart. Let me get what is in your mind, for I do not 
understand you. 

Mr. Mack. It shows the Government revenue was increasing, 
from mail, very rapidly, but the compensation to the railroad com- 
panies during that period decreased. We had that $63,159,007 
worth of business to transport for the Post Office Department, but 
got no compensation for that increased business, as our mail pay was 
reduced instead of increased during that period. 

Mr. Stewart. Between 1908 and 1912 the mail pay increased? 

Mr. Mack. The postage. The Government revenue in the Postal 
Service increased $63,159,007. In other words, it produced $63,- 
000,000 more worth of business and the railroad companies did not 
receive one cent more for transporting that great volume ol addi- 
tional business. The figures show that we had a decrease in railway- 
mail pay during that time of $305,787. Those figures are taken 
from the departmental reports. 

Mr. Stewart. Your premises are not correct, and I would like the 
privilege of correcting the record. 

The reports show that the revenue was increased about $55,000,000 
from 1908 to 1912, inclusive. They further show that the expendi- 
ture for railroad transportation and cars for 1908 was $48,458,255.34 
and for 1912, $51,691,301.21, making an increase of $3,233,045.87. 

a For a corrected and supplementary statement submitted by Mr. Mack, see vol. 11, pp. 1316 and 1317, 



RAILWAY MAIL PAY. 1107 

Furthermore, between 1908 and 1912 the new divisor became effective 
in the three remaining contract sections, effecting a large decrease in 
railroad-mail pay. If the new divisor was justified, this decrease 
was a proner one and can not be complained of. The department 
believes this is true. Again, Mr. Mack's premise leaves out ol con- 
sideration the reasons for reduction in pay resulting from the trans- 
portation of certain periodical mail matter in fast freight trains 
instead of mail trains, which amounts to approximately one and a 
half million dollars a year; also the reduction in mail pay as a result 
of the transportation of empty equipment, etc., in freight trains 
instead of mail trains. 

The Chairman. At this point of the proceeding we will insert in 
the record a letter addressed to Hon. Jonathan Bourne, jr., chairman 
of the Joint Committee, signed by Mr. John N. Drake, secretary of 
the Short Line Railroad Association, together with a tentative draft 
of a bill transmitted with said letter. 

Washington, D. C, February 26, 1914. 
Hon. Jonathan Bourne, Jr., 

Chairman of the Joint Committee on Postage on Second-Class Mail Matter 
and Compensation for the Transportation of Mails, Congress of the United 
States. 

Dear Sir: The Short Line Railroad Association desires to submit for the considera- 
tion of the Joint Committee of which you are the chairman, the accompanying tenta- 
tive draft of a bill embodying suggestions for legislation in amending existing laws 
and equalizing pay for mail service on railroad lines. 

This bill amends the present law in these particulars: 

Increased pay for the weight of mail carried by the short line railroads. 

Annual weighing of the mails. 

Relief from side and terminal deliveries. 

Pay for apartment-car space. 

The basic principle of the present law governing the mail service on railroad lines 
appeals to us as fair and reasonable in recognizing the rights of the carrier and the 
Government in serving the public. No better proof of the law's efficiency to meet the 
requirements of the Railway Mail Service without embarrassment is needed than that 
which its record affords during the 41 years of its existence. During that time the 
length of the mail routes have increased from 63,457 miles to 228,618 miles, and the 
cost of the Railway Mail Service per annum from $7,257,196 to $51,466,030, without 
causing any friction or disarrangement of the service or any claim on the part of the 
Government or the carrier that the law so far as it went was not equitable and just to 
all concerned. 

With the amendments proposed to correct certain inequalities in the old, reliable, 
and tried law without interfering with its general scope, there would be little if any 
room for improvement. 

The association is of the opinion that not one of the tentative bills submitted for 
the consideration of your committee could withstand, year in and year out, a prac- 
tical test to adjust the mail service to its growth with that degree of fairness shown by 
the record of the existing law without causing friction between the carrier and the 
Government and a general disturbance to the system that would operate against the 
public welfare. This is certainly true of the tentative bill submitted by the Post 
Office Department, in the submission of which an effort is made to convey the impres- 
sion that the measure is intended to be just and equitable to all concerned, when as 
a matter of fact, so far as it applies to the short-line railroads, it is the reverse. 

The association is willing to concede that the closed-pouch mail service is of "a 
simple character " ; so also is the carrying of passengers, freight, and express. Because 
of the simplicity of loading and unloading mail bags, it does not follow as a sequence 
that a railroad should maintain a quick and efficient service for their transportation, 
provide car space, be liable for fines, and held responsible for the mail intrusted to it 
at a rate of compensation so small that it would not pay the cost of the employees' 
time in loading and unloading in the baggage car. 

In the statements of short-line railroads carrying pouch mail only submitted to your 
committee, which appears on pages 831, 833, 840, 841, and 842" in No. 5 report of 
hearings, it is shown in a comprehensive manner that the present compensation of 



1108 RAILWAY MAIL PAY. 

carrying pouch mail is very much less than that derived from the express service of a 
similar character. On pages 32 and 33 of the preliminary report of your committee 
Mr. Robert Frazer, president of the Bellefonte Central Railroad, goes into detail of the 
expense incurred by his road — short line — in hauling pouch mail. Mr. Frazer shows 
that a careful estimate of the cost of conducting the service for the year ending June 
30. 1912, was $2,474.46. while the mail revenue received was $947.67, making a net 
loss of $1,526.79. 

In the Post Office Department report contained in Document 105 the estimated 
cost of the mail service on this road was given at $575.40 per annum. In no one 
instance where pouch mail is carried on short-line railroads have we been able to 
show a profit at the rate now paid. 

While the increased compensation for carrying pouch mail suggested in the ten- 
tative bill we submit for your consideration does not aim to secure a profit, it will 
provide against a considerable loss in the performance of the mail service. The 
service now rendered by short-line railroads could not be duplicated in any other 
way at anything like the present cost. The communities served by them are justly 
entitled to receive their mail as expeditiously as the best methods of transportation 
will permit, and the railroads making the deliveries are equally entitled to a fair and 
reasonable rate for the service. Each has similar rights with citizens residing in con- 
gested districts where short-line independent pneumatic-tube mail routes are main- 
tained and paid for by the Government at the rate of $17,500 per mile per year. The 
annual cost of this short-line mail service, covering less than 68 miles, is given at 
$1,140,119.85 in the Annual Report of the Second Assistant Postmaster General for 
the year 1913 (p. 22). 

The short-line railroads have been carrying pouch mail for years at a pecuniary 
loss. They have also donated their car space for post-office purposes, performed 
messenger service on the highways, and have cooperated with the Post Office Depart- 
ment in every known way to contribute to its efficiency without a murmur, firmly 
believing, when the department became in a measure self-sustaining, Congress 
would recognize their claim for increased pay commensurate with the service per- 
formed. This hope still prevails in spite of the efforts made by the Post Office Depart- 
ment to convince Congress that it should delegate its power to the administrative 
branch of the Government. 

Trusting your committee will give heed to our request in amending the present 
law as suggested, we beg to remain, 
Yours, very truly, 

Short Line Railroad Association, 
By John N. Drake, 

Secretary and Treasurer. 

a tentative draft of a bill to amend existing laws and equalize pay for 
mail service on railroad lines. 

Be it enacted by the Senate and House of Representatives of the United States of America 
in Congress assembled, That that part of the act of March third, eighteen hundred and 
seventy-three, as it appears in section four thousand and two of the Revised Statutes 
and as it has been modified by subsequent legislation, be, and the same is hereby 
amended to read as follows, namely: 

"The Postmaster General is authorized and directed to readjust the compensation 
to be paid from and after July first, nineteen hundred and fourteen, for the transporta- 
tion of mails on railroad routes upon the conditions and at the rates hereinafter men- 
tioned. 

"First. That the mails shall be conveyed with due frequency and speed; and that 
sufficient and suitable room, fixtures, and furniture in a car or apartment proprely 
lighted and warmed shall be provided for railway postal clerks to accompany and 
distribute the mails. 

"Second. That the pay per mile per annum shall be at the following rates, namely: 
On routes carrying their whole length an average weight of mail per day of not more 
than two hundred pounds, fifty dollars; five hundred pounds, seventy-five dollars; 
one thousand pounds, eighty-five dollars and fifty cents; one thousand five hundred 
pounds, one hundred and six dollars and eighty-seven cents; two thousand pounds, 
one hundred and twenty-eight dollars and twenty-five cents; three thousand five 
hundred pounds, one hundred and forty-nine dollars and sixty-two cents; five thou- 
sand pounds, one hundred and seventy-one dollars; and on routes carrying their whole 
length an average weight of mails per day of upward of five thousand pounds by making 
the following changes in the rates per mile per annum for the transportation of mail 
on such routes in effect on June thirtieth, nineteen hundred and seven, and hereafter 
the rates on such routes shall be as follows: On routes carrying their whole length an 



RAILWAY MAIL PAY. 1109 

average weight of mail per day of more than five thousand pounds and less than forty- 
eight thousand pounds, the rate shall be five per centum less than the rates on June 
thirtieth, nineteen hundred and seven, on all weight carried in excess of five thousand 
pounds; and on routes carrying their whole length an average weight of mail per day 
of more than forty-eight thousand pounds the rate shall be five per centum less than 
the rates on June thirtieth, nineteen hundred and seven, on all weight carried in 
excess of five thousand pounds; and for each additional two thousand pounds in excess 
of forty-eight thousand pounds, the rate shall be nineteen dollars and twenty-four 
cents upon all roads other than land-grant roads, and upon all land-grant roads the rate 
shall be fifteen dollars and thirty-nine cents for each two thousand pounds carried in 
excess of said forty-eight thousand pounds; the average daily weight to be ascertained 
in every case by the actual weighing of the mails on all of the railroad mail routes at the 
same time for thirty-five successive days, commencing on such date, to be designated 
by the Postmaster General, as is fair and just to the Government and to the carriers, 
and not less frequently than onec in each year, and the result to be stated and verified 
in such form and manner as the Postmaster General may direct, and that the Post- 
master General is hereby authorized and directed to require a railroad mail carrier 
to provide for the carriage of the mails between its trains and a post office or postal 
station only where such post office or postal station is located in a railroad depot or 
station of such carrier." 

Sec. 2. That section four thousand and four of the Revised Statutes, as modified by 
the act of March second, nineteen hundred and seven, making appropriations for the 
service of the Post Office Department for the fiscal year ending June thirtieth, nine- 
teen hundred and fourteen, and for other purposes, be, and is hereby, amended by 
adding thereto the following, namely: 

"And the Postmaster General is hereby authorized and directed to allow for space used 
for railway post-office purposes in apartment cars at pro rata of the rate of compensation 
allowed for postal cars forty feet in length." 

(New matter in italic.) 

(Thereupon, at 1 o'clock p. m., the hearing adjourned until 10 
o'clock a. m., Friday, February 27, 1914. x ) 

i The hearing referred to in the text was postpone until 10 o'clock a. m , Monday, March 16, 1914. 



EAILWAY MAIL PAY. 



MONDAY, MARCH 16, 1914. 

Joint Committee on 
Postage on Second-Class Mail Matter, Etc., 

Washington, D. C. 

The committee met at the call of the chairman at 10 o'clock a. m. 

Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W. 
Weeks, and Eepresentatives James T. Lloyd and William E. 
Tuttle, jr. 

The following gentlemen were present and were sworn by the 
chairman : 

Eepresenting the railway -mail pay committee : 

Mr. Kalph Peters, chairman, president Long Island Railroad. 

Mr. H. L. Fairfield, supervisor of mails, Illinois Central and Cen- 
tral of Georgia Railroads. 

Mr. R. B. Coleman, chairman committee No. 2, Short Line Rail- 
road Association of South Carolina; general manager Georgia, 
Florida & Alabama Railroad. 

Mr. V. J. Bradley, general supervisor mail traffic, Pennsylvania 
Railroad. 

Mr. S. C. Scott, vice president's assistant, Pennsylvania Railroad. 

Mr. A. H. Rowan, assistant to vice president, New York Central 
Railroad. 

Mr. H. E. Mack, manager mail traffic, Missouri Pacific Railway. 

Mr. W. W. Safford, general mail and express agent, Seaboard Air 
Line Railway. 

Mr. F. E. Campbell, traveling agent, transportation department, 
Norfolk & Western Railway. 

Mr. (Jeorge W. Hardin, vice president, East Tennessee & West- 
ern North Carolina Railroad. 

Ex-Senator Charles J. Faulkner, counsel. 

Mr. H. M. Wade, agent mail traffic, Erie Railroad. 

Mr. R. H. Snead, manager express traffic, Chesapeake & Ohio 
Railway. 

Col. W. B. Thompson, counsel. 

Mr. Moultrie Hitt, secretary General Managers' Association of the 
Southeast, etc. 

Mr. J. P. Connolly, supervisor of- mail traffic, Central Railroad of 
New Jersey. 

Mr. John N. Drake, secretary Short line Railroad Association. 

Mr. James Peabody, statistician, Santa Fe system. 

Mr. W. W. Baldwin, vice president, Chicago, Burlington & Quincy 
Railroad. 

mi 



1112 RAILWAY MAIL PAY. 

Mr. C. A. Searle, manager mail traffic, Rock Island lines. 

Capt. W. B. Denham, general manager, Ocala & Northern Rail- 
road. 

Mr. L. T. Nichols, general manager, Carolina & Northwestern 
Railroad. 

Mr. J. P. Lindsay, manager mail traffic, Santa Fe system. 

Col. Samuel P. Maddox, counsel. 

Mr. W. M. Blount, president, Birmingham & Southeastern Rail- 
road. 

Representing Post Office Department : 

Hon. Joseph Stewart, Second Assistant Postmaster General. 

Mr. C. H. McBride, superintendent division of railway adjust- 
ments. 

Mr. George E. Bandel, assistant superintendent division of rail- 
way adjustments. 

Mr. A. N. Prentiss, clerk. 

Mr. M. O. Lorenz, statistician, Interstate Commerce Commission. 

The Chairman. Gentlemen, this meeting was called for the pur- 
pose of giving the representatives of the railroad companies doing 
business with the Government, opportunity of expressing their com- 
ment in reference to a tentative draft of legislation relative to rail- 
road mail service and compensation therefor, submitted by the Post- 
master General in what is known as volume No. 8, under date of 
February 12, 1914. 

Mr. Peters, will you start the hearing? 

Mr. Peters. I have prepared a short statement which I would like 
to read and put into the record, and it will be followed by two 
more statements from other members of the committee before we go 
into a general discussion of the subject. 

The Chairman. You prefer to submit the matter in full without 
interruption and then take up the discussion of the details after- 
wards ? 

Mr. Peters. Yes. 

STATEMENT OF MR. PETERS. 

Mr. Peters. We have been asked to discuss to-day volume 8 of 
your hearings, this containing the letter of the Postmaster General 
to your honorable committee of February 12, 1914, transmitting " a 
report and tentative draft of legislation relative to railroad mail 
service and compensation therefor," as submitted by the Second 
Assistant Postmaster General under the same date. 

We thus find ourselves in a similar position to that we occupied 
over a year ago when we were called upon to discuss a similar " ten- 
tative draft of proposed law for regulation of railway mail pay" 
which had been submitted by the Post Office Department in connec- 
tion with House Document No. 105, under date of August 12, 1911. 
That bill had been introduced in the United States Senate on July 
25, 1912 (S. 7371) at the request of the Post Office Department, not- 
withstanding the fact that when Document No. 105 was first pub- 
lished in December, 1911, it was promptly assailed by the chairman 



BAIL WAY MAIL PAY. 1113 

of the railroad committee as being based on incomplete data, incor- 
rect tabulations, and fallacious assumptions; also, notwithstanding 
the fact that no hearings had as yet been held to determine the rela- 
tive merits of the respective arguments. A similar bill had already 
been introduced in the House of Representatives as early as April 
24, 1912, under the title H. R. 23721. 

Since that time the whole subject has been analyzed and discussed 
at the many hearings accorded to both sides by your honorable com- 
mittee, and we take advantage of this opportunity to express our 
acknowledgments for the fair and impartial attitude of the con- 
gressional committee toward the subject and to express the opinion 
that the information and data collected at these hearings are by far 
the clearest and most important contributions to the subject of rail- 
way mail pay that have ever been made. 

In presenting the proposed bill which accompanied Document No. 
105, and which reappeared in Senate bill 7371 and H. R. 23721, 
former Postmaster General Hitchcock indicated that the new method 
of fixing railway-mail pay Avould entirely abandon the long-existing 
method of fixing it in accordance with weight and would substitute 
therefor the measure of car space based on rates which would be 
ascertained according to the cost to each railway company of per- 
forming the service. 

It now appears in volume 8 that the Post Office Department had 
also abandoned the cost method of arriving at the rates, but main- 
tains its adherence to the car space measure of service. 

Before proceeding to the consideration, first, as to the general 
character, and, second, as to the particular provisions of the new 
space bill proposed in volume 8, it may be advantageous to occupy 
a few minutes, with your permission, in very briefly reviewing the 
present situation as it appears to us. 

The law of August 24, 1912, appointing the joint congressional 
committee prescribed that it is " to make inquiry into the subject of 
postage on second-class mail matter and compensation for the trans- 
portation of mail, and to report at the earliest practicable date." 
Therefore, so far as the question of railway-mail pay is concerned, 
it appears that your honorable committee is expected to make inquiry 
as to the compensation. 

We would, therefore, seem justified in surmising that whatever 
range your committee gives to the scope of its recommendations in 
the way of remedial legislation, it is of first and paramount im- 
portance to decide the question of underpay or overpay and approxi- 
mately the amount of such underpay or overpay. It might also be 
argued with much force that such an ascertainment and^such a de- 
cision is essential before the question of constructive legislation or 
amendatory legislation is determined upon. 

In regard to underpay or overpay, the Post Office Department has 
claimed overpayment and has based their claim entirely upon Docu- 
ment No. 105 ; that is, their own ascertainment of cost, reaching a 
result of $9,000,000 overpay for the fiscal year 1910. When they 
subsequently revised this estimate to include capital cost which they 
had originally overlooked, they reduced the amount of their claim 
to $1,600,000. The railroad committee in making the same calcula- 
tion, but by using different ratios, which they believed to be more 



1114 RAILWAY MAIL PAY. 

correct, showed underpay in the fiscal year of 1910 of $29,000,000, 
instead of overpay of $1,600,000. 

It has been pointed out that the Post Office Department, in addi- 
tion to omitting capital cost, had treated the car space for the post 
office purposes on a different basis from what they had treated the 
car space devoted to other than mail traffic. The railroads have been 
perfectly willing to have the comparison made according to the gross 
amount of space for the passenger, mail, or express business, and they 
have been equally willing to have the comparison made on the basis of 
the net amount of space for each of these traffics, but they could not 
consent that the Post Office Department should compare the net 
amount of space required for mail service with the gross amount in 
the passenger and express service, when it is perfectly clear that the 
public pays in one way or another for all of these services. 

The railroad committee has submitted a number of comparisons 
entirely distinct from the ascertainment in Document No. 105, which 
tend to confirm their claim of underpay, and none of these compari- 
sons have been refuted or matched by the Post Office Department. 

For example, it has been shown that by comparing the mail reve- 
nue of the railroads on the space basis with the revenue from similar 
car space in the rest of the train, there was a deficit in mail pay in 
1909 of $17,000,000. 

Again it has been shown that by applying to the postal revenues 
for 1912 the same percentage of postal revenues which were employed 
for railway-mail pay in 1901, there would have been a deficit in rail- 
way-mail pay in 1912 of $32,000,000. 

Again it has been shown by the relative increase in freight and 
passenger revenues between the years 1901 and 1910 that there would 
have been a deficit in railway-mail pay in 1910 of from $15,000,000 
to $17,000,000. 

We therefore believe that in making the statement that the amount 
or railway-mail pay is at least $15,000,000 below what it should be, 
the claim is moderate. We also feel that this condition fully sus- 
tains the statement made in the letter to the chairman of your com- 
mittee on October 3, 1912, which said : 

The existing law has never worked to the disadvantage of the Government, 
but has failed to do justice to the railways by reason of infrequent weighing; 
absence of pay for nearly 40 per cent of the space occupied as traveling post 
offices; the performance, without pay, of side and terminal messenger service; 
and the unjustifiable reduction in pay by the act of Congress dated March 2, 1907, 
supplemented by Order No. 412 of the Postmaster General changing the divisor. 

We respectfully submit that if your committee decides that the 
railroads generally were underpaid in 1909 for mail transportation 
not less than $15,000,000 per annum, it would not be inappropriate to 
regard most carefully, and perhaps preferentially, the recommenda- 
tions which the railroad committee would submit for remedying 
those applications of the present law and regulations which are 
obviously the most burdensome. The committee on railway-mail pay 
submitted in the letter of October 3, 1912, addressed to the chair- 
man of your committee, a statement of a few amendments which 
seem to be desirable in the present law and regulations in order to 
correct in a measure the condition of underpayment. 

We have all been working under the present law of 1873 for the 
past 40 years, and all concerned are more or less familiar with its 



RAILWAY MAIL PAY. 1116 

operations. That is one reason why it is deemed preferable to any 
untried or theoretical plan that could be proposed. Yet, if expe- 
rience had demonstrated that a different plan would be desirable, 
it would be proper for those advocating such a plan to show a 
fundamental importance for it and unmistakable advantages. We 
believe that no alternative plan thus far proposed satisfies these pri- 
mary conditions of consideration, but if there were any such plan 
before us it might still be held that the present time is not oppor- 
tune for any final and deliberate legislative action, because since 
this investigation was started the Government has embarked upon 
an entirely new class of mail traffic, namely, the parcel post. The 
original law which fixed the zones, rates, and conditions, as well as 
the weight limits, included a clause authorizing the Postmaster 
General to alter these conditions subject to the concurrence of the 
Interstate Commerce Commission. The present Postmaster General 
has used this power to greatly extend the weight limits and to re- 
duce the rates and to alter the other conditions according to his views 
of his duty in the premises. The Interstate Commerce Commission 
has indicated that its participation in the joint responsibility for 
such action is on such a restricted basis that it has asked to be relieved, 
but Congress has not taken action to that end. The Postmaster 
General has intimated his purpose of greatly raising the weight 
limit and making other modifications in the provisions of the original 
law. 

There is already a great difference of opinion in regard to the 
true volume of the new parcel-post traffic, and there is no one who 
can estimate with any degree of accuracy the effect of future changes. 
Therefore, the problem of railway mail pay which was of sufficiently 
complicated character when your committee first undertook a study 
of the subject has been radically changed so far as the traffic is con- 
cerned, and the operating conditions as regards the future and as 
affecting both the Post Office Department and the railroads can not 
now be satisfactorily estimated. 

Certainly any law which seeks to properly measure the service 
rendered, or the method of arriving at the ascertainment of pay, 
should fulfill certain primary conditions: 

First. It should take cognizance of the relations of the future as 
well as of the past between the railroads and the Postal Service. 

Second. It should measure the service performed by the railroads 
by some simple factor easily understood and meaning the same to 
both parties in interest. 

Third. Its provisions should be obviously and manifestly just to 
both parties in interest, and thus protect equally the rights of the 
Government and the rights of the railroad carriers. 

Fourth. The rates of pay should, we believe, take cognizance of 
the present condition of underpayment, and make provision for 
remedying that condition. 

Fifth. Its basis, as well as its provisions, should tend toward sim- 
plicity. 

Sixth. The terms and conditions under which the service is to be 
performed should be so explicitly defined that any causes for misun- 
derstanding or irritation leading to lack of cooperation between the 
post office service and the railroad service should be eliminated, or, 
at least, reduced to a minimum. 
49396—14 78 



1116 RAILWAY MAIL PAY. 

Our judgment is that the plan proposed in volume 8 of the hear- 
ings, and the terms in which it is expressed, completely fail to sat- 
isfy any of these requirements. 

If the tentative draft of a postal law which was submitted with 
Document No. 105 was conceived in a spirit of justice and fairness, 
it is difficult to understand how some of the autocratic provisions 
were made, because it is believed that this was the first time in the 
history of the United States Postal Service that such an extreme po- 
sition was taken. Eeferences might be made to many of the para- 
graphs, but it may be sufficient to point out that the first paragraph 
provides that any railroad company that fails or refuses to submit 
statistical information to the Postmaster General of all of its oper- 
ating expenses shall have its compensation for the service rendered 
forfeited to the United States and withheld as liquidated damages. 
The second paragraph provides for a fine of $20,000 or imprison- 
ment for five years for any railroad employee who knowingly fur- 
nishes false information, but there is no mention of any correspond- 
ing penalty for any postal employee who might perpetrate a similar 
act. The third paragraph provides that the Postmaster General 
shall assign or apportion all of the railroad expenses between freight 
and passenger service, and if an appeal is made to the Interstate 
Commerce Commission he need only submit such papers as in his 
judgment may be essential to an understanding of the method. The 
action of the Interstate Commerce Commission was made final with- 
out any intimation that any voluntary recourse to the courts would be 
permitted. The proposed law in Document No. 105 continues in this 
spirit, and concludes with a new requirement that any railroad com- 
pany refusing to carry the mails at the rates of compensation pro- 
vided by law, when and for the period required by the Postmaster 
General so to do, shall be fined for every such offense not exceeding 
$5,000. 

We respectfully submit that the same spirit permeates the new 
proposed law published in volume 8, the concluding paragraphs of 
which propose to give practically unlimited power to the Post Office 
Department to change all of the conditions regardless of the specifi- 
cations in the earlier paragraphs, in addition to which it concludes 
with a penalty of $5,000 for every failure of a railroad company to 
carry the mails. 

Where is the justification for according such arbitrary power to 
any department of the executive branch of the Government, even if 
the existing conditions were such as to create a tendency toward a 
legislative inclination in that direction, because it might be deemed 
temporarily advantageous, although not permanently advisable in 
the best interests of the Republic? Where are the conditions that 
even suggest the temptation? The railroads are all carrying the 
mails in such a manner as to give the United States Postal Service 
the highest reputation for expedition and ample facilities and yet at 
a rate of pay which has been demonstrated to be far below the amount 
which should be justly allowed for the service. The attitude ex- 
pressed in recent years by some officers of the department, that the 
only way in which a railroad could make its protest effective would 
be by refusing to carry the mails, has probably created an atmos- 
phere in which imaginary dangers exist. It is most earnestly sug- 
gested that those occupying public office, as well as those operating 



KAILWAY MAIL PAY. 1117 

public utilities, should feel equally as trustees of the public good 
that it is their first duty to secure enthusiastic cooperation in the joint 
performance of a public service by making sure that their relations 
with each other and that the rates of compensation and the condi- 
tions of the service shall rest upon such an unmistakably just and 
fair basis that there will be no reason and, in fact, no excuse for 
any deficiency. 

"We are willing, if your committee desires it, to discuss the detailed 
provisions of this proposed law. We believe, however, that in its 
entirety it is no more deserving of serious consideration than was the 
tentative draft of the law submitted in connection with document 
No. 105, as many of the provisions of that proposal are included in 
the new proposal. 

We also believe that your honorable committee should take cog- 
nizance of the fact that this new plan is proposed on a basis of rates 
which are apparently calculated to reduce railway mail pay $2,000,- 
000 and upward, in comparison with the present amount, and while 
it might be said in response to this suggestion that the rates could 
be made higher by Congress, the uncertainty which attaches to the 
interpretation of the measurement by space and of the other details 
of the service would make the total amount indeterminate. We are 
therefore obliged to estimate the department's purpose by the rates 
that are specifically named in volume 8. 

In concluding these general remarks we ask that it be remembered 
that while this matter may appear to be a question between the Post 
Office Department on the one hand and the railroad companies of 
the United States on the other, it is really a subject of great conse- 
quence to the whole people. 

When we survey the field of those who are financially concerned in 
this matter, either as employees of the railroad companies or em- 
ployees of industrial establishments depending upon railroad busi- 
ness, or as stockholders or bondholders of railroad securities, or as 
depositors in savings banks, or policyholders of life insurance com- 
panies, or as members of fraternal insurance organizations whose in- 
vestments are largely in railroad securities, we are convinced that a 
great majority of the American people are now interested or will 
become interested in the proper settlement of this important question. 

I submit this statement as a general opening of the discussion, and 
would ask that you call Mr. Baldwin, who is chairman of the sub- 
committee appointed from the Chicago lines, to open the discussion 
of the bill. 

The Chairman. We will be glad to hear from Mr. Baldwin. 

STATEMENT OF MR. BALDWIN. 

Mr. Baldwin. At a meeting of the representatives of the road held 
after the last session it was suggested that a committee representing 
the western railroads take up this separate consideration of this 
matter, and that committee has asked me to present some general 
observations by way of introduction and has asked Mr. Mack to pre- 
sent some specific comments on the details of the bill, after which, of 
course, we will take it up section by section, if you so desire. 

The members of the mail pay committee representing the railroads 
are of opinion that the evidence submitted to the commission shows 



1118 RAILWAY MAIL PAY. 

that the companies carrying the mails of the country are underpaid 
at this time, for the service they perform for the Government in 
that behalf, at least $15,000,000 annually. Any bill in the framing 
of which they participate and cooperate should, they respectfully 
suggest, have for at least one of its purposes the correction of this 
condition. The bill that is embodied in volume 8 of your hearings, 
instead of such a purpose, is designed, as we have been advised, to 
still further reduce the already inadequate pay of the railroad com- 
panies from two to six million dollars a year, based upon a contin- 
uance of the present service. 

Senator Weeks. You do not mean to say designed for that pur- 
pose? 

Mr. Baldwin. I did not say that. I said, if it existed. Let me 
read the next sentence. 

Not having sympathy with this purpose of the bill if it exists 
such comments as we make should not be regarded as primarily made 
with a view of perfecting it, because from our point of view the 
principle upon which it is based is not workable. 

Senator Weeks. It struck me, as you read that, that it was an 
unfortunate expression. The Post Office officials ought not to rest 
under the charge that they are designedly doing something to reduce 
pay, but their judgment does reduce the pay. 

Mr. Baldwin. I understand that, but they also believe, or have 
expressed the opinion, that the pay is higher than it ought to be, 
and have also said that the effect of this bill — I have understood that 
some of the officials of the department have claimed — would be to 
reduce the mail pay about $6,000,000 a year. We can not very well 
sypathize with that. 

Senator Weeks. I am not criticizing your sympathy or your lack 
of sympathy with it, but simply the suggestion that the bill was 
designed for that purpose. That is what I am criticizing. 

Mr. Baldwin. I did not mean to assert that. 

There are certain general considerations that we desire to call to 
your attention before referring to the separate sections. 

We assume that the service which the railways are now perform- 
ing for the Government in the transportation of the mails is in the 
main satisfactory and that it is the desire of the commission not to 
destroy nor to seriously impair this service. 

The question which led to the appointment of your commission 
did not relate to the quality of the service which the railroads are 
furnishing, but were substantially confined to the question of ade- 
quate compensation for that service. 

Before the railroad companies can be asked or expected to agree 
to continue the service in its present form they should, it seems to 
us, have some assurance regarding the definiteness and certainty 
of the rules under which they are to be compensated, if new rules 
are to be adopted. The plan embodied in volume 8 does not accord- 
ing to our view embrace such definite and certain rules, but intro- 
duces elements of indefiniteness and uncertainty that have not here- 
tofore existed in the law. No one familiar with the wide differences 
of opinion that have developed at these hearings with apparent 
good faith on both sides, regarding space authorized, or space neces- 
sary, or space used, in November, 1909, and the question of " dead 
space," " deadhead space," and other features can fail to appreciate 



EAILWAY MAIL PAY. 1119 

the possibilities in future disputes and controversy that are sure to 
arise. 

But the proposed bill would confide in the officials of the Post 
Office unlimited discretion over every feature of the subject, not 
only by the use of the phrase "not exceeding," but in different 
terms, and by fines or by the exercise of such discretion as to make 
the compensation adequate or inadequate, almost at will. The phrase 
" not exceeding " in previous enactments had to be applied to definite 
rates per pound, leaving little room for dispute. 

Practically every controversy the railroads have had with the 
department has arisen over " half lines " and other questions grow- 
ing out of what would seem to be the simplest form of the space 
question — the payment per mile-run for the use of cars of a specified 
length. But questions of space " authorized " and space " neces- 
sary " and space " used," which inspectors of the department have 
been able to raise have proved vexatious and have been frequent. 
Under a system basing everything on space, with a maximum rate 
schedule, and the entire authorization and use governed solely by 
the unlimited discretion of inspectors anxious to make a record, and 
of their superiors slow to disregard recommendations that may 
produce possible economies, it is plain that no railway can know 
with definiteness or certainty what its compensation is to be. This 
uncertainty may have an important bearing upon the continuation 
of the expedited or special mail trains which have been denominated 
the " heart " of the Railway Mail Service. This service has been 
highly developed and made possible, because it was made com- 
pensatory by concentrating weights of mail upon the lines which 
have the facilities for providing the service. With the termination 
of the weight system you terminate the present motive and reason 
for the railroads to operate fast mail trains, and no method for 
reviving such a service has to our knowledge been suggested except 
subsidy, the appropriation for which in 1883, before compensatory 
weights existed, reached as high as $600,000 a year, and at this time 
must apparently be much greater. There are now many special 
fast mail trains where one existed in 1883. 

The bill in volume 8 was framed to embody the idea of a " prefer- 
ential rate." This means, as the author says, a rate based upon a 
consideration of what the railroads owe, first, to the Government of 
the United States ; secondly, what they owe the people ; and, thirdly, 
what they owe the country at large for the privilege of existence, etc., 
and presents a wide field for contemplation. It necessarily leaves to 
those who may have the power of decision the right to give such 
weight to these very indefinite elements as they may think they de- 
serve. To this is now to be added the condition that the Government, 
through orders issued at the discretion of the Post Office Department, 
is rapidly extending the transportation package freight by mail in 
competition with the railroads. That is to say, this bill is framed to 
enforce upon the railroads by law a preferential rate upon indefinite 
premises in competition with the roads themselves, and to be based 
upon authorized space that is to be measured by department officials, 
the rate to be only a maximum rate and the decision of all questions 
arising to rest solely in the discretion of the same officials. 

It is an anomaly in legislation appropriating private property. 



1120 RAILWAY MAIL PAY. 

The Chairman. With no parallel whatever ? 

Mr. Baldwin. I think not, sir ; in its indefiniteness and possibilities. 

Railroad corporations are common carriers, but their roads and 
steamboats and other facilities for conducting the business are private 
property which the Post Office Department could thus appropriate 
without compensation through the process described. 

It has been suggested that Mr. Mack has the committee's memoran- 
dum as to the details, which I think you will find, to some extent at 
least, tends to corroborate this. 

The Chairman. Would you like to put that in now ? 

Mr. Baldwin. Yes; if you please. We will have them set out in 
their order. 

Mr. Mack. I would like to have it printed as a complete argument, 
so that the interruptions will not break the thread of it in the print 
of hearings. 

The Chairman. I will say that thus far there have been no inter- 
ruptions until the witness completed his statement. We can continue 
that and any point the committee may have in mind can be taken up 
for discussion later. 

STATEMENT OF MR. MACK. 

Mr. Mack. The latest method proposed by the Post Office Depart- 
ment for the adjustment of railway-mail pay, and submitted on Feb- 
ruary 12, 1914, for the consideration of the joint committee of Con- 
gress, may be considered coercive and unjust to the railroads, if it is 
necessary that the sovereign power of the Government be exerted 
through a requirement of compulsory service, with compulsory ac- 
ceptance of rates wholly in the discretion of the Postmaster General, 
as maximum and not fixed rates are stated and compulsory compli- 
ance with every condition the Post Office Department may in its dis- 
cretion impose under a penalty of $5,000 fine for each offense of 
refusal to carry the mail under the proposed law. 

Mistaken inference might be drawn from this provision that the 
railroads have refused to carry the United States mail, but although 
they are under provocation of unjust treatment, particularly with ref- 
erence to the failure of the Government to provide proper compensa- 
tion for the transportation of parcel post, they have responded to 
obvious public necessity and carried the mails, confident in ultimate 
fair adjustment, as the United States Government can not afford to 
do otherwise. 

As the maximum rates provided in the bill are concededly by im- 
plication not compensatory rates, the proposed law is fundamentally 
unsound, and as noncompensatory rates would be alternatively con- 
fiscatory rates, the suggested law instead of proving a solution of the 
question would be merely an initiative in throwing all the railroads 
of the country into the courts with years of litigation, a most unfor- 
tunate outcome of the six vears of continuous protest by the railroads 
against the unjust reductions made in 1907 and the work and ex- 
pense of investigation by the railroads themselves, by the Post Office 
Department, and by the joint commission. 

The railroads now have twenty-five million or more dollars in- 
volved in litigation on the mail-pay question, resulting from an ex- 



RAILWAY MAIL PAY. 1121 

ecutive order of the Post Office Department, issued in 190T, effecting 
a change in existing law, and hope any legislation that may arise in 
future will be free of legal complications. 

Any rates fixed upon a noncompensatory basis ; upon a theory that 
the Government has rights to less rates for mail, would put Congress 
in the attitude of fixing discriminate^ rates as representing the peo- 
ple as a whole against the individual citizens who travel as passen- 
gers or ship by freight or express, for it is certain that the burden of 
meeting any deficiency would fall upon them as a matter of course. 

As discriminatory rates are so generally condemned, the Govern- 
ment might fairly set an example of fixing full and adequate pay for 
every service required, as well of corporations as necessarily of 
citizens. 

The effect of a noncompensatory rate for mail would mainly be to 
enable the Post Office Department to make an economical showing 
for transportation. 

The opinion may be stated that anything less than full compen- 
satory rates to be iegal must be founded upon express valuable con- 
sideration in some form, such as franchise privileges, etc., but special 
pleading on the ground of Government protection to railway prop- 
erty or a theory of incidental interest or benefit to other traffic would 
not be valid. Railroad property is fully entitled to complete protec- 
tion by reason of its participation in direct and indirect taxation as 
other property. 

The rates named in the plan are designated as maximum rates and 
are not fixed rates, and as to each and all of them complete discretion- 
ary power is conferred upon the Postmaster General to fix any other 
rate he may choose, with no alternative to the railroads but recourse 
to the courts, and as to all of these rates, even if they were fixed rates, 
they would be nullified and rendered inoperative by paragraphs 36, 
37, and 38. 

The entire bill therefore as to rates and conditions of service en- 
larges to the last degree the discretionary power of the Postmaster 
General, and as to the three paragraphs of the bill just described, it 
conveys to him also the power to discriminate between the classes of 
mail matter in the service rendered the public. 

The proposed method instead of settling the mail-pay question for 
a long period of years, aside from the certainty of litigation to result, 
would be largely an embarkment upon the field of experiment^ for it 
can not be doubted that it would revolutionize the service in some 
respects. 

Instead of being in the direction of simplification of method, it 
would be the most complicated of all plans that have been proposed. 

Certain it is that the plan would make a great many rearrange- 
ments and readjustments, as shown by the application of it by the 
department to a list of routes submitted informally at the last hear- 
ing, but it is speculative as to whether any of these readjustments 
would promote efficiency of service. It is impossible to learn their 
full extent, as the effect of the plan can not be definitely known 
upon all routes until put into actual practice. But obviously, so far 
as the railroads themselves are concerned, aside from the inadequacy 
of pay of all the rates proposed, the readjustments would create a 
great deal of dissatisfaction, and there is certainly enough now. 



1122 BAILWAY MAIL PAY. 

NO PRESUMPTION IN FAVOR OF THE PROPOSED PLAN. 

There is no presumptive weight of evidence in favor of this new 
plan because it originates with the Post Office Department, either 
upon the theory that it would be sound in principle or fair either as 
to rates or conditions, for the essential reason that the department 
is in the position of a shipper, and proposes through this bill, as its 
terms show, to secure complete discretionary and therefore arbi- 
trary power over the rates which will be paid for mail transporta- 
tion and the conditions of service that it may demand, and the de- 
partment is therefore not in an impartial or judicial attitude in 
laying this plan before the joint commission. 

There are facts which it is necessary for your commission to re- 
flect upon concerning the attitude of the Post Office Department in 
reference to proposed mail-pay legislation in considering any new 
plan. 

In submitting, on July 25, 1911, the plan described and recom- 
mended in Document 105, it was confidently presented as " one which 
will be scientific and businesslike." (Doc. 105, p. 19.) 

The new plan, which is fundamentally different both as to basic 
methods and rates, is now represented as a " scientific plan of deal- 
ing with the subject." (Vol. 8, p. 1056.) 

The plan recommended in Document 105 was the " one-unit " plan 
(Doc. 105, p. 15), being an exclusive-space plan. 

The new plan is a weight-and-space plan with many complica- 
tions, as will hereafter be explained, although in Document 105, 
page 15, the existing method, which is a simplified weight-and-space 
plan, is criticized as " unscientifie in plan " because of the " two 
different methods of nay." 

The plan described in Document 105 was upon an alleged cost basis 
with 6 per cent profit on such operating cost. As the cost was to be 
determined by the Postmaster General, it involved the necessity of 
his determining the cost of all classes of transportation before he 
could attempt any ascertainment on any basis of the subcost for mail 
service. 

Later the department proposed that the cost be ascertained by the 
Interstate Commerce Commission. Now the department proposes 
rates fixed in its own discretion, without any governing basis except 
the inadequate maximum limitation. 

As to the rate of profit which the department originally proposed 
as 6 per cent, it must be remembered that it was to be applied to the 
operating costs, obviously upon the wrong^ thing, for as a simple ele- 
mental principle profit is based upon capital invested instead of the 
cost of doing business. 

When this was pointed out the department afterwards changed 
position, and in conceding that profit should be upon capital, was 
not willing to support the principle of profit at 6 per cent, which it 
had originally proposed, but proposes a less rate of earning for mail, 
a subject which has otherwise been dealt with separately. 

The department proposed originally to eliminate mail weighing 
entirely (Doc. 105, p. 15) and now recommends that there should 
be a weighing, but upon a more complicated system, as will hereafter 
be explained. 



RAILWAY MAIL PAY. 1123 

An annual weighing under existing law was stated by the depart- 
ment on January 16, 1914, to have no merit (vol. 7, p. 1018), but on 
February 12, 1914, the department recommended an annual weighing 
as applicable to the weights of mail to be paid for on the weight 
basis. (Vol. 8.) 

On January 16, 1914, the department stated that there is no merit 
in the contention that the railroads are underpaid as to apartment- 
car service, yet in Document 105 it was stated that " no additional 
compensation is allowed for space for distribution purposes occupy- 
ing less than 40 feet of the car length. This distinction is a purely 
arbitrary one and without any logical reason for its existence." 

It is but fair to state upon the foregoing premises as to uncer- 
tainty and changing view in the department, that the weight of evi- 
dence is against rather than in favor of the plan now proposed by 
the department. 

FUNDAMENTAL ERROR. 

The serious defect with the new plan proposed by the department 
on February 12, 1914, is that which has been continuously pointed 
out at length throughout the hearings before the joint committee, 
that space as a main factor to fix mail pay would be fundamentally 
wrong, because the volume of mail does not automatically deter- 
mine 'the space required in its transportation, but instead is one 
wholly of opinion and judgment at the very best, and it is human 
judgment and opinion under a space plan which would determine 
the measure of pay to the railroads on every mail route and be the 
factor determining the disbursement of $50,000,000 or $60,000,000 
annually. 

The objection would seem to be greater from the standpoint of 
Congress as unsound and impolitic, but is objected to by the rail- 
roads because relationship with the Post Office Department would 
be unsatisfactory upon that basis, and they ask a definite basis for 
the transportation service rendered, upon weight with the object of 
transportation itself fixing and determining the exact volume of 
transportation service rendered and which is free of any element of 
opinion or judgment in the transaction. 

It is more essential to-day even than heretofore, because the new 
plan of handling mail through what are termed "Terminal K. P. 
O.'s " throws a greater bulk of mail into the strictly transportation 
channels of baggage-car service than under the former plan. 

The existing method upon this sure foundation is as thoroughly 
important to the Government as to the railroads, as to 90 per cent 
of the mail pay, leaving but 10 per cent now determinable upon opin- 
ion or judgment of postal officers, which is for space for post-office 
work, very properly in the discretion of the department, as this fea- 
ture of the service is based upon the extent of letter and paper dis- 
tribution which the Post Office Department desires to carry on upon 
the railway trains. 

The space plan would be productive of perpetual controversy be- 
tween the railroads and the administrative officers of the service, not 
only in Washington but in the local sections throughout the country 
where chief clerks of Railway Mail Service have supervision; and 



1124 RAILWAY MAIL PAY. 

how serious this would he may be estimated by your committee from 
its observation throughout the hearings of the difference in opinion 
concerning in the neighborhood of 21.28 per cent of space reported 
by the railroads and eliminated by the Post Office Department in its 
calculations in Document 105. 

There is nothing original or new in the proposition to make space 
a main factor, because it has been proposed by previous commissions 
and as often rejected, and the presumption is very strongly against 
it for the solid fundamental objections briefly alluded to throughout 
the hearings and in condensed form in volume 1, pages 301 to 314, and 
volume 4, pages 624 to 627. 

COMPLICATIONS OF PLAN. 

Obviously any plan of mail pay should fit the character of service 
performed, which has been pointed out frequently and specifically, 
is of two important features: First, the transportation of the mail 
itself; and second, the feature which is not a transportation facility, 
namely, that of post-office distribution in mail cars. The existing 
plan recognizes these two distinct services in a comparatively simple 
way ; that is, weight for the transportation service and space for the 
postal- distributing facilities. 

The new plan of the department now recognizes these two essen- 
tials, but substitutes a 5-unit plan instead of a 1-unit plan, as origi- 
nally proposed. It is more complicated as to the weight feature, as 
now the mails are simply weighted to the route and the daily average 
thereof ascertained ; but the new plan maintains this method as to 37 
per cent of routes, and as to all others requires separate weighing of 
all trains which do not have full R. P. O. or apartment mail cars; 
and then, as to trains having such cars, it is necessary that the weight 
be taken of the mail placed in each car for determining the pro- 
posed loading rate, as to all classes of full R. P. O. apartment cars 
and storage cars, and as to baggage-car overflow mail on such trains. 

This would be exceedingly complicated and difficult at large sta- 
tions like St. Louis, Chicago, Kansas City, Omaha, and other inter- 
mediate points where the mails for each car would have to be trans- 
ferred and trucked separately, whereas now to a considerable extent 
truck loads contain mail for several different cars. 

There is further complication in the fact that if mails are carried 
in the baggage car of a train with full R. P. O. or mail apartment 
cars, the pay would be on a space basis, without any fixed method of 
determining the amount of space to be paid for ; whereas, on a mail- 
car route if the mail were carried in a baggage care upon a train 
without full R. P. O. or mail-apartment cars, the pay would be on a 
weight basis. If mail which ordinarily was transported in an au- 
thorized mail or storage car and paid for on a space basis, missed con- 
nection and was shipped on a following train without mail cars there 
would be no compensation for it, except as based upon such miscon- 
nections and irregular dispatch if it occurred during the weighing 
period. 

It would be possible for the mail to be confined or limited during 
the weighing period to trains paid for upon a space basis and there- 
after to be carried upon trains for which the railroads are paid upon 
weight, but without the weight being included in the adjustment. A 



BAIL WAY MAIL PAY. 1125 

plan of this kind ought not to be possible, and is not when all trans- 
portation service is upon the weight basis. 

While nominally the new proposed plan is designated as of five 
units, it is a fact that a single route could have, and some would have, 
a complicated system of 64 different factors of pay, illustrated as 
follows : 

Full R. P. O. car 4 kinds at different mileage rate each car. 

Storage cars 4 kinds at different mileage rate each car. 

Apartment cars 5 kinds at different mileage rate each car. 

Baggage car (weight) 1 

car (space) pay 1 



15 mileage rates. 
Full R. P. O. cars 4 initial, terminal,loading, and unloading rates each. 

Car — 16 rates. 
Storage cars 4 initial, terminal, loading, and unloading rates each. 

Car — 16 rates. 
Apartment cars 4 initial, terminal, loading, and unloading rates each. 

Car— 20 rates. 

Terminal rates 52 

Mileage rates 15 

Terminal rates 52 

Total 67 

The present plan with graduated rates would apply to 1,293 routes, 
or 37 per cent, representing 35,874,714 annual miles of service (1913). 
Baggage-car mail rates on the remaining 63 per cent of routes would 
be on a straight tonnage rate, representing 117,396,569 annual miles 
of service. The full E. P. O. car rate would apply to 86,613,684 
annual miles of service, and the apartment-car rates to 231,656,122 
annual miles of service; but there are no figures in the department's 
reports showing how many annual miles of service there would be 
representing the storage car or the overflow baggage-car service on 
a space basis upon routes having the full R. P. O. and the apart- 
ment-car service. 

DISCUSSION OF BATES. 

In addition to what has been said previously with reference to 
the noncompensatory character of rates as a whole in the proposed 
plan, further specific criticism as to their inadequacy should be made. 

The rate for a 30- foot apartment would be 9 or 9J cents per car- 
mile; for a 15-foot apartment, 4§ cents per car-mile; for a 10-foot 
apartment, 3 cents per car-mile. 

As to 30-foot cars, it is a fact that in many instances throughout 
the country the furnishing of 30-foot distributing facilities requires 
the hauling of an entire car; in such cases the proposed rates are 
ridiculously low, and as to the cars of smaller units, it is only neces- 
sary to point out that one or two passengers occupying a single seat 
in a coach would pay as much or more fare than the department pro- 
poses to pay for a private apartment occupied by a mail clerk who 
would use 10 or 15 feet in a car, which would be equipped with 
private-car facilities. 

To further illustrate that a theory of lower rates for apartment cars 
than for full E. P. O. cars would be inadequate, it may be pointed out 
that four cars of 15-foot apartments or six cars of 10-foot apartments 
would have to be furnished and operated with four or six units of 



1126 



RAILWAY MAIL PAY. 



service as to all details of such operation, with station handling, 
switching charges, and cleaning; ice would have to be furnished 
them and placed in four to six cars instead of one; hoppers would 
have to be furnished and cleaned in four to six cars instead of one; 
the switching of four to six cars would have to be done; and four to 
six cars would have to be set for advance work; all in comparison 
with one unit of a 60-foot car, as the proposed plan does not fix 
specific rates for each specific car, but provides proper earnings based 
upon a 60-foot-car rate. 

Initial and terminal rates. — Initial and terminal rates are proposed 
on a prorated basis of a 60-foot car, which for a 70-foot car, if the 
maximum were paid, would be $1.68 ; for a 40-foot car, 96 cents ; a 
30-foot apartment, 70 cents; a 10-foot apartment, 23 cents; and as 
to storage cars, a 70-foot car, if paid for at the maximum rate, 
would be $1.51, and for a 40-foot car, 84 cents; while as to heating, 
lighting, and cleaning there would be some difference in the relative 
cost, according to the length of the car, yet as to other terminal 
charges, such as inspection, switching, etc., the car unit of service 
and movement would be the same for one car as for another regard- 
less of length and this would be true as to the space occupied by the 
cars in stations for advance distribution. 

In the proposed plan maximum rates, not fixed rates, are stated 
for this service, and it is explained that they are in the discretion 
of the department, and the determining factors in rate as to each of 
the different kinds of cars " shall be varied in accordance with the 
approximate difference in their respective cost of construction and 
maintenance." 

Certainly as to none of these factors of initial or terminal charges 
has the cost of construction anything whatever to do with the use of 
the cars. 

Loading rates. — The loading rate of not to exceed 12 cents per ton 
is also grossly inadequate. It is ascertained that at St. Louis, where 
the mail is handled in truck loads to a great extent on account of 
volume, the actual cost of specially employed porters is 31 cents per 
ton; and at Kansas City, where there are lighter volumes for the 
transfers as compared to truck volumes, the actual cost is 47 cents per 
ton. 

Senator Weeks. In your judgment would that represent a fair 
average of cost in cities of that class? 

Mr. Mack. Why, it is impossible to say. It is a factor that will 
vary greatly in accordance with the volume of the mail. For in- 
stance, you see that between St. Louis and Kansas City. At St. 
Louis there are truck loads and at Kansas City there are some truck 
loads and some small volumes of transfer, but it takes a man just 
as long to go from one point to another in the depot with two or 
three parcels as it would to take an entire truck load of mail, so 
that the cost would vary, and at the heavier stations it seems likely 
that we are quoting low costs rather than high costs. 

Mr. Baldwin. Mr. Peabody has some figures illuminating the cost 
figures applying to less than carload lots. 

Mr. Mack. I have no doubt that these would be comparatively low 
figures. 



KAIL WAY MAIL PAY. 1127 

Senator Weeks. Figures are not very useful unless they are com- 
pared with the average, and you have not any reason to feel that 
these are not clear averages in cities of that class. 

Mr. Mack. I should say they were low, rather than high. We 
had a figure ascertained at Chicago which was considerably in excess 
of this, but we did not desire to use it because it had not been fully 
verified, but that rate was 77 cents. Is that correct, Mr. Scott ? 

Mr. Scott. That depends altogether on the volume of mail. I 
would rather that would not go in the record. 

Mr. Mack. I only mention that to show we have not selected 
places with an object of showing high cost. 

Mr. Bradley. I have figures which I have not had opportunity to 
verify, yet which show that at the Pennsylvania Station in New 
York, the average cost is 40 cents per ton for handling, and I think 
Mr. Wade has some figures for Jersey City. 

Mr. Wade. Eighty cents. 

Mr. Mack. There you will find a difference between the extreme 
heavy loading and a comparatively light loading as between the 
Pennsylvania at New York and the Erie at Jersey City. 

Under the proposed plan, all the larger railroad systems would be 
compelled to build new and keep in supply, four classes of full R. P. O. 
cars, as compared with one standard as a rule to-day, and four classes 
of storage cars, as compared with one to-day, for cars under 60 feet 
in length now in the service are few in number, and are largely 
those constructed in the past, or which were built to some extent, for 
demonstration purposes. 

It would be unreasonable to adopt a plan that would compel large 
railroad systems to buy large numbers of additional cars of differ- 
ent classes now, and yet they could not afford to run cars of greater 
length than the department was willing to pay for where the entire 
pay was dependent upon space, as there would be interminable con- 
troversy as to whether more than 40 feet were actually used in cars 
of greater length of run. 

Now, where full R. P. O. pay is supplemental, and where the rail- 
roads furnish cars of 60 feet, and are paid for possibly 40 or 50, or 40 
one way and 60 the other, of course it is not so material ; but it would 
be a much more serious matter if standard cars of 60- foot length 
were used, with discretionary power to pay for 40 or 50 foot cars, if 
the entire mail pay were affected. So that the result of the situa- 
tion would be that the railroads would have to carry a stock of 40 
and 50 foot postal cars and storage cars, which they do not now do. 

LAND-GRANT ROUTES. 

The proposed plan would extend the reduction of pay upon a 
greater volume of mail earnings than at present, for now the 20 per 
cent reduction applies only to transportation pay and not to full 
R. P. O. car pay. It would doubtless develop upon investigation 
that the time has arrived when land-grant routes, particularly those 
furnishing fast-mail service, should not suffer any reduction at all 
in their mail pay. 

ROOMS AT STATIONS. 

The plan proposed by the Postmaster General to give him power to 
require such space as he might choose without limitation or restraint 



1128 RAILWAY MAIL PAY. 

for rooms at stations for mail work, without compensation, would 
be entirely inconsistent 'and out of place with a plan to pay for 
transportation of mail upon a space or mixed basis as proposed, as 
it could be developed to any extent without compensation to the com- 
pany, and could be utilized to such an extent as to actually deprive 
railroads of their main sourue of revenue for transportation and dis- 
tribution space on the trains. 

FAST-MAIL SERVICE. 

The proposed plan with these rates would undoubtedly endanger 
the continuance of the fast-mail service, which is of inestimable value 
in special and expedited schedule to the important first-class main 
revenue-producing mail. One clear illustration would be that of the 
fast mail from St. Louis to Texas. 

The rates provided for this special service of 664 train miles daily 
would only produce for two 60- foot postal cars 40 cents ; for baggage 
cars, 27 cents; total, 6T cents per train-mile. These figures show 
conclusively that such pay would not be adequate to maintain the 
service. 

Senator Weeks. Why do they show conclusively ? 

Mr. Mack. The rate of 67 cents ? We could not run a train for 67 
cents a mile. 

Mr. Baldwin. The average cost of running all trains is $1.64. 

Mr. Mack. Some things are self-evident to us that may not be self- 
evident to you gentlemen. As Mr. Baldwin states, it costs us much 
more than 67 cents. 

Mr. Stewart. How much a mile do you get now for that train ? 

Mr. Mack. We get now about $1.15 or $1.20. 

Dr. Lorenz. How many cars are in the train ? 

Mr. Mack. Four mail cars. The fact is, even now we had to put 
on a sleeping car in order to try to maintain the train. 

TRANSPORTATION OF POSTAL OFFICERS AND EMPLOYEES. 

There has never been a good reason for free transportation of 
postal officers engaged in the inspection of the post offices, star and 
rural routes of the country, or for their general transportation, ex- 
cept, perhaps, as to the direct force supervisory over the Kailway 
Mail Service itself, or even for the transportation of postal em- 
ployees, except when actually in postal cars engaged in work; but 
whatever vestige of reason exists now, would disappear entirely upon 
any space plan. 

ADMINISTRATION. 

In administration the plan proposed would permit the cutting off 
of distributing cars between weighing periods with material reduc- 
tion in expense to the Post Office Department, and throw mail into 
the baggage cars without any compensation to the railroads until the 
new weighing period. 

CLOSING. 

While investigation of railway-mail pay very naturally and prop- 
erly includes consideration of new methods proposed from any source, 



KAILWAY MAIL PAY. 1129 

it does not at all follow that a solution of the question involves a 
new plan, which would be experimental at best, and it is very clear 
in our opinion, irrespective entirely of the question of rates or total 
compensation, that no plan has as yet been considered that fits the 
service as well as the present general plan with imperfections easily 
remedied without overturning conditions to which the service has be- 
come adapted from its foundation. 

No plan, in our judgment, would do justice to the railroads unless 
predicated upon increasing pay of at least $15,000,000 per annum, so 
that the gross earnings from this service, to be adequate and compen- 
satory, would equal the other earnings on passenger trains. 

In connection with this, I would like to say that I attempted to 
figure the revenue that would be derived by some of our companies 
from the new rates. On the Denver & Rio Grande Railroad, with 
an entire apartment-car service, it would reduce the compensation 
$124,021 per annum; cutting it down from $303,128 to $179,107. 
That may give you a fair indication of the effect the plan would 
have on short lines, because the Denver & Rio Grande service is en- 
tirely apartment-car service. 

Senator Weeks. Where does that run from? And to where? 

Mr. Mack. It takes in all the local service in Colorado and part 
of Utah. It is entirely a mountainous road and runs from Denver to 
Ogden. Practically all of the interior service in Colorado is on the 
Denver & Rio Grande, and much of it on narrow-gauge roads. 

Mr. Baldwin. You say that is all apartment-car service? 

Mr. Mack. There are no full cars on that line. It is entirely 
apartment-car service. 

The Chairman. The compensation is based on maximum pay- 
ments under the suggested plan? 

Mr. Mack. Yes, sir; on the space that now exist, that is, that 
which is now in use, or supposed to be needed, by the department, 
as shown by their division schedules of railway-mail service. With 
regard to this apartment-car service, the effect of a plan of this kind, 
by strict administration and by the application of strict methods of 
economy in the department, would be to impair efficiency. For in- 
stance, we would find where there are two trains a day each way 
over a railroad; upon a basis of this kind the Post Office Depart- 
ment would be enabled to cut the cost of transportation on a line in 
half, and there would be very strong temptation to do it with the 
resulting impairment of the facilities to the public. The apartment- 
car service and the distribution service to-day on sparsely settled 
lines throughout the country is based upon the fact that there is no 
specific pay for apartment cars. With supplemental pay for apart- 
ment cars no such tendency as that would exist. It might have a 
restraining influence on the extension or reduction of service, but 
very naturally there would be a strong disposition to economize and 
withdraw facilities when so much could be saved. 

Senator Weeks. Do you think /that would be a very practical 
proposition? Withdrawing facilities immediately affects someone, 
and someone is going to make complaint to the department, and the 
department can not afford to withdraw facilities in any way that 
will affect the service materially. 

Mr. Mack. But the department does not necessarily establish 
facilities or withdraw facilities simply because there is complaint? 



1130 RAILWAY MAIL PAY. 

Senator Weeks. But when the department wants to establish 
facilities, then it gives a Jot of people vested rights, or they think they 
are, and to change this by a reduction immediately brings complaint. 
Therefore, as a practical proposition, do you think that wherever 
there has been a facility in operation that there is likely to be a mate- 
rial redaction for that very reason? 

Mr. Mack. Of course, we are going into the field of opinion. I 
should say yes. 

Senator Weeks. If you had been a Representative in Congress 
you would probably have said no. 

Mr. Mack. I think the reply would be — in many such cases, not all 
of them — that the cost of the service was out of proportion to the 
benefits derived. With regard to the service between St. Louis and 
Kansas City — which was referred to at the informal meeting — on 
the Missouri Pacific, we find that there would be a reduction of about 
$22,109. 

The Chaieman. That is just on that route? 

Mr. Mack. Yes. 

The Chaieman. Not on the whole Missouri Pacific line? 

Mr. Mack. No ; just that route. There may be some imperfections 
here, but we have allowed for all possible space. Between St. Louis 
and Texarkana, 493 miles to Texas, as nearly as we can figure, there 
would be a reduction of about $146,233 per annum. 

Senator Weeks. Is that the entire service between those points on 
one train? 

Mr. Mack. That is the entire service between those points on all 
trains. That is a land-grant route, with 493 miles of railroad to 
Texas. 

Senator Weeks. Do you think those are fair inferences of what 
would happen? 

Mr. Mack. We have taken our heavy routes and we have taken our 
apartment-car lines on the Denver & Rio Grande, and I do not see 
how it would be possible for anything except very great reductions 
to follow a plan of this kind. 

Senator Weeks. How did you happen to select these particular 
roads ? 

Mr. Mack. I selected the Missouri Pacific because Mr. Lloyd picked 
it out at the informal meeting, and I selected the Rio Grande myself, 
because it was an entirely apartment-car service. 

Mr. Lloyd. I suggested the Missouri Pacific, because it was the 
heaviest road in Missouri, and the one with which Mr. Mack was 
most familiar. 

Mr. Mack. When I found the reduction on the Missouri Pacific 
would be $23,000 I wanted to see myself then what the effect would 
be on the Iron Mountain, which is our heavy route to Texas, and I 
discovered this. Of course I did not know what it was going to be 
when I started figuring. 

Senator Weeks. Did you try any figures on any other routes than 
these? 

Mr. Mack. No, sir ; I did not ; simply for lack of time. 

Mr. Lloyd. Do you want this to go into the record ? 

Mr. Mack. I have no objection to it going into the record. 

Senator Weeks. How are we going to know that these are fair 
examples for that kind of service? 



RAILWAY MAIL PAY. 1131 

Mr. Mack. They represent all of our heavier service between St. 
Louis and Kansas City and St. Louis and Texarkana. 

Senator Weeks. Do you think the proportional reduction in the 
light service will be greater? 

Mr. Mack. No; there would be a fluctuation in the apartment- 
car service depending on the amount of weight as compared with 
the volume of apartment-car service to the line. For instance, where 
there were several apartment cars, but light weight, the new plan 
would show an increase, but where there is considerable weight in the 
car it would show a decrease under the new plan. That would be 
the tendency. I think there is no question about that. 

Mr. Lloyd. Did you not find this, also, that the rates on the shorter 
lines, or on the lines on which there is not so much business, would 
be affected by the frequency of transit of the mails each day ? 

Mr. Mack. As I say, that would depend in comparison with the 
weight of mail that is now the basis which you are comparing with. 
If the route had two 15-foot apartments, with a tonnage of 500 or 
600 pounds in the way of distributing facilities, this plan would 
probably produce an increase, and if it had 1,000 or 1,500 pounds it 
would probably produce a decrease. I think that would be the way 
a comparison of that kind would work out. 

Mr. Lloyd. I made a comparison On two roads in my section, one 
on which there was one mail each way 8 day and one on which there 
were two mails each way a day, and I found on investigation that 
where they had two mails each way a day the probabilities were 
that there would be an increase of pay, and where there was only 
one mail each way each day there would be a decrease. 

Mr. Mack. It would work almost certainly in that case, provided 
the weights were light and I have no doubt the weight was light. 
Sometimes frequency of service and the amount of apartment cars 
would be the same on a route with 500 or 600 pounds as a route with 
1,500. So that the new plan as applied would, perhaps, decrease 
the rate with the heavier weight and increase the rate compared to 
the lighter weights. 

Mr. Lloyd. Have you something more in detail on these matters? 

Mr. Mack. No, sir ; that is all, I think. 

Mr. Lloyd. Is that a full statement of your case? 

Mr. Petees. Yes. 

Mr. Lloyd. Have you anyone you desire to make an oral state- 
ment ? 

The Chairman. I would like to ask Gen. Stewart with reference 
to the concrete illustrations mentioned by Mr. Mack of 64 different 
rates being possible on a single route, if the proposed or suggested 
plan of the department should be enacted into law? What have you 
to sav in reference to that? Have you any criticism to make as to 
the correctness of his statement ? 

Mr. Stewart. My impression is that Mr. Mack has greatly exag- 
gerated the possibilities of fluctuation in service and multiplicity of 
rates on a particular route. I should like to analyze the statement, 
and prepare and read to you for the record our specific reply thereto. 
Apparently he has taken the possibility of running every sized car 
on the route, necessitating the adjustment of a loading charge and a 
constant terminal charge for each sized car. 

49396—14 79 



1132 RAILWAY MAIL PAY. 

The Chairman. Would you, in this connection, just discuss that 
particular phase with Mr. Mack here, so that we will have the benefit 
of an interchange of ideas on the concrete illustration such as he has 
mentioned ? 

Mr. Stewart. Yes, sir. I will ask the privilege of taking his con- 
crete statement and making a statement in reply. 

Mr. Lloyd. Have you any questions you might ask him on anything 
he has stated in his paper ? 

Mr. Stewart. I hardly think it essential to take up the time of the 
commission now in going into it. 

Senator Weeks. You say Mr. Mack has exaggerated the possibili- 
ties. Do you mean probabilities ? 

Mr. Stewart. Yes; probabilities. 

Senator Weeks. You do not mean possibilities ? 

Mr. Stewart. Yes. 

Senator Weeks. Do you mean to say it would not be possible to 
have this result under any condition? 

Mr. Stewart. I do not know of any conditions which render it 
probable. 

Mr. Mack. But it is possible ? 

Mr. Stewart. Not under the conditions of the service. 

Mr. Mack. The conditions of the service as they would occur out 
of this plan ? 

Mr. Stewart. Unless you could find such conditions existing to- 
day, you can hardly imagine such a condition in the future. 

Mr. Mack. Take the existing standards of 60, 50, 40, 30, 25, 20, 15, 
and 10 foot apartment cars; I do not think it difficult to find such 
illustrations. 

Mr. Stewart. I think it would be extremely difficult to find any 
such condition on any one route. 

Mr. Mack. We have some of them ourselves. 

Mr. Rowan. Between New York and Buffalo you will find them. 

Mr. Mack. Of course, as I have said, this plan would require the 
railroads to build 40 and 50 foot cars, storage as well as mail cars, 
because we could not afford to put in a 60- foot car and then get paid 
for a 40-foot car; there is too much difference. We run a risk of too 
great a loss of money. 

Mr. Stewart. You do that now. 

Mr. Mack. With full cars, because the amount, depending on the 
supplemental space pay, is very small ; but if this plan were made ef- 
fective we could not ; for instance, take a storage car. We could not 
run a 60-foot storage car for which we should receive 18 cents and get 
only 12 cents and be certain that we derived all the pay that we ought 
to have from that car. 

Mr. Stewart. Under the proposed plan the tendency would be to 
eliminate the smaller-sized cars by combining what we now call the 
authorized space, for which we pay specifically, and the space to 
carry the mails which are otherwise carried now in baggage and 
storage cars, for which we do not pay an additional specific amount, 
so that the objection raised by Mr. Mack would be gradually elimi- 
nated from the service. The department would so authorize the 
space for distribution purposes in connection with the storage mails, 
the mails now carried in the baggage cars, as to practically take up 



EAILWAY MAIL PAY. 1133 

all the space in a 50 or 60 foot car. So, therefore, his objection 
would gradually disappear. 

Senator Weeks. .Could not the department do that ? 

Mr. Stewart. Yes, sir. When we go on this basis it will be a space 
basis and the distinction between distribution space and other space 
disappears. It is on this very distinction that exists now out of 
which the controversies arise that Mr. Mack and others have spoken 
of. The controversy that exists between the railroad companies and 
the department is about space. What kind of space? Distribution 
space. Space in the car which Ave claim is only necessary for dis- 
tribution space and the company claims should be more because we 
may carry some storage mail in the excess space over that authorized. 

The Chairman. If you do, you ought to pay for it. 

Mr. Stewart. Mails for which we do not need distribution space, 
There is where the controversy arises, and the new plan would tend 
to eliminate such controversies, for we would be paying for all space 
under the new plan, whereas under the old plan we are paying ad- 
ditional for distribution space only. I think the gentlemen have- 
overlooked that, and it is a very material point in connection with 
this plan. 

The Chairman. What difference does it make whether it is dis- 
tribution space or space for carrying sacks or pouches of mail? 
What is the difference? 

Mr. Stewart. There would be no difference under the proposed 
law. That is the advantage of the new law in this respect. 

The Chairman. I do not see why you make any distinction at all ; 
it is so much space occupied and used and it should be paid for. 

Mr. Stewart. We do not under the proposed law, but under the 
present law there are two different rates of pay, one based upon the 
weight of the mail for transportation, and additional pay for 
distribution space. Under the law we can not allow additional 
money for distribution space except for space devoted to distribu- 
tion. 

The Chairman. Is it your contention in the plan suggested by the 
department that it is far simpler in its operation than the present 
one? 

Mr. Stewart. Yes, sir ; I think so. 

The Chairman. And it is yours, Mr. Mack, and the opinion of 
your associates, that it would be more intricate ? 

Mr. Mack. Infinitely more intricate, and I can not agree with 
Gen. Stewart about its eliminating points of dispute. I think it 
would multiply them very rapidly, and I am very sure that that 
is the opinion of all railroad men who have studied the question, 
that the complications will be multiplied rather than eliminated. 
That is one of the great points of objection we have to the space 
basis, that it is not a factor that adjusts itself, but it rests absolutely 
upon the judgment of somebody as to how much space they would 
say they needed. With this large variation of cars we would have 
to carry a big stock of all sorts of cars, otherwise we would lose a 
great deal of money while we were arguing the question whether 
40, 50. or 60 feet ought to be paid for. 

The Chairman. You would not furnish any more space than they 
would ask for? 



1134 RAILWAY MAIL PAY. 

Mr. Mack. We would have to build a lot of cars as a result of the 
plan, and we would haye to keep in stock a lot of cars we do not 
now have. 

Mr. Stewart. Why would you have to build a lot of new cars? 
We have the service now in operation, and if we adopt the new plan 
we would gradually merge from one to the other without the neces- 
sity of the companies supplying new cars. The cars now in use will 
serve as well under the new law as under the old. 
. Mr. Mack. I haven't any idea but what there would be demands 
for 40-foot storage cars. 

Mr. Stewart. What is the average size of your storage cars now ? 

Mr. Mack. There are no storage cars under 60 feet, and nobody 
is building any under 60 feet to-day, except where they build 40- 
foot postal cars with the idea of demonstrating that a 40-foot cai 
would not hold the mail. 

Mr. Stewart. Which you partitioned off the mail space ? 

Mr. Mack. No. 

Mr. Stewart. You are not building any of those ? 

Mr. Mack. No. 

Mr. Stewart. I think the railroads are, as a rule, building at least 
60-foot cars. My judgment is, and I think these gentlemen are 
clearly mistaken on that point, that this plan would gradually tend 
to eliminate the shorter-length cars, for wherever we are now paying 
for an authorization of 50 feet, for instance, and storage mail is 
carried in addition, we would combine the whole into a 60-foot car, 
because it will be on the same basis of pay. 

Senator Weeks. Suppose you only had mail enough for a 40- 
foot car. Then what ? 

Mr. Stewart. Then we would pay for 40 feet, unless there were 
storage or baggage mails that could be combined in the 60-foot postal 
car, if the company was running that sized car. 

Senator Weeks. Then they would be running a 60-foot car and 
getting pay for a 40-foot car ? 

Mr. Stewart. If there was a condition of that kind. 

Senator Weeks. Would not that exist frequently? 

Mr. Stewart. I hardly think so. 

Mr. Lloyd. Does it exist now ? 

Mr. Stewart. In nearly every case where full cars are run I pre- 
sume we have baggage mails, and we would combine the space occu- 
pied by them with the 40 feet of distribution space. 

Mr. Lloyd. Are they not combined now ? 

Mr. Stewart. They are combined, but we do not pay additional 
money. 

Mr. Lloyd. You pay for carrying the baggage mail by weight ? 

Mr. Stewart. Yes; and under the new plan we would pay for :»t 
on basis of space and combine it with the other space. 

The Chairman. Gen. Stewart, what do you say to the presenta- 
tion made by Mr. Mack, and some of these other gentlemen, in ref- 
erence to the loading charge. You suggest a maximum of 12 cents a 
ton loading charge, and they present concrete instances running 
from 40 cents up to 77 cents per ton, which latter I think was the 
maximum. There is a vast discrepancy there. 



RAILWAY MAIL PAY. 1135 

Mr. Scott. I would not like to have that 77 cents go into the rec- 
ord as a correct figure. We have 107 men in Chicago who do noth- 
ing but transfer mail. If we divide their salary into 300 tons of 
mail a day it means 77 cents, but if it is 500 tons it means 47 cents, 
I do not know whether to-day there are 300 or 500 tons going through 
the station. 

Mr. Mack. Mr. Wade mentioned 80 cents at Jersey City. 

The Chairman. What was the one you mentioned, the maximum! 

Mr. Mack. Forty-nine. 

Mr. Lloyd. How are we to know that 49 cents is accurate ? 

Mr. Mack. There is no question about that. My testimony is that 
that is the actual cost. 

Mr. Lloyd. And you have figured it out in your statement and 
your statement will show that? 

Mr. Mack. Yes. That is the actual average tonnage taken from 
the weights of the mail as handled at St. Louis and at Kansas City ? 

Senator Weeks. For how long a time ? 

Mr. Mack. You see it is worked out from an average daily 
weight. 

Mr. Lloyd. Is this worked out with the same accuracy ? 

Mr. Wade. There are no special mail employees. We have about 
30, perhaps, who work on the mail for an hour or two at a time at 
different times during the day and my estimate was based upon the 
figures made by the station baggage agents of the number of hours 
that each man on this force of porters was engaged in the work of 
handling the mails. 

The Chairman. And doing no other work during that period ? 

Mr. Wade. Doing no other work during that period. 

Mr. Lloyd. How did you determine the weight of the mail? 

Mr. Wade. That is from the last annual weighing. 

Mr. Lloyd. You obtained the daily average from that? 

Mr. Wade. Yes, sir. 

Dr. Lorenz. May I ask whether the figures given per ton are the 
cost of handling on alone, off alone, or does it include the cost of 
handling both off and on ? 

Mr. Wade. The cost of handling the tonnage. 

Dr. Lorenz. That is indefinite. If you transfer mail from one 
car, put it on a truck, carry it over to the next car and put it into 
that car, that is handling it twice. I understand your maximum of 
49 cents includes those two operations ? 

Mr. Mack. Yes. 

Dr. Lorenz. So that the 12 cents should be compared with half 
your rate and not the entire rate you quote, because Mr. Stewart pro- 
poses to pay 12 cents for putting it off and 12 cents for putting it on ? 

Mr. Mack. It is a loading rate. 

Dr. Lorenz. Mr. Stewart's is both loading and unloading. That 
would make 100 per cent difference. 

Mr. Mack. Then it would increase the rate to 24 cents as compared 
with 49, but I do not think the bill covers that. 

Dr. Lorenz. That is the intention of the bill. 

The Chairman. The mails loaded and unloaded at terminal, or 
anywhere, 12 cents per ton? 



1136 RAILWAY MAIL PAY. 

Mr. Stewart. In reply to the question asked me, I should like to 
make this request of the gentlemen, that they file with the commission 
the data upon which they have reached these conclusions, so that we 
may examine it. 

The Chairman. Mr. Mack gave concrete instances which have gone 
into the record of ascertainments that he has made on these lines. 

Mr. Stewart. He has given his ascertainments, and I want the 
data from which he arrived at those ascertainments. 

Mr. Mack. We would be very glad to give you that. 

Mr. Stewart. This question is an extremely difficult one, and we 
have given it all the attention we could, since it was necessary to 
submit to you the draft of a bill. Both Dr. Lorenz and ourselves 
have endeavored in every way to get adequate light on the subject. 
We have examined, for instance, the amounts given by the companies 
themselves, on page 14 of the preliminary report of the commission, 
on which they set forth certain items of wages and other expenses at 
terminals throughout the United States as the basis for their claim 
that the department did not allow sufficient in Document 105. We 
assumed that that statement represented the maximum and that it 
is correct, so far as the judgment of the railway-mail pay committee 
was concerned. We have made some calculations upon those figures, 
although they are much higher than our judgment would dictate. 

The Chairman. Based on your judgment, do I understand you 
think 12 cents is too high ? 

Mr. Stewart. I think 12 cents is about right. Based on those fig- 
ures, we are unable to make a higher rate than $3.50 for the constant 
and the loading charge throughout the entire country; that is, per 
trip. That would cover both the loading and the unloading, and is 
almost the same amount proposed by Dr. Lorenz in his bill. Ours 
is a trifle lower than that, but, as I say, the figures given by the rail- 
way-mail pay committee I assume to be the maximum and with 
which they could not find any fault. We have also compared our 
figures with statements of terminal charges submitted by a number 
of terminal associations and union depots to the Interstate Com- 
merce Commission, and we find that our constant and leading charge 
is well sustained by the figures. 

The Chairman. That is 12 cents a ton? 

Mr. Stewart. Yes, sir. In addition to that, I have a specific in- 
stance here which is in the files of the department and which covers 
the operations of the Terminal Railroad Association of St. Louis. 
You all know that the Terminal Railroad Association of St. Louis 
handles all the cars in and out of St. Louis and operates the trackage 
over the Eads and Merchants' bridges and extending into the Union 
Station. Here is a complete statement of all charges of every de- 
scription, including overhead charges. 

Senator Weeks. Furnished by whom ? 

Mr. Stewart. Furnished by the Terminal Railroad Association 
of St. Louis in connection with their claim that the allowance of 
$50,000 for the special services there should not be reduced. This 
proposition has been before Congress for two years. They have 
reduced these expenses to a car basis, and they are as follows: 
Average cost per car, all lines, operating expenses, $1,767; rental, 
taxes, etc., less joint facility revenues, 86.3 cents; total, $2.63; mail 
transfer expenses, 6.7 cents a car; Washington Avenue Station ex- 



RAILWAY MAIL PAY. 1137 

penses, 3.2 cents: total, $2.73 a car for all the cars handled in and 
out of that immense terminal, the gateway to the Southwest. 

Senator Weeks. Does that cover both in and out ? 

Mr. Stewart. Yes, sir ; that is only one way. Covering a trackage 
of 5 to 10 miles outside of the Union Station itself. 

Senator Weeks. Does that mean that they would load and unload 
mail in the car for 6.7 cents? 

Mr. Stewart. These are the figures indicated by this account. 

Senator Weeks. How long would it take a man to do it in your 
opinion ? 

Mr. Steavart. It would depend on the load, of course. 

Senator Weeks. Suppose you filled the car ? 

Mr. Stewart. You do not mean one man, but you mean enough 
men at the station to load it? Of course they have a number of 
porters there who are engaged on this work alone. 

Senator Weeks. I mean reduced to the basis of one man. If you 
had a dozen men, we will assume that they would do it 12 times as 
quickty as one man, but how long do you think it would take one 
man to load a car with mail? 

Mr. Stewart. I have never made a calculation on that. 

Senator Weeks. What does your common sense indicate ? 

Mr. Steavakt. I should not want to guess. 

Senator Weeks. Do you think it would take him seA'eral hours ? 

Mr. Steavart. No ; I do not. 

Senator Weeks. Do you not think it would take him two or three 
hours ? 

Mr. Steavart. There are practical railroad and mail men here avIio 
can give you an exact estimate on that. 

Senator Weeks. But you dispute their figures ? 

Mr. Steavart. No ; I do not. I dispute their conclusions. 

Senator Weeks. What have you to say, Mr. Mack, as to Iioav long 
it Avould take a man to load a car of mail ? 

Mr. Mack. Of course that depends on the loading. With our out- 
going trains at St. Louis the loading is through a process of time, 
and Ave set our cars for both of the fast mails — South and West — at 
9 o'clock in the evening, and the trains do not leaA^e until half past 2, 
and the process of loading is going on in five cars on one train and 
six on the other constantly during that time. 

Senator Weeks. We are not getting anywhere on this proposition. 
Do you think it would take a man three hours to load one of those 
cars? 

Mr. Mack. It would take two men three hours, I have not the 
slightest doubt of it. I am giving, howeA T er, an offhand opinion. 

Senator Weeks. You have not any men who work for less than 20 
cents an hour? 

Mr. Mack. No, sir. 

Senator Weeks. Then, if it Avould take two men three hours, it 
would cost $1.20? 

Mr. Mack. Yes. 

Senator Weeks. Then, how is it possible 6.7 could be right ? 

Mr. Mack. I do not understand it. 

Senator Weeks. Mr. Peters, are not those figures the cost of all 
cars in and out? Is that of mail cars alone or of all cars? 

Mr. Peters. That is mail cars alone. 



1138 EAILWAY MAIL PAY. 

Senator Weeks. When he adds it up and says the total cost of all 
cars is $2.73 per car, " all cars " means every class of car handled in 
and out of the station, express, baggage, postal, and storage? 

Mr. Mack. This statement might not purport to show what Gen. 
Stewart has understood. 

Mr. Peters. Bearing on the cost of handling, Mr. Peabody has a 
record of a great many stations on the road. The handling of freight, 
of course, is different from the handling of mail, but they keep the 
pay for handling freight on a tonnage basis, and Mr. Peabody has 
the rate at many of those stations and can give it to us. Whether that 
will give you an idea as to what it should cost for handling mail, it 
would, at least, give you a very fair idea of what their labor cost is. 

Mr. Mack. I would like the opportunity to see the statement that 
Mr. Stewart has, to see whether it really shows what he thinks it 
does. 

Mr. Stewart. Which statement is that? 

Mr. Mack. The statement that you have here. 

Mr. Lloyd. Do you wish to make any further statement ? 

Mr. Stewart. Yes. There was something said by each of the gen- 
tlemen in presenting their papers with regard to the supposed ab- 
sence of an exigency for legislation requiring the railroad companies 
to carry the mails, and they seemed to be under the impression that 
all the railroad companies are carrying the mails without protest and 
without threat to discontinue service. I assume that they are not 
familiar with the facts as they have developed in the last one or 
two years and the situation in which the department now finds 
itself where we are confronted almost daily with the difficulty of 
keeping mails on the railroads. We have had specific notices from 
some of the large companies that they intended to discontinue the 
carrying of mails, and cases are still pending where the question is 
unsettled as to whether they will continue to carry the mails. I re- 
plied to one yesterday ; I replied to one last week ; and to another one 
recently in the New England section. I have a letter on my desk 
now in which the writer states that I have forgotten the controversy 
I had with him a few months ago in which he threatened to take 
the mails off of his entire line and forced me to come to his terms for 
railroad mail service. So the matter goes on from day to day. 

The Chairman. The reason being what ? Do they specify in their 
letters any specific reason? 

Mr. Stewart. Because of difference of opinion existing between 
the department and the railroad companies as to what they think 
the terms of the service are. For instance, in one case the controversy 
was over the fact that the department refused to waive the postal 
regulation and relieve the company of the terminal service on cer- 
tain routes. Those cases are not infrequent. 

Mr. Mack. They are short lines? 

Mr. Stewart. No ; they are not all short lines. 

Mr. Mack. But they are short routes ? 

Mr. Stewart. They are short routes on branch lines operated in 
connection with main-line routes. I did not intend to put into the 
record at this time the name of any specific company, but it is well 
known that the Toledo, St. Louis & Western Railroad gave the de- 
partment notice that on a certain day they would discontinue the 



RAILWAY MAIL PAY. 1139 

• 

carrying of the mails. That company has some 400 miles of line 
running from Toledo, Ohio, to St. Louis, Mo., supplying a large 
number of offices and towns that are not otherwise supplied by rail- 
road-mail service. The withdrawal of that service would result in 
great inconvenience to many patrons of the mails and many patrons 
of the railroad itself. 

The Chairman. Would not the threat or the suggestion of with- 
drawal of service indicate that, in the opinion of the operators of the 
road, they are not making large profits? 

Mr. Stewart. Yes, sir. In that case it was alleged by the company 
that they were not making expenses. I am satisfied that they had 
been induced to believe that by representations which may have been 
sincerely made to them, but which were entirely inaccurate. I went 
to Toledo and convinced the gentlemen, I think, that they were 
wrong in that. 

The Chairman. That is, the management of the company? 

Mr. Stewart. Yes, sir. They consented to continue the service 
upon certain conditions, which we attempted to comply with; but 
after I returned to Washington I found that our agreement was mis- 
understood by the company, or certainly we did not understand the 
matter the same way, and I still have pending the proposition to 
take the mails off that road. It is usually over small, trifling, and 
immaterial things, as in this case, that these controversies arise. We 
asked the company to take care of the mails during the night at two 
or three stations where they did not think that they should do 
so, and that is one of the things that led to the notice. We discon- 
tinued delivery of mails for these towns from the night-mail trains 
in order to help out the company and keep the service going, and 
have since supplied them by local freight trains in the early morning. 

Mr. Baldwin. I will ask General Stewart if any such condition 
ever came to his notice prior to that time? In other words, if it 
has not all arisen in recent years from the present administration 
of the Post Office Department? 

Mr. Stewart. It has arisen during recent years. 

Mr. Baldwin. Yes. 

Mr. Mack. Do you not think it is due to dissatisfaction with the 
pay, dissatisfaction with the requirements, and dissatisfaction be- 
cause there has not been reasonable pay, in their judgment, for the 
Parcel Post Service ? Is not the whole trouble one resulting from the 
question of inadequate pay, or believed to be inadequate in the judg- 
ment of the railroads, and is it not further true that it applies to ex- 
ceptional instances and does not apply to large railroad systems or to 
the railroads of the country anything like a whole? 

Mr. Stewart. Answering your last question first, we have serious 
controversies with some of the large companies with regard to dis- 
continuing the mail service, not with the Missouri Pacific, the Bur- 
lington, the Pennsylvania, or the New York Central, but with some 
roads of what might be called the *' intermediate grades." Answering 
your other question, I am compelled to say that I believe that the 
sentiment of managers of railroads throughout the country in regard 
to railway-mail pay and its adequacy, or inadequacy, has been 
brought about by the needless and unwarranted agitation by persons 



1140 RAILWAY MAIL PAY. 

who have represented throughout the country that the mail pay is 
too low. 

Mr. Mack. All growing out of the reductions that were made in 
1907, and the application of the divisor reducing the railway-mail 
pay $9,000,000 ? There was no trouble before that. 

Mr. Stewart. Congress reduced the mail pay in 1907. 

Mr. Mack. Yes; I am not charging you with reducing the mail 
pay. I am stating the conditions now. 

Mr. Stewart. I am also stating the conditions. 

Mr. Lloyd. You might charge the Postmaster General with obtain- 
ing the divisor. 

Mr. Mack. I think we can do that all right. 

Mr. Stewart. The Post Office Department assumes responsibility 
for changing the divisor. I am satisfied that there are not many men 
in this room who do not believe that the mathematically correct 
divisor is the right divisor. 

Mr. Peters. I am one who will disagree with you on that. 

Mr. Stewart. Although the pay is fixed per annum ? 

Mr. Peters. No; fixed on the average daily weight carried per 
mile per annum. 

Mr. Stewart. Yes ; not per diem. 

Mr. Peters. Not the weight carried per annum. 

Mr. Mack. We will have to refer to the Court of Claims decision. 

Mr. Stewart. The Court of Claims has this under consideration 
now, and it will be argued next week. 

Mr. Peters. Mr. Chairman, I would like to say to Mr. Stewart that 
while there is such a feeling about this, our committee is responsible 
for it and I will assume the responsibility, if nobody else will. We 
have studied this question as it was never studied before, and we 
have had the best minds we could get hold of to devote their atten- 
tion to it, and we have advised the railroad people of the country of 
the condition, we have advised the people of the country of the 
condition and we honestly believe we are doing a great work for very 
small pay. That is why there is that feeling. It was not started 
with any antagonism, but it was started with the idea of getting 
what we think is fair. Now, you differ from us and we differ from 
you. We have put all the cards on the table before this commission 
and we are asking this commission to decide that. May I add just 
one more thing in regard to the St. Louis terminal situation : That I 
think there has been a great misunderstanding there. The total num- 
ber of cars handled there is proportioned between the different roads ; 
that is, all classes of cars, at 523,000, as I understand it, and this is 
the proportion of cars to each road, and the mail transfer chargeable 
to each road has been proportioned on the basis of the total cars for 
each road, and that same thing is carried out there. These are not 
mail cars, but it is the proportion on which they distribute the mail 
expense to each one of these different roads. That is the way I 
analyzed the statement, but I think before it should go into the 
record as to what is right, we ought to have the St. Louis Terminal 
Association analyze it for us. We have with us Mr. Hitt, of the 
Short Line Association. 

The Chairman. We will be glad to hear Mr. Hitt after Mr. Stewart 
gets through. Do you think Mr. Hitt can make a statement on this 
point ? 



RAILWAY MAIL PAY. 1141 

Mr. Peters. They carry a similar statement on the terminals at 
Atlanta. 

The Chairman. We will be glad to have you take this statement up 
and make a statement as to your experience of a similar nature. 

STATEMENT OF MR. HITT. 

Mr. Hitt. I can throw some light on the question of cost of cars 
for mail transfer, as I am familiar with the operations of the At- 
lanta terminal station, the expenses, as I understand it, being divided 
on a basis similar to that at St. Louis. That is, expenses are prorated 
on basis of all cars handled. The total figure runs about 76 cents, 
not including interest. For the information of the roads concerned 
this total average figure of 76 cents is divided into certain subele- 
ments, and while I do not know that the cost of mail transfer by the 
Atlanta Terminal Station is shown separately, other items are and 
for that purpose no certain classes of cars are segregated. For com- 
parative purposes from year to year it is entirely convenient to use 
the one factor of total average cars. 

By noticing the St. Louis statement there will be found a total of 
523,000 cars, which is the average used in getting the rate of 6.7 cents. 
In other words, it is an average charge spread over all cars, showing 
what proportion of the total average consists of handling the mail 
transfer. 

The Chairman. From which, do you deduce that that is not a fair 
statement as to the cost of loading the car at that terminal ? 

Mr. Hitt. Not loading a carload of mail. Of the charge of the 
grand total cost of handling all cars at the St. Louis Terminal Sta- 
tion, 6.7 cents is chargeable to the cost of the mail transfer ; that is 
the average cost of the grand total of handling all cars. 

The Chairman. Not a cost per mail car in cents ? 

Mr. Hitt. No, sir. 

Mr. Bradley. Mr. Chairman, I think it will be illuminating to 
analyze that rate in this way: The average reported by the depart- 
ment for the loading of a storage car is a little over 7 tons. The rate 
per car assigned in this statement is a little less than 7 cents. Re- 
membering that the cars are not loaded mechanically, but by hand, 
that only allows 1 cent a ton for the manual labor of loading a stor- 
age car. In the case of a railway post office it would average a little 
over 2 cents a ton for the manual loading of a postal car, so it seems 
from that point of view alone that it is obvious that the figures can 
not be correct. 

Mr. Stewart. In regard to this statement of the Terminal Rail- 
road Association of St. Louis, I want to say that we have not had an 
opportunity of analyzing this with reference to the question before 
the commission, but I simply introduced it here to-day during the 
casual discussion as I want to give you all the available informa- 
tion we have before us. It may be correct, as these gentlemen say, 
that this is prorated on all the cars, for I think it very low. It struck 
us as extremely low, but we did not predicate a rate upon it. 

The Chairman. I misunderstood you. I thought you had this un- 
der consideration when you came to your determination as to the 
maximum of 12 cents. 



1142 RAILWAY MAIL PAY. 

Mr. Stewart. Not at all. 

(Mr. Stewart subsequently submitted the following memorandum 
relative to this matter:) 

As stated in the bearings, the average costs for each car were as follows: 

Operating expenses $1. 767 

Rental, taxes, etc., less general facilities revenue . 863 

Total 2.630 

Mail transfer expenses . 0679 

Washington Avenue Station expenses . 0324 

Grand total 2. 731 

The total mail-transfer expenses are shown in the company's statement to 
be $35,557.25. A statement submitted by the company for the fiscal year ended 
June 30, 1912, showing the number of mail, express, and baggage cars handled 
at the Union Station, St. Louis, Mo., gives the total number of mail cars 
handled as 53,175. It has been ascertained from the records of the department 
that the total weight handled on and off at the Union Station for the several 
mail routes involved aggregates 133,590 tons per annum. Dividing the total 
mail transfer cost as above stated by the total weight handled results in an 
average cost per ton handled of 26.62 cents. Dividing the total weight by twice 
the number of cars handled gives the average load for each car in and out of 
the station as 1.26 tons and sbows the average number of mail cars handled per 
day as 291. However, this total mail transfer cost is based on two items, one 
for actual labor involved in handling the mails by porters aggregating $29,017.25, 
and the other for supervisory labor of eight foremen at an annual cost of 
$6,540. The total cost per ton handled should therefore be divided into the 
cost for handling and the cost for supervision, which produces 21.72 cents and 
4.90 cents, respectively. 

Mr. Peters. Now, Mr. Chairman, if you would like some more in- 
formation as to the average cost for handling ..freight in less than 
carloads in freight houses, which would give you a fairly good idea 
of what would be a good average cost of handling the mail, Mr. 
Peabody has some figures on that subject. 

The Chairman. We would be glad to have Mr. Peabody come for- 
ward and give us the benefit of the computations he has made on the 
Atchison road. 

STATEMENT OF MR. PEABODY. 

Mr. Peabody^ Mr. Chairman, when I received a copy of pamphlet 
No. 8 and noticed the allowance of 12 cents per ton, I immediately 
commenced, an investigation as to the cost of handling less-than- 
carload freight on our own line at various points. We keep these 
figures constantly on file and I have compiled the actual handling 
cost for less-than-carload freight for the months of September, Oc- 
tober, and November, those months being taken as being the last 
three months where I had the complete record at Chicago, St. Joseph, 
Kansas City, Topeka, Wichita, Oklahoma City, Fresno, Cal., San 
Francisco, Los Angeles, San Diego, Dallas, Fort Worth, Galveston, 
and Houston, as being representative points over the country. The 
statement covers the number of cars that we handled at the time, 
the number of tons loaded into those cars, the actual handling cost 
and the cost per ton. The Chicago cost per ton was 45 cents; St. 
Joseph, 36 cents; Kansas City, 45 cents; Topeka, 32 cents; Wichita, 
35 cents; Oklahoma City, 31 cents; Fresno, 44 cents; San Francisco, 
47 cents; Los Angeles, 53 cents; San Diego, 46 cents; Dallas, 45 



BAILWAY MAIL PAY. 1143 

cents; Fort Worth, 31 cents; Galveston, 23; Houston, 34 cents; 
making an average of 43 cents. 

The Chairman. Will you kindly give the committee the benefit 
of the information as to what factors entered into your calculation 
in making up those costs. 

Mr. Peabody. The cost of the truckers and the stowers, the cost 
of the checkers. It is all labor cost and there is included no clerical 
cost in connection with the billing. 

The Chairman. No overhead charge whatever? 

Mr. Peabody. No overhead charge whatever, but simply labor cost. 

Dr. Lorenz. Is that cost per ton counted once off and once on? 

Mr. Peabody. That is the cost per ton of handling. Most of it is 
received from a wagon, it is unloaded from the wagon by the man in 
the wagon. 

Mr. Lloyd. That includes both the cost of loading and unloading? 

Mr. Peabody. Oh, no. It is unloaded from the wagon to the plat- 
form by the men in the wagon and our truckers take it from that 
point and load it into the cars. It is true, however, in some cases, 
we do transfer freight and in that case it would check the labor cost 
of taking it from one car and putting it into another. 

Mr. Stewart. How much of this is an apportioned cost and how 
much is direct? 

Mr. Peabody. Not a cent apportioned. It is was all direct labor 
cost. 

Mr. Stewart. These men do not do anything else but handle 
freight? 

Mr. Peabody. They all work by the hour. 

Dr. Lorenz. Is it not true that in the case of the mail handling 
that the work of the checker and the work of the stower in the car 
is done by the Post Office Department and not done by the railroad 
company ? 

Mr. Peabody. Certainly not done by the railroad, because the} 7 
have no interest in the car. 

Dr. Lorenz. So that these figures would make a difference in the 
comparison ? 

Mr. Searle. With reference to the loading of storage cars on 
our line, the stowing away is done by the railroad employees and 
not by the post-office employees. 

The Chairman. Then, Mr. Peabody, if you had a car of freight 
loaded at Chicago and unloaded it at Houston, the cost of the loading 
and unloading would be the cost of the total of your two computa- 
tions ; that is, 45 "cents and 34 cents? 

Mr. Peabody. The same total ; yes, sir. 

The Chairman. Seventy-nine cents would be the cost? 

Mr. Peabody. That is correct. 

Mr. Stewart. What are the services performed by these porters? 

Mr. Peabody. You mean the truckers? 

They are not porters. They put the stuff on the truck and truck it 
to the car. 

Dr. Lorenz. Does it include the cost of weighing the freight ? 

Mr. Peabody. No : this is not mail, but it is freight. They take it 
from the point that it is put into the house at the freight-receiving 
door, load it onto the truck, truck it to the car, unload it, and come 
back and get another load. 



1144 RAILWAY MAIL PAY. 

Mr. Stewart. Put it in the car? 

Mr. Peabody. They run the truck into the car. 

Mr. Stewart. And stow it in the car? 

Mr. Peabody. No ; there is a stower in most cases. 

Dr. Lorenz. Does it include the cost of weighing the freight? 

Mr. Peabody. I would not be certain. I should say I think not. 
There is a scale at the door and the weighing is almost automatically 
done as it goes in. 

Mr. Lloyd. Some one has to look after it ? 

Mr. Peabody. Yes. 

Mr. Scott. The general practice is to accept small shipments on 
shippers' weights ; they are already fixed by tariff by special instruc- 
tion in regard to the weight. For instance, a box of soap would be 
put in at so many pounds ; that would not be weighed, and it saves a 
great deal of time in that way. 

Senator Weeks. How much do you pay these men an hour ? 

Mr. Peabody. I do not know. 

Senator Weeks. How much do you think? 

Mr. Peabody. Somewhere between 20 and 25 cents, I think. I do 
not know what the rate is; it varies at different places. I should 
judge in Los Angeles the rate of pay was a good deal more, because 
the rate there is 53 cents, whereas in Galveston, where they employ 
colored labor, the cost is only 23 cents. 

Mr. Stewart. What is the character of the articles ? 

Mr. Peabody. Everything that is shipped. 

Mr. Stewart. Are they small articles? 

Mr, Peabody. Small boxes and large boxes. 

Mr. Stewart. Then there is quite a material difference from sacks 
of mail that are all uniform in character and size ? 

Mr. Peabody. Oh, yes. It is not intended to be compared with 
mail, but it is an indication of what it will cost to handle stuff over 
the platform. 

Mr. Lloyd. Then this will prove that the proposed rate of $1.40 is 
a little bit too high, would it not ? 

Mr. Peabody. $1.40 for what? 

Mr. Lloyd. This proposed bill allows $1.40 for the terminal charge 
and, according to this statement 

Mr. Peabody. Oh, no. As I understand it, $1.40 is the expense for 
handling the car, switching, and cleaning. 

Mr. Stewart. How much longer do you think it would require to 
load a ton of this kind of matter you are speaking of than it would 
require to load a ton of mail in sacks? 

Mr. Peabody. I should think that if there was any difference it 
would be in favor of the merchandise. 

Mr. Stewart. You say they are smaller packages? 

Mr. Peabody. Smaller and larger. 

Mr. Stew t art. Are they principally larger or smaller? 

Mr. Peabody. There are all sorts. They run all the way from 10 
pounds up to 200 and 300 and 400 pounds. In some cases they load 
pianos, furniture, and everything else of that sort. 

Mr. Stewart. What would be the average weight of the parcel? 

Mr. Peabody. That would be impossible to state. 

Senator Weeks. What is the average weight of a sack of mail ? 



RAILWAY MAIL PAY. 1145 

Mr. Stewart. It depends somewhat on whether it is storage mail 
or mail in the working car. 

Senator Weeks. The sacks are of different sizes ? 

Mr. Peabody. Yes. 

Mr. McBride. The average weight of sacks containing second 
class mail is about 40 pounds. 

The Chairman. What is your average for first-class mail, and 
third? 

Mr. McBride. I could not say. 

Senator Weeks.* The only value of this is whether it is a fair com- 
parison with the mail. Are you prepared to say it is not? 

Mr. Stewart. I am not. I was trying to get information from 
him because I am not familiar with the freight business. 

Mr. Safford. I think the department has a regulation in order to 
conserve the use of equipment that requires that any sacks having 
less than 25 pounds shall be consolidated, so that the weight of mail 
sacks would run, according to their theoretical adjustment of the 
matter, from 25 pounds to, probably 250 or 300 pounds. A sack of 
documents going out of here, for instance, is as much as two men 
can handle. 

Mr. McBride. I might say that in 1909 when the department de- 
termined upon the basis for the allotment of closed-pouch space a 
record was kept for a period of the weights of pouches and sacks on 
closed -pouch lines, from which it was determined that the average 
weight was about 20 pounds on closed-pouch lines. 

Mr. Peabody. If the average is 20 pounds for the mail, there are 
more packages of mail to be handled per ton than less-than-carload 
freight. 

Mr. Lloyd. But you can handle them more easily because they are 
uniform ? 

Mr. McBride. The figure I gave was for sacks and pouches car- 
ried on closed-pouch trains, not on trains where mail is carried in 
bulk. The limit of weight prescribed by the department is 150 
pounds to a sack. 

Mr. Mack. You have a larger number of parcels and do not get 
the limit? 

Mr. Tuttle. It is a fact you have to take a great deal more time 
in handling the ordinary freight packages of glass and groceries, 
than the average sacks of mail ? 

Mr. Peabody. We would be glad to believe our men handled that 
stuff carefully, but we do not believe they do. 

The Chairman. Mr. Peabody, have }^ou any other statements in 
reference to this? 

Mr. Peabody. No. 

Air. Lloyd. Mr. Mack, suppose that, according to your view of 
things the commission should commit the unpardonable blunder of 
accepting this space basis. What would you say as to the division 
into the five classes, " Services herein provided for shall be of five 
classes, namely, full railway-post-office-car mail service, apartment 
railway-post-office-car mail service, storage-car mail service, closed- 
pouch mail service, and side, terminal, and transfer mail service "? 

Mr. Mack. How many classes do I think there should be? 



1146 RAILWAY MAIL PAY. 

Mr. Lloyd. If we are going to accept this theory of the space basis, 
what is your objection to the division into classes, and are those the 
classes that ought to be made ? 

Mr. Mack. I think the parcel post is developing a very consider- 
able change in the Postal Service. The probabilities are with our 
company, that we will not build any mail apartment cars less than 
30 feet in length. 

Mr. Lloyd. You would have these five divisions, would you not, if 
we are going to have this space basis? 

Mr. Mack. On any space system I would not think there would be 
need of any such number of units. To-day, for instance, practically 
all of the apartment-car service is developing overflow mail into bag- 
gage cars, and we find that a pretty general condition in the service. 
They work this mail up at the terminals. 

Mr. Lloyd. Now, what kind of services, if they do not adopt these 
five classes, should be adopted ? You are not committing yourself to 
space, but you have decidedly taken a position against space and in 
favor of weight. But suppose we should conclude to make a report 
in favor of the space basis. Now, if we do, you people are certain 
to protect yourselves as much as possible in the fixing and arrange- 
ment of the line in reference to the space basis. I want your idea 
with reference to these things. I am not committing any member of 
the commission or myself, but suppose we come to the conclusion that 
General Stewart's suggestion, or something like that, should be the 
basis of pay? I want to get at your notion with reference to these 
classes. You have not objected to General Stewart's provision with 
reference to side, terminal, and transfer mail service, because that is 
one thing you want, and he relieves you of that burden. 

Mr. Mack. Yes, sir ; we will be very glad to be relieved of that. 

Mr. Lloyd. So you would be satisfied with that suggestion. How 
about the other, the railway postal car, apartment railway postal 
car, storage and closed pouch mail service? You would need all of 
those, would you not ? 

Mr. Mack. There are all classes of that kind of service to-day, but 
the proposition to pay for them on a space basis would produce these 
difficulties that we have endeavored to point out. 

Mr. Lloyd. Would it produce difficulty if you changed the classes ? 

Mr. Mack. I think the service itself is producing a change in the 
matter of apartment-car service, or will produce it. For instance, 
let me show you the effect of a change that came up a day or two 
ago on the Denver & Kio Grande. On a train out of Salida they 
have a 25-foot mail apartment car 

Mr. Lloyd. I have -not reached that point yet, but I am coming 
to that. 

Mr. Mack. All this has a very direct bearing on the sizes of apart- 
ment cars and shows you how the overflow mail is going into the 
baggage car, and for that reason, as I say, we will not undertake to 
build anything less than 30-foot mail apartments in the future. For 
instance, on the Rio Grande train, No. 315, out of Salida, the baggage- 
master said that there are 77 sacks of mail in the baggage car, and 
he makes a note on the bottom of his report and says that is less than 
half the number when they are not weighing the mail. When weigh- 
ing the mail they load up their car to a greater capacity, because it 
is easier to weigh it. As I say, we would not undertake to build 



RAILWAY MAIL PAY. 1147 

anything less than 30-foot apartments on our railroad hereafter. 
Particularly will that be necessary with the parcel post, If the 
parcel post develops and increases, the tendency is going to eliminate 
need for a smaller car; that is, the smaller cars that are in service 
to-day. If the department was to enlarge the space to take in all 
the mails, instead of throwing the surplus mail into the baggage 
car, it would eliminate the smaller cars, except, in my judgment, in 
very rare instances on very small lines. 

Mr. Lloyd. In the suggested bill it is proposed that — 

Full railway post office car mail service shall be service by cars 40 feet or 
more in length, constructed, fitted up, and maintained for the distribution 
of mails on trains. Four standard sizes of full railway post-office cars may be 
authorized and paid for, namely, cars 40 feet, 50 feet, 60 feet, and 70 feet in 
length. 

What would you say to those classes ? 

Mr. Mack. I pointed out that we are not building anything less 
than 60-foot cars, neither storage cars or postal cars. No railroad is 
building 40-foot cars. 

Mr. Lloyd. Do you think that any system that is adopted ought to 
provide for only one class of car, namely, a 60-foot car for a railway 
post-office car? 

Mr. Mack. I do not think any plan ought to provide for anything 
less, when a full car is used, than a 60-foot car. 

Mr. Lloyd. You think that is the view generally of all your 
people ? 

Mr. Mack. I can not say for them all, because we have not dis- 
cussed it, but I think it is fair to take the judgment of the railway 
men present. That is my own view. We would not build anything 
less than 30-foot in apartment cars in view of the service as it" exists 
to-day and the probable development of the parcels post on similar 
lines. As to full cars, nobody would think of building less than 
60-foot cars except as a matter of compulsion to protect ourselves on 
40 and 50 foot car rates. 

Mr. Lloyd. Then, as I understand you, you think if that was 
adopted there ought to be one standard size for full cars and that 
should be 60 feet in length? 

Mr. Mack. That is my judgment. 

Mr. Lloyd. In reference to the post-office cars, there is a recom- 
mendation of " Five standard sizes of apartment railway post-office 
cars may be authorized and paid for, namely, apartments 10 feet, 
15 feet, 20 feet, 25 feet, and 30 feet in length." As I understand you, 
your suggestion is that if this is to be adopted there should not be but 
one class, and that class a 30-foot car. 

Mr. Mack. I say I do not want to commit myself as favoring the 
plan at all. I don't think space fits the service. 

Mr. Lloyd. We are not committing you to the plan. 

Mr. Mack. Nor to any rate in connection with it, but I say we 
would not build anything less than 30-foot apartments, and I do not 
know why any other railroad should do so, considering the develop- 
ment of the Postal Service. 

Mr. Lloyd. You do not want to say that, because if this becomes a 
law it would provide that you will have to do it. 

Mr. Connolly. The Jersey Central is now building steel cars, 71 
feet in all, 70 feet inside length, and every one of those cars are to 
49396—14 80 



1148 RAILWAY MAIL PAY. 

have apartments, although the department had standardized some 
of those down as low as 10 feet on our trains. 

Mr. Stewart. He is willing to provide that 30 feet under the 
present conditions. 

Mr. Lloyd. Under your suggested plan he would not get paid for 
weight, but he would get paid for space. Then the question of 10 
feet, 20 feet, and 30 feet is to him a very serious matter if he is paid 
on a space basis. He says that he ought to be paid for the full 30 
feet, because now he gives 30 feet; hereafter he will give 30 feet if 
he is required to use that car, and he ought to have pay for 30 feet. 
You say, in the suggested plan, we will not pay you for 30 feet, not- 
withstanding you furnish the car, but we will pay you for 10 feet, 15 
feet, or 20, as the case may be. 

Mr. Stewart. But his rate of pay does not pay him now for 30 
feet. 

Mr. Lloyd. This is on an apartment car, where he gets paid for 
nothing except the weight. 

Mr. McBride. Is it not probable that in that car, where he uses 
10 feet only for distribution space, the rest of the space would be 
taken up with storage mail, which, if the apartment was but 10 feet 
in length, would have to be loaded in the baggage end ? Under the 
new plan we would pay for 30 feet under such conditions. 

Mr. Connolly. I beg your pardon. You are using that 30 feet 
now and sending it back in your baggage cars, too. 

Mr. McBride. Then under the new plan we would probably pay 
for more than 30 feet. 

Mr. Connolly. I think the position is inconsistent. 

Mr. Mack. I do not think that these two questions have been thor- 
oughly discussed between us, and I do not know what their view is, 
but I think it would be a good idea to take the view of the other 
gentlemen present to see whether the view that I have expressed, as 
to 30 and 60 feet, is correct. 

The Chairman. We might add if any of the gentlemen present 
differ with Mr. Mack's judgment in this matter, and his statement 
that his line, so far as he believes, would build no cars of less than 
30-foot apartment, that they will so indicate. 

Mr. Peters. In our opinion, Mr. Chairman, we would not be justi- 
fied in building new steel cars (and that is all we build on account of 
running through the tunnels and running the electric service), with 
an apartment of less than 30 feet. In building a steel car it costs a 
great deal of money to change the apartment. Taking one-sized car, 
even though the department is asking for only 15 and 20 feet now, 
we feel that with the growth of the mail they will soon be using 30 
feet and it is better to adopt a standard of 30 feet instead of going 
to the different sizes, because in building the steel cars we can get 
them all of the proper size. 

Mr. Chairman, we have with us a number of the representatives 
of the short-line road association of the southeast, who hoped that 
they could have a hearing before you to-morrow morning, if you 
will give them the time. 

The Chairman. We will be glad to hear them in the morning. 

Mr. Lloyd. In the matter of storage cars in this suggested bill, 
there are four standard sizes, namely, 40 feet, 50 feet, 60 feet, and 70 



RAILWAY MAIL PAY. 1149 

feet. If this system is to be adopted, what do you say as to these four 
sizes ? 

Mr. Mack. The same thing would apply to the storage car and 
apply more particularly to the storage car than the mail car. A 
storage car is nothing more or less than a baggage car with perhaps 
better lighting facilities than the baggage car. 

Mr. Lloyd. Do you not have all lengths of baggage cars? 

Mr. Mack. No, sir. We do not build anything in the way of bag- 
gage cars to-day under 70 feet. The tendency is not to build short 
cars, as we have outgrown that condition entirely. 

Mr. Lloyd. Suppose, if this system were adopted, there is enough 
storage mail to fill a 40-foot car, or fill the space of a 40-foot car in 
the car. Do you think it would be right for the Government to pay 
for 60 feet? 

Mr. Mack. I think it would be right for the Government to pay 
for the car, or whatever we have to haul, whatever we have to fur- 
nish. We ought not be asked to furnish a 40-foot car or a 50-foot 
car, or carry a lot of irregular-sized cars in our equipment simply 
to give what would be equivalent to a special rate to the Govern- 
ment in furnishing a car we do not furnish to anybody else. 

Mr. Lloyd. You are getting at the point I want to reach with 
reference to storage and other cars, too. Is the mail car to be 10 
feet, 15 feet, 20 feet, 25, 30, 35, 40, 45, 50, 55, 60, 65, or 70 feet to suit 
the suggestion of the Post Office Department, or would it be a wiser 
proposition to have a standard R. P. O. car and a standard storage 
car and a standard apartment car. Do you think it would be better 
to have a standard car? 

Mr. Mack. It is a transportation proposition. 

Mr. Lloyd. What would you say to that, General Stewart ? 

Mr. Stewart. I think it would be very unfair to the department 
to establish such a unit, because it would compel the Government to 
pay for a large amount of space that it was not using and did not 
need to use, and which the railroad company could use. Those con- 
ditions could be met just as they are met to-day. Take, for instance, 
.the 70 foot cars which some companies have been building for 
some time past. They do not want to build any more 60-foot cars. 
The companies came to the department and asked if we would con- 
sent to their partitioning off 40 feet in a 70- foot car, and if we 
would agree to pay for that 40-foot space in a 70-foot car as a 40- 
foot car. We said we would do so and made a regulation to that 
effect, and we are now paying for some such cars. So that this 
question could be met in the same way. They use the remainder of 
the cars for their own purposes. 

The Chairman. What do they use them for, for express and 
baggage? 

Mr. Stewart. I do not know. I presume so. 

Mr. Scott. I had no recollection of that. 

Mr. Stewart. Haven't you 70-foot cars with 40-foot apartments! 

Mr. Scott. Not one on the system. 

Mr. Bradley. Probably you are thinking of the Frisco. 

Mr. Stewart. Probably. I will correct the record. 

Mr. Mack. There is one road that does that, and I think that was 
the Frisco Road, and I am very sure they^ only do that on one train, 
which is the Meteor out of St. Louis — their fast train. 



1150 RAILWAY MAIL PAY. 

Mr. Stewart. The regulation was promulgated to meet a condi- 
dition in the service, and any company is privileged to avail itself 
of it. 

Mr. Lloyd. As I understand your proposed bill, you propose to 
pay for the maximum space used. Then you would have a great 
deal of dead space in every car, would you not ? 

Mr. Stewart. No. We would pay for the space that we authorize. 

Mr. Lloyd. In order to get at the question of authorization, you 
would determine about how much mail was carried from day to day, 
and you would direct them to furnish from time to time a certain 
car — 60 feet, full R. P. O. car, and a 60-foot car. Now, that is the 
terminal arrangement every day, starting out at the same time, and 
you suppose they must furnish that 60-foot car, yet you may not fill 
it half of the time. 

Mr. Stewart. The probabilities are we would have need for all 
that space if we authorized it. We would take into consideration 
not only the need for distribution, which we now do, but how we 
could use the rest of that car for storage or for baggage mail, and we 
would attempt to utilize all of the space. 

Mr. Lloyd. If you had a full 60-foot car which you had ordered, 
what objection would there be under this proposed bill to using part 
of it for storage ? 

Mr. Stewart. None. That is what I am saying. We would com- 
bine the space needed for distribution purposes and that needed for 
the other purposes in one car where we could. We can not do that 
now and pay for all the space occupied, for the additional pay for 
space is allowable under the law only for space needed for distribu- 
tion purposes. 

Mr. Lloyd. According to your plan, suppose that you would 
order in a given place a regular 60-foot R. P. O. car, and that is the 
only car you would need on that particular line for that particular 
train, and it turned out that during certain periods of the year when 
there was an excessive amount of mail that you had an overflow ; 
what would you do with that? 

Mr. Stewart. We would have to authorize that additional space 
during the time that we needed it. Under this bill we can authorize 
from time to time additional space. That is one of the advantages of 
the bill — it makes authorization conform to the conditions existing 
in the service. 

Mr. Lloyd. How do the railroad companies prepare for these 
emergencies? Suppose you order a 60-foot car on the line I am 
speaking of and it turns out to be during the Christmas time, which 
is a busy time with all the railroad companies, and you demand two 
cars ? 

Mr. Stewart. They would put on an extra car. 

Mr. Lloyd. They would not have it to put on. 

Mr. Stewart. They meet that same necessity now, and we pay 
under the present plan for the additional authorization. 

Mr. Lloyd. Do you know what becomes of that car during the rest 
of the year? 

Mr. Stewart. I could not say. The cars in reserve are probably 
utilized, and cars are doubled back on their runs with shorter lay- 
overs at terminals. 



BAIL WAY MAIL PAY. 1151 

Mr. Lloyd. That is a very important thing to determine. If it is 
true that you make a demand for a car for one month in the year 
that is not used during the other 11 months, and it can not be used 
during the other 11 months, then that is a matter which ought to be 
considered. 

Mr. Stewart. There are a number of cars in reserve. 

Mr. Scott. We build standard cars on the Pennsylvania system 
TO feet long. If the Post Office Department authorizes a car 60 feet 
long during the winter months and in the summer months, when the 
business becomes light, when the mail becomes light, they would say 
we only need a 40 or a 50 foot car, the car is not a collapsible sort of a 
thing, and we can not change it, because the framing of the car is 
such that we can not change it. 

Mr. Lloyd. You do that like you do with your freight. There 
are some times when you utilize all of your cars in handling the 
freight, and other times when you will not use them all. 

Mr. Scott. We are put to our wits end to find cars to handle the 
business during the busy season. We had a lot of old cars that were 
going to the scrap heap, but the Post Office Department allowed us 
to use them in an emergency. 

Mr. Lloyd. Do you not have empty movement in freight cars ? 

Mr. Scott. Of course, but that is considered in the rate. 

Mr. Lloyd. You do not take into consideration the cars that are 
held in reserve? 

Mr. Scott. We know what our empty freight car movements are 
during the year, that is, a certain percentage of the total movement, 
and the freight car also has a minimum load, which the postal car 
does not. I do not see how we can have two or three different types 
of cars, it would be an enormously expensive thing for us to build 
cars that cost anywhere from $9,000 to $12,000 and have to hold 
them in reserve. 

Mr. Lloyd. Is there any necessity for having these provisions of 
10, 15, 20, 25, and 30 foot apartment cars? 

Mr. Scott. I have been trying to get a standard car for a good 
while; that is, a standard apartment and a standard full car. 

Mr. Lloyd. Suppose you have a space basis, then the Government 
would have to pay for the full 30 feet whether they used 10 feet or 
15 feet. 

Mr. Scott. It seems to me the thing to do would be to fix a 
standard, as you suggest, at 15 feet and 30 feet, and pay a higher 
relative rate for 15 feet than for 30 feet. We had a case on our line 
where a 60-foot car was authorized in one direction and an apart- 
ment car in the other. We had to either haul both of those cars over 
the road empty one wajr, or we had to allow a 60-foot car going east 
to be used as an apartment car. That is what we did during the 
weighing and the Post Office Department got the benefit of it. 

Mr. Lloyd. This suggested bill would remedy that, because you 
would get paid for the maximum use both ways. In other words, 
you would get paid for the greatest space used each way. 

Mr. Scott. But that is subject to change, as I understood Mr. 
Stewart to say, for the fluctuations of traffic, and then we would be 
where we are now, a 40-foot car one way and a 60-foot car another. 

The Chairman. Your authorization is for a round-trip compensa- 
tion? 



1152 RAILWAY MAIL PAY. 

Mr. Stewart. You do not understand me. I do not think the 
application of this law would subject the company to any such fluctu- 
ations. The pay under it for cars would be the same in each direc- 
tion of a round trip. 

Mr. Lloyd. That is a very essential point to come out. 

Mr. Scott. Would the authority be for the year; for instance, 
would you authorize a 60-foot car to be run for the year ? 

Mr. Stewart. No. For such times as the needs of the service 
would require that space. You do not mean to say the mails will 
fluctuate on the Pennsylvania road from month to month to such 
an extent as to reduce a 60-foot car to a 40-foot car ? 

Mr. Scott. I do not know. 

Mr. Mack. There are very great fluctuations in mail from day to 
day and from week to week and from one part of a month to another. 
For instance, during the latter part of the month when the periodi- 
cals are running the volume of space is much greater. If for the 
maximum needed during the month we had a 40-foot car authoriza- 
tion, there are plenty of days when the 60-foot car would be used 
to its capacity. 

Mr. Stewart. You know the periodical mail is carried largely in 
the storage cars and worked in terminals ? 

Mr. Mack. Only on trunk lines. 

The Chairman. Suppose your authorization holds for a month. 
Would that interfere with administration and would it not equalize 
and adjust itself if it were over the ordinary peak? 

Mr. Stewart. I do not say there are no conditions in the service 
when the mails would fluctuate so as to necessitate changes by the 
month, but at present it is only during the Christmas season that we 
call upon the companies to furnish extra equipment to carry and 
handle the extraordinary amount of mails. 

Mr. Lloyd. That is getting at a very, very, important point, if 
it is true you can make an authorization that will run through the 
year except, perhaps at the Christmas period, and at that time you 
will ask for additional space only during the Christmas period, 
no harm will result to the railroad companies. 

Mr. Stewart. No. But I do not think it wise to tie the depart- 
ment up for a year's authorization. 

Mr. Lloyd. You have had practical experience. Your idea, as I 
understand you now, is that the authorization ordinarily would not 
be changed during the year except at the Christmas period. 

Mr. Stewart. I would not say during the year, but it would not 
be changed from month to month. The changes in the service occur 
very much less frequently than that. There would have to be some 
remarkable change in the service to cause changes in the car author- 
izations. The mails gradually grow and on the big trunk lines the 
authorization of space would gradually grow. You would reach the 
time on a particular train when you would need more space, and we 
would authorize it and that authorization would possibly continue 
for some time before any change would be made. Suppose some 
changes in schedules should occur, or some other reason which would 
result in diversion of a large amount of mail. That would result in 
a radical change, perhaps, in the authorization and we might take 
off a 40-foot or a 50-foot car, or it might reduce a 60-foot car to a 
40-foot car. 



RAILWAY MAIL PAY. 1153 

The Chairman. What would be the objection to having the law 
specify that any authorization should hold through a period of 
months ? 

-Mr. Stewart. The objection is, I think, that it is wholly unnec- 
essary. 

The Chairman. Then, if it is unnecessary, certainly no hardship 
can be done, but there should be something definite in the law so that 
the transportation companies could know exactly what they had to 
comply with and what you might expect. 

Mr. Bradley. Is there not an analogy in the practice of the First 
Assistant Postmaster General when he makes leases for post-office 
buildings and post-office space for a term of 5 years or for a term 
of 10 years? He must take into consideration the growth of the 
business under those circumstances. It might be held against him 
that if he made a suitable provision for the growth of the business he 
was wasting the Government's money in hiring to-day more space 
than he was going to need next year, because he was including a 
view of next year's necessities. 

The Chairman. These are slight analogies, but not complete ones, 
because in certain localities the postmaster is accustomed to making 
arrangements. 

Senator Weeks. I do not understand Mr. Lloyd is talking about 
the growth of business, but the irregularity. 

Mr. Lloyd. That is it exactly. You can readily see the fear of 
the railroads, that is what I term it — the fear of the railroads. They 
have the idea, for example, if the mail is heavy in March, which is 
in the springtime, that they might make an authorization then, 
when in June, when the mail is not so heavy, they would change the 
60-foot car to a 40-foot car, change the authorization of 30-foot in 
the apartment to 15 feet and carry the change during a period when 
there is not so much mail carried. That is the thing they object to, 
the probable effect in the space to be used during different times in 
the year. Is not that the fear? 

Mr. Scott. Yes ; that is the fear. 

Mr. Mack. A minimum authorization with maximum use. 

Mr. Stewart. I think that is without any foundation for this 
reason : That the present practice is to give 30 daj^s' notice before we 
discontinue a line or change an authorization. We now give the 
company 30 clays' notice. 

The Chairman. Then there could be no objection whatever to 
having the law specify that an authorization when made was to hold 
good for 30 days? 

Mr. Stewart. Except, as I say, it might be unnecessary. 

Mr. Baldwin. Under the present law it applies to only 10 per 
cent of our pay, but when you base the whole pay on the space, the 
department multiplies 

Mr. Stewart. I am glad Mr. Baldwin brings that out, because it 
gives me an opportunity to correct -the idea that the full-car service 
represents 10 per cent of the space. That 10 per cent is the pay. 
The full cars represent, I think, about 46 per cent of the service now 
and authorizations of full cars now control 46 per cent of the service 
and not 10 per cent. 

Mr. Mack. It is additional pay. 



1154 EAILWAY MAIL PAY. 

Mr. Stewart. That is for additional pay. If we go on the basis 
of this bill, the apartment cars, which are now authorized, in a sense, 
would be authorized formally instead of being authorized as they 
are now, and that, together with the full R. P. O. cars, represents 
about 86 per cent of the entire service. So that we are now practi- 
cally upon a space basis so far as the authorization is concerned. Tt 
would be a very slight transition from the old to the new system. 

Mr. Mack. But not as to pay? 

Mr. Stewart. Pay would be based on space. 

Mr. Mack. Ninety per cent of our pay depends on weight and is 
fixed by the volume of mail handled. The 10 per cent of pay repre- 
sents the greater amount of space, which, as you described, is not 
fixed on the amount of space used, but it is additional pay allowed 
in consideration of the facilities furnished in connection with han- 
dling the mail in full cars, because the transportation rate is based 
primarily upon the fact that the load in the postal car will not pay 
adequately for the haul of the car. 

Mr. Stewart. That covers the field of authorization to which you 
gentlemen have so frequently referred. It is 46 per cent of the 
service now. 

Mr. Mack. We have been very careful throughout, I think, to say 
10 per cent of the pay. 

Mr. Stewart. You do not say either service or pay, but leave the 
inference to be drawn that it is service. 

Mr. Mack. We do not desire to mislead in that respect. We think 
that 10 per cent of the pay is certainly about all that ought to be 
dependent on the judgment and opinion of the officers in the service. 

The Chairman. There is a question I would like to ask you gen- 
tlemen while you are here, and that is, supposing that three units 
were adopted, the E. P. O. 60-foot car, 30-foot apartment car, and a 
storage car, do you agree with the department that there is a dif- 
ference in cost of service and that there should be a resultant differ- 
ence in the compensation, the department suggesting in its plan a 
reduction of 5 per cent on the cost to the Government on the apart- 
ment car from an R. P. O. car and a reduction of 10 per cent on the 
storage car over an R. P. O. car. What would you gentlemen have 
to say in reference to the department's position on those particulars ? 

Mr. Mack, That there should be less pay for the apartment car. 

The Chairman. Less relative pay? 

Mr. Mack. I have pointed out in my statement the very strongest 
reasons why it should be higher rather than lower. 

The Chairman. How about the storage car? 

Mr. Mack. Well, there is no storage car considered under 40 feet. 

The Chairman. But the storage car will be considered, or is con- 
sidered under the suggested plan of the department and the rate of 18 
cents per car mile, as against 20 cents per R. P. O. car mile, the full 
rate for a 60-foot car? 

Mr. Mack. We do not think any of these rates are adequate, but 
as to differential rates 

The Chairman. The differentiation of rates; entirely apply your 
comments to that. 

Mr. Mack. There would be some less care in the maintenance, the 
cleaning, and some little less expense in the lighting in the storage 



RAILWAY MAIL PAY. 1155 

car. There is no question about that; but just what that would be, 
I do not know. 

Mr. Peters. Do you think there should be any less rate per car 
mile on the storage cars with full loads than on R. P. O. cars that 
haul two or three tons? 

Mr. Mack. For hauling, no ; I do not. 

Mr. Peters. Ought there be any difference? Your storage car 
hauls full weight, yet your R. P. O. car hauls the postal clerk? 

Mr. Mack. I did not get the point. Those features that I was 
describing were largely covered in the proposed initial charge, clean- 
ing, and lighting. 

The Chairman. I mean in the transportation ? 
Mr. Mack. In the transportation I can see no difference, certainly 
for not any less rate, for the value to the Government would be 
greater in the storage than in the full postal car. The storage car 
would transport 15 or 20 tons, as compared with the postal car prob- 
ably transporting two and one-half tons, so that the storage car 
would furnish the most valuable service to the department in the 
way of transportation. 

The Chairman. On the car-mile basis? 
Mr. Mack. Yes, sir. 

Dr. Lorenz. In spite of the heavier load of a storage car, would 
not the gross weight of the car and contents together be less than 
the gross weight of the R. P. O. car ? 
Mr. Mack. The gross weight? 
Dr. Lorenz. Yes. 
Mr. Mack. No. 

Dr. Lorenz. What is the tare weight of the storage car? 
Mr. Mack. I. do not think there would be much difference in the 
weight of the cars themselves. 

Mr. Scott. A 70-foot R. P. O. car weighs from 120,000 to 125,000 
pounds. A 60- foot storage car runs about 100,000 pounds; that is, 
50 tons in one case and 62^ in the other. The load in the storage car 
would raise the weight of the storage car to almost the load of the 
working car with the light tonnage in it. The expense to the rail- 
road company is energy expended in hauling the cars and weight 
over the road, and it costs us just as much to haul a storage car with 
a heavj^ weight as it would a working car with less weight. The 
only difference would be in the cost of lighting, as there would not 
be any difference in the heating, because they are both heated by steam. 
Mr. Stewart. They would not be heated, lighted, or cleaned in 
the same way. One is fitted with sanitary appliances, the other 
is not. Neither would there be the amount of service performed 
by the company en route between terminals, as the greater part of 
the storage mails are undisturbed until they reach destination and 
require no intermediate handling. 

Mr. Scott. Are you not distributing parcel post in storage cars 
to-day? 

Mr. Stewart. That is not the point I am speaking of. I am speak- 
ing of the service the company renders the Government. 

Mr. Lloyd. I am afraid you do not understand it. He is saying 
you now require them to make some distribution in the storage car 
and that they are actually distributing the mails in the storage car. 

Mr. Stewart. I am referring to the service performed en route 
in the handling of mail at stations by railroad men. 



1156 KAIL WAY MAIL PAY. 

Mr. Scott. I am getting at the revenue to the company for the 
hauling of those two cars and the relative cost of hauling them, and 
I say there is practically no difference. 

Mr. Stewart. You certainly give us a very different service in the 
case of the storage cars. You simply haul the car from one large 
terminal to another, with a limited amount of intermediate handling 
of mail. 

Mr. Peters. But we haul the large quantity of mail; we perform 
the transportation service; in the other you get the distribution 
service. 

Mr. Stewart. But Dr. Lorenz has called attention to the question 
of weight which, according to Dr. Scott, seems to about balance. 
Now, I call attention to the other conditions, the difference in fitting 
up and furnishing the car, in lighting, heating, and cleaning it, and 
putting in sanitary appliances, and of the service the company gives 
from one terminal point to another. All of these services are dif- 
ferent in the case of a full car from those rendered in the case of an 
apartment car. 

The Chairman. Would there be any difference in the cost of 
cleaning ? 

Mr. Stewart. Yes. 

The Chairman. I should think it would cost just as much to clean 
a storage car as an E. P. O. car. 

Mr. Stewart. No; the requirements are not so exacting. The 
statute requires the full cars to be regularly and thoroughly cleaned, 
and says that no payment shall be made for such service unless this 
is done. 

Mr. Mack. The storage cars have to be cleaned. 

Mr. Stewart. Yes ; but not in the same way as the full cars. 

Mr. Mack. They have to have closet arrangements. All baggage 
cars are equipped with toilet facilities. As to the cleaning^ I do not 
think there is much difference in the cost. 

Mr. McBride. Storage mail cars have no closet arrangements. 
There are not as many windows in a storage car as in a mail car, nor 
is the amount of cleaning necessary, because it consists in simply 
sweeping the floors in the storage cars, while the floors, racks, side 
walls, etc., of the mail car have to be cleaned. 

Mr. Peters. They are getting away from the transportation service 
the railroads perform. It is the hauling of the mails. 

The Chairman. What percentage of your cost is the hauling cost 
and what percentage of your cost, according to your methods of 
calculations or accounting, is your cost for lighting and cleaning ? 

Mr. Scott. I do not believe I could tell you that off-hand. 

Mr. Stewart. The companies have submitted some very specific 
figures on the cost of cleaning, etc., which are published in volume 
No. 6. 

Mr. Mack. A great many of these charges would be the same — in- 
spection and maintenance of the car and trucks. 

Mr. Searle. General Stewart referred to the question of storage 
cars as a purely haulage question; that the cars were loaded at ter- 
minals and hauled to the destination without breaking the bulk or 
breaking the contents. That is not correct in every instance. We 
have instances where the bulk is broken at three points ; and there is 
another instance, with which I am familiar, where the mail is taken 



RAILWAY MAIL PAY. 1157 

from the storage car at four different points. For instance, in con- 
nection with this I want to make this observation: Here is a car 
that is a storage car which is loaded with 10 tons of mail, for which 
they vjay 12 cents per ton. That car is unloaded at a point 200 miles 
distant and 4 tons of the mail are taken out there at a junction 
point. At a point 200 miles farther a couple of more tons are un- 
loaded, with the result that when it arrives at the terminal of the 
route there is only a ton left in there. There does not appear to be 
iiny provision for that loading or unloading — a rate for the 9 tons 
which have been dispatched at intermediate points — and that is of 
frequent occurrence, I am inclined to think, cut in our section. 

Mr. Mack. While the bill provides for a maximum in both direc- 
tions, it does not provide for a maximum over a natural operating 
run of the car. For instance, a car starts out loaded and goes to the 
«nd of the line with only a ton left. In that case we would have 
great difficulty in having it understood that we ought to be paid for 
that car as far as we have to haul it. 

The Chairman. You are paid for the car on the car-mile basis 
for the distance the car travels, and you would be paid for the ton- 
nage that was put on. If 10 tons went on you would get 12 cents a 
ton, and if only 1 ton was delivered at the ultimate destination and 
only 9 tons delivered at the intermediate point, you would still get 
your 12 cents unloading for each of the 9 tons. 

Mr. Mack. No ; not under the bill. 

Mr. Stewart. The mail would be weighed at each terminal. 

The Chairman. Then that is a weakness, it seems to me, in the 
bill. 

Mr. Stewart. I think not. 

The Chairman. It seems to me it is a weakness in the bill if you 
only allow one payment, namely, the loading payment on 80 per cent 
of the business and double payment on 10 per cent in the case 
mentioned. 

Mr. Stewart. Such compensation as is represented by the other 
service is covered by the line rates; that is the idea. It would be 
wholly impracticable to weigh mails on and off and fix loading 
charges at different intermediate points. They can only be fixed at 
the ends of the route. 

Mr. Baldwin. Then the Post Office Department has the absolute 
control of stating a route. Suppose they stated a route on the Santa 
Fe, say from Chicago to San Francisco", and on the Great Northern 
from St. Paul to Seattle. Then there would be nothing paid for 
any loading or unloading charge except at the initial point and the 
terminal point and nothing for all that intermediate route. 

Mr. Stewart. The line rates would cover all of that service. 

The Chairman. Then why have any loading charge at all, but 
make everything a line rate? 

Mr. Stewart. I have never been particularly favorable to the load- 
ing charge otherwise than for this reason, that it is a concession to 
the short line ; it serves to equalize the pay between long and short 
lines. It is not so very material to the large lines on the long routes, 
and if it were not for the fact that there are so many short hauls, 
it would be better, I think, to include the loading charge and the 
constant terminal charge with the one line charge; but the great 
advantage of having separate terminal and loading charges is that it 



1158 KAILWAY MAIL PAY. 

tends to equalize the pay to the short lines and the short routes, and 
it does that very well. 

The Chairman. Why would not this be more equitable: If you 
were to have an unloading charge which would be 24 cents a ton, you 
provide first for loading and unloading the mail at a rate which shall 
not exceed 12 cents per ton — that is, for loading maximum, and 12 
cents per ton for unloading. 

Mr. Baldwin. Does it say so? 

The Chairman. It says for loading and unloading the mails it 
shall not exceed 12 cents per ton. 

Mr. Baldwin. That is both loading and unloading. That is what 
it says. ■ 

The Chairman. What would be the objection to saying for load- 
ing and unloading the mails the aggregate shall not be more than 24 
cents a ton? 

Mr. Stewart. Under the bill as it is now drafted we would ascer- 
tain the loading charge at the initial terminal and the unloading 
charge at the other terminal. We would adjust each case by con- 
sidering them both together and fixing one rate. 

Mr. Peters. Would it not be the one charge for the unloading end ? 
If you have the one total put on all the loads that went into that car 
when it started, you would make no charge on account of labor when 
it gets to its terminal. The next car that starts at that point would 
take the mail and get full pay for loading and nothing for unload- 
ing. I think that was the point the chairman was trying to bring 
out. At the last meeting, Mr. Chairman, it was suggested that 
General Stewart should submit at this hearing some statements 
worked up to show the effect on many lines of this proposed method. 
He gave us one or two statements at that time, but I think he was 
asked to pick out some more typical routes to show what effect it 
would have compared with the present basis and this new basis. 

The Chairman. Were you able to prepare those, General Stewart? 

Mr. Lloyd. I supposed General Stewart would give that in his 
general statement. He will make a statement when you get through. 

Mr. Mack. Before we get away from the point which Mr. Searle 
referred to, initial and terminal charge, I want to put in one re- 
mark. What I was drawing attention to was the fact that while 
the proposed plan provides for a maximum authorization in both 
directions, or a rate in both directions based upon the maximum re- 
quirement, it does not fix what that maximum requirement is going 
to be, nor how far that maximum requirement is going to go. For 
instance, we will take a car that leaves St. Louis fully loaded; 
when that car gets to Little Rock half of the load is out, when it 
gets to Texarkana there is very little left, and there would be an 
immediate controversy as to whether we will be paid on that car on 
the basis of the maximum load outbound as far as the car goes. 
We have cases like this in the pcstal car service. We have a 60-foot 
car that goes all the way from St. Louis to San Antonio and it is 
paid for at the rate of 60 feet to Texarkana and from Texarkana to 
Lcngview it is paid for at either 40 or 50 feet, and from Longview 
it is paid for at 60 feet. That is a postal car, but it indicates the 
possibility with regard to both storage and postal cars, as to whether 
the actual car we are required to use will be paid for on the maxi- 
mum basis for the natural operating run of the car. We can not 



RAILWAY MAIL PAY. 1159 

shift from a 60 to 50-foot car and from 50 to 40 as we go down the 
line, so the bill does not cover a very essential feature of that kind 
on a space basis, because, undoubtedly, we would have a great deal of 
controversy about that. 

I would be glad to know what General Stewart's idea would be 
in instances of that character, also with regard to the overflow space 
in baggage cars on passenger trains which have a full E. P. O. car. 
The rate fluctuates not only day by day but as the car goes over 
the road; sometimes the load increases between points as well as 
diminishes, and in fixing space, how are we going to find out what 
that would be ? We have a car in which the Government can expand 
according to the volume of the mail handled, and we can not give 
them 6 feet authorized and throw the rest of the mail out. That 
is one of the great advantages of the plan of to-day, the Government 
is not restricted in the use of all the train service of the country, 
but it is on a weight basis, and if you have service on a space basis 
which implies reservation and limitation, you can not expect to ex- 
ceed it with your overflow mails, neither can you expect to have space 
unless you pay for the maximum which you will use. 

Mr. Stewart. There would be no essential difference between the 
new plan and the old plan in that respect. Mr. Mack speaks of the 
fluctuations in the service and the fact that he thinks they would not 
get paid under the space basis for fluctuations which occur. They 
do not get paid to-day upon the weight basis for fluctuations in serv- 
ice during the term. 

Mr. Mack. Yes we do. 

Mr. Stewart. The mails are weighed once in four years and the 
fluctuations occur many times during the four years, but pay is not 
reduced or increased for that. You get the full pay you start with 
for the four years. 

Mr. Mack. We can not accept that view. That may be your view 
of the matter. 

Mr. Stewart. I am going to supplement it in a few days with 
additional evidence which I hope will convince you. 

Mr. Lloyd. What would be the objection to providing for an 
initial charge and not for a terminal charge in the matter of loading 
and unloading? In other words it provides for loading and makes 
a charge of 20 cents for loading and half that charge for unloading. 
That is on the theory that every pound of mail that starts will have 
to be unloaded, and they will get paid for it. 

Mr. Scott. The trouble about that is this: That westbound we 
would have a heavy load in our cars to start out with ; but east bound 
we would have a light load. 

Mr. Lloyd. It is equalized. You have a heavy charge going one 
way and a light charge going the other. 

Mr. Mack. I can do better than that. Mr. Scott would get all 
the money on through storage car that we carry. We would unload 
it at Kansas City without getting any money and it would come back 
empty. 

The Chairman. The bill proposes that loading and unloading 
shall not exceed 12 cents per ton. The intention is that there shall 
be a payment for each activity. 

Mr. Stewart. Yes. 



1160 RAILWAY MAIL PAY. 

The Chairman. For the loading of every ton and the unloading: 
of every ton. 

Mr. Stewart. Yes; at the terminals. 

Mr. Searle. It costs just as much to unload at intermediate points 
as it does at the terminal. 

The Chairman. I did not so understand the bill. I thought it 
was a maximum of 12 cents for loading and a maximum of 12 cents 
for unloading, wherever it was unloaded. 

Mr. Mack. It would not multiply on the weight. What difference 
does it make whether you pay for unloading at Little Rock on our 
line or at Texarkana ? We start out with 10,000 pounds and unload 
5,000 at Little Rock and 5,000 at Texarkana. Why not pay for what 
we unload at Little Rock as well as at Texarkana ? 

Mr. Searle. Another feature with regard to that is that we have 
a storage car that starts out with 10 tons, and a good portion of that 
is unloaded at a junction point; then, in addition to that, it is un- 
loaded at the junction point and there is a quantity that has to be 
unloaded from the storage car and put into the working car on the 
same train for distribution purposes. Why should not that partici- 
pate in the loading and unloading? 

Mr. Mack. Just the same as at the terminal. 

Mr. Stewart. Because it is amply covered in the line charge. 

The Chairman. If the line charge amply covers part, I do not 
see why it should not cover all and eliminate the loading charge. 

Mr. Stewart. It would if we had routes of uniform length. As 
I said, it furnishes that natural and proper declension in the rate 
between the short line and the long line. The loading charge on the 
short line will raise the line rate very materially. It provides the 
declension in rate which occurs in ordinary rate making, as sug- 
gested by Dr. Lorenz's draft. I was not at first in favor of the 
loading charge. 

Dr. Lorenz. May I supplement what Gen. Stewart has just said? 
It is true that I suggested in my draft the separation between line 
charge and terminal charge, but I suggested something in the line 
charge which Gen. Stewart has rejected, namely, that that line 
charge should increase as the weight of the mails on that line in- 
creased, on the assumption that the increased weights of mail occa- 
sion not merely additional handling at terminals but also occasional 
rehandling en route, and even though the weight might be small, 
compared with the total weight carried, and might not affect the loco- 
motives, nevertheless there would be more work on the route with 
the heavy mail, as compared with the route in light mail, and there- 
fore the line charge itself should increase with the increased weight 
of mail as well as the terminal charge. 

General Stewart has followed my suggestion with respect to the 
terminal charge, but not with respect to the line charge, and I think 
that it would be very helpful indeed if the railroad representatives 
here present could express an opinion as to whether the weight should 
be rejected altogther, proceeding upon the assumption which Mr. 
Lloyd suggested in this discussion, if the space basis is to be adopted 
at all, whether in that case we should have simply one charge at the 
terminal, say $3.50, and one charge on the line, say 20 or 21 cents, 
or whether both the terminal charge and the line charge should be 
affected by the weight. In other words, does it appeal to them as 



RAILWAY MAIL PAY. 1161 

reasonable that if there is one line in which the average post-office 
car carries 1 ton of mail, another line in which the average 
R. P. O. car carries 2 tons of mail, whether both of those lines 
should receive the same rate per car mile, or whether one line should 
not receive a greater rate per car mile because of its increasing 
weight of mail. Before I leave that particular subject I wish to 
emphasize one point which General Stewart made, which appears to 
be very important, and that is in regard to the controversy as to what 
the terminal rate should be. In reality it is not a controversy be- 
tween the Post Office Department and the railroads, but a contro- 
versy between the long lines and the short lines solely. To make this 
perfectly clear, let us assume that the average rate is 22^ cents per 
car mile. 

Suppose the average run is 200 miles: } 7 our payment for that 
line would be $-15. If you take out $3 of that for terminal charges,, 
you have $42 left for the line charge; if you take $5 of that for the 
terminal charge, you have left only $40 for the line charge and, 
obviously, if your total payment is to be a specified sum. because you 
are proceeding on aA^erage earnings and average costs per car mile, 
it is totally a matter of indifference to the Post Office Department 
whether they pay $5 or even $10 for the terminal charge, providing 
you reduce the line charge correspondingly, so that the combined 
charge will be the rate you want it to be — 20, 22^, or 25 cents. So 
that I should think that the Post Office Department would be open 
to any suggestion as to changing the terminal rate ; that they would 
gladly make it $5 if the railroads would like to have it $5. The 
rate suggested, $3.50 for a terminal charge, makes a difference in 
rate of long hauls and short hauls of from about 30 cents for the 
short haul of 30 miles, down to about 20 cents for the long haul, and 
the sole question is whether that is a reasonable variation for the 
different lengths of haul. 

The Chairman. I want to thank Dr. Lorenz for making the sug- 
gestion he has made, and to ask the gentlemen representing the rail- 
roads if they can throw any light on the question he has propounded. 

Mr. Safford. The remarks that Dr. Lorenz just made bring to 
my mind a suggestion I made when we were here at the last meet- 
ing, but which occurred in our informal talk so that it did not get 
into the record. I do not think that any space basis for mail pay, 
adjusted on a flat rate for space, that limits the earning capacity of 
the railroad facilities by law, is in accordance with any known traf- 
fic principle or that it is economically sound. 

We carry passengers for, say, 2 cents a mile, and we carry freight 
for so much a hundred pounds, but nobody tells us how many pas- 
sengers we shall put in a car or how many tons we shall haul in a 
freight car. They do not limit the earning capacity of the facility. 
The proposition to do that not only disregards the value of the 
service performed, but it also absolutely fails to recognize the ele- 
ment of efficiency, and in every human activity the element of effi- 
ciency is the key to success. 

Mr. Lloyd. If you did not have a sufficient number of passengers 
in a coach to make it compensatory for you to carry the passengers, 
you would certainly discontinue the carrying of it. 

Mr. Safford. We would discontinue the train or cut out some of 
the facilities. 



1162 RAILWAY MAIL PAY. 

Mr. Lloyd. And if it turned out that there was not enough freight 
for the freight charge that you were making, you would increase the 
freight charge. 

Mr. Safford. Or we would not run the train. 

Mr. Lloyd. Then you are doing the very thing in a different way 
that the Post Office Department is seeking to do. 

Mr. Safford. The difference is simply this: That when you pass 
a law it puts us in a position where we must accept the terms be- 
cause public policy requires us to carry the mail and we have no 
voice as to whether we can afford to do it for the rate or not. There 
is no element of contract or meeting of the minds or anything of 
that sort in a rate fixed by law, and there is no element of justice in 
a law that absolutely limits the earning capacity of any organization 
or any person. That is my fundamental objection to a space basis, 
and I think it is vital. I think that Dr. Lorenz will confirm the 
statement that no railroad facility is limited as to its earning. You 
would not fix a rate for freight on the average earnings per freight 
car? 

Dr. Lorenz. There are several railroads, having representatives 
present to-day, which have in force at the Interstate Commerce Com- 
mission a tariff which provides that a special baggage car loaded 
and not accompanied by persons will be carried at the rate of 25 
cents per car-mile for 500 miles and for a distance over 625 miles at 
20 cents per car-mile irrespective of what is in the car. 

Mr. Safford. In that case the railroad adjusts the compensation 
to its operating conditions, having in view the fares of the passengers 
to whom the baggage belongs, to be collected on some other train, 
as part of the consideration. In the other case the Post Office De- 
partment adjusts the operating conditions to its own will or its own 
necessity. 

Mr. Stewart. Suppose it was shown that the rates which the Post 
Office Department are suggesting are as high, or higher, than the 
rates for like space and service that the railroad companies them- 
selves by contract receive for express service. Then what would you 
say? 

Mr. Safford. I would say that in either case the railroad com- 
panies should have an opportunity to say whether the service is de- 
sirable or not; but I do not believe, as a rule, it can be proven that 
the mail rate is higher than the express rate. To start with, the two 
services are not comparable. It is worth very much more to carry 
mail than it is express. 

The Chairman. Do you mean the cost is very much more? 

Mr. Safford. I mean to say we have much more service to per- 
form, much more duty, trouble, and annoyance. Practically all that 
a railroad does in the express business is to haul the car in which the 
express matter is loaded; it has no responsibility for the express 
messengers — their personal safety; it has no responsibility for the 
traffic. The express company is responsible for all loss and damage 
and personal injury and everything of that sort. They solicit the 
business ; collect the business, load it on the cars, and when it gets to 
the destination they take it off the cars, and we do not touch it. 

The Chairman. You do not solicit the Government mail business ? 

Mr. Safford. Certainly not. But we handle it, and we perform a 

thousand services for the Government that we do not perform for 



KAIL WAY MAIL PAY. 1163 

the express people. We furnish a specially equipped car exclusively 
for the Government that we do not furnish for the express people; 
we take care of all the side and terminal services ; with the mail we are 
responsible not only for the safety of the business but for the safety 
of the people in the car that go with it — six, seven, or eight people 
sometimes. 

Mr. Stewart. Under the proposed plan side and terminal services 
are eliminated. That is one of the differences between the express 
and the mail service as performed by the railroad companies. I 
grant that there are other differences. I am going to submit to the 
commission a comparison between express rates and mail rates, and, 
then, of course, it will be incumbent upon the representatives of the 
railroads to point out the differences that exist, if there are any dif- 
ferences, between the services that would be performed under this 
bill for the Government and the services performed for the express 
companies. 

Mr. Mack. With regard to relief from side and messenger service, 
it ought to be clear that at the local station the handling is done by 
the express company's employees. In other words, they pay the sta- 
tion agent or their own people for the handling at the station as 
well, whereas we handle mail at stations as well as handle side and 
terminal service. 

Mr. Stewart. Under the proposed bill you will not have to per- 
form the latter. 

Mr. Mack. But under this bill we would have to handle at all sta- 
tions. 

Mr. Stewart. What handling ? 

Mr. Mack. At all stations ; the loading and unloading at all of our 
stations. 

Mr. Stewart. The handling until it reaches the postal employee, 
the mail messenger, would continue to be performed by the company. 

Mr. Mack. Is it your purpose to have messengers load and unload 
directly at the car ? 

Mr. Stewart. There would be services at the station proper that 
would not be performed by the mail mesenger. 

Mr. Mack. I say with regard to the express service we do not 
even do that. I wanted to bring that out. 

Mr. Peters. But, General Stewart, you make a reduction of 5 per 
cent from the present weight basis of pay to give you funds to pay 
for this terminal service. Your recommendation is that you would 
pay only 95 per cent, cutting off 5 per cent in consideration of your 
reducing the cost to the railroads of that service. 

Mr. Stewart. You are assuming that it would cost the railroads 
generally 5 per cent. Is that your idea ? 

Mr. Peters. Yes. And also the special one with reference to 
closed-pouch service. I think your Document No. 8 specified that. 

Mr. Stewart. I am not expecting that the railway mail pay com- 
mittee are prepared to point out -all the differences in the services 
they perform for the express companies and all the duties they 
perform for the Government under this bill. I am prepared to say 
now that I am going to file with the joint committee very soon a state- 
ment showing a comparison between the amounts the railroads are 
now receiving for performing express service and the amounts they 
are receiving for performing the mail service. Then, T say. it will be 
49396—14 81 



1164 RAILWAY MAIL PAY. 

incumbent upon the representatives of the railroads to point out the 
differences in the services they perform for each. 

Mr. Bradley. Will that statement apply to all the railroads of the 
country ? 

Mr. Stewart. Yes, sir ; as a whole. 

Mr. Bradley. I would like to call the chairman's attention to the 
fact that we have filed a statement during one of the earlier hearings 
showing the incidental service performed for the express companies 
as compared with the service rendered the Post Office Department. 

Mr. Lloyd. But you did not show what you were receiving for it. 

Mr. Mack. I think that the figures that have been submitted on the 
space basis show the relative earnings of space. I can tell you off- 
hand that it is $3.86 per thousand car-foot mile. 

Mr. Lloyd. He is going to be able to show what you are going to 
get or actually receiving for carrying the express between certain 
points. He will show what you receive for carrying the mail also 
between those points. 

Mr. Stewart. I will also show a comparison between the total re- 
ceipts of the railroads from the express business and the total receipts 
from the mail service. 

Mr. Scott. Is that on the present basis or the proposed basis? 

Mr. Stewart. On the existing conditions. 

Mr. Baldwin. Express is on a partnership basis ? 

Mr. Stewart. Yes ; I understand that. 

Mr. Baldwin. Did we not report that in our answers to you on 
which Document 105 was based, and did we not report that in 
detail for express and mail i 

Mr. Stewart. I think you did, in some of the statistics. 

Mr. Mack. How recent are these figures, may I ask? 

Mr. Stewart. They are up to date. 

Mr. Mack. You apply those to the express rates ? 

Mr. Stewart. Yes. 

Mr. Mack. The application under the new express rate should not 
be considered a voluntary proposition on the part of the railroad 
companies, so far as they are concerned, and it should be understood 
that those express rates are on trial as experimental for two years, 
I believe. 

Mr. Stewart. We will also show it on the rates before they were 
reduced. 

Mr. Peabody. Will it be submitted on a tonnage basis ? 

Mr. Stewart. Yes. 

Mr. Searle. If the gentleman intimated that he was going to pro- 
duce figures showing we were getting more for the mail than the 
express, I presume if he uses your figures for compensation he would 
do it the same as I do with the express ; that is, we get a certain per- 
centage of all the business secured, and we would naturally want 
a percentage they have of the Post Office Department. 

Mr. Lloyd. The theory is this : If you went into a voluntary con- 
tract with a private corporation to transport their goods, you cer- 
tainly ought to be willing to carry the mail on about the same basis 
of pay. 

Mr. Searle. Yes ; but without the limitation the Government puts 
on us. 



RAILWAY MAIL PAY. 1165 

The Chairman. Are any of you gentlemen going to submit any 
further remarks in regard to Dr. Lorenz's suggestion of a few mo- 
ments ago? 

Mr. Bradley. I would suggest that Dr. Lorenz's bill, or pro- 
posed law, takes cognizance of the fact, that there is an additional 
value of service rendered in the increased tonnage carried per car. 
It is true that his allowances in that direction are very, very small — 
they average, I think, about three-tenths of 1 cent per ton per mile; 
however, it was in the right direction, according to our view. The 
Post Office Department, in their proposed law, gives no consideration 
to that. It does not seem to me that an initial and a terminal 
charge is a very important contribution to the settlement of this 
question, because it introduces a great many additional com- 
plications. 

However, Dr. Lorenz's suggestions bring us back to a discussion 
that was not completed earlier this afternoon, as to the difference in 
the value of services between an K. P. O. car and a storage car. It 
has occurred to me to suggest that if the department's figures are ac- 
cepted, that the average load of a railway post-office car is about 3 
tons and the average load of a storage car is about 7 tons; then, 
remembering that the principal service which the .railroads per- 
form for the Post Office Department is the transportation of its 
tonnage, it might be roughly assumed that the storage car repre- 
sented twice the service that the postal car does. However, that 
would have to be modified by the fact that the department, within 
the postal car, distributes the mails en route and so gets some addi- 
tional advantage. I do not think, however, that that additional 
advantage would offset the difference in 3 tons in the service ren- 
dered by the railroads to the Post Office Department. There- 
fore, it would seem to be to me that the service rendered is about 
equally represented, wdiether in the R. P. O. car or in the storage car. 

The Chairman. How about the apartment car? Would it be 
relatively the same as the E. P. O. car? 

Mr. Bradley. Relatively the same, except that I think there it 
would be just to apply the retail principle. When you divide your 
cars into fractions, even on the suggestion of Congressman Lloyd, 
15 feet and 30 feet, there is an economical loss in operating those 
fractional units in combination with other activities, such as bag- 
gage and express. That, I think, should be taken into considera- 
tion. 

The Chairman. Taken into consideration in doing what; giving 
a higher rate relatively. 

Mr Bradley. In justifying, I think, a higher rate. When you 
proceed further and recognize minor distinctions in the allotment of 
space, as in the department's plan, 10 feet, 15, 20, 25, and 30 feet, 
you increase the relative necessity for the recognition of higher rates. 
There was some talk this afternoon in regard to the stability of the 
rates, and it Avas suggested that authorization should be made for at 
least one month. It occurred to me to contrast that with the pro- 
posed rates. For instance, at the rate of 18 cents for the 60 feet 
of mail-apartment car space, we would find that a 25-foot apartment 
would get 7-| cents per mile, a 20-foot apartment would gQt 6 cents 
per running mile. There is a difference of 1£ cents. If it happened 
to be a short-line route, say, 50 miles long, it would be 75 cents 



1166 RAILWAY MAIL PAY. • 

extra each way per day for the difference between the 20-foot apart- 
ment and the 25-foot apartment, or, say, $1.50 a day. Monthly earn- 
ings, for that, then, would be $45. If the department should later 
notify the railroads that it no longer needs 25 feet, but that it only 
needs 20 feet, the cost of making that alteration in the interior of the 
car would be an addiional expense plus the loss of mileage rates. If, 
on the contrary, the department authorized an extension of 5 feet, 
the cost of the alteration in the car alone would eat up the earnings 
for a long time to come — that is, the extra earnings. 

It seems to me, as a result of all the conferences to-day as well as 
our previous study of the subject, that the new plan proposed is very 
much more complicated than the present plan, and that the difficulty 
with any space plan is more in the administrative treatment of the 
subject, the inevitable differences between the Post Office Department 
officials on the one side and the railroad officials on the other; that 
they would not be able to talk in common language as to what was 
meant, and that the amount of friction and irritation would be 
greatly increased without any resulting advantages. 

Mr. Stewart. Could I be privileged to ask you when you changed 
your mind about the space basis ? 

Mr. Bradley. I will be glad to answer that if it is of any interest 
to the committee. When the Wolcott-Loud commission investigated 
the question in the year 1900 or thereabouts, it happened that I, as 
superintendent of the Railway Mail Service at New York, had 
rather intimate relations with the Wolcott-Loud commission and I 
prepared a brief relative to Railway Mail Pay which was submitted 
to the commission, and incidentally in that brief I favored the adop- 
tion of a space basis of payment. Of course, I looked upon the ques- 
tion from my viewpoint, as an officer of the postal service. When 
this subject came up later in 1911, in Document 105, I gave further 
study to the subject, and about that time I left the Government 
service and went into the railroad service. 

Now, I think that any change in viewpoint tends to broaden the 
opinion that one has on any subject, and in that case I think my 
views were broadened. I also learned by a more intimate study of 
the subject that I had made a mistake previously in assuming that 
there was a great opportunity for the Post Office Department to 
economize by controlling its own cars and loading its space to 
the capacity. When I had, in recent years — within the last two or 
three — opportunity to test that by study and by working out particu- 
lar examples, I found it was very largely a delusion. The mail 
from the initial point, contrary to being a traffic of great stability, 
varies greatly. I have seen instances where the volume would vary 
60 per cent from day to day. The outbound tonnage is much greater 
than the inbound tonnage, varying in some cases from 60 per cent 
outbound to 30 per cent inbound. I recall a case of one very im- 
portant line where it varied from 85 per cent outbound to 15 per cent 
inbound. Then there is a diminishing load in the car from the initial 
point going to the terminal point. When you add all those varia- 
tions together you find that while you have a maximum loading ca- 
pacity at one place, you can not utilize it at all times, so while T would 
not say that the department could not practice some economy in its 
loading, I will offer the opinion that it would be a very small per- 
centage of economy, unless, in regard to the storage carload, it would 



RAILWAY MAIL PAY. 1167 

undertake through the establishment of terminal railway post offices 
and by delaying the dispatch of mail to allow it to accumulate in 
order to get full carloads. That practice would enable them to get 
some small economies in the storage car space, and yet. according to 
Document 105, the storage car space is only about 10 per cent of the 
whole. 

The economies that are practiced in regard to the storage space 
illustrate the attention that is given to cases where the weight of mail 
can be concentrated, thus attracting the notice of the department 
and leading to an effort to reduce the earnings of the company in that 
particular line of traffic without, I think, giving clue regard to many 
of the unremunerative features of the business which the companies 
are obliged to perform in the full railway post-office cars, in the 
apartment cars, and sometimes in the closed-pouch service. Those 
briefly are the reasons why I was led to change my belief, and, in 
addition to all that, and perhaps what is in Gen. Stewart's mind, is 
the fact that under the last administration, under a particular pres- 
sure, there came to pass an attempted economy in the Railway Mail 
Service toward cutting down railway post-office space. It was found 
that in the development of that policy the postal officials, the chief 
clerks, and division superintendents felt under such compulsion from 
the criticism of the post-office inspectors that they were obliged to 
make recommendations for reductions which were contrary to their* 
better judgment. There entered into the service a new measure- 
ment of space according to the interior facilities; the department 
changed its formula to read, not that they needed 40 feet of space, 
or 50 or 60, but that they needed the facilities of a 10-foot car or 
a 50-foot car, as the case may be. It developed in such a way that 
the chief clerk would base his estimate of space according to the 
number of pigeonholes he would need in the letter case. He would 
say we do not need 5 or 25 pigeonholes, or we do not need but four 
sections of that rack instead of five; consequently we only need 40 
feet instead of 50. 

The Chairman. You would not take out the rack or the four or 
five pigeonholes. 

Mr. Bradley. It would not pay the railroad company to take them 
out. I think that is undue pressure, but space is subject to that sort 
of supervision which coerces the postal officials against their better 
judgment, and it seems to me it is not as safe as the plan that has 
been in use for so many years. Those briefly are the reasons why I 
have changed my opinion. 

Mr. Stewart. I do not want it understood that I question in any 
way the right of Mr. Bradley to change his views or the sincerity of 
his position at any time. 

The Chairman. I do not think anyone so inferred that. 

Mr. Stewart. I have known Mr. Bradley for many years in the 
Postal Service as well as during his connection with the railway busi- 
ness since, and I have had the highest regard for him as a postal official, 
just as I now have for him as a railway official. Knowing, however, 
that he did hold the position that space was the right basis, and held 
it so long, and so ably defended it. I asked him if I was privileged to 
ask the question why he now thinks the weight basis is better. Per- 
haps he does not remember that when the inquiry was under consid- 
eration that he wrote me a very good defense of the space basis. I 



1168 RAILWAY MAIL PAY. 

did not expect to make any point of this, and do not want to now. I 
know that Mr. Bradley is sincere in his views. 

The Chairman. Do you not think it is advantageous to us all to 
get the evolution of his views? 

Mr. Stewart. Yes. 

Mr. Baldwin. Before we adjourn I would like to make one in- 
quiry. When we were here the last time the department produced 
quite a large table of mail routes in which they showed the results 
of the application of this law. I believe you were not here at the 
time, Mr. Chairman. A large proportion showed reductions and 
some showed increases, but when we came to examine the table we 
found they were all light routes and there were no heavy routes, so 
we said at once, show us some heavy routes and they said they 
would. Mr. McBride afterwards came to me and asked for certain 
information. Now, that was three weeks ago, and I asked Mr. 
McBride to-day if he had made his calculation with regard to the 
route, say, from Chicago to Council Bluffs; that is a heavy route 
and we would like to see that. Mr. McBride said no, that he had 
not done it. Now, I would like to have them state when we will 
have an opportunity to see what effect this law has upon that par- 
ticular route and upon a heavier route. 

The Chairman. Under the suggested plan? 
• Mr. Stewart. Just one moment before we leave the other subject. 
I have a matter I would like to mention before going into an entirely 
different question. I would like to suggest as to the validity of the 
reasons presented by Mr. Bradley that they appear to be based 
largely upon the fact that he has come to the conclusion that the 
Post Office Department can not accomplish any economies under the 
space basis, such as he formerly believed they would, and therefore 
while I concede his right to change his views, I think the reasons for 
his changing them are not very good from the railroad standpoint. 
Upon this other point I wish to call attention to the fact that the 
weight of mails carried in a car and discharged along the route at 
the several post offices, is not a very material element in considering 
rates, for the reason that mails must be discharged and received at 
every one of those points, whatever the weight may be. If you 
have full E. P. O. service or apartment-car service and are supplying 
20 offices along the route there will be mail to be discharged and mail 
to be received at every point regardless of the amount of mail in- 
volved, and an increase in the amount of mail may not add an ad- 
ditional pouch at any point. It in most cases simply increases the 
quantity of mail in those pouches and sacks. Therefore, the question 
as to the amount of mail carried in a car reduces itself to a very in- 
consequential element so far as the tonnage is concerned. Therefore, 
the only other element could be the additional service performed at 
the station in discharging and receiving the mail and as you have to 
discharge and receive mails anyway at all of these points, the ad- 
ditional weight makes very little difference in the cost of the service. 

Mr. Searle. That remark is true with respect to the ordinary rail- 
road E. P. O. car service. We do despatch mail at every station and 
take on mail at every station, but my remarks are in reply to Mr. 
Stewart's that the car was loaded intact at the terminal and went 
intact to destination. I think there is a clear distinction there. 



RAILWAY MAIL PAY. 1169 

The Chairman. We will resume this discussion in the morning, if 
we can, and I would like Gen. Stewart to give the information asked 
by the gentlemen present, as to when the statement as to the heavy 
lines, as propounded by Mr. Baldwin and some other gentlemen, will 
probably be ready. As I understand, the department promised at the 
last meeting to have it ? 

Mr. Baldwin. On February 6, when we were here. 

Mr. Stewart. I do not understand the great haste Mr. Baldwin 
is in. We are now preparing a statement for this committee and 
T do not think it would be wise to delay that paper to get statistics 
for Mr. Baldwin. 

The Chairman. I was absent at the last meeting, because I was ill 
at the time, but I understood the department stated they would be 
able to furnish that information in a very short time. 

Mr. Baldwin. That is not the whole of it. The department brought 
in a statement which purported to show certain things and which' did 
relate to light lines, and we said, " Will } r ou show that for the heavy 
lines," and we asked for certain information. Now, if Gen. Stewart 
means to say he does not intend to furnish that information, that is 
one thing. I simply ask him if he will furnish it ; and if so, when? 
Mr. Stewart. We will furnish it at the very earliest day possible. 

The Chairman. Can 3^011 give any day ? 

Mr. Stew t art. No ; we can not do that. We are getting this other 
reply ready now. 

The Chairman. We will now adjourn until 10 o'clock to-morrow 
morning. 

(Thereupon, at 6 o'clock p. m., the hearing adjourned until 10 
o'clock a. m., March 17, 1914.) 



TUESDAY, MARCH 17, 1914. 

Joint Committee on 
Second-Class Mail Matter, Etc., 

Washington, D. C. 

The hearing was resumed, according to adjournment, at 10 o'clock 
a. m. 

Present: Hon. Jonathan Bourne, jr. (chairman), Senators John H. 
Bankhead and John W. Weeks, and Representatives James T. Lloyd 
and William E. Tuttle, jr. 

There was present, also, in addition to those noted on the preced- 
ing day, Mr. E. F. Blomeyer, vice president and general manager 
of the Tennessee, Alabama & Georgia Eailroad, who was sworn by 
the chairman. 

The Chairman. As I understand, Mr. Peters, the representa- 
tives of the short lines are present and want to be heard with refer- 
ence to this suggested plan of the department? 

Mr. Peters. That is correct, Mr. Chairman ; but before you go into 
that I would like to have an entry made into the record with regard 
to a statement of Dr. Lorenz, on yesterday, in regard to a rate that 
is made by the railroads of 25 cents a mile for a baggage car for 
500 miles and for a distance beyond of, say, 20 cents a mile. I would 
like for Mr. Rowan, who has the tariff giving that rate, to explain 
how it is made. It is not made as a mercantile rate. 



1170 RAILWAY MAIL PAY. 

Mr. Bo wan. I telephoned to New York this morning, and found 
out that that is a rate which is made in connection with theatrical 
baggage in cases where they do not accompany the baggage, but 
send the baggage on ahead of them, with Sunday intervening, or 
something like that. 

The Chairman. That is 25 cents a car-mile ? 

Mr. Rowan. Twenty-five cents a car-mile. The same tariff pro- 
vides a rate of 25 cents a car-mile for empty cars — privately owned 
cars that are to be transported from one point to another in order 
to take a load or to go from one road to another. 

The Chairman. Dr. Lorenz, is this information new to you? 
Dr. Lorenz. I think it is very well to have this explanation. I did 
not know anything more than just what the tariff called for. As I 
understand, it does not contradict the rate, but simply explains that 
it is made for theatrical companies which send persons on some other 
traim 

The Chairman. Does that in any way change your conclusion that 
you drew from the information issued by the Interstate Commerce 
Commission in making this rate ? 

Dr. Lorenz. I do not think it especially changes the conclusions, 
except that it perhaps shows it is not a commercial rate to the same 
extent that it would be if it were made generally, without being a 
part of a combination, you might say, in which the persons were 
transported at regular rates on some other train or in another car. 

Mr. Rowan. The point I wanted to bring out is the fact that this 
is an exceptional rate and tariff reads in this manner: When unac- 
companied by parties, or accompanied by parties of less than 10 per- 
sons, in which latter case tickets sold at regular first-class rates must 
be held by each person ; the rate from 1 to 499 miles, 25 cents a mile ; 
from 500 miles to 624 miles, $124 ; 625 miles and over, 20 cents a mile ; 
a minimum charge of $15, which, after June 1, 1914, will be $25, and 
the rate will be 30 cents per car-mile instead of 25 cents, as at present. 
The Chairman. That is an order from the Interstate Commerce 
Commission ? 

Mr. Rowan. Yes, sir ; it is a regularly published tariff. 
Mr. Lloyd. Is it true that in the case of a privately owned car 
being transported from one place to another in order that it may be 
used at some other point, you charge 25 cents per mile for its transit? 
Mr. Rowan. I am not thoroughly familiar with that. 
Mr. Lloyd. Do any of the rest of you know whether that is the 
rule or not? 

Mr. Peabody. That is the rule on the Santa Fe. We move empty 
cars for private parties at 25 cents a mile. 

Mr. Rowan. Unoccupied cars, passenger or baggage cars, not in 
service, owned by individuals, theatrical companies, amusement or 
advertising companies, when moved empty, when a charge for porter 
or other attendants will be charged for at the rate of 25 cents per 
mile per car, with a minimum charge of $25 per car, plus one adult 
individual fare for each porter or attendant. This charge will apply 
whether or not the cars move in service in the first direction. After 
June 1 this rate will be 30 cents. 

The Chairman. What is the date of that order ? 

Mr. Rowan. That will be effective June 1. 

The Chairman. What is the designation of the order? 



KAILWAY MAIL PAY. 1171 

Mr. Bo wan. It is a tariff and it will be a supplement to New York 
Central tariff No. 1. 

The Chairman. And goes into effect on June 1 ? 

Mr. Rowan. Yes. I. C. C. No. 817. The rate in effect to-day is 
25 cents per car, and new rate 30 cents per car-mile, and the minimum 
charge of $15 will be $25 after June 1. 

Senator Weeks. That means that the rate would obtain in each 
direction ? 

Mr. Rowan. In each direction; yes, sir. 

Senator Weeks. And if the car made a round trip the rate would 
be doubled? 

Mr. Rowan. It will be doubled; yes, sir. I would like to call the 
attention of the commission to an interesting comparison I worked 
out yesterday, showing the difference between the rate per car which 
we get now for handling magazines by freight (blue tag), and the 
rate which it is proposed to pay under this bill, for the month of 
October, 1913. During that month there were 41 cars of blue-tag 
mail handled between Buffalo and Chicago with a total of 1,415,880 
pounds, or an average per car of 34,530 pounds. At the freight rate 
of 30 cents per 100 pounds, which is the commercial freight rate, it 
gives an earning per car (a 36-foot car) of 19.8 cents per mile. Un- 
der this proposed law we would get 18 cents for hauling a steel 60- 
foot car on a passenger train the speed of which is three time as great 
as that of the freight service. 

• The Chairman. What is your present rate per car mile brought 
up to a 60-foot car basis ? 

Mr. Rowan. I have not figured that out, but the standard freight 
car is 36 feet 6 inches in length.- 

The Chairman. That is the rate you are receiving for freight on 
blue tag? 

Mr. Rowan. Yes, sir ; we get approximately, taking an average for 
the month, of 20 cents a car mile for a 36-foot freight car to-day be- 
tween Buffalo and Chicago, and under the proposed law we would 
get 18 cents for hauling on a passenger train of three times the speed. 
The freight service is about 36 hours and the passenger-train service 
is about 12 hours. 

Mr. Lloyd. Who fixes the present rate ? 

Mr. Rowan. The freight rate? 

Mr. Lloyd. The blue-tag rate? 

Mr. Rowan. We quoted the regular freight rate that is open to 
every shipper in the country, published and filed with the Interstate 
Commerce Commission. 

Mr. Mack. You get a very direct comparison with the 40-foot 
storage-car rate proposed in the bill— that is, a 36-foot car is similar 
to that which earns 20 cents. 

The Chairman. On a freight train ? 

Mr. Mack. A freight train. Freight service in a freight car built 
at one-eighth of the cost, and maintained at nominal cost by com- 
parison with a mail car. 

Mr. Rowan. The result would be that the Post Office Department 
would turn over all their freight to the storage car, because it would 
be cheaper. 



1172 RAILWAY MAIL PAY. 

Dr. Lorenz. I did not understand whether, in getting the 19 cents, 
Mr. Kowan took the mileage in one direction or both directions ? 

Mr. Rowan. One direction. 

Dr. Lorenz. The rate the Post Office Department pays you is for 
a round trip, so you would have to double that rate. 

Mr. Peters. Those cars may be loaded back? 

Mr. Rowan. The preponderance of freight is eastbound. It is the 
reverse of the mail movement. We never bring back empty freight 
cars. 

Mr. Lloyd. That answers the contention of the Post Office Depart- 
ment that you have an opportunity to use the cars coming back, be- 
cause you have much more freight to handle coming East than going 
West, but you have more mail going West than East? 

Mr. Stewart. We have empty equipment to transport East. 

Mr. Peters. But that would not fill up your cars, Mr. Stewart. 

Mr. Stewart. Perhaps not all of them. Mr. Rowan is making a 
comparison between a strictly freight business, 34,000 pounds to the 
car, and a passenger movement with an average of 7 tons to the 
car. It is well understood that the freight business is always con- 
ducted very largely on the weight basis and is very different from 
the passenger business. The latter is conducted almost exclusively 
on a space basis. This being the case, the comparison is not a fair one. 

Mr. Rowan. The comparison I am making is the comparison of 
the revenue which we receive. We are receiving to-day 20 cents for 
the shipment in a freight car that you are proposing to pay for, under 
the new bill, 12 cents when on a passenger train. 

Mr. Lloyd. But you are carrying about IT tons of mail, while in 
the R. P. O. car you carry only about 3 tons. 

Mr. Peters. I just want to call Mr. Stewart's attention to the 
fact that this is what he is paying for carrying the mail that has been 
taken out of the postal cars and sent by freight — the blue- tag mail. 

Mr. Rowan. Let us take the weight of the stuff that is handled. 
A storage car with 20,000 pounds of mail in it would make 125,000 
pounds to haul over the road. A freight car weighs 40,000 pounds. 
This average weight of 34,530 pounds would make a total of 74,570 
pounds, for which we get approximately 20 cents as against pro- 
posed hauling of 125,000 pounds in a passenger train for 18 cents. 

The Chairman. To my mind, the strength of your presentation 
depends entirely on your answer to Dr. Lorenz 's question as to 
whether your calculation is on a single trip or a round trip — a one- 
way movement or a round-trip movement. 

Mr. Rowan. I took a one-way movement, because we would use 
the car coming back and there are frequently cars of blue-tag mail 
that have as much as 46,000, 48,000, and, in some cases, 50,000 pounds 
in a car. Take the particular car that I picked out that had 46,595 
pounds of blue-tag matter moved in the month of October, and there 
were many more that had a greater tonnage than that. At 30 cents, 
that gives a car earning, for a 36-foot car, of 26.7 cents per mile. 
If you want to bring that up to a 60-foot car, it would be at least 50 
per cent more. 

The Chairman. Then you think the department ought to reduce 
that rate? 

Mr. Rowan. No. We are asking for an increase of freight rates. 

The Chairman. I mean on the blue tag. 



RAILWAY MAIL PAY. 1173 

Mr. Stewart. You are asking an increase of freight rates on what 
basis? 

Mr. Rowan. I think they are asking for an increase of 5 per cent. 

Mr. Stewart. For what reason? The freight rates are tco low? 

Mr. Rowan. Yes. I do not want to get into a discussion of 
freight rates, however. 

Mr. Stewakt. I will refer to that incidentally here next Tuesday 
and I want to know what your views are as to the reasons why the 
railroads are asking for an increase in freight rates. 

Mr. Rowan. The Interstate Commerce Commission is handling 
that question. 

Mr. Stewart. But you gentlemen have introduced it here in the 
percentages which you have submitted to the joint committee. How- 
ever, we will take that up later. On this question of comparison be- 
tween passenger and freight service, I want to read what Mr. Tom- 
linson, an expert of the Pennsylvania Railroad Co., said during a 
conference at the department in 1908 : 

I might add that as between passenger traffic and freight traffic, freight traf- 
fic is carried entirely by weight, but passenger traffic is, from its original 
standpoint, handling per capita. Consequently in the passenger traffic we reach 
a space basis rather than a tonnage basis. 

And again, he says: 

As I have pointed out before, the difference between the passenger service 
and the freight service is the difference between carrying the load on a tonnage 
basis and carrying it per capita — equivalent to space basis. If I desire to 
travel on a train and occupy a sleeper I will pay for a definite amount of 
space, whether my personal weight is large or small. I would still occupy the 
same space. The passenger train is always limited, so that no logical solution 
of passenger traffic to be divided between several classes appears to us except 
the space basis. 

Mr. Tomlinson is one of the most expert railroad men in the 
country, and every railroad man here knows the value of his opinion, 
which goes directly to the validity of the comparison which has 
been submitted this morning between a freight rate for 34,000 pounds 
and a purely passenger movement, where the minimum load would 
be perhaps 3 tons and the maximum, say, 12 tons. 

Mr. Petees. Mr. Chairman, that is just where we differ with 
General Stewart. The mails are not passenger business. The mails 
now are largely composed of merchandise, parcels post, and it is a 
traffic that should be carried by weight and not by space. We do 
not handle the mails as we do passengers and that is the difference. 
While it is carried on passenger trains it should be carried by weight. 
Express is carried on passenger trains under a series of rates based 
on weights and size. The railroads make no specific charge for that. 
Those rates are issued by the express companies, but the contracts 
with the express companies say that the railroads shall have a cer- 
tain proportion of their gross receipts. The express business is car- 
ried on the passenger trains, but not on a space basis. The mails 
have become practically like the express and they should be carried 
on a weight and not on a space basfs. 

The Chairman. We will suspend for a moment. Representative 
Madden is here. Mr. Madden has a committee meeting to attend in 
a short time and he will give this commission the benefit of some 
views he has relative to the subject under consideration. Mr. Mad- 
den, would you kindly address us? 



1174 RAILWAY MAIL PAY. 

STATEMENT OF HON. MARTIN B. MADDEN. 

Mr. Madden. Mr. Chairman, I really did not come here to speak 
of the value of the service, but rather to make a suggestion that oc- 
curred to me of letting contracts for the movements of the mail. 
It has occurred tome, from a little experience that I have had, that 
the present method of letting contracts for the movement of the 
mail might be changed with some benefit, perhaps, to the Govern- 
ment. The present method is that the Post Office Department enters 
into private arrangements with the railroad companies instead of 
advertising for bids, as I think public policy demands they should 
do. The fact that the department makes a contract with a particu- 
lar railroad company for the transportation of the mails into a 
given territory now without competition in fact, I think sometimes 
prevents the expedition of the mails and service to territory far 
west or far east as the case may be. For example, I have in mind 
this situation: Two competing railroads running, say, to the Pacific 
slope out of Chicago, one having a contract and. the other not carry- 
ing the mails to any extent, one railroad not having any contract 
for the movement of the mails to-day might be willing to offer to the 
Government a special service that would enable the mail to reach, 
say, Portland, Oreg., 10 or 12 hours earlier than it goes now. 

Under the present method of letting mail contracts that could not 
happen, because if the railroads that would be willing to move the 
mails to the Pacific slope territory 12 hours earlier than it is moved 
to-day were to offer that suggestion to the Post Office Department, 
the Post Office Department would say all right, offer your sugges- 
tion, but we must submit that suggestion to the railroad company 
that now has the contract, and if they are willing to meet the pro- 
posal that you contemplate making, your bid will not be considered. 
Of course, the natural consequence of that is that the proposal is 
not made, because no railroad company would be willing to make 
a proposal merely to force another railroad company to do something 
which it would like to do, but would not have the opportunity to do 
even after a proposal was made. But it is my opinion that if bids 
were asked at the end of each quadrennial period from railroads 
in competing territory, you would get a better movement of the 
mails; that is, you would get more rapidity, get faster trains. A 
continuation of the present method seems to be antiquated, not up 
to the scientific method of doing business in the commercial life of 
the country and in a sense tends to give a monopoly to some particu- 
lar railroad. 

The Chairman. Then, it is your opinion that the law should 
direct and compel the Post Office Department to do this ? 

Mr. Madden. Yes, sir. 

The Chairman. Not leaving it to its discretion ? 

Mr. Madden. Yes, sir. I think that is about all I have to say. 

Mr. Lloyd. That would not affect the question of the rate or com- 
pensation that is paid to the railroad companies for carrying the 
mails. 

Mr. Madden. No: but I think the two things ought to be con- 
sidered together, while you are considering the question of com- 
pensation, the question of services ought to also be taken into account, 
and hence my suggestion. 



KAIL WAY MAIL PAY. 1175 



Mr. Lloyd. Do you think it is true, at the present time, that the 
ilroad companies in some instances do not have the most expedi- 



Mr. 

rail 

tious service? 

Mr. Madden. I do. I know of cases now where proposals would 
be made to the Post Office Department for the transportation of 
mails to given territory where 12 hours' better time could be made in 
the delivery of the mails than is made, but the company that would 
be willing to do this hesitates to make the proposal, because they are 
notified in advance if they do make the proposal that it will have 
to be submitted to their competitors, and if their competitors are 
willing to beat the proposal their proposition would not be consid- 
ered at all. 

The Chairman. It is irritation without compensation? 

Mr. Madden. Yes. 

Mr. Lloyd. My understanding is that your position has been as one 
representing the Post Office Department. 

Mr. Madden. I am not representing any department. 

Mr. Lloyd. My understanding is they will send the mails by a 
route which will make the greatest expedition. 

Mr. Madden. I do not agree with that, because I know of at least 
one case to-day where they could get the mails moved to a given 
territory 12 hours sooner than they are being moved if the parties 
who are willing to move them with that extra degree of rapidity 
could be given any assurance that they would get any part of the 
mail to transport ; but they are told when they make the suggestion 
that the suggestion would be welcome and received with open arms, 
but it would be received with the distinct understanding that the 
question be submitted to the road already carrying the mail. 

Senator Bankhead. Under your theory, suppose two competing 
lines between Chicago and San Francisco should bid in competition 
for the mail ; one line, of course, would get the contract. How would 
the mail be supplied on the line that did not get any contract, and 
how would the branch lines be supplied? How would the offices be 
supplied that had generally been supplied by the road that failed to 
get the contract under competitive bid between San Francisco and 
Chicago or New York and Chicago or between any other points? 

Mr. Madden. The way they are supplied now where one road does 
not get it. 

Senator Bankhead. The roads carry the mail wherever the service 
is necessary. 

Mr. Madden. I am only calling attention to a case I have had 
called to my attention, and I have called it to the attention of the 
Second Assistant Postmaster General, and he verifies the truth of the 
statement. 

Mr. Tuttle. As I understand it, is a railroad so anxious to get 
the mail at the present rate of compensation that they would cut 
down 12 hours' time limit? 

Mr. Madden. I do not know what their anxiety leads to, but I 
know they would be willing to cut down the time. In the eastern 
territory, I understand, for example, the mail carried is divided be- 
tween the Baltimore & Ohio and the Pennsylvania Eailroad, both 
companies being owned by the same people, or they were up to within 
a very recent period, and the Lake Shore & Michigan Southern and 
the New York Central, of course, are in the same territory, and the 



1176 RAILWAY MAIL PAY. 

transportation of the mails is divided between these people so there 
is really no competition. 

Mr. Tuttle. We have got the impression that the carriage of the 
mail was very undesirable, people were anxious to get rid of it rather 
than to get contracts for carrying it. 

Mr. Madden. Of course, that impression can be easily obtained if 
you listen to certain people, and if you listen to certain other people 
an entirely different impression may be gained. Of course, I do not 
know anything about the value of the service, and all I know is that 
railroads are anxious to get part of this tonnage, whatever it amounts 
to, in a given territory. I do not speak for any railroad, but I speak 
simply for the principle. 

Senator Weeks. What particular instance have you in mind? 

Mr. Madden. Do you want me to name the railroad ? 

Senator Weeks. Yes. 

Mr. Madden. For example, the Chicago & Northwestern out of 
Chicago to-day is willing to put on an extra train and make 10 or 
12 hours' faster time to Portland, Oreg., on the Pacific coast if it 
could be assured that it could get any part of the mail to transport, 
and I believe it would be willing to take part of the mail during 
the present quadrennial period and transport it without deducting 
from the compensation that is paid to the railroad that now carries 
the mail. 

Mr. Lloyd. What railroad now carries it? 

Mr. Madden. I think it is the Milwaukee & St. Paul. They are 
both competing lines in the same territory. 

The Chairman. That would be through post mail? 

Mr. Madden. I suppose so. 

Senator Bankhead. Who is going to carry it for the other people, 
the same road? 

Mr. Madden. I suppose so. Of course, I am not an expert, but I 
wanted to call the attention of the commission to this particular case. 

Senator Bankhead. I think it is just as important to other sections 
not to be deprived of their mail as it would be to deprive the patrons 
along the line from St. Louis to Chicago or any other points. I 
think the whole country is entitled to the best service. 

Mr. Madden. Surely; and I think you would get the best mail 
service in the way I suggest. 

The Chairman. The territory served by the St. Paul would get 
exactly the same service and the coast would get 12 hours' quicker 
service by the utilization of the Northwestern for the coast business, 
as against the St. Paul, as I understand Mr. Madden's idea. 

Mr. Madden. I suppose both roads would then make the fast time 
if the contracts were let on the basis of what the best time would be. 

The Chairman. It would be only competitive territory and com- 
petitive business. 

Mr. Madden. Surely. 

Mr. Baldwin. Before you place too much reliance on general 
statements about what railroads have offered to do in this direction, 
you ought to hear from those railroads themselves. 

The Chairman. I will ask Mr. Baldwin if he has had any in- 
stance in the hearings which we have held where we have been 
known to take the ipse dixit of any witness without giving every 
witness full opportunity of expressing his viewpoint ? 



RAILWAY MAIL PAY. 1177 

Mr. Baldwin. Oh, no. The Northwestern has no road to the 
Puget Sound country and the Milwaukee has. Just what proposi- 
tion the Northwestern would be willing to make, it seems to me, 
should be gotten from the Northwestern people themselves, if it is 
said that they have made any such proposition. I have never heard 
of it myself, and I do not quite see how they could perform the 
service, and I do not believe that they have proposed to perform 
the service. 

Mr. Madden. I think it might be well for me to say that they have 
not made the proposition. I said they would be willing to make 
the proposition and had suggested their willingness to do it, but 
would not care to do it under the conditions named. 

The Chairman. As I understand, your suggestion is purely that 
a well-known business principle be applied to a governmental op- 
eration ? 

Mr. Madden. Surely. That is all I care to say, and I just wanted 
the committee to have the thought so that they might apply it if 
they thought it wise. 

Mr. Stewart. Before Mr. Madden goes, would you allow me to 
supplement his remarks by a little more complete statement in regard 
to the practice of the department? We universally dispatch the 
mails by the fastest service available, the best schedules that are 
offered to get the mails through" are the schedules that are accepted, 
whatever they may be, subject to the further rule that where 
a company is carrying particular mails the department does not 
take those mails from the carrying company and give them to a 
competitor as long as the carrying company will furnish equal facil- 
ities, as good schedules, and the same advantages for getting the 
mails through. There are fairly good reasons for that; where the 
service is built up on a line that has carried the mail for many 
years, they have the equipment already built, they have their cars, 
and we have our clerks who live along the line, many of them at the 
terminus, but a number of them will live out along the line, and a 
radical change from one line to another may render the equipment, 
which has been constructed for the use of the department, valueless, 
and may necessitate the removal of our postal clerks from their homes, 
because they would have to take up service on the other lines. How- 
ever, if the advantages were sufficiently in favor of the diversion, 
those considerations might be waived. 

Senator Weeks. If there was a case where you could deliver the 
mail 10 hours earlier, as has been instanced as a tentative proposi- 
tion by representative Madden, would you consider that sufficient 
reason for making a change ? 

Mr. Stewart. Yes, sir; and we welcome all those propositions. 
The proposition which Mr. Madden has instanced this morning 
has been discussed with me, and I told the gentleman that I was 
ready at any moment to receive their proposition and I would treat 
it just as we treat all other propositions of the kind; that is to say, 
if they put the train on, and they would have to do that to show 
that they were in good faith with the department and in good faith 
with the carrying company, that the carrying company would have 
a reasonable time to meet their schedule. If the latter met the sched- 
ule they would continue to carry the mails they are now carrying, and 



1178 RAILWAY MAIL PAY. 

if they did not meet the schedule the mails would go to the other 
company. 

The Chairman. But they would not put the train on under such 
circumstances ? 

Mr. Stewart. They sometimes do. 

The Chairman. With no assurance whatever that they are going 
to get the business ? 

Mr. Stewart. Yes. 

The Chairman. I would hate to own securities on that line. 

Mr. Stewart. I can mention some prominent railroads that do it. 
The Eock Island put on a special train at one time running from 
Chicago to Burlington to compete with the C, B. & Q., and the C, B. 
& Q. met the terms of the Rock Island in order to retain the haul of 
the mails. The Burlington road has, for many years, given us fast 
mail service out of Chicago, and so far as that particular mail is con- 
cerned they hold it against all competitors, but there are competitors 
in the field, and from time to time we receive propositions offering to 
better their schedules. The Burlington does not allow anybody to get 
the mail. The Pennsylvania Co. gives us fast mail trains from New 
York to St. Louis under similar conditions. The New York Central 
give us fast mail trains to Chicago likewise. The Missouri Pacific 
system gives us fast mail trains to the South and West. They can 
not hold a pound of that mail if there is anybody else who is will- 
ing to put on a better schedule between those points, and they do 
not meet it. Those are the general rules of the department. I some- 
what sympathize with the views expressed by Mr. Madden here 
about competition for through mail service. Of course, it can not 
be applied to anything but through mails. But considering all the 
facts and viewing the question from long experience in the depart- 
ment, I am not sure but that the present plan works out just about as 
well as if we asked for bids for the service between principal points, 
because there is sharp competition for the mail. In connection with 
the statement that has been made to the joint committee only yesterday, 
that if the department adopts the space basis it will lose the fast mail 
trains, I will say that it was following the first suggestion of that 
kind made here that I received two propositions from competing lines 
out of Chicago to put on fast mail trains, and I said to them, " Will 
you do it with the understanding that you are going to be paid on a 
space basis ? " and they said, " Give us the mails." 

Mr. Madden. I am much obliged to you, gentlemen. 

The Chairman. We are much obliged to you. 

Now, we will be glad to hear from the gentlemen representing 
the short lines. Who desires to speak first. 

Mr. Peters. I will ask Mr. Hitt to appear first. 

STATEMENT OF MR. MOULTRIE HITT. 

The Chairman. Mr. Hitt, will you kindly give us your full name 
and your official position ? 

Mr. Hitt. Moultrie Hitt. I am here, Mr. Chairman, in rather a 
peculiar capacity. I am secretary of the General Managers' Asso- 
ciation of the Southeast, which has a number of the short lines in its 
membership, I am chief clerk to the present general manager of 
the Atlanta & West Point and Western Kailway of Alabama, and 



RAILWAY MAIL PAY. 1179 

general manager of the Georgia Eailroad. There are some points 
that came up yesterday which I did not expect to testify about, but 
on which, perhaps, I could throw a little light from my general 
knowledge of the situation on the Atlanta & West Point and Western 
Railway of Alabama particularly, and partly on the Georgia Eail- 
road. The point was made on yesterday that if the basis of pay 
was fixed on space, that there would be an incentive for the depart- 
ment to economize on space. One of the members of the committee 
suggested that that proposition would be impracticable on account 
of the protest that might arise from the public on account of the 
curtailment of the service. On the Western Railway of Alabama 
we had this experience: We had 50-foot cars on trains Nos. 35 and 
36, between Atlanta and Montgomery, and 60-foot cars on trains 
Nos. 37 and 38. Those cars run through from Atlanta to New 
Orleans. Under the Hitchcock regime there was an attempt made 
to curtail expenses on the railway post-office car. Our first ex- 
perience with that was they ordered a 40-foot car in one direction 
and a 50-foot car in the return movement, which forced us to fur- 
nish 50-foot cars in both directions, for which we got no pay for 
the difference between the 40 and 50 feet in one direction. 

In the meantime the law went- into effect, or was about to go into 
effect, requiring the use of steel cars. Our road from Atlanta to 
Montgomery is 173 miles long, and we ordered four full 60-foot steel 
cars, according to the department's specifications and their repre- 
sentative went over the cars and inspected them at the shops. Just 
about the time those cars were delivered, the department notified us 
that they would only need 40-foot cars on our trains and said that 
we might furnish 60-foot cars for the 40-foot pay, which we were 
unwilling to do. The matter was discussed and in the meantime 
the department made further report that it only needed 25 feet of 
space on trains 35 and 36, and I think it was 30 feet on trains Nos. 37 
and 38. 

The Chairman. When you ordered the four 60-foct steel cars, did 
you do so under the requirements from the department ? 

Mr. Hitt. It was under the provision in the appropriation bill 
that we would have to furnish steel cars. 

The Chairman. Had you any indication from the department 
that they would require cars of that size ? 

Mr. Hitt. Not the slightest. 

The Chairman. They approved of your plans and specifications? 

Mr. Hitt. They did. 

The Chairman. But you had no indication from them that they 
needed 60 feet? 

Mr. Hitt. That is correct. When the cars were delivered we had 
them on hand and we have since been trying to dispose of them 
without too great a less. In the meantime our trains Nos. 37 and 38, 
the fast through trains between New York and New Orleans were 
running and we had to put steel cars into those trains, so we used 
the 60-foot cars for the 30 feet of space required by the department. 
We felt that our pay having been cut off entirely, we would not 
furnish any more space than the department needed, so we parti- 
tioned 30 feet of space in the 60-foot car, and found that the depart- 
ment was using the other part of car for storage mail and at the 
same time they would step into the storage car and bring out mail 

49396—14 82 



1180 RAILWAY MAIL PAY. 

they wanted to work in transit. However, coming to the point of 
the curtailment of the service, so far as it would affect the public 

The Chairman. Before we reach that I would like a little more 
light on this concrete instance you have mentioned. Why did you 
build four 60-foot cars ? 

Mr. Hitt. We built them to take care of the Government service, 
as we understood it. We thought they would need 60-foot cars. 

The Chairman. What had they indicated to you as to what their 
need was? 

Mr. Hitt. We had been going on the past assumption; that is to 
say, we had been furnishing 60-foot cars on two trains and 50-foot 
cars on the two others. 

The Chairman. Receiving compensation at what rate? 

Mr. Hitt. For 60-foot and 50-foot cars until the time they made 
what they called the half line. 

The Chairman. What is your criticism? Is it directed at the 
Post Office Department or at the existing law on account of the ex- 
perience that you had, as just mentioned? 

Mr. Hitt. We feel that the department is entirely within its rights, 
so far as reducing the amount of space is concerned, but we do feel 
they should pay for such space as they use ; in other words, they cut 
down our 60-foot cars in order to avoid paying for any space, and 
now they are using 30 feet without any pay. 

The Chairman. Using 30 feet in what way ? 

Mr. Hitt. As a distributing office. 

The Chairman. You get compensation for the carriage of the 
weight of the mail put into that 30 feet ? 

Mr. Hitt. Yes, sir. 

The Chairman. But you get no compensation for the service for 
the utilization of distribution space in the 30 feet ? 

Mr. Hitt. That is correct. 

Senator Weeks. And you complained also that the balance of the 
car is used for storage purposes ? 

Mr. Hitt. Yes. They probably Avould have to use the baggage car 
for storage purposes, anyhow. In other words, if they choose to 
inconvenience themselves by using only 30 feet of space for distri- 
bution purposes, we have no particular complaint on that, but we 
feel we should be paid for what they use. 

Mr. Lloyd. Suppose that the law is changed so that you would 
receive it on a space basis. Then, how would you be with reference 
to the matter ? 

Mr. Hitt. I would like to make this explanation as to the effect of 
the curtailment of the service. What we fear in the space basis is that 
it would be manipulated so as to cut our pay, without reducing the 
value of our service, in this way: The former practice was to dis- 
tribute the mail between Atlanta and New Orleans. The Govern- 
ment in saving the railway post-office car pay used a 30-foot car from 
Atlanta to Montgomery and do not work the mail that they formerly 
worked between Atlanta and Montgomery for distribution beyond 
Montgomery. They undertook to overcome that by doubling the 
force out of Atlanta and between Montgomery and New Orleans. 
The Atlanta papers were filled, for quite a while, with complaints 
of this passing through Atlanta and this false economy, as they 
called it, and they attacked the administration on that proposition. 



RAILWAY MAIL PAY. 1181 

They said that their papers going to points in Alabama, which 
theretofore had been worked in transit between Atlanta and Mont- 
gomery and despatched promptly from Montgomery, were not 
worked, but that they laid over at those places and reached their 
subscribers from 12 to 21 hours late. They kept that complaint up 
for quite a while until the Democratic administration came in. 

Mr. Coleman. That reduction in your car service, in your 50 and 
60 foot cars, did not take place until the Hitchcock administration 
had undertaken to readjust with economies? 

Mr. Hitt. No. That was the point I was making, about the 
tendency or the incentive to economize in space. There they were 
economizing for the sake of saving the railway post-office car space, 
and now, if the entire basis of railway-mail pay was put on space, 
there would certainly be a large incentive to reduce that amount of 
space to a minimum. 

Mr. Coleman. During the period of Mr. Hitchcock's regime, were 
they trying to effect considerable economies in the operation of the 
mail? 

Mr. Hitt. Yes, sir. 

The Chairman. Is that all? 

Mr. Hitt. There is another point I would like to ask Gen. Stewart 
about. On the Georgia railroad, between Atlanta and Augusta, a 
distance of 171 miles, they have two midnight trains, one leaving 
Augusta about midnight and arriving at Atlanta at about 6 o'clock 
in the morning, with a corresponding train in the reverse direction. 
Heretofore there has been more attention paid on the Georgia Rail- 
road to the development of local travel than through travel, and 
there are plans under way for the purpose of undertaking to give 
the territory between the Carolina coast and the territory south of 
Atlanta better through service. One of the conditions we met with on 
the Georgia Railroad was that on the two midnight trains between 
Atlanta and Augusta there were 20 stations at which the train had to 
stop at night, and a member of the crew goes to the post-office car, 
the clerk hands him a sack of mail, he takes that sack to a lock box 
on the platform, unlocks the box, puts the sack in, and takes another 
sack out, and picks it up and gives it to the post-office clerk. There 
are 20 of those stations, and it perhaps takes fully 5 minutes for each 
one of those stations in a distance of 171 miles. At a modest calcu- 
lation there is an hour and a half's delay within a distance of 171 
miles. 

The Chairman. Delay to what? 

Mr. Hitt. Delay to those two trains. I understood from a dis- 
cussion of the plan here suggested that it was the idea to relieve the 
railroads of side and terminal service. Someone asked General 
Stewart the question, if that meant that the postmaster would go 
down and take the pouch off of the train, and he said that it would 
not, but that it meant that the railroads would take the custody of 
the pouch until the postmaster did show up. That represents a very 
considerable delay to our trains, and in order to overcome that we 
would have to put on night men at all of those points at considerable 
expense. 

The Chairman. It would- necessitate the emploj^ment of 20 addi- 
tional men? 



1182 RAILWAY MAIL PAY. 

Mr. Hitt. Yes. I would like to know, under the proposed plan, 
how we get relief or compensation for the additional 20 men? 

Mr. Stewart. That service would be incidental to your main trans- 
portation service; if you carry the mails on a train you would get 
your regular rates for the line movement, which would cover all the 
incidental service along the lines. 

Mr. Hitt. In a case of that sort you know the line charge would 
have to be considerably higher than the average to take care of a 
peculiar condition of that sort. We are paid, as I understand, on 
a line charge. The proposition is for the service of hauling the mail, 
and not the service of hauling trains or employing 20 men to take 
care or custody of the mail. 

Mr. Stewart. The line charge covers not only the hauling charge, 
but includes an allowance for all the incidental service along the line. 
It is based on the passenger-car revenue, which, of course, is associated 
with the question of cost. You were not at the former hearings when 
the origin of the rate was discussed. There was a proposition to 
fix the rate on costs. That would necessitate the ascertainment of 
cost on every line, but afterwards it was proposed to take the average 
passenger-car revenue as a basis, assuming that the revenues actually 
covered cost, and make certain reductions in that rate to compensate 
for the difference between the passenger service and the mail service, 
so that the line charge, on an average, is supposed to cover all of 
these different services. 

The Chairman. Do you think the services would equalize ? 

Mr. Stewart. Yes, sir. 

The Chairman. Cases like the 20 illustrations Mr. Hitt mentioned 
make quite an impression on my mind as to whether there was an 
equality that stands through all the service and the line charge 
would cover that. If not, the line charge would be unfair to some 
and too great to others. 

Mr. Stewart. The line charge, I think, would equalize very well 
throughout the service and does not present as great a contrast 
as the rates of pay do under the present plan. Under this new 
plan they will get pay for every movement of a car. If you have 
service twice a day over a line, you will get double the amount of pay 
for single daily service, even if you carried the same amount of mail. 
Now we do not specifically take into consideration the frequency of 
service, as the frequency of service is reflected in the weights. 

Mr. Hitt. Assuming as you say, that under the proposed basis we 
would get double the amount of our present pay, do you go on the 
assumption that the space basis would bring about practically the 
same results that we now get by the weight basis ? 

Mr. Stewart. No. You misunderstood me. I did not say you 
would get double the amount of the present pay. I said if you run 
double daily service you would get double the pay you would get for 
running one train carrying the same amount of mail. 

Mr. Hitt. Then, suppose that the department saw fit, for the sake 
of economy, to reduce the service from two trains a day to a single 
train daily. Would our pay not be reduced on a space basis and cut 
in half? 

Mr. Stewart. Yes ; it would. 



EAILWAY MAIL PAY. 1183 

The Chairman. Whereas under the present basis it would be un- 
changed ? 

Mr. Hitt. It would be unchanged. 

Mr. Stewart. There would be compensation, however, for the service. 
It is not practical for the department to reduce service arbitrarily 
where there is need for it. As has been suggested before, the depart- 
ment, in the first place, is not disposed to reduce mail facilities be- 
cause they want to give the best possible service to the patrons of the 
Postal Service. There are many people who would make known the 
service they desire and would be insistent on a continuance of service 
being provided, as has been suggested here. It is impracticable to 
materially reduce the mail service unless there is a reason which is 
convincing to everybody. 

Mr. Hitt. I gave an illustration just now of a case where it was 
not considered impracticable in spite of the complaint to reduce the 
service. In recent months there has been considerable development of 
R. P. O. terminal post-office service. There has been a good deal 
in the papers at least from time to time, to the effect that the depart- 
ment proposes to extend that even further in order to reduce the 
amount of space that they use on trains in R. P. O. cars by chang- 
ing to a space basis that more mail would be handled in an R. P. O. 
terminal post office. Would not that have a tendency to cut down the 
space if the Government could economize by cutting our pay by re- 
ducing the amount of space used on trains ? 

Mr. Stewart. You must not believe everything you see in the pa- 
pers about the contemplations of the Post Office Department. The 
authorization of R. P. O. terminals was for specific purposes, first, to 
handle the blue tag mail, which would not affect a line like this ; and, 
secondly, to handle the parcel-post mail. We can not handle the 
parcel-post mail in the cars to any advantage; we tried it, and it was 
not at all successful. The best and most economical way is to handle 
it in the railway post-office terminals by railway post-office clerks 
who are accustomed to handling it on the trains, but where there are 
facilities for handling it in a manner which can not be accomplished 
on the trains. The extension of R. P. O. terminals to handle other 
mail might affect the question of car space, but that is not practicable ; 
we can not handle first-class mail at the railway post-office terminals 
unless it is what we call " stuck " mail — that is, mail that might be 
carried, for instance, on the New York & St. Louis Line, which, be- 
cause of extra quantity, could not be distributed en route by the 
clerks on the trains and is taken into St. Louis undistributed. Such 
mail might go into the R. P. O. terminal and be worked there, where 
we have the force. 

Mr. Hitt. As I understand the proposed plan, the railroads would 
be required to furnish an unlimited amount of space in terminals? 

Mr. Stewart. No; that is a mistaken idea. Railroad companies 
would be required to furnish space in terminals for transfer purposes ; 
that is to the advantage of the railroads just as much as it is to the ad- 
vantage of the department. We do not have to put a transfer clerk 
there. We can call on railroad men, under the present regulations, to 
furnish all of that service, but we prefer to put the transfer clerk 
there, because he is a man who knows how the mail should be trans- 
ferred and dispatched, and he assists the railroad service as well as 
ours ; so we furnish the employee and the companies furnish him the 



1184 RAILWAY MAIL PAY. 

space for his office. Further than that, we require the railroad com- 
pany now — and we are not asking a thing more under this proposed 
law — to furnish us such space as is necessary to handle the mails in 
transit, to distribute the mails between trains, not mails that go into 
a post office, but only mails that are in transit. There is no such 
condition on your road. , 

Mr. Hitt. Take this case: Suppose now it is the custom to place 
a mail car at the station for some time before the departure of the 
train, and that a full car is used for distributing the mail, would not 
there be a tendency to use the terminal facilities in the station to 
do that distributing instead of in the postal car, and put the mail 
on the car in bulk, rather than put three or four tons in the car to be 
worked in transit? 

Mr. Stewart. No; we would not use the space required of the 
companies for that purpose. 

Mr. Hitt. If the pay is based on space, there would certainly be an 
incentive, for space is much cheaper at some given settled points than 
on trains. 

Mr. Stewart. Yes ; but if we get space from the railroad company 
for that purpose w T e would have to pay rental for it. If we paid 
rental to you for the space for such purposes, and we could delay the 
mail sufficiently to accomplish that, without complaint from the 
patrons of the mails, then you could not complain because we did 
not need your car. 

Mr. Hitt. That argument sounds well, except that in fixing your 
basis of pay now on space, then when you made that readjustment 
about which you said we could not complain, we would have already 
provided facilities on the present basis and then you would cut down 
our facilities and throw them out, and we would simply be losing 
that capital that has been put into those facilities. 

Mr. Stewart. That is true, but I can hardly imagine changes in 
the service which would bring about any such condition on your line. 

Mr. Coleman. It has already happened on his line. 

Mr. Stewart. No. I beg your pardon. We had there an authori- 
zation which was greatly in excess of the needs of the service, which 
continued for years without a proper supervision and the time came, 
as it comes throughout the entire service, when there had to be a 
reckoning and checking up, and it occurred on this line. I do not 
blame the company for complaining, because they thought we needed 
the space, which had been authorized and paid for, when, as a matter 
of fact, we had not needed it for years. 

Mr. Coleman. Do I understand you to say that the line charge 
would take care of these 20 additional men on the Georgia Eailroad 
who would be necessarily employed to take care of the night station, 
or would it take care of the proportionate cost of the hire of these 
20 men? What would be the department's ruling on that proposi- 
tion? 

Mr. Stewaet. It ought to take care of such services as were neces- 
sary for that service. 

Mr. Coleman. The Georgia Railroad does not keep any agents or 
operators at any of those points at the present time. Would your 
line charge take care of the entire cost of the 20 additional employees 
of the railroads ? 



RAILWAY MAIL PAY. 1185 

Mr. Stewart. It should, on the average. It may be, in a plan such 
as we propose, that you can pick out individual cases where it would 
seem not to be true that the specific charge would cover all the cir- 
cumstances; but I think on the whole service on his line that the 
line charge would even up very well. Of course there are not a 
great many night trains like that where we would ask to have the 
mails carried. It would not necessarily follow if you put on a night 
train that we would require you to supply everv office along the line. 

Mr. Tttttle. You do not agree that it would necessitate the em- 
ployment of 20 additional men like Mr. Hitt suggested ? 

Mr. Stewakt. No, sir; I doubt if there is a parallel ca c e in the 
service. The instance cited is an extreme one. 

Mr. Hitt. But it would delay the train. In other words, we would 
have to put it in the box and it would require the 20 men. That is 
the condition at the present time. 

Mr. Stewart. You stop your trains there for some purpose. You 
do not mean to say you stop them at every station just to put the 
pouch off? 

Mr. Hitt. Not at every station, but at these 20 stations there is 
not sufficient business there to require a night agent to sell tickets 
and in the majority of those cases we would need a special employee 
for that purpose. 

Mr. Stewart. We do not require you to put an agent there, but 
we require you to put a box there with a lock on it and require your 
men to put the mail in the box. 

The Chairman. That necessitates stopping the train. 

Mr. Stewart. Stopping and starting, but Mr. Hitt says he stops 
the train for other purposes. 

Mr. Hitt. No. I beg your pardon. I said in some few cases, but 
in the majority of the cases we would not stop for any purpose. 

Mr. Lloyd. But there would not be any additional cost beyond 
that which is now paid, because they are rendering the same service. 

Mr. Hitt. As I understood you just now, you said it would not be 
the intention, under this proposed bill, to require the railroad to 
furnish' space for distributing the mails in order to save space on 
post office cars. Let me read you this section : 

They shall provide station space and room for handling, distribution, and 
transfer of mails in transit, and for offices and rooms for the employees of the 
Postal Service engaged in such transportation, when required by the Postmaster 
General. 

That is not exactly the same thing, as I understand it. In other 
words, this is rather broader than I understood you to state. 

Mr. Stewart. No. This is just as I stated it, and this follows 
the present practice. 

The Chairman. And it makes no compensation extra for this? 

Mr. Steavart. The general compensation covers all of this. If 
we should require other space than that named in the provision just 
quoted we would rent it from the company. 

Mr. Hitt. I happen to be rather fa'miliar with the Atlanta Termi- 
nal Station. When the station was first opened there seemed to be 
a general impression among the railroad people that the depart- 
ment would call for as much space as they might want and they did 
call for, I think, some 12,000 square feet of space. The department's 
wagons would drive in and all around this space, but when we dis- 



1186 RAILWAY MAIL PA!. 

covered that under the present law it was not necessary for us to 
furnish an unlimited amount of space, but merely an amount of 
space necessary to take care of mail between trains, that amount of 
space was cut clown from about 12,000 square feet to something like 
2,000 square feet, or maybe 1,200 square feet. Under this bill it 
would seem to open it up and they would have power to require the 
whole 12,000 feet of space. 

Mr. Stewart. No ; not at ail. It follows exactly the present regu- 
lation. 

Mr. Hitt. The present regulation does not say anything about dis- 
tribution of transit mail in terminal post office. 

Mr. Stewart. But it says " distribution of mails in transit," and 
that has been the practice throughout the country and has been for 
many years, and it has been decided by the Court of Claims that it 
is proper under the law and regulations. There is no change what- 
ever. That matter has been adjudicated in the courts, so that it is 
practically removed from dispute. 

Mr. Coleman. Under the new plan would you pay for this space 
at the terminal ? 

Mr. Stewart. Not the particular space under discussion that we 
have said will be covered by the line charge, but if we needed more 
space for general distribution of mails we would pay for it. We are 
now paying for such space in many places where we have installed 
the parcel-post terminals. 

The Chairman. Where is the line of demarcation drawn? 

Mr. Stewart. We can only ask the railroad company to furnish 
such space as is pertinent to the services they perform for us. 

Senator Bankhead. That is entirely in the discretion of the de- 
partment what that should be ? 

Mr. Stewart. Yes. 

Senator Bankhead. For instance, you cut down the space from 
12,000 to 2,000 feet. Would the Post Office Department not be forced, 
under this provision, to require restoration of that 12,000 feet ? 

Mr. Stewart. No; not unless we needed it for the purpose of 
handling the mail in transit. 

Mr. Coleman. They could take the whole terminal if the Postmaster 
General said it was necessary in the operation of the mail? 

Mr. Stewart. We could not do anything of the kind, and no such 
condition ever arose in the service, and could not. 

Mr. Hitt. When they took on the parcel post the department nego- 
tiated with the terminal station companies for space to handle the 
parcel pest. They did not consider under the law they had a right to 
demand space for the distribution of the parcel post in the terminal 
station, and they were not satisfied with the offer of the terminal 
station company for space, and the department rented a storage 
room away from the terminal station on a side street. They now 
take the mails from the trains and require the wagon service located 
there to take the mail up to this wareroom, and they made a distri- 
bution at the wareroom, and then require the wagon people to bring 
it back to the terminal station and put it on the train. 

The Chairman. With no extra compensation to the wagon people? 

Mr. Hitt. No extra compensation to the wagon people. 

The Chairman. The only additional cost being the rental of the 
storage room? 



KAILWAY MAIL PAY. lib i 

Mr. Hitt. The only additional cost being the rental of the storage 
room away from the terminal station at, presumably, a lower rate 
than they could get at these stations. 

Mr. Stewart. On what authority do you say that ? 

Mr. Hitt. My information comes in a sort of a confidential way 
from the wagon people. 

Mr. Stewart. I can not see how it could be true, because unless 
the new point was named in the advertisement we could not require 
the screen-wagon contractor to perform that service without addi- 
tional pay. As a matter of fact, I have been authorizing additional 
pay for additional wagon service at practically all places where termi- 
nal railway post offices have been established, and it has cost a great 
deal of money to take care of the parcel post mail at these places. 

Mr. Hitt. That is exactly what they were complaining about. That 
was several months ago, but it may have been adjusted since that 
time. 

Mr. Stew t aRt. What relevancy has that to the proposition in this 
bill to pay the railroads on a space basis ? 

Mr. Hitt. The incentive on the space basis would be to require «Jie 
railroad companies to furnish free distributing space in their depot. 

Mr. Steavart. Did we get space free at Atlanta? You just said 
we rented it. 

Mr. Hitt. I am speaking of your bill wherein you say they snail 
provide rooms for handling the distribution of mails in transit. 

Mr. Stewart. The language is very clear ; it can not be mistaken. 
It is the same as the present laws and regulations provide, and, as I 
say, it has been the subject of adjudication. 

Mr. Hitt. Allow me to call on one of the gentlemen who is more 
expert in these matters. 

Mr. Lloyd. Haven't you got the matter confused in your mind, " m 
transit" and "for transit?" This language is "in transit." It 
seems to me that you have the idea that you are required to furnish 
space in the station for transit. 

Mr. Hitt. In transit. For instance, if mail comes in on one line 
at 10 o'clock in the morning and it would go out on a route at 1 
o'clock in the afternoon, we are now required to furnish space to take 
care of that mail between those two trains. It would require a much 
less amount of space to take care of that mail between trains than to 
furnish facilities for distributing that mail to save themselves the 
distribution on the train that leaves at 4 o'clock. 

Mr. Stewart. The mails in transit are either those distributed 
on the cars or those distributed to sacks in the terminal for lines 
connected from that station. That is the only space for distribution 
purposes we require the railroad company to furnish. 

Mr. Lloyd. Could additional space be required by the Government ? 
At the present time you are only requiring that amount of space, but 
could you not require additional space for additional service that is 
now performed on the railway trains? 

Mr. Stewart. No. 

Mr. Hitt. That would seem to be a question of fact, as per the 
regulations of the department at present in existence. I am not a 
mail expert, but I have a sort of a general knowledge of these things, 
and I would like to ask one of the mail experts if they could refer 



1188 RAILWAY MAIL PAY. 

me to the present regulations of the department as to the space that 
must be furnished at terminal post offices ? 

Mr. Lloyd. General Stewart knows about that. 

Mr. Stewart. As I have previously stated, the provision of the 
proposed bill under discussion is, in effect, the regulation that now 
exists, and under this we require just such space as I have outlined to 
you, and none other. Where we require additional space we rent 
the space from the terminal company. 

Mr. Bradley. Is it not a fact that there is no law requiring the 
railroad companies to furnish space at railroad stations for dis- 
tribution purposes, but a regulation has been made that requires that, 
and is not this an effort to put into the law the present regulation; 
and in connection with that is it not a fact that all mail can be re- 
garded as in transit until it is delivered to the person to whom it is 
addressed, and that under the interpretation which the department 
would give to this law you would have complete power to demand 
any amount of space to the extent that all of the mail would require 
distribution ? 

Mr. Stewart. Oh, no. That is an exaggerated view of the possi- 
bilities. This expresses the present regulation the practice under 
which has been in effect for many years throughout the country, well 
known to the department and its officers and to the railroad com- 
panies, and never was disputed. A few railroad mail agents got 
together a few years ago and disputed the right of the department to 
require this space, and declined to furnish it at the union station at 
Kansas City. The department rented the space of the Union Sta- 
tion Co. under an arrangement and charged the cost back to the com- 
panies. The Missouri Pacific Railway brought suit against the 
United States to recover the amount charged back, the case was fully 
heard in the Court of Claims, and the Court of Claims decided that 
this space was pertinent to the service ; that it was a reasonable re- 
quirement; that the department had a right to handle the mails in 
this way and to require space for handling them. The Court of 
Claims dismissed the suit. That provision does not go a particle 
further than the present regulation. It defines it exactly as we 
define it in the proposed law. 

The Chairman. The purpose is to make permanent law the present 
rule or regulation which has been in operation for a number of years? 

Mr. Stewart. Yes; and it has been decided by the court to be a 
reasonable requirement. 

Mr. Rowan. I might say that the lawyers whom I have consulted 
put a different interpretation on that clause there. They think it is 
broad enough, to require the railroad companies to furnish any space 
the department might need for distribution. If the department 
wants to confine it to certain distribution it seems to me it ought to 
be limited in the phraseology there, and not as broad as it is, because 
I think the average lawyer would put a different interpretation on it. 

Mr. Stewart. The lawyers you have consulted, I presume, never 
had any experience in the Postal Service and do not know the history 
of this practice and its application? 

Mr. Rowan. It ought to be so that there could be no dispute what- 
ever. As it is now, it could be disputed. 

Mr. Mack. Mr. Chairman, I think we ought to put into the record 
&t this point a statement to correct the impression that General 



KAIL WAY MAIL PAY. 1189 

Stewart creates by his statements. The case at Kansas City is not 
settled; the case did not involve a sufficient amount of money for 
appeal to the Supreme Court of the United States, and we think the 
decision of the Court of Claims is very unsatisfactory, and a new 
suit has been instituted and will be prosecuted as soon as necessary 
data is furnished by the department to permit of the procedure, and 
that case will be appealed to the Supreme Court of the United States. 
AVe decidedly disagree with General Stewart as to the right of the 
department to require this space. If the paragraph under discussion 
were enacted into law it would eventually be referred to by somebody 
in the future to develop why the Government was paying for space 
in terminals for terminal R. P. O., which at all intermediate points 
handle mail in transit, not only parcel post but circular mail and 
other mail of that class, so that the language of that section is very 
dangerous ; it admits of all sorts of interpretations in the future, and 
while I entirely concede that Mr. Stewart's purpose is fairly to main- 
tain the existing practice, such language will undoubtedly involve 
trouble in the future just the same as we are having trouble with the 
divisor. Any power of that kind ought to be very clearly and defi- 
nitely stated and its limitations ought to be secure and definite. 

Mr. Stewart. Mr. Mack's statement is incorrect when he says that 
the case is not settled. The case is finally settled by the Court of 
Claims and there is no appeal from it. What the Missouri Pacific 
has done is to present a new case, and they are not even arguing this 
case in the Court of Claims, but expect to go to the Supreme Court 
on the dismissal of the petition. Therefore the case is not pending 
in the ordinary sense. 

Mr. Lloyd. Is it true that the reason may be it had not been ap- 
pealed was because the amount involved was not sufficient? 

Mr. Stewart. Yes, sir. 

Mr. Lloyd. Then there is no difference between you and Mr. Mack 
on that. Mr. Mack said it was not appealed because they could not 
appeal, but now they are making a new case which they can appeal ? 

Mr. Mack. It will not be finally settled until this case is settled by 
the Supreme Court. 

Mr. Lloyd. There is only a technical difference. This case is set- 
tled; you are right in that, Mr. Stewart, but the principle involved 
is not settled and they are going to try to have it settled in the 
Supreme Court. 

Mr. Stewart. In another case they have failed. 

Mr. Hitt. Mr. Chairman, that is all I have to say. 

The Chairman. We thank you, Mr. Hitt. 

Who will you have appear next ? 

Mr. Peters. I would be glad to have you call Mr. Coleman. 

STATEMENT OE ME. R. B. COLEMAN. 

The Chairman. Kindly state your name and official position. 

Mr. Coleman. E. B. Coleman; general manager of the Georgia, 
Florida & Alabama Railroad. 

Mr. Chairman, about the only thing I care to add to Mr. Hitt's 
statement is to try and apply this whole law to our line as I see it. 
We are, at the present time, receiving about $16,000 annually from 
mail pay. I think that the new law would result in giving us about 
$19,000, or an additional $3,000 per annum. 



1190 RAILWAY MAIL PAY. 

The Chairman. Assuming that you are allowed the maximum in 
the suggested plan? 

Mr. Coleman. Yes. But my conviction is that if we would weigh 
our mail to-day it would be twenty-five or thirty thousand a year, 
based upon the tonnage we are actually hauling, and we therefore 
want to enter our earnest protest against any space basis for rail- 
way-mail pay. 

The Chairman. Simply because you would receive less compen- 
sation ? 

Mr. Coleman. Simply because we would receive less compensa- 
tion than we are due to receive to-day, according to the tonnage we 
are hauling, if paid for 

The Chairman. Under the present method of payment? 

Mr. Coleman. Yes, sir. 

The Chairman. Then your objection is not to the principle, but 
rather to the remuneration received. Is that it? 

Mr. Coleman. Well, the principle is what produces the under pay. 

The Chairman. Will you give us the benefit of your views and 
comments regarding the principle, namely the present method and 
the suggested one? 

Mr. Coleman. The method is absolutely contrary to any other rate 
of pay or compensation with which a railroad deals. We do not sell 
space to anybody. To the contrary, where you have a carload of 
freight, a rate may vary. It is a recognized principle, and it is ap- 
proved by the Interstate Commerce Commission, that where we have 
a carload of mules moving 100 miles, we would have a less-than-car- 
loacl rate for 5 mules, and it would exceed the carload rate for 30 
mules. 

The Chairman. Then you think the apartment-car pay should be 
greater than the K. P. O. pay? 

Mr. Coleman. No; I do not, but I think on the principle of the 
linear feet it ought to be. 

The Chairman. I mean relatively? 

Mr. Coleman. Yes; relatively. 

The Chairman. How about storage? 

Mr. Coleman. I haven't any storage cars on our line. I am not 
prepared to go into that detail. 

The Chairman. What are your principal objections to the space 
plan as outlined in the suggested plan submitted by the Post Office 
Department in volume 8 ? 

Mr. Coleman. I do not think it is fair to the railroad companies 
from any angle. 

The Chairman. Your reasons being what ? 

Mr. Coleman. Just as I said, it has a tendency to reduce our pay, 
the space plan. 

Mr. Lloyd. Suppose we made that rate 30 cents instead of of 20 
cents. Then it would increase your pay. Would you object to it 
then ? 

Mr. Coleman. Yes; because I do not want any pay for what I 
do not do, but I do want pay for what I do. I am not up here asking 
you gentlemen to help us out and be gratuitous to us and hand us 
something, but we want fairly and honestly to deal with this ques- 
tion and get light on it and apply a remedy that will be fair, not 
only to the railroads, but fair to the Government. 



RAILWAY MAIL PAY. 1191 

The Chairman. That is the proper spirit? 

Mr. Coleman. We do not feel that a space basis is fair to anybody. 

Mr. Lloyd. The Chairman is trying to get at your reasons why. 

Mr. Coleman. There are a great man}'- reasons why. In the first 
place, while General Stewart has disclaimed any purpose of re- 
ducing the frequency of service, and that kind of thing, or cutting 
down the mail space 

Mr. Lloyd. Now, let us deal with this proposition just like Gen- 
eral Stewart was going out of the office to-morrow. 

Mr. Colemax. I do not think he is going out. He has been there 
too long. 

Mr. Lloyd. Well, leave the personnel out. 

Mr. Colemax. Well, the personnel is the railway branch of the 
Post Office Department and the head of that is General Stewart. 
That is why I referred to General Stewart. On the present basis 
of pay for the side and terminal service at several points, we have 
three or four routes on our line of 225 miles and we have terminals 
where it costs us a great deal of money to attend to terminal delivery. 
For instance, at Tallahassee, the capital of Florida, we get pay for 
an additional mile on a line where we receive about $42 or $45 and 
it costs us $240 to attend to that service. 

The Chairman. Do you think a single rule of law, or method, 
<^an apply with equal justice to the long trunk and the short lines? 

Mr. Colemax. Yes, sir. I believe it can be figured out so that it 
will be applicable in every case. 

The Chairman. You do? 

Mr. Colemax. Yes, sir; I believe that is possible. 

The Chairmax. And you do not think, under the present methods, 
that there is an inequality or injustice to the short lines as com- 
pared with the longer lines ? 

Mr. Colemax. I do not, under the present method. 
, The Chairman. I mean the present system, for the time being, 
eliminating the question of rates ? 

Mr. Colemax. >To; I do not know that there is, if you eliminate 
rate, because rate is the whole show in the mail argument. 

The Chairmax. But the method as to distribution — the rate for 
that is universal? 

Mr. Colemax. Yes, sir. 

The Chairmax. And you think that a universal rate will be per- 
fectly equitable and just to both short and long lines; that is, it is 
not necessary to have two different methods? 

Mr. Colemax. No ; I do not think so. Take the railway-mail pay 
since the introduction of the parcel post on our lines, you will find 
the department has allowed us in the thickly settled territory of 107 
miles an increase of 2.T. 

The Chairman. That is an increase in your pay ? 

Mr. Coleman. In our pay; yes, sir. On a line 82 miles south of 
there, where we have practically no people at all, where it will hardly 
average four people per square mile along the coast, we got an in- 
crease of 3.3, and there is nobod}^ there to use the parcel post at all; 
but there we got a greater amount of increase than we did where we 
had people. 

The Chairman. There was an increase in figures, but not in 
money ? 



1192 RAILWAY MAIL PAY. 

Mr. Coleman. That is it. 

The Chairman. How was this increase arrived at? 

Mr. Coleman. I wrote to General Stewart along that line and tried 
to get him to say how it was arrived at; but I could not get anything 
definite that would explain to my mind the reasons why the increases 
were made in that respect. Then, again, on two lines we got no in- 
crease at all. 

Mr. Stewart. Have j^ou my letter with you? 

Mr. Coleman. I think so; yes, sir. 

Mr. Stewart. Will you read it to the commission? Bead the last 
one. 

Mr. Coleman. I am not sure that I have it, but I think so. 

Mr. Stewart. That is the one I wish you would read, because that 
has the explanation. 

Mr. Coleman. I guess it would probably be better for me to read 
my letter to General Stewart first? 

The Chairman. We would be very glad to have it. 

Mr. Coleman. I will first read my letter to General Stewart and 
then his reply : 

Mr. Joseph Stewaet, 

Second Assistant Postmaster General, Washington, D. C. 

Dear Sir: Referring to your letter of October 14, regarding increase in rail- 
way-mail pay and compensation to be allowed on account of parcel post, I 
desire to state that the method and manner quoted in your letter of ascertain- 
ing the facts regarding the increased weights are so at variance with actual 
conditions that I desire to call your attention specifically to the following in- 
formation • 

On route No. 123045, between Tallahassee and Appalachicola, Fla., on which 
you allowed us 3.39 per cent increase, is practically no people living along 
our line except the towns of Sopchoppy, Carrabelle, and Appalachicola. 

On route No, 121077, between Cuthbert, Ga., and Tallahassee, Fla., where 
you allow us 2.53 per cent increase, it is very thickly populated with towns 
ranging from 500 to 7,000, densely settled with farmers, and intermediate 
points, and possibly beyond twenty times as many people per square mile as 
on route No. 123045, still our increase is less than it is where we have very few 
people. In our thinly populated territory, which has not yet developed to any 
appreciable extent, viz, south of Tallahassee, you state that the increase was 
9 per cent; on route No. 121077, where it is densely populated by towns and 
farmers at intermediate points, our increase was only 8 per cent. The popu- 
lated districts of our country are the sections which require and use the Rail- 
way Mail Service, and I would thank you to look into this situation again, and 
see if the percentage between Cuthbert, Ga., and Tallahassee, Fla., should not 
be 18 per cent rather than 8 per cent. I would also like to inquire further 
whether or not the field agents reporting on these routes were one and the same 
person; if not, then it was purely a guess as to the increase which we are un- 
willing to accept. 

No increase whatever was allowed on route No. 12304S between Quincy and 
Havana, Fla., nor was any increase allowed on route No. 121079, between Rich- 
land and Cuthbert, Ga., although these routes have increased in such propor- 
tion that the other routes have. 

The language of the act, viz, " not exceeding," would not be construed as 
permitting you to compel the railroads to accept less than 5 per cent increase. 
In legal effect, this language is the same as the language of the act of March 
3, 1873, which provided that the pay should be at "not exceeding" the rates 
thereinafter named. As I understand the situation, the most that has ever 
been held with reference to this language is that it gave the Postmaster Gen- 
eral the right, if he could do so, to make contracts with the railroad companies 
for less than the rates named in the statute, but you have no right to compel 
them to accept less. At the time the law was being discussed, conference 
report submitted to the House and Senate stated the cost of reweighing would 
be about $500,000, and the departmental estimate of the increased railway 
mail pay, due to the establishment of parcel post, was 10 per cent, but the 



BAIL WAY MAIL PAY. 1193 

conferees had agreed to allow 5 per cent, and both in the conference report 
itself and in the debates upon it it was not only treated as a flat 5 per cent in- 
crease but an actual saving in cost of reweighing and of 5 per cent on your 
estimate. The discussion resulted in statements on the floor of the House and 
Senate that if the mails were re weighed it would cost the Government 10 per 
cent more than they were then paying them, so it was agreed to make the rail- 
roads take 5 per cent more and save 5 per cent besides the cost of reweighing. 

We therefore desire to advise our construction of the act of March 4, 1913, in 
that it allows to the railroad companies an increase of 5 per cent on their mail 
pay, and we believe the action of the department in allowing us less to be viola- 
tion of our rights. We therefore reserve the right, as we may be advised, to 
recover the difference between what the department is allowing us and what 
we conceive to be due us. 

I shall be glad to have reply as early as possible. 
Yours, truly, 

R. B. Coleman. 
General Manager, 



Mr. R. B. Coleman, 

General Manager Georgia. Florida & Alabama Railway Co., 

Bainbridgc, Ga. 

Sir : The statements in your communication of December 22, 1913, respecting 
the increase in compensation allowed your company for increased weight of 
mail carried due to the inauguration of the parcel-post system have been investi- 
gated. You state that on the route between Tallahassee and Apalachicola, 
which serves a thinly populated territory, the increase in weight was reported 
as 9 per cent, while on the route between Cuthbert and Tallahassee, a well- 
settled district, an increase of only 8 per cent is reported, and ask that the mat- 
ter be looked into. 

This has been done, and in reports recently received it is stated that the 
estimates of the increases in weight due to the establishment of the parcel- 
post system were given careful attention at the time they were made, and it is 
not thought any error was made in them. In this connection your attention is 
called to the fact that the reported percentage of increase in weight have rela- 
tion to the average daily weights of all mail carried on the routes. On the route 
between Tallahassee and Apalachicola the average daily weight is 310 pounds, 
and an increase of 9 per cent represents only 28 pounds, while on the route 
between Cuthbert and Tallahassee the average daily weight is 1,367 pounds, and 
an increase of 8 per cent represents 110 pounds. Respecting the increases in 
weight on the routes between Quincy and Havana and between Richland and 
Cuthbert, I have to say that these routes carried average daily weights of 93 
and 8S pounds, respectively, during the quadrennial weighing in 1912. The 
reported increase due to the parcel post on the first-named route is 9 per cent, 
or 8 pounds, and on the other route 8 per cent, or 7 pounds. This gives a total 
weight of 101 and 96 pounds, respectively, for the two routes. The rate of 
compensation allowed your company for service on each of these routes is 
$42.75 per mile per annum, which is the maximum rate allowable for routes 
carrying an average daily weight of 211 pounds or less. You will therefore 
see that the department would not have been warranted in increasing the pay 
on these routes unless the increase in weight had been considerably more than 
100 per cent. 

Concerning your statement that you construe the act of March 4, 1913, to 
allow railroad companies an increase of 5 per cent in their pay, and that the 
action of the department in making allowances of less amounts is a violation 
of your rights, I would invite your attention to my letter of October 14, 1913, in 
which the position of the department is fully set forth. In reply to your state- 
ment that you reserve the right to recover the difference between what the 
department is allowing your company and what you conceive to be due it, I 
have to say that the compensation fixed , by the orders of the Postmaster Gen- 
eral for service on the routes of your company is full compensation for all serv- 
ice performed and no other or further compensation will be paid for such 
service, subject to future orders that may be determined warranted by the Post- 
master General. 

Very respectfully, 

Joseph Stewart, 
Seeond Assistant Postmaster General, 



1194 RAILWAY MAIL PAY. 

That is not the language of the law. There is a 5 per cent increase 
on all roads which was established prior to July 1, 1912, but it does 
not say if you had 100 pounds, 40 pounds, or 10 pounds ; but the law 
says to allow not exceedingly 5 per cent increase to those lines which 
were established prior to a given period. Our legal department says 
that the words " not in excess of " so much per cent do not mean that 
it is discretionary with the Postmaster General whether he should 
allow 1, 2, or 3 per cent, but the law intended to give to the lines a 
flat 5 per cent increase. Gen. Stewart takes another view. 

The Chairman. You do not think the law intended to give a flat 
5 per cent increase unless there was a demonstration that the increase 
was 5 per cent in the fourth-class mail activity ? 

Mr. Coleman. What are you going to do? Eeally it was more 
than 5 per cent with us. 

The Chairman. It could not exceed 5 per cent? 

Mr. Coleman. No. 

The Chairman. But please answer my question. 

Mr. Coleman. My impression is that since the law did not carry 
any specific weight authorization, I think it was the intention — and I 
understand from the argument in Congress that it was the general im- 
pression — even in the committee that it would be a 5 per cent increase, 
and at that percentage the Government would save mone}^ If I re- 
member correctly the department's estimate was that the parcel-post 
matter would increase 10 per cent and it would cost the Government a 
half a million dollars to reweigh all of the routes. Therefore, they 
decided they would not reweigh the routes but give a 5 per cent on 
what they thought was the actual increase. 

The Chairman. Your contention is that you thought you would 
be entitled to the increase under the law where it was demonstrated 
the increase was 5 per cent or more ? 

Mr. Coleman. Yes, sir; that is my contention. 

The Chairman. General Stewart, will you further elucidate with 
reference to those two cases. 

Mr. Stewart. In the last two cases Mr. Coleman mentioned, the 
average daily weight was far below 200 pounds, and what he is con- 
tending for is that he should be allowed 5 per cent, notwithstanding 
the fact that the increase in the weight of mails would not justify 
us, under the law, if we had weighed the mails, in paying the addi- 
tional amount. 

The Chairman. The department's position being that you had no 
legal authority but were in fact prohibited under the law because 
of the weight limitation in giving any greater increase than was 
allowed in those two cases. 

Mr. Stewart. For instance, under this provision of law allowing 
us to pay not exceeding 5 per cent where the companies were entitled 
to additional pay, we could not allow them an increase which they 
would not be entitled to if we weighed the mail. As stated by the 
gentleman, the proposition first before Congress was to permit us to 
weigh the mails and to readjust upon the weights, but in lieu of that 
Congress provided that we might pay not exceeding 5 per cent. It is 
not to be supposed that Congress intended that we should pay under 
that provision money we could not pay if we had weighed the mails, 
and that is what the gentleman wants us to do on those two little 
routes. On the other road the condition is accounted for by the fact 



RAILWAY MAIL PAY. 



1195 



that the average daily weight on one of the two routes is greater than 
on the other, so that a 9 per cent increase in one case does not add as 
much money per mile as does an 8 per cent increase in the other. We, 
of course, must consider the average daily weight on a route, and we 
can not make any adjustment of pay except under the terms of the 
statute. 

Mr. Coleman. I insist that my mail has increased on every route 
more than 5 per cent. That is my contention. 

Mr. Stewart. You understand that this adjustment was made to 
cover conditions resulting from the inauguration of the parcel post. 
The Postmaster General made an order, under date of August 15, 
1918, which changed the conditions of the service and we are expect- 
ing to make a readjustment upon that change if Congress grants 
authority. We also made a change effective January 1, 1914, and we 
expect to take statistics and make a readjustment, if Congress gives 
us authority, to cover the changes effective on that date. 

Mr. Coleman. I think we are carrying 100 per cent more than we 
were carrying prior. 

Mr. Stewart. You will get the pay as soon as Congress authorizes 
us to do it. 

Mr. Lloyd. It will not be retroactive? 

Mr. Stewart. Yes; it will be retroactive. 

Mr. Eowan. Based on estimates? 

Mr. Stewart. It will be retroactive, effective from the date of the 
Postmaster General's order. For instance, from August 15, 1913, up 
to January 1, 1914, and from January 1, 1914, when the new order 
was made, until the regular weighing occurs on the routes. 

Mr. Coleman. May I ask, just for information, as to how those 
estimates were arrived at? 

Mr. Stewart. They were arrived at by our field officers who 
traveled the lines and observed the conditions of the service. 

Mr. Coleman. Did your field officers depend, to any extent, upon 
the post office clerks on those lines for an estimate ? 

Mr. Stewart. They availed themselves of all the information they 
could get as to the conditions on the lines. Those were the instruc- 
tions. 

Mr. Peters. Could I ask this question : Will you kindly state the 
amount you decided was the readjustment you should make on ac- 
count of the increase of August 15 ? 

Mr. Stewart. About $254,000. 

Mr. Peters. One-half of 1 per cent. 

Mr. Stewart. Yes; about $254,000. That estimate is based on 
actual weighings of parcel-post mails dispatched from the 50 largest 
offices, October 1 to 15, 1913, and the ascertainment of weight of par- 
cels over 11 pounds handled on screen-wagon routes, October 23 to 
November 22, 1913. 

The Chairman. Let me understand that under this ascertain- 
ment, based on the actual weighing; that your opinion was that the 
increase in the mail matter due to what is known as parcel-post legis- 
lation was only one-half of 1 per cent. 

Mr. Stewart. No. That is the effect of the order of August 15 
alone. 

Mr. Lloyd. The order of August 15 changed the weight from 11 to 
20 pounds? 

49396—14 83 



1196 RAILWAY MAIL PAY. 

Mr. Stewart. Yes. We added approximately $1,700,000 under 
the provision allowing us to pay not exceeding 5 per cent. That 
adjusted the condition that existed before August 15. The Post- 
master General made an order which changed conditions from that 
date and in October we took statistics in post offices, actually weighing 
the parcel-post mail and the mails on the wagon routes, upon which 
data the estimate made to Congress was based. 

The Chairman. For the calendar year, 1913, how much has the 
Post Office Department paid additional compensation to the trans- 
portation companies because of what is known as the parcel-post 
law, just one year in operation? 

Mr. Stewart. That would be one-half of $1,700,000. The orders 
took effect July 1, 1913, and the calendar year ended December 31. 
1913. The annual rate of the increases allowed was about $1,700,000. 

The Chairman. So that the law went into operation on the 1st of 
January, 1913, and for that year you paid the railroads and the 
transportation companies $1,700,000 more than their regular pay 
because of what is known as the parcel-post law operation for that 
year. Is that right? 

Mr. Stewart. No. We fixed an annual rate of $1,700,000, taking 
effect July 1, 1913, and, for the calendar year, of course, the railroads 
received only one-half of that amount. 

The Chairman. So that they actually got for the year, 1913, 
$850,000? 

Mr. Stew'art. Yes, sir. They will get an additional amount if 
Congress authorizes it, for the changes that occurred by reason of 
the order effective August 15. 

The Chairman. Under what is known as the parcel-post bill you 
were authorized to pay two million and a half ? 

Mr. Stewart. No. We were authorized not to pay exceeding 5 
per cent of the compensation on certain routes. 

The Chairman. On railway mail pay ? 

Mr. Stewart. Yes. 

The Chairman. That was $50,000,000 or $49,000,000. 

Mr. Peters. That is the point that I wanted to bring out. Would 
you say the amount you have paid for the parcel post on this parcel- 
post adjustment was not exceeding $850,000, but you paid for parcel 
post to the roads that were weighed in the spring of 1913 on the 
weights of parcels that came into that weighing ? 

Mr. Stewart. Yes, sir. 

Mr. Peters. Was not the pay on all those roads that were weighed 
very, very largely increased ? Did not the majority of them show a 
very large growth of mail, partly due to the regular growth and 
partly due to the parcel post? Were you able to make any estimate 
as to what part of the increased weighing on the eastern weighing 
section was due to the parcel post ? 

Mr. Stewart. No. Unfortunately, we can not make a reliable es- 
timate there, for this reason : You will remember that preceding and 
during the weighing period of 1909 there was a depression in business 
in the country which affected the weights in the first section which 
was weighed that year, and there was actually a decrease in the rail- 
way-mail pay below that fixed by the adjustment of 1905, and there- 
fore it prevented an accurate comparison of the percentages. 



BAIL WAY MAIL PAY. 1197 

Mr. Coleman. It is just on that point that I tried to get at my ex- 
pense, the weight of the mail. We thought we were being underpaid 
at least 50 per cent. 

The Chairman. In other words, the department's hands were tied 
under the law. If the department was satisfied that there was an 8 
or 9 per cent increase in weight, it could not disregard the existing 
law as to certain payments according to certain schedules of rates. 
That was the crux ? 

Mr. Stewart. Yes. A certain percentage of weight means so many 

Eounds added to the daily weight, and we allowed the rate warranted 
y such increased weight, and we could not exceed that. 

Mr. Mack. As I understand, your opinion is that you have more 
mail than was estimated by the officers of the Railway Mail Service? 

Mr. Coleman. That is it, exactly. 

Mr. Stewart. No. He says he has more now ? 

Mr. Mack. He said more, then. 

Mr. Coleman. We had more at that time and attention was called 
to it. We unfortunately got into a lawsuit with one of the R. P. O. 
clerks and my information is that that R. P. O. clerk practically said 
what our increase was. We had had a fight with him for a good long 
time and we finally paid him a thousand dollars to get rid of him. 

The Chairman. I doubt if that is of very much value to us unless 
you can substantate your statement. You say that that is your in- 
formation. 

Mr. Coleman. Yes, sir. 

The Chairman. I doubt if that is material in our consideration. 
We would be glad if you could corroborate a statement of that kind. 

Mr. Bradley. Might it not be considered material in this way, 
that the ordinary provision of law to determine the rate of pay is 
by an actual weighing, whereas this 5 per cent was ascertained by 
personal estimates which might, of course, be affected by the excep- 
tional circumstance Mr. Coleman has referred to? 

Mr. Coleman. That is what I had in mind. I think we were 
legally entitled to and would have gotten more if it had not been 
for that circumstance. 

The Chairman. Haye you any evidence to submit to this commis- 
sion by which you can substantiate the impression which you got? 

Mr. Coleman. Nothing definite. 

The Chairman. It is simply an impression on your part? 

Mr. Coleman. Yes, sir. 

The Chairman. Is there any further evidence you wish to pre- 
sent? 

Mr. Coleman. No ; I think that is about all I had in mind. 

Mr. Hitt. What does your increase in parcel post amount to per 
annum ? 

Mr. Coleman. It amounts to $314 annually and our express earn- 
ings show a probable reduction for the fiscal year of between $4,000 
and $6,000. 

The Chairman. At the same point over the same route ? 

Mr. Coleman. Over the same route ; yes, sir. That is why I con- 
tend I am not being paid what I ought to be. I ought to have 5 per 
cent anyhow. 

The Chairman. That is interesting. Do you say that you receive 
from $6,000 to $8,000 annually less from the express since January, 



1198 RAILWAY MAIL PAY. 

1913, and that you only get $314 from the Government for the 
railway-mail pay over those same routes? 

Mr. Coleman. Yes, sir. That is exactly what I mean. The in- 
dications are that our express earnings, so far as I recall, are about 
$4,500 to $5,500 less over identically the same route than it was 
prior to that time. Again, we are losing in our freight business. 
There is a haberdasher in our town who tells me at the present time 
that all of his fill-in orders between seasons, formerly shipped by 
freight, he now gets every week by parcel post, and so we are not 
only losing on our express, but on our freight traffic. We have no 
way of determining what the amount is on our freight traffic. 

The Chairman. Do you mean to say that the parcel-post rate 
is less than the freight rate? 

Mr. Coleman. Yes, sir; a great deal less. If you ship a package 
from Atlanta to Bainbridge, Ga., the minimum rate is 99 cents, if it 
weighs 5 pounds, and it would be 8 cents on the parcel post. 

The Chairman. How about on 250 pounds? 

Mr. Coleman. They are not doing it that way. 

The Chairman. How about the relative rates there ? 

Mr. Coleman. I think 100 pounds of freight would be 99 cents. 

The Chairman. Less than a cent a pound on 100-pound lots. 

Mr. Mack. I think this gentleman explained the case to me last 
night. I think it would be interesting for him to illustrate the exact 
effect of this haberdasher's business. I know it will be interesting as 
to how that operates in taking the stuff out of the freight and put- 
ting it in the parcel post. 

Mr. Coleman. That was just his explanation. He said to me that 
if he wants a dozen shirts as a fill-in order between the fall and sum- 
mer seasons, that he gets it by parcel post, he does not wait and ac- 
cumulate 100 pounds of freight, but he orders it in pounds at what- 
ever the parcel-post maximum might be. 

The Chairman. So there is one instance of a merchant who has 
been benefited by the parcel post? 

Mr. Coleman. Yes, sir; to the detriment of the railway. 

Mr. Peters. How about you? 

Mr. Coleman. I have been very much hurt hy it. 

Mr. Hitt. Is your line one continuous mileage or is it broken up 
into branches. 

Mr. Coleman. One straight system with the exception of an 11- 
mile branch. 

Mr. Hitt. How many post-office routes have you on that straight 
system ? 

Mr. Coleman. We have three. 

Mr. Hitt. Why is that divided into separate routes ? 

Mr. Coleman. My impression is it is in order to get a terminal 
delivery. We have tried to get it changed, but we could not. 

Mr. Hitt. In other words, that seems to be an arbitrary division 
for the purpose of compelling you to assume the expense of deliver- 
ing the mail from these three offices and to and from the office in 
transit ? 

Mr. Coleman. That is it exactly. 

Mr. Stewart. That is a very unfair statement to introduce here 
imputing improper motives to the officers of the department. 



RAILWAY MAIL PAY. 1199 

The Chairman. You will have ample opportunity to refute it. 

Mr. Stewart. It is absolutely untrue. 

The department is never actuated by motives of that kind in stat- 
ing mail routes. We state mail routes in accordance with the opera- 
tion of the Railway Mail Service as a rule and the operation of the 
trains has a great deal to do with it, so that if his line is divided 
into three different routes, there are excellent Railway Mail Service 
reasons for those divisions. Before we weigh a section we go over 
all the routes in the section and wherever we can combine the routes 
we do so and many changes of this kind are made, most of which 
result in relieving companies of terminal service. The question of 
throwing the terminal service on to the company is not a controlling 
consideration if it is the proper thing otherwise to combine the 
routes. 

The Chairman. The desideratum of the department is first, effi- 
ciency for the department and, secondly, economy to the Govern- 
ment? 

Mr. Stewart. Yes, sir. 

The Chairman. And justice to all parties in interest? 

Mr. Stewart. Yes, sir. The tendency of the department is to 
eliminate all such conditions that this gentleman states exist here. 
If there is any reason why those routes should be combined, we would 
combine them. We would not arbitrarily keep them separate simply 
to compel the railroad to perform the terminal service. We pay 
especial attention to all those features every time a weighing is had. 

Mr. McBride. In your estimate of the probable revenue you would 
receive under the new plan, did you take into consideration the saving 
that you will accomplish in the cost of side and terminal service? 

Mr. Coleman. Yes, sir; I did. 

Mr. McBride. What did that amount to? 

Mr. Coleman. $1,080, I think. 

The Chairman. The statement that you have made as to the fall- 
ing off in revenue from express business made quite an impression 
on my mind. As I remember, you made a conflicting statement there. 
I understood you to refer to the fact that the decrease in the rev- 
enue from the express business was from $6,000 to $8,000, and then I 
understood you to say 

Mr. Coleman. No. I corrected that. I said from $4,000 to $6,000, 
somewhere between those figures. 

The Chairman. And the conditions are exactly the same as ex- 
isted before, with reference to the express service? There has been 
no change, no express company has gone out of business or taken off 
any of its agencies or anything of that kind? In other words, the 
conditions are exactly the same? 

Mr. Coleman. Exactly the same ; that is, co-vering the present fis- 
cal year up to this time. That is why I can not say definitely what 
amount. 

Mr. McBride. Do you know what- effect the new express rates will 
have? 

Mr. Coleman. No; I do not. It looks like it will have a pretty 
bad effect when we see notice of an express company going out of 
business. 



1200 RAILWAY MAIL PAY. 

The Chairman. Is that all, Mr. Coleman? 

Mr. Coleman. Yes. 

The Chairman. We thank you very much. 

STATEMENT OF MR. GEORGE W. HARDIN. 

The Chairman. Mr. Hardin, will you kindly state your full name, 
your residence, and official position? 

Mr. Hardin. George W. Hardin, Johnson City, Tenn. I am vice 
president and superintendent of the East Tennessee & Western North 
Carolina Railway. I have a peculiar story to tell. This is a narrow- 
gauge road 34 miles long and runs from Johnson City, Tenn., to 
Cranberry, N. C., serving a people not served in any other way. Our 
passenger and mail train consists of one combination car, which has 
a mail apartment, baggage, and small passenger end the entire }^ear 
and a parlor car four months of the year. In order to get what this 
train would be 12 months, I have taken one-third of the 4-months' 
car for 12 months. These cars are each 40 feet long, which gives us a 
train 133 feet long. The apartment used by the Post Office Depart- 
ment, as I said, and the rest of the space for passengers and baggage, 
we not having any express line on our road. The 133 feet of train 
makes 6,602,120 car-foot-miles per year, of which 510,816 car-foot- 
miles are included in the apartment car, and 6,191,304 car- foot-miles 
assigned to baggage and passenger. The mail pay is $2,050 per 
year, which makes the department pay 4 mills per car-foot-miles, 
while the balance of the train is 7 mills per car-foot-mile. I 
understood General Stewart to state — and if I am not correct, I 
wish you would correct me — that getting up this recommendation 
here for this bill they use the earnings of the passenger train, or 
what the passenger train would earn, to establish a basis for making 
their calculation on it. Am I correct ? 

Mr. Stewart. The average earnings? 

Mr. Hardin. The average earnings. So, in our case, the basis 
used does not fit the situation by any means. 

The Chairman. The figures submitted, however, as I understand, 
simply apply to existing conditions and are not applicable to the 
suggested plan of the department. 

Mr. Hardin. I am coming to that, Senator. I have not included in 
this 4,819 closed-pouch-miles which I left out, thinking that if 1 had 
made an error at all in my calculations that it would be favorable to 
the department rather than to ourselves. The increase of our mail 
by reason of the parcel post is rather peculiar. We serve a section up 
there in the mountains where the express companies do not operate, 
there is no delivery of that kind, and 34 miles we have mail deliv- 
eries, an average of only a little over 4 miles apart, and our people 
around there have just about stopped shipping any light material 
at all by freight, they have taken it out of our freight cars where we 
got paid for it and are putting it in the mail car where we do not get 
paid for it and it gets us both coming and going. I make the state- 
ment that the weight of our mail, by reason of the parcels post, has 
increased 100 per cent. 

The Chairman. Is that an opinion or an ascertainment? 

Mr. Hardin. That is an opinion from observation. I would have 
brought the actual results if I had been allowed by the department to 
do so. 



RAILWAY MAIL PAY. 1201 

The Chairman. How did the department prevent you from bring- 
ing your own ascertainment ? 

Mr. Hardin. I asked that we be allowed, for our own information, 
at our own expense, without inconvenience, delay, or interference at 
all with the mail service, to weigh this mail for 30 days, in order that 
we might state positively what it was, rather than to express an 
opinion about it. 

The Chairman. What was the reply of the department to that 
request ? 

Mr. Hardin. The reply is here and I can read it if you like. 

The Chairman. We would like to have it ; yes. 

Mr. Hardin. There are only four short letters. Will you have 
them all? 

The Chairman. Yes. 

Mr. Hardin. The four letters referred to are as follows : 

September 27, 1913. 
Superintendent Railway-Mail Service, 

Atlanta, Ga. 
Dear Sir: We would be very glad to weigh the mails carried oil this (Cran- 
berry and Johnson City) route for 30 days for our own information. 

We assume, of course, that there will be no objection on the part of the de- 
partment, and we will thank you very much to give such advice to the mail 
clerk as will allow him to cooperate with us in such way as he may care to 
without adding to his work or responsibilities in any way whatever. 

It will be our purpose to put a competent man in the baggage car and weigh 
all mail just as it comes in without any inconvenience in any way to the mail 
clerk. If you should desire it, we would be very glad to furnish you with any 
information gained by the weighing. If you will be kind enough to give this 
your early attention, we will thank you very much indeed. 
Very respectfully, 

George W. Hardin, 
Vice President and Superintendent. 



Post Office Department, 
Second Assistant Postmaster General, 

Division of Railway Adjustments, 

Washington, October 6, 1913. 
Mr. George W. Hardin, 

Vice President and Superintendent East Tennessee & 

Western North Carolina Railroad Co., Johnson City, Tenn. 
Sir: Your communication of the 27th ultimo, addressed to the superintendent 
Railway-Mail Service, Atlanta, Ga., in which you advise that you will weigh 
the mails on your route from Cranberry, N. C, to Johnson City, Tenn., for 30 
days for your own information has been referred to the department. 

In this connection you are informed that the law requires that the weighing 
of the mails for the purpose of readjustment of compensation shall be per- 
formed by the employees of the Post Office Department. See paragraph 4 of 
section 1164, of the Postal Laws and Regulations. (1875, Mar. 3, chap. 128, 1 
Sup., 70.) Under this provision of law, the mails were weighed during the regu- 
lar quadrennial period commencing February 15, 1912, and ending May 29, 
1912, and upon the results of such weighing the compensation paid the company 
has been readjusted from July 1, 1912. No reports have been received that 
there were any failures to weigh the mails during the period or that the weights 
were incorrectly taken. In regular course the next weighing on the route will 
occur in the spring of 1916. 

Relative to your proposed weighing of the mails, you are informed that 
neither the law nor the regulation devolves upon you the duty, and the depart- 
ment can not recognize any result which you may obtain for any purpose what- 
ever. Furthermore, railroad companies are not permitted to interfere in any 
manner with the handling or the passage of the mails, and the obstruction or 



1202 RAILWAY MAIL PAY. 

retarding of such passage is made an offense under section 1622, Postal Laws 
and Regulations (35 Stats. L., 1127), to which your attention is invited. 
Very respectfully, 

Joseph Stewart, 
Second Assistant Postmaster General. 



October 7, 1913. 
Hon. Joseph Stewart, 

Second Assistant Postmaster General, Washington, D. G. 
Dear Sir : We are in receipt of yours of the 6th replying to our communica- 
tion of September 27 to the superintendent Railway Mail Service, Atlanta, Ga., 
in which we suggested to him that we desired very much to weigh the mails 
for 30 days on the Cranberry and Johnson City route for our own information, 
asking his permission to do so. 

We understand quite well that the department weighing period was early in 
1912, and that it will come again in 1916. Our purpose in weighing would be, 
as stated in former letter, for our own information, and our request was made 
for permission and cooperation in doing so. It was not a notice that we were 
going to do so, but was a request that we be allowed to do so. We had no idea 
that there would be objection on the part of the department. We respectfully 
ask that you review the said letter and beg that you indulge us to the extent 
of a further reply to the same. 
Very respectfully, 

George W. Hardin, 
Vice President and Superintendent, 



Post Office Department, 
Second Assistant Postmaster General, 

Division of Railway Adjustments, 

Washington, Octooer 14, 191 S, 
Mr. George W. Hardin, 

Vice President and Superintendent East Tennessee & 

Western North Carolina Railroad Co., Johnson City, Tenn. 
Sir : In answer to your communication of the 7th instant, in further reference 
to your desire to weigh the mails for 30 days on the Cranberry and Johnson 
City route for your own information, I have to inform you that the proposed 
weighing would serve no purpose whatever for departmental use, and if the 
privilege you ask were extended to your company the department would be 
bound to extend the same privilege to other companies which might request it. 
Such action would undoubtedly result in confusion, and it does not seem ad- 
visable to grant your company's request. 
Very respectfully, 

Joseph Stewart, 
Second Assistant Postmaster General. 

The Chairman. What criticism have you to make of those replies? 

Mr. Hardin. The criticism that I could have gotten actual results 
before this commission from our particular operation rather than 
coming here and saying to you that my best and honest judgment 
was that the parcel post had increased 100 per cent. 

The Chairman. You do not think that the department's position 
is well taken? Don't you. think that if such permission had been 
extended to one road, and it was generally requested by others, that 
it might have interfered with the administration of the mail service? 

Mr. Hardin. If the department was put to no expense or incon- 
venience, or the mails delayed in any way whatever, I do not see 
where trouble would arise. 

The Chairman. It takes some time to weigh the mails ? 

Mr. Hardin. Yes; but if the railroad companies undertook to do 
that at their own time, cost, and expense, without delay, as I say, I 
do not know where the objection would come from the department. 






KAIL WAY MAIL PAY. 1203 

The Chairman. But in the weighing of the mails that would inter- 
fere with the mails in the car, would it not? 

Mr. Hardin. No, sir. 

The Chairman. Where would you weigh the mails? 

Mr. Hardin. The bulk of our mail goes on at Johnson City. We 
would weigh that before the train came in, before the car was ready 
for the mail, and we could have weighed that without hindrance or 
interference from anybody, but we did not weigh any part of it 
without weighing all of it, and we could not weigh the mail handed 
in along the line that our carriers did not actually carry without per- 
mission — that is, I did not think we could. When the carrier at the 
intermediate point took the mail we could have our agent weigh 
that and hand it back to him. 

Mr. Coleman. Is it not a fact there is no delay even when the Gov- 
ernment weighs the mail ? 

Mr. Hardin. No delay to the mail so far as I know. 

Mr. Lloyd. Do you think you are getting enough pay for carrying 
the mail ? 

Mr. Hardin. No, sir. 

Mr. Lloyd. Are you satisfied with the present system of railway- 
mail pay? 

Mr. Hardin. With the system itself or the pay we get? 

Mr. Lloyd. I asked about the system. 

Mr. Hardin. If it were corrected to allow for side and terminal 
service and more frequent weighing, I think we would be. 

Mr. Lloyd. If you had an annual weighing and did not have to 
perforin the side and terminal service, would you then be content 
with the present system ? 

Mr. Hardin. With the addition that we want pay for the equip- 
ment we furnish the Government to carry it in — the car. 

Mr. Lloyd. Do you want the Government to pay for the car ? 

Mr. Hardin. We want them to pay for what part of the car they 
use. 

Mr. Lloyd. You want pay for the apartment? 

Mr. Hardin. Yes, sir. 

Mr. Lloyd. But you are satisfied with the rate of pay if the side 
and terminal service were discontinued, and you got paid for the 
use of the apartment car? 

Mr. Hardin. Pay for the mail that we actually carry. 

Mr. Lloyd. By having an annual weighing? 

Mr. Hardin. I did not say I was entirely satisfied. 

Mr. Lloyd. I left out the word " entirely." We are never entirely 
satisfied with anything. 

Mr. Hardin. I do not think that the graduation of the schedule 
of rates is exactly just to the light lines. • 

Mr. Lloyd. How would you change that? 

Mr. Hardin. By increasing the pay per 100 pounds or tons for the 
lighter lines. 

Mr. Lloyd. Have you figured out what it ought to be? It is 
$42.75 now, the smallest amount carried. 

Mr. Hardin. I have not made those figures and that low class 
does not affect this line, but it seems to me that we should have a 
rate of at least $50 for the first class. 



1204 RAILWAY MAIL PAY. 

Mr. Lloyd. The next is $64.12. How would you change that? 

Mr. Hardin. I would make it about $85. 

Mr. Lloyd. Would that reach your road? 

Mr. Hardin. Yes. I think it would reach us now, if we had a 
weighing. 

Mr. Lloyd. And the next class you would want raised in about 
the same proportion? 

Mr. Hardin. As the tonnage increases I would decrease the rate 
per 100 pounds. 

Mr. Lloyd. You think the main lines get enough now where they 
carry 48,000 pounds? 

Mr. Hardin. I am not enough familiar with that subject to state. 

Mr. Lloyd. Then, on your road you think you ought to have $85 
per mile, that the Government ought to pay for side and terminal 
service, and that you ought to have an annual weighing. If you 
had all those things and got paid for the apartment car, do you 
think you would be satisfied? 

Mr. Hardin. I would risk that for a while. 

Mr. Lloyd. How much pay would you want for apartments ? The 
same rate that you do for the E. P. O. ? 

Mr. Hardin. No, sir. I think the smaller the space, the shorter 
the length of the car that the Government requires, the more per 
foot they ought to pay for it. It is like a retail and wholesale busi- 
ness. 

Mr. Lloyd. What difference would you make between the apart- 
ment and the R. P. O. car in point of space ? 

Mr. Hardin. The apartment car, where 10, 15, 20, or 30 feet 
is used — in the first place, I would not have all of those divisions. 

Mr. Lloyd. We do not have them now under existing law. We 
are talking about existing law. I am trying to get at what you think 
the law ought to be. 

Mr. Hardin. The pay for space in 30-foot apartment car? 

Mr. Lloyd. It ought to be about half what the similar space would 
be in the R. P. O. car? 

Mr. Hardin. No; it ought to be about twice as much as the same 
space would be in the R. P. O. car; twice as much per foot, I mean. 
We are confronted with a proposition to fix a maximum. It seems 
it ought to carry with it the idea of some minimum. 

Mr. Lloyd. We are talking about the suggested bill. 

Mr. Hardin. Yes. I got off the track for a moment. 

Mr. Lloyd. I understand you are decidedly opposed to the sug- 
gested bill. 

Mr. Hardin. Yes, sir. 

Mr. Lloyd. And you are not in favor of it in any particular ex- 
cept that part which would rid you of the side and terminal service ? 

Mr. Hardin. I think, without going into it carefully, from what 
I have in my mind, that that is about the only thing in it I see to 
commend it, and I believe it is offset bv the methods of the Post- 
master General; when the companies are relieved of that, they might 
have their pay reduced 5 per cent. 

Mr. Peters. Have you made up, in your mind, any objection to the 
space basis? Have you formed any conclusion on that? 

Mr. Hardin. Yes. As suggested in this bill the power given to 
the department is such that it would have the tendency to concen- 



KAIL WAY MAIL PAY. 1205 

trate their loads in such a way that they would pay for little space, 
and they would get increased service out of the expenditures made 
without giving the railroads an opportunity to exercise the same 
degree of economy and to participate in any economies of that kind. 

Mr. Lloyd. That is a matter of administration. Now, what is 
your objection to the principle involved in making space the basis of 
pay rather than weight? Suppose all other things were made right. 
Then would you still object to space being used as the basis ? 

Mr. Hardin. On general principles, I think I would. 

Mr. Lloyd. Why? 

Mr. Hardin. The fact that the railroad weighs its stuff, they have 
track scales at all principal points and platform scales at all depots, 
and their rates for every kind of freight service are, almost without 
exception, based on weight, because they can determine that — they 
know what they are doing, what they are up against, and what they 
have to do. 

Mr. Lloyd. Is it possible to weigh the mails and get paid for them 
on a weight basis just like you do on freight? 

Mr. Hardin. I think so. 

Mr. Lloyd. Would that not be the correct system if you are going 
to have a correct system ? 

Mr. Hardin. Yes. That could be done at frequent intervals if 
you did not Avant to weigh it every day. So far as I am concerned, 
I would be willing to weigh it every day. 

Mr. Lloyd. Having all the scales that are necessary, you could 
weigh it every day just as you do everything else? 

Mr. Hardin. Yes. 

Mr. Tuttle. Are there many lines in the country like vours, Mr. 
Hardin? 

Mr. Hardin. Well, I rather think not. 

Mr. Tuttle. What I was getting at is whether there are many 
short lines 34 miles long, and are there enough of them that would 
have an influence in framing a law? 

Mr. Hardin. Yes; there are a great many lines in North Carolina, 
South Carolina, Tennessee, Georgia, Alabama, and West Virginia that 
are about our length. I will say down to 20 miles. Just to show you 
I have some knowledge of what I am speaking of, I have just had 
occasion in the last 30 days to address a communication to 42 short 
lines around there near us to get at the rate of pay each one of them 
was paying their employees, and I think I have had answers from 34. 
There are at least that many in what the Interstate Commerce Com- 
mission designates as Division No. 5. 

Mr. Baldwin. May I ask a few questions? 

The Chairman. Yes; we will be glad to have you do so. 

Mr. Baldwin. Is there any official statement of what your loss 
below actual cost is from carrying the mail at the present time? 

Mr. Hardin. I think Document 105 has that in it. 

Mr. Baldwin. How much below the actual cost do they report? 

Mr. Hardin. It seems to me it is $300 or $400 a year. 

Mr. Baldwin. About 25 per cent below actual cost. Well, if you 
were allowed relief from the side and terminal service and pay for 
your apartment-car service and an annual weighing, about how much 
would your pay increase above the present amount, in your opinion ? 

Mr. Hardin. Relieved from the side and terminal service, our pay 



1206 RAILWAY MAIL PAY. 

would increase about $400 from the last weighing. If we had a 
weighing I think it would be increased 100 per cent. 

Mr. Baldwin. With that increase, would you then be paid accept- 
ably for the service you would render the Government compared with 
freight service? 

Mr. Hardin. No, sir; we would not. 

Dr. Lorenz. A moment ago Mr. Hardin gave here what he is get- 
ting per car- foot mile from this train for passenger and mail service, 
and as I understood it was 7 mills and a fraction for the passenger 
and 4 mills and a fraction for the mails per car-foot mile. Now, I 
wish to ask whether he has calculated what the suggested law would 
give him per car-foot mile in the mail service ? 

Mr. Hardin. No, sir ; I have not. 

Dr. Lorenz. From a rough computation I made a moment ago, 
which is not accurate, the indications are that the earnings would be 
increased. I am not certain about that, but it would be worth look- 
ing into first before condemning the proposed law. It might actually 
increase your mail pay as it stands. 

The Chairman. That is, the suggested plan, if adopted, would, in 
your opinion, equalize the mail pay for passenger compensation ? 

Dr. Lorenz. Yes ; for a short line like that. 

The Chairman. On this particular road? 

Dr. Lorenz. Yes; for a short line such as this road, which is 
earning per car-mile in the neighborhood of about 30 cents; in the 
rate suggested in the bill it is about what he is getting from the 
passenger service. 

Mr. Baldwin. You mean on the basis of the present service? 

Dr. Lorenz. I assume that; yes. 

Mr. Lloyd. Do you run trains on Sunday? 

Mr. Hardin. Yes. We began some years ago with a mixed train 
leaving Johnson City in the morning and getting back when we 
could ; that has a full coach, a combination coach, with a mail apart- 
ment in it. Some 12 years ago we put on a regular passenger train 
making two round trips a day. For some time the department put a 
mail clerk on one round trip, and after that some months they had a 
closed pouch on the other trip. Then a few years later they put a 
mail clerk on both of the round trips and closed pouches on the 
freight trains, so we are supposed to carry the two mail clerks two 
round trips a day for six days in the week. The accumulation of the 
mail on Sunday is such that we can not distribute it in the 34 miles, 
so we have instructed the men in our district to send it from John- 
son City to Cranberry on Sunday, and the mail clerk is supposed to 
go to work 5 o'clock Monday morning and w T ork that way so that he 
can distribute it coming back, so we are hauling that mail twice 
over the road. What he actually does is to come down to Johnson 
City on Sunday and work his mail up so that he has it ready to dis- 
tribute and does not have to get up early in the morning. 

Mr. Baldwin. Your mail during the weighing period is weighed 
for how many days? 

Mr. Hardin. During the last weighing period it was weighed for 
15 weeks. It is weighed 90 days. 

Mr. Baldwin. Do they divide the aggregate by 90? 

Mr. Hardin. I understood by 105. 

Mr. Stew^art. Is your pay fixed per annum ? 



RAILWAY MAIL PAY. 1207 

Mr. Hardin. The pay is fixed at an average daily weight per mile; 
yes, sir. 

Mr. Stewart. How many days in the year does your average pro- 
cured by the division by 90 represent ? 

Mr. Hardin. If we divide by 90 the average would be greater 
than if we divide by 105. 

Mr. Stt.wart. I am asking you how many days that would repre- 
sent in ths year — 365 or 313. 

Mr. Hardin. Six days in the week for 52 weeks, of course, would 
be 312. 

Mr. Stewart. Then it would be applying an average daily weight 
for 312 clays to a compensation fixed by Congress for 365 days' 
service. 

Mr. Hardin. We handle it 365 days. 

Mr. Stewart. Then the average ascertained by the department is 
absolutely correct. 

Mr. Baldwin. Did you weigh on Sunday? 

Mr. Hardin. No. 

Mr. Baldwin. There is the point of the whole thing. 

The Chairman. Is that all, Mr. Hardin? 

Mr. Hardin. Yes, sir. 

The Chairman. Thank you very much. 

STATEMENT OF MR. L. T. NICHOLS. 

The Chairman. Mr. Nichols, will you kindly state your name and 
your official position. 

Mr. Nichols. L. T. Nichols, general manager Carolina & North- 
western. 

Mr. Chairman, the Carolina & Northwestern is a small road run- 
ning from Chester, S. C, to Edgemont, N. C., in the mountains. I 
shall not undertake to go into any technical matters under this pro- 
posed bill because the gentlemen who have preceded me seem to know 
more about that than I. However, I am in hopes that the com- 
mission will hear our individual conditions and I trust that it will 
help the commission in any bill they may decide to report, in correct- 
ing these individual cases. I wish to say further, if I make any 
reference to the Post Office Department, that it is done with all due 
deference, for I have the highest respect for all of the officials of the 
department, and there is no intention whatever to show that there 
is any feeling in the matter, but I am simply stating facts and I 
do not think I will have anything to say that you will object to. As 
to the position of my line on the mail pay business, we have not 
changed. We still stand on our letter of October, 1912, which is 
published in the preliminary report of January, 1913, in which we 
suggest a 30 days' weighing period each year, a divisor by 6 and not 
by 7, in order to encourage seven-day mail pay, rather than dis- 
courage it, and the pay on weight basis for haulage. Please bear 
m mind that when I say " haulage " I mean for the carriage. And 
pay a fair passage rate, or relieve the roads of the risk of handling 
the clerks. Cut out the side line and terminal deliveries. Pay for 
apartment cars on some fair basis, and I think we can find statistics 
enough to get that, and it can be worked out by experts; and 1 
am willing to leave it to the Interstate Commerce Commission ex- 



1208 KAILWAY MAIL PAY. 

perts so far as our line goes. The Carolina & Northwestern is a poor 
line by reason of unusual conditions in the way of competition, but 
it does not serve a poor territory, but one of the thriftiest 134-mile 
sections that the South boasts of outside of large cities. That is 
further evidenced by the fact that on information which I believe 
to be correct, the post-office receipts from the post offices along our 
lines increased from 1905 to 1913 from $59,000, in round numbers, to 
$72,000. The department pays for R. F. D. and star routes at purely 
local stations not served by any railroad, approximately $39,000 
per annum, and at one station which is served altogether by our line 
they paid $6,589 for that service, while the Carolina & Northwestern 
Railroad received during the fiscal year $8,459, or only $870 in excess. 

Mr. Peters. How many miles of road was that ? 

Mr. Nichols. One hundred and thirty-four is our mileage. Docu- 
ment 105 shows that the C. & N. W. was underpaid, and since that 
time the parcel post has been inaugurated. We object to the pro- 
posed bill because we do not think it is a sound principle; it is an 
untried proposition, except as it has been forced upon the railroads 
by their own shortsightedness. I have been directly and indirectly 
connected with the handling of the mail in one way or another for a 
good long while, and in recent years there has been a constant de- 
crease — thaf is, the 10 per cent and 5 per cent and the divisor — and 
constant demands of the Post Office Department for additional serv- 
ice in railway post-office cars and a rapid growth of the country in 
the last two years, which seems to have called for so much of this 
free service, speaking for ourselves, it has become burdensome. My 
opinion is that when it comes to paying for railway post-office cars 
it is exactly as you would pay for a post office in any of the cities. 
The carriage of the mail is an entirely different thing to housing it, 
and I do not see how the renting of a post office can be made to pay 
for carriage of the mail unless they are separately considered and 
put together ; for, if you are going to consider them separately and 
combine them you might work out something, but I am not in a 
position to know just now how you would do it. I do not know that 
we have a correct idea from this proposed bill, but we are operating 
two 20-foot apartment cars, 134 miles each way, daily, with a pouch 
service 20 miles each way on weekdays, and I am not sure, but I 
think some of that mail is going on the passenger trains Sundays. 
I figure that we would be reduced $500 per annum and that the esti- 
mate in Document 103 shows that we are already $3,960 short on 
pay ; and since that time the parcel post has been added. The time 
is getting very short and I do not want to keep you gentlemen at all, 
but I would be glad to answer any questions that may occur to you. 

The Chairman. You say your present compensation will be re- 
duced $500 per annum by the adoption of the suggested plan of the 
department, assuming that the maximum rates proposed under this 
plan is adopted were allowed you ? 

Mr. Nichols. Yes, sir. Now, may I state, too, a condition there 
that we fear may operate against the car space with us and make it 
exceedingly unfair. We have trunk lines crossing us every 10 to 23 
miles; those trunk lines naturally lead out to the larger cities; the 
mail coming over our lines from points intermediate will be shunted 
off from that on to the short routes to these other places, reducing 
the car space that the department would use on our lines, giving it 



BAIL WAY MAIL PAY. 1209 

to these other lines. From 1901 to 1909 our mail receipts increased 
6.42 per cent. 

The Chairman. You mean the mail payments that you received 
from the Government for carrying the mails ? 

Mr. Nichols. Yes, sir. The amount of revenue from express re- 
ceived during the same period was 71.15 per cent; the freight ton- 
nage increased in the same period 147.8 per cent. From 1901 to 
1913, according to the best information I have, the post-office receipts 
from the offices on my line increased nearly 33 per cent. The mail 
pay received by the Carolina & Northwestern Railroad in 1909 was 
approximately $8,436. The mail pay received in 1913 was $8,461. 
The cost of doing business for the 10 years up to 1909, cost us 66 per 
cent of our gross revenue. Since that time it has gone to 74 per 
cent. I make that statement to show the relative increase of busi- 
ness and to indicate the rapidly increasing cost of business, and want 
to state that it occurs to me that the mail is not carrying its propor- 
tional part of the increased burden. I will state one or two physical 
situations, showing the hardship under which the small lines operate. 

A few years ago there was quite a demand on the line of our road 
by the public — not in the volume of business offered — for a second 
passenger train, and it became so forcible that we put on a second 
passenger train. The people at once petitioned the Post Office De- 
partment for additional mail service, wanting double daily service. 
We did not have the cars, and, under the rulings of the department, 
heavy fines would accrue against us if we did not operate those cars, 
and therefore we discontinued the trains at a very great cost, bj 
reason of dissatisfaction among the people, and it hurt the competi- 
tive business very seriously, but we were helpless. We had not 
money to go out and buy apartment cars for 10 feet, and when the 
department changes its mind, buy one of 20. I will state the final 
condition we are confronted with to-day. Several months ago we 
had the misfortune to lose one of the three mail cars we had, in a de- 
railment. It tore the car up and the cost of repairs being greater 
than we thought it would warrant, we cut it out of service. That 
left us with only two cars, and those cars cross on the line every day, 
and when it becomes necessary to put one of those cars in the shop 
for ordinary every day repairs, the train is not served by a mail 
car unless our connections find themselves in position to help us out 
and let us have a car. And, as occurred very recently, I had to go 
and hunt for one, and I could only find a full car, and I had to 
operate that car, pay for it on our line of road for over two weeks, 
while making minor repairs to this other car. 

The Chairman. And getting pay for how many feet? 

Mr. Nichols. Getting pay for no feet, but the same that we got 
before. It made no difference in our rates. It would not have made 
any difference under this proposed bill, as I understand it. There is 
another feature in this matter that I am free to say that I am seeking 
information about from the Post Office Department and making an 
appeal to them more than to you gentlemen, perhaps, but it is a cir- 
cumstance that represents some of our conditions. These post-office 
clerks the railroad companies have absolutely no control over. The 
rules and regulations for their safety can be disobeyed with impunity. 
For instance, my transportation superintendent passing along a 
passenger landing, with a train standing and receiving passengers^ 



1210 KAIL WAY MAIL PAY. 

went by the mail-car door and the mail clerk kicked a mail pouch 
out on top of him. He turned around to the clerk and said, " Look 
out, old man, the first thing you know you will hurt some passenger 
and we will have to pay for it." The clerk replied, " Well, keep out 
of the way and you won't get hit." Not three weeks ago at a hotel 
at one of our terminals a postal clerk had his opinion of the character 
of cars we were running, their condition, and made the statement that 
the cars we were running had been condemned by the department 
three years ago. In this very car that we destroyed there was a mail 
clerk and a helper and one of them sprained his ankle and another 
his elbow, or something, and it cost us $500. I suppose the only thing 
that would actuate the clerk in making such a remark was to lay a 
foundation in case he had a similar action to get $500, or as much as 
the two others. What redress has a railroad when the postal clerks 
act like that ? 

The Chairman. Do you report these things to the postal authori- 
ties? 

Mr. Nichols. We did not, sir. 

The Chairman. Is not that the proper place for your redress ? 

Mr. Nichols. We steer as far from disturbing the Post Office De- 
partment in any way, shape, or form as is possible. 

Mr. Lloyd. For the good of the service, aside from your position 
as a railroad official, do you not think it is your duty as a citizen to 
notify the department of any wrongdoing of its employees ? 

Mr. Nichols. We have trouble without hunting it, and as long as 
he does not hurt somebody we do not bother with them. 

Mr. Lloyd. You are talking about a condition, however, that hurts 
you. Your implication is that this man is pursuing a course that 
will enable him to make money out of you in the end. 

Mr. Nichols. As I stated, I brought out the question to see if the 
department would feel inclined to express themselves on that condi- 
tion. 

Mr. Lloyd. I have had a great deal of dealing with the depart- 
ment as an official, and I have found them exceedingly fair in mat- 
ters of that kind, and if you call their attention to these troubles 
and things they will do the best they can to remedy the evil. It is 
impossible to control every employee, and you know that is true in 
your own business, as well as being true in the Government business. 

Mr. Nichols. That is a little aside, perhaps, and I might say it 
has nothing to do with this particular case. However, if that con- 
tinues to go on further and further, we will have people on our 
trains that we are responsible for that we have not the control over 
that we have over the passengers. 

Mr. Lloyd. That is the point; you are censuring, by indirection, 
the Post Office Department for the dereliction of those officers and 
yet you have not notified the department of that dereliction. 

Mr. Nichols. If it is any censure, I beg your pardon. I was try- 
ing to find out how to get at it. 

Mr. Stewart. I assure you we expect the officers of a railway com- 
pany to report every dereliction, even every discourtesy, of a rail- 
way-mail clerk, and if you do that I assure you that every effort 
will be made to correct it. We do not countenance any acts of dis- 
courtesy on the part of clerks. 



RAILWAY MAIL PAY. 1211 

Mr. Nichols. I thank you, Mr. Stewart, and I will say no more 
except that I am delighted to have that information. 

Mr. Lloyd. I know of an instance on a road in Missouri where a 
postal clerk had a fight or altercation with the conductor. The clerk 
was sitting on the seat and the seat in front of him was thrown back 
and he was occupying two seats. In going from place to place the 
conductor suggested to him that they needed the space and he would 
like for him to give up one of the seats. The clerk abused the con- 
ductor a little bit, a war of words followed, and the result was that 
that conductor notified the Post Office Department. The Post Office 
Department sent out its inspector, who inspected that case and they 
dismissed the employee from the service. 

Mr. Nichols. That post-office clerk was in the passenger car, was 
he not? 

Mr. Lloyd. Yes. 

Mr. Nichols. We would not have gone to the Post Office Depart- 
ment with it. We would have taken him up before the first justice 
of the peace. Here, in the case I mentioned, is a man in the post- 
office car surrounded by the power of the United States. 

Mr. Lloyd. I am illustrating another point, that you do not have 
to go to the justice of the peace. The Post Office Department dis- 
missed this man from the service and he is out of the railway post- 
office service to-day. 

Mr. Nichols. I am glad to hear that, because I am getting a little 
concerned with some of ours. I was wondering whether we had to 
give up the entire car and everything else with it. 

The Chairman. Do you see any difference between the short lines 
and the long lines ? In other words, is it necessary to have two meth- 
ods of ascertainment to be equitable and just as between the two — 
what are known as short lines and what are known as the trunk 
lines ? 

Mr. Nichols. Mr. Chairman, I will give my opinion for what it 
is worth. The rate for the mileage basis was made when there was 
no such thing as a post-office car or an apartment car; the mail was 
brought to the station, or if it was within 80 rods of wdiere the sta- 
tion agent could walk out and get it, but very often at that time he 
was the postmaster, and he put it on the baggage car, tagged for the 
station, and so on, and the baggage-master put it off and the agent 
carried it to the post office, and that was the basis on which the pay 
was made at a time when there was such a small volume that it could 
be followed ; every item could be counted and it was gone into, and I 
think the proof of the condition of the situation is that it has stood 
the test of time. That is the basis on which all railroad earnings are 
arrived at. You may talk about your passenger-rate basis as you 
please, but it is the tonnage basis of that train that we base our cost 
on, and it takes coal to pull tonnage, and our conditions are largely 
more in proportion to the tonnage than anything else. The apart- 
ment car came along later, voluntarily, first by the railroads and later 
demanded by the department, but here is where the trouble comes in, 
like freight rates and other conditions : The freight rates, mail rates, 
and passenger rates are downward; the expense multiplies upward 
all the time until we have gotten to the dividing line and there is no 
longer any leeway for us, and, to use an expression which has been 
pretty generally used and understood to be correct, we are gradually 
49396—14 84 



1212 RAILWAY MAIL PAY. 

starving to death. That may be going a little too far, but if you will 
put back the 10 and the 15 per cent that was taken off of the mail-pay 
basis at different periods and you will give us a fair rental basis for 
the space that the department would use for its exclusive purpose and 
relieve us from the side line and terminal service I think along that 
line you would find it a correct basis. 

The Chairman. It is self-evident that you have received more 
compensation than you receive to-day, but you failed to demonstrate 
that you are entitled to it, have you not ? 

Mr. Nichols. I do not think so, sir; speaking for the Carolina & 
Northwestern. To be perfectly frank with you, sir, and every rail- 
road — I am speaking for mine, particularly — certainly needs and 
wants every dollar that it can get, but I feel that every dollar the 
mail service is paying us to-day is costing more than it is paying. 

Mr. Lloyd. Do you want to carry the mail ? 

Mr. Nichols. If the property belonged to me it would not be car- 
ried on that route at the price at which it is being taken. 

The Chairman. We will now take a recess until 2.30 o'clock p. m. 

(Thereupon, at 1.15 o'clock p. m., a recess was taken until 2.30 
o'clock p. m.) 

AFTER RECESS. 

(The hearing was resumed at the expiration of the recess at 2.30 
o'clock p. m.) 

Mr. Lloyd. Mr. Nichols, have' you carefully examined Document 
No. 8? 

Mr. Nichols. I can not say that I have, further than to read and 
look at it. 

Mr. Lloyd. You have the suggested plan of pay? 

Mr. Nichols. Yes, sir. 

Mr. Lloyd. What is your objection to that plan? 

Mr. Nichols. It is so complicated that I have not as yet been 
able to analyze it. The document seems to make the basis of pay 
altogether on space. 

Mr. Lloyd. Excepting pouch mail? 

Mr. Nichols. Excepting pouch mail; yes, sir. In that particular 
we have one 20-mile pouch mail route and I do not understand 
whether they would pay for that independently and irrespectively 
of the other or whether it would be combined. My auditor, who is 
a very fine accountant, only had a short time to go over it, but ac- 
cording to our figures, it is the best we could make out of it. It 
evidently is not correct, because the department has very kindly 
given me some figures here and it does not agree with our under- 
standing. Therefore, I think I am rather at a loss on this docu- 
ment. 

Mr. Lloyd. According to your figures, as you understand it, how 
much will you receive compared with what you now receive ? 

Mr. Nichols. About as 6,300 is to 8,400. 

Mr. Lloyd. And, according to the department's figures ? 

Mr. Nichols. We would make some money according to their 
figures. 

Mr. Lloyd. Did you include the same items of cost — you and 
they? 



KAILWAY MAIL PAY. 1213 

Mr. Nichols. They are not using cost items, but revenue items. 

Mr. Lloyd. Now you have revenue from mileage, revenue from 
loading and unloading service, and the weight of the mail. 

Mr. Nichols. Where the figures of the department seem to differ 
the greatest from my figures — I went into more detail than I was 
capable of doing, because I do not profess to be an expert in that 
line — is that where we are running a 22-foot apartment, and under 
that bill, as I understand it, they would either have to take a 20 or 
25 foot apartment^ and they would naturally authorize the 20-foot 
apartment. 

Mr. Lloyd. They would have to authorize a 20 or 25 foot apart- 
ment, one or the other. 

Mr. Nichols. In that case it appears from their figures, and I am 
not capable of criticizing them, but we would get more money. But 
let me cite a condition. We have two daily passenger trains, as I 
stated, only one carrying the mail, and they say we have been paid 
for a 25-foot apartment. As I understand this document the Post 
Office Department is allowed all discretion, and if I were in their 
place, in making a showing for the Government, I would certainly 
take advantage of that law, so far as good business judgment would 
permit. Therefore, in calling for the service they would put on four 
additional cars instead of two. 

Mr. Lloyd. You mean twice a day each way ? 

Mr. Nichols. Yes, sir; twice a day each way. 

Mr. Lloyd. That would nearly double your pay. 

Mr. Nichols. I beg your pardon. If they are performing all that 
service in a 22-foot apartment, they would not order four 25-foot 
apartments, but they would order four 10-foot apartments, and I 
would get instead of pay for two 20-foot apartments pay for four 
10-foot apartments. As to the susceptibility of the changes, I gave an 
illustration a while ago, and I will add to it in this way : We come 
across to Hickory, Newton, Lincolnton, Gastonia, Chester, and the 
mail is picked up in between those points passing over the larger lines 
to a larger center than we serve direct and good business judgment 
of the department requires them to shunt that mail and get into those 
larger centers by the shortest route so as to use the least space on 
my line that they could require, because on the larger lines the varia- 
tion of the mail is such that they are better prepared to take care 
of the fluctuation than they would be on the shorter line. That is 
the only way the space basis can be used that I can conceive of. 
No matter on what space you make the rate you have to get back to 
the mileage basis to start with. You are compelled to take the ex- 
perience and the data, which is on the weight, in order to get to it. 
Now, if that can be done, then you get into the space basis. If you 
do, I venture the assertion that unless there is a minimum provided 
as to the amount of space, as well as a miximum, there will always be 
more or less dissatisfaction. 

Mr. Lloyd. You make an arbitrary statement, as I take it, that on 
the figures submitted to you on the 25-foot car, if they had mail 
twice each day, that the amount would be less, because they would 
use a 10-foot apartment. It seems to me that that presumption is 
wide of the mark. The natural presumption would be that there 
would be at least a 15-foot car each way and it would make a 60-foot 



1214 RAILWAY MAIL PAY. 

space instead of 50, and you would get paid for 10 feet additional 
each day. 

Mr. Nichols. I am simply putting myself in the department's 
place. 

Mr. Lloyd. I mean to put you in the department's place. 

Mr. Nichols. I would not put on 15 feet if 10 feet would do. 

Mr. Lloyd. Certainly not ; but you have 22 feet of space now each 
way, and you have to use a 25 -foot car. You can not divide that 
evenly. 

Mr. Stewart. The gentleman is wrong for this reason: He does 
not understand the manner of authorizing the apartment-car service. 
We would not divide the separation ; the main item that controls the 
space is the matter of separation dependent on the number of post 
offices supplied and connections made. We now have 22 feet needed 
to provide the number of separations necessary on the line and we 
could not cut that number of separations in two and do the required 
work in 10 feet, for we would require approximately the same space, 
whether we had the same amount of mail or not, because we would 
have to make the same separations. 

The Chairman. Does your authorization have to go to the peak of 
the load? 

Mr. Stewart. It must cover the separations necessary ; that is the 
main thing. 

Mr. Nichols. I do not exactly get that. If you are doing the 
business alone in 22- foot apartments and you wanted to double the 
service you would certainly have correspondingly less. 

Mr. Stewart. Not necessarily, as I said before, if the separations 
required were the same on each train, the space authorized would be 
the same. 

Mr. Nichols. You mean to work in? 

Mr. Stewart. To work in; yes. 

Mr. Nichols. If you can work mail in a 10-foot apartment it 
strikes me you would be able to do this, by dividing apartments into 
4 and let us do away with the 10-foot apartments. 

Mr. Lloyd. Take the 22- foot apartment and divide by 2, that would 
be 11. If you had 11 feet of space you can not put that in a 10-foot 
space, so you will have to have a 15-foot car, and in any event you 
would then have a 60-foot daily space. 

Mr. Nichols. My idea is that it just so happens that the 22-foot 
apartment car was divided that way and we used it for some reason. 
I do not know why, but we followed out their regulations so far as 
we could. On the new basis it goes 10 feet, 15, and so on. If 10 feet 
would not do I would certainly use 15, but my contention is with the 
mail as it now stands, but with the ability to allot the mail the other 
way without hurting the mail very seriously, I would naturally, as 
a business proposition, use as little as I could, and therefore 10 feet 
would do, and we would not get any more for four services than for 
the two. 

Mr. Lloyd. That would be because the mail is diverted. 

Mr. Nichols. A natural diversion, and it is proper business for 
them to divert it. 

Mr. Lloyd. If it is diverted then the other roads would get the 
benefit of it. 

Mr. Nichols. Certainly ; but we are not doing that business. 



RAILWAY MAIL PAY. 1215 

Mr. Lloyd. But the general public is interested, and the cost of 
the service is the thing in which the Government is especially con- 
cerned. Now, if it shunts the mail off onto another line, it would 
cost them just as much to carry it on the other line as it would yours. 

Mr. Nichols. But you are getting the benefit of double service on 
my line. 

Mr. Lloyd. You have not presented a case yet to show why they 
would want to shunt it. Why would they want to get rid of your 
service ? 

Mr. Nichols. Naturally, with all traffic conditions, if there is 
nothing else to induce them to do it, they would naturally give the 
originating carrier the longest haul they could so that they could get 
it to its destination without delaying it. If they have additional 
space on these other lines, and want to give the additional space to 
the other people, and want to do it as cheap as possible, they would 
not shunt it off so they could load it up between points, and they 
would not need so much space on my line, but I am doing it at a 
double cost. We are crossed at six points and our service is taking 
it at these points and carrying it from the junction points to the 
distant centers. 

Mr. Lloyd. Evidently your road is a fair sample. 

Mr. Nichols. But it is the conditions under which we have to 
operate. 

Mr. Lloyd. Yes; but you could not make a law that would fit every 
particular case, unless you leave it to the Post Office Department to 
contract with each individual railroad. 

Mr. Nichols. I think, sir, the present basis has been worked out 
and seems to take notice of the several conditions. 

Mr. Lloyd. The short-line people contend that you are not getting 
enough pay. 

Mr. Nichols. Yes, sir. 

Mr. Lloyd. And that you are not getting as much proportionately 
as the main trunk-line roads. 

Mr. Nichols. I have not said anything about the main trunk-line 
roads. 

Mr. Lloyd. I know, but you are very anxious not to say anything 
about them. I may say the trunk-line railroads are getting pay out 
of proportion what you people receive, and I say — and I think that 
it is the concensus of opinion of all of us — that the trunk-line roads 
have but little ground for complaint. It is the little fellow that has 
ground to complain. 

Mr. Nichols. I am not familiar enough with the trunk line to 
form an opinion. 

Mr. Lloyd. You are in a position where it would not be wise for 
you to say, and I do not want you to say, because you are crossing 
other roads and you must do business with other roads, and you 
probably do business with roads larger than your own, and that is 
true with many of the roads of the United States. Apparently 
there are about five roads at the present time directing the policy 
of this business and the hearing before this committee. That is 
my judgment about that. 

Mr. Peters. I would like to take an exception to that. 

Mr. Lloyd. You can note your exception, because it goes in the 
record. 



1216 RAILWAY MAIL PAY. 

Mr. Peters. Those five roads are not directing this, but we are all 
trying to get at what is best for us to have. 

Mr. Lloyd. I think that this is true : That there is not one trunk- 
line representative here but who is doing everything in his power to 
make it appear they are not receiving enough for carrying the mail, 
and it is not the question of whether it should be carried by weight 
or space, and the reason you are objecting to space is because you do 
not think you will get as much compensation as under the weight 
system. 

Mr. Peters. No ; we do not think it is right to attempt to pay by 
space for one of the utilities of the transportation companies that 
you w r ill use on a weight basis for transporting a revenue producing 
or commercial business. You propose to take the space and pay for 
it on the wholesale space basis and then farm it out on the package or 
piece or pound basis, and use the facilities of the railroad to produce 
you a great revenue from what you sell by the pound or by the 
piece. Now, we feel that as we are in the transportation business, 
the business of furnishing transportation and carrying commodities, 
and have been carrying these in express, carrying them in freight, 
they are now taken out of that and put into your big cars on a space 
basis and carried there without the railroad having any oppor- 
tunity to participate in the increased traffic which you are making 
and taking from the other side. There is the real truth of it. You 
propose to utilize or pay the railroads on the space basis, and yet, 
through that means of transportation, you collect from the people 
on a pound or piece basis. Now, you take the trunk-line roads, they 
are carrying the mails for something like from 5^ cents to 6 or 7 cents 
a ton a mile. I think Mr. Hardin's road, as it was figured out, was 
about $1.40 a ton-mile. The rate based on weight and on a mile haul 
produced those different results. You are getting the big quantity 
of your mail carried by the big railroads, your trunk lines, carried 
at a very low rate when you consider the service performed. We 
have studied this from all sides. At first it was thought that the 
space basis would be good and we studied it from that point of 
view and we all came back to the one thing, that the weight was 
what we transport and that we should participate in these increased 
revenues the United States is making out of the transportation 
facilities we are furnishing, by being paid on the weight basis rather 
than on a space basis. 

Mr. Stewart. Are you objecting, then, to the character of the 
matter that we put in the cars and use we make of the space for the 
transportation ? 

Mr. Peters. We do object to your going into the wholesale freight 
business. We felt when you went into the parcel-post business up 
to 11 pounds that that was an adjunct of the mails, it was something 
that the people wanted, they had it in other countries and it was 
bound to come, but when you started in general competition with 
the freight and express and go to 50 pounds or 100 pounds, or per- 
haps — we do not know — to 200 pounds, then you have gone into 
actual competition with the railroads themselves in the conduct of 
the business for which they were incorporated and for which they 
were built. 

Mr. Stewart. Then you are objecting to our taking business from 
you which you are now transporting as express or freight ? 



RAILWAY MAIL PAY. 1217 

Mr. Peters. Yes. 

Mr. Stewart. And transporting it on the space basis in the pas- 
senger train. Do I understand your objection correctly? 

Mr. Peters. That is right, without our being able to participate in 
the revenue that is obtained through the instrumentality that we 
furnish. 

Mr. Lloyd. So far as the commission is concerned, we have never 
as yet for one moment considered the question of how much you 
would get, but it is the kind of system and what we have begged 
you from time to time to do, was to discuss this system, and the 
thing you complain about in connection with the proposed system is 
that it leaves too much to the discretion of the Postmaster General, 
and yet we have never gotten one of you at any time to assist us a 
particle in trying to suggest a bill on the space basis which would 
eliminate, to some extent, the discretion of the Postmaster General. 

Mr. Peters. Because we did not see how it could be possible to 
provide a bill on the space basis that did not leave the whole matter 
to the discretion of the administration. It is a question of adminis- 
tration. A weight basis is one that depends upon what the scales 
say and the number of miles that the weight is hauled. 

Mr. Stewart. Would you be willing to make a division of the 
mail and accept space for all but fourth-class matter and let fourth- 
class matter go upon some other basis? 

Mr. Peters. I do not quite catch that. 

Mr. Stewart. Would you be willing to have a combination plan 
and accept the space basis for all but fourth-class matter and let 
fourth-class matter be handled upon some other basis ? I understand 
your objection is that we are taking over a part of the railroad's busi- 
ness, as you think, and are going to ask you to transport that matter 
on a space basis on }^our passenger trains. Now, if that be your 
objection, I ask you whether you would be willing to divide the plan 
and go to the space basis on all but fourth-class mail and have some 
other plan to handle the fourth class as, for instance, fast freight or 
fast express? Give us, for instance, the same rate on fourth class 
that you get for the express matter, which is somewhat less than we 
pay for the mail in large lots. 

Mr. Peters. It is all carried under the general law and part of the 
mail, and I do not see how you can discriminate. You use the 
sovereign power of the people to handle the mail, to perform its 
governmental functions. I think it is a Government function han- 
dling the mail. The Constitution gave Congress the right to legis- 
late on it, to establish post roads and establish the mail, and Con- 
gress has so done, and it has, therefore, by law, become a Govern- 
ment function. I do not see how you can make different classes of 
such a function. I have considered that point of separating. We do 
have it to a small extent now with the traveling post office, or 
the railway post-office car. which is paid for at so much for a 
car per mile — that is, a partial space.payment — but the principal part 
of it is carried on a basis of weight. We have sincerely studied it 
and Ave do not see how you can make any kind of a combination of 
space and weight other than that which now exists. I think Mr. 
Worthington brought it out in one of his statements that there were 
about 70 mail routes in the United States that received over $100,000 
a year and they represented a little over 2 per cent of all the mail 



1218 RAILWAY MAIL PAY. 

routes. They carried over 60 per cent of all the mail. The other 
98 per cent of the mail routes carried the other 40 per cent. 
That 2 per cent of the mail loutes received nearly 50 per cent of the 
total mail pay and the other 98 per cent of the mail routes, repre- 
senting about 88 per cent of the mileage of the railroads of the 
country, got the other 50 per cent. Therefore, you can see that a 
great majority of the roads are thinly paid for rather thin mail, but 
the mail handled on those 70 heavy routes is handled at the very 
lowest rate, as your schedule for increasing weight brings the pay per 
ton mile down very low. 

Mr. Stewaet. Is it not true that the very active members of the 
railway mail pay committee largely represent those 70 routes ? 

Mr. Peters. Yes ; it is true. When the committee was originally 
appointed, of only five, and they were executive officers of the roads 
and were so occupied with other matters that we had to call in other 
representatives and their mail experts, the men who would attend 
and work on these matters, with those who were near by, and those 
who could be spared for it, and we had to depend on those men to 
come in and do this work, and we have had counsel from all over 
the country, we have kept all the roads posted as to what we are 
doing, and we have had in the committee representatives from many 
directions and from different sections and different classes of roads. 

Mr. Bradley. I was going to ask Mr. Peters whether it was not a 
fact that the companies operating these heavy routes you speak of, 
where the mail is carried at the lowest possible rate per ton-mile, 
also includes the management of hundreds of small routes that 
would be affected by the various considerations that have been 
brought out by Mr. Nichols's testimony. 

Mr. Peters. I think that is true. 

Mr. Mack. That is particularly true of the western country where 
the predominance of the apartment-car service exists. 

Mr. Bradley. It is particularly true with the eastern country. 

Mr. Lloyd. I think it is probably true in the western country that 
more branch lines are part of the main system, and that there are 
fewer independent roads than there are in the South. 

Mr. Nichols. I wish to say that we had nothing to hide on the 
point I last spoke of. The small lines, speaking from our stand- 
point, are not able to keep in touch with these things as the larger- 
lines are. They do tell us when these things are going on, and in 
that way we get together with them and they give us very valuable 
assistance in matters which we are not able to work out for ourselves, 
and we find a great similarity on the smaller roads, with our own, 
but I do not know that we are so tied up that we want to lose any- 
thing by it. A small line must have a preferred connection with a 
larger line. 

Mr. Lloyd. That was the point I called your attention to. 

Mr. Nichols. I have no recollection of the lines with which we 
have that particular traffic arrangement ever having brought, in 
any shape or form, any undue pressure on the small line, so far 
as I know, upon this mail-pay question. The pressure is the con- 
dition as it appeals to us and as we see it, and I would like very much 
if there is anything I can tell you in my experience to help you to 
come to a conclusion, I certainly want to do it, and I will only regret 
it if I can not. 



RAILWAY MAIL PAY. 1219 

Mr. Lloyd. You said a while ago you had not carefully examined 
this plan and you started to give general objections. Can you give 
specific objections to this plan — that is. the suggested plan of the 
Post Office Department s 

Mr. Bradley. Might I suggest a thought there? 

Mr. Lloyd. Yes. 

Mr. Bradley. As bearing on a remark which Mr. Nichols previ- 
ously made, which I think indicated that he was operating a mail 
apartment car which was 22 feet in length. Suppose that under this 
proposed bill the department reorganized the service on your line, 
and called upon you to establish a mail-apartment car service in a 15- 
foot apartment on your present trains, with an additional service in 
a 10-foot apartment on the other train. Would the additional re- 
muneration, if you see any in the new bill, recompense you for the 
changes that they would call upon you to make in their discretion? 

Mr. Nichols. If I understand your question, and answering you 
under the condition which we now labor under, it would be physi- 
cally impossible for us to supply those cars, and the fines would be 
imposed upon us — I was coming to that point. That is one of my 
objections to that proposition there — and we would be confiscated in 
a short while by the fines by reason of the physical inability to com- 
ply with the requirements of the department. 

Mr. Lloyd. That is on the theory that they would make demands 
of you that they do not now do ? 

Mr. Nichols. On the theory of what they can do and on the theory 
that good business would require them to make demands upon us. 

Mr. Lloyd. Under the existing law if they need the space and need 
the service, and they demand it, you are expected to comply with the 
demand ? 

Mr. Nichols. Their fines, however, are commensurate with the serv- 
ice. They simply cut us off 10 per cent if we do not furnish a car. 
There is no objection to a reasonable fine. 

Mr. Lloyd. What you object to there, then, is that the penalty that 
they propose in the suggested bill is too severe ? 

Mr. Nichols. Not only burdensome, sir, but in many cases they 
would confiscate the property if it is unlimited. 

Mr. Lloyd. Then, if it was decided to make a recommendation to 
pay for space, would you say that the penalty proposed there is en- 
tirely too severe and the penalty that is proposed in the law ought to 
be a much lighter penalty ? 

Mr. Nichols. That ought to bear some relation to the service we 
refuse the Government. Another thing, this bill says we shall per- 
form that service regardless of what the conditions are, while the 
present law allows us to make a contract every four years, and allows 
the department to go out, if we can not agree, and contract with 
somebody else to carry it. Here they simply say " We will take 
everything you have if necessary and make you carr}' this mail." 

Mr. Lloyd. Now, let us come back to the principle involved. 
You do not object to the railroad companies, as a general principle, 
being required to carry the mails, do you ? 

Mr. Nichols. Absolutely not. 

Mr. Lloyd. You would say they ought to be required ? 



1220 RAILWAY MAIL PAY. 

Mr. Nichols. We would like to carry them the same as any other 
traffic. We do say, however, that this road is not getting a fair re- 
muneration for the service now, for reasons that I cited a while ago. 

Mr. Lloyd. I think you present a very strong case on a road that 
is not receiving sufficient remuneration. But coming back to the 
other question, the objection that you urge is not to the principle but 
what it would result in to you under the enforcement of that prin- 
ciple? 

Mr. Nichols. I am using that as a fact to criticize a principle. 

Mr. Lloyd. In other words, you would use the exceptional case 
to prove that the rule is not a good one ? 

Mr. Nichols. No, sir; but a rule that has so many of these ex- 
ceptions that it is going to crush out the smaller roads. 

Mr. Lloyd. The crushing out comes from what is proposed in the 
way of revenue. Now, if that were put in so that the penalty was 
no more severe than the penalty to-day, then you would have no more 
complaint on that score? 

Mr. Nichols. I think I made myself clear in my statement that 
there might be a way of getting at an apartment-space basis, but that 
you would, in my opinion, get down to the weight basis first in order 
to get a basis to make it on. The question, then, in my mind was, Is 
not the weight basis, after all, the better. I do not mean to say that 
the space basis can not be worked out. 

Mr. Lloyd. You do not think, as a practical business proposition, 
that the weight of mail put in a car necessarily determines the space 
that may be used in that car ? 

Mr. Nichols. My contention, as stated this morning, is that the 
two services are entirely separate and distinct. 

Mr. Lloyd. That is first-class and fourth-class mail? 

Mr. Nichols. Regardless of the class. I speak of the mail as a 
whole. We are carrying in our car a passenger or two passengers, 
and furnish him with a private-apartment car service that is exclu- 
sively the Government's, and that I can not use after it is once as- 
signed, whether I want to or not. If the Government wants a house 
on wheels, they certainly should pay for that house, no matter what 
use they make of it. 

Mr. Beadley. Imagine, Mr. Nichols, that there were no penalties 
prescribed in this bill and that you managed to find capital enough 
to build these additional cars and so provide the 15 feet of space on 
one train for a mail apartment and 10 feet of space on another, and 
continue performing that service for a month, in connection with the 
conference on yesterday, when it was suggested that these contracts 
should at least be made to last for one month, and if, at the end of 
that month, the post-office inspector went over your line, and the 
department, acting upon his recommendation, called upon you to 
furnish a 10-foot apartment on your present train and a 20-foot 
apartment on your other train, do you think that you could fulfill 
the obligation, and do you think that the compensation proposed in 
that law would be remunerative? 

Mr. Nichols. You started off by saying if we had the capital to do 
it. Assuming that we have, of course we could go to work and then 
we would supply the cars as soon as we could build them or rearrange 
them in the shops. As to the remuneration, the point I made a while 



KAILWAY MAIL PAY. 1221 

ago Avas that if the car-space basis is to be the basis, then it must be 
flexible enough to take care, of an increase as well as a decrease in 
the traffic and there should be a minimum as well as a maximum 
amount which the post office could call for if it establishes a route. 

Mr. Stewart. Mr. Bradley's question is hardly a fair one, because 
the present practice of the department is not in accordance with it — 
that is to say, we do not authorize car space nor call upon the com- 
pany to furnish additional cars at the behest of the post-office in- 
spectors. Such a request would come from the officers of the Railway 
Mail Service or those connected with the immediate office of the Sec- 
ond Assistant Postmaster General. Under the present practice it is 
true that post-office inspectors inspect authorizations that are already 
made and do make reports upon whether or not the space authorized 
is needed, and they sometimes report that more space is needed than 
is authorized. 

Mr. Lloyd. Is it not true, as a matter of fact, that the position he 
takes, that you are governed very largely in your determination by 
the report that is made by the post-office inspector is correct? 

Mr. Stewart. No ; it is not true. 

Mr. Lloyd. What officer do you rely upon ? 

Mr. Stewart. We rely upon our own officers in the field. 

Mr. Lloyd. Who are your officers ? 

Mr. Stewart. The division superintendents. 

Mr. Lloyd. Who does he look to ? 

Mr. Stewart. The chief clerks. 

Mr. Lloyd. Who does he look to ? 

Mr. Stewart. The chief clerk looks to himself. He goes over the 
line and inspects the line personally. 

Mr. Lloyd. Then he is your post-office inspector? 

Mr. Steavart. Yes, sir. 

Mr. Lloyd. Then it depends upon that one officer ? 

Mr. Stewart. Depends upon him for facts. 

Mr. Lloyd. He reports to the superintendent and the superintend- 
ent reports to you and the natural supposition is that whatever he 
reports will be carried out by you ? 

Mr. Steavart. No. The chief clerk inspects the line and he alone 
reports to the division superintendent; the diAdsion superintendent 
passes his judgment upon the case and reports to the general super- 
intendent. The general superintendent goes over the case thoroughly, 
exercises his judgment in the matter, and reports to the Second 
Assistant Postmaster General. The Superintendent of the Division 
of Railway Adjustments goes oA~er the case carefully and reports 
upon the matter in Avriting with recommendation to the Second 
Assistant Postmaster General and he exercises his judgment. 

Mr. Lloyd. I am getting back to the practical proposition. The 
practical proposition is, after all, that you rely upon the statement 
of facts that is made by the chief clerk? 

Mr. Steavart. On a statement of facts, yes. 

Mr. Bradley. Of whom there are, I think, 125 chief clerks, 15 
division superintendents, all making reports to headquarters at Wash- 
ington. General Stewart commented on my question as not. being 
fair. I want to say that I have every desire to be fair. Is it not a 
fact that this law places entire discretion upon the department? 



1222 RAILWAY MAIL PAY. 

Mr. Stewart. Yes; but not upon the post-office inspectors. The 
post-office inspectors, under the present practice, would not or could 
not require the railroad company to furnish a car 

Mr. Lloyd. As a matter of fact, under the proposed law, the dis- 
cretion will be placed in the Postmaster General ; he is the man who 
would decide. The Postmaster General would get his information 
from the Second Assistant Postmaster General, and you can follow 
on down the line. The Second Assistant Postmaster General gets 
his information from the division superintendent, the division super- 
intendent from the chief clerk. Now, who makes the statement of 
facts upon which the Postmaster General decides? Why, it is the 
chief clerk. Whose opinion controls the Postmaster General ? Yours. 
Who controls your opinion, if anybody ? The statement of fact that 
is made by the superintendent and the report made by the super- 
intendent upon that statement of fact, and you follow it back after 
all, and you rely on the chief clerk because he makes the statement 
of fact. Now, if there is anything wrong it may be in the statement 
of fact. Then the railroad company suffers the wrong because the 
chief clerk has not made a correct statement of the situation. It is 
largely a matter of judgment, too, in many of these cases, about 
which the chief clerk or inspector makes his report. He may have 
his little bias or feeling in the matter, as they frequently do, and he 
makes a statement of fact which may not be exactly the statement 
of facts as they exist. 

Mr. Stewart. Mr. Nichols, you referred to the excessive fine that 
might be imposed. Will you indicate under what provision of this 
proposed law you anticipate anything of the kind? 

Mr. Nichols. If for any reason a railroad found that the carry- 
ing of the mail was a burden too great for it to bear, and it wished 
not to do so, it would be subject to this clause : 

It shall be unlawful for any railroad company to refuse to perform mail 
service at the rates of compensation provided by law when and for the period 
required by the Postmaster General so to do, and for every such offense it shall 
be fined not exceeding $5,000. 

Mr. Stewart. That has nothing to do with the question we have 
before us and which we were discussing ; that is, whether or not your 
company would be able to furnish a car when asked to furnish it. 

Mr. Nichols. My idea was that that applied to any one of these 
requests. 

Mr. Stewart. No ; it would not. 

Mr. Nichols. It says when " required by the Postmaster General 
so to do." When the Postmaster General or his assistants request 
me to put on a car 

Mr. Stewart. That relates to the refusal to perform service. Turn 
over to page 1061 and note the paragraph at the top of the page: 

If any railroad company carrying the mail shall fail or refuse to provide 
cars or apartments in cars for distribution purposes when required by the 
Postmaster General, or shall fail or refuse to construct, fit up, maintain, heat, 
light, and clean such cars and provide such appliances for use in case of acci- 
dent, as may be required by the Postmaster General, it shall be fined such sum 
as may, in the discretion of the Postmaster General, be deemed proper. 

Mr. Nichols. It may be $10,000. 

Mr. Stewart. That is the provision that exists to-day. It is no 
different from the present law or regulation. 

The Chairman. Is that law to-day, or is it a regulation? 



RAILWAY MAIL PAY. 1223 

Mr. Stewart. It is covered partly by law and partly by regula- 
tion. 

Mr. Lloyd. What is the law ? Have you got it there before you ? 

Mr. Nichols. Only this particular feature, but that is not my un- 
derstanding. 

Mr. Stewart. Let me go a little further. The present situation 
with regard to furnishing apartments is this: Your transportation 
pay is, by law, based upon several conditions. It so states in the first 
paragraph of the law, and one condition is that the company shall 
furnish a suitable apartment or apartments in cars for the purpose 
of enabling the distribution of mail en route. 

Mr. Nichols. May I ask you when that amendment to the law of 
1873 was put in? 

Mr. Stewart. That is part of the original law of 1873. 

Mr. Nichols. Are you certain about that ? 

Mr. Stewart. Yes ; I am very familiar with it. That is a condi- 
tion precedent to your getting pay for transportation of the mail on 
a weight basis, and the penalty for failure to furnish such apart- 
ments would be a fine. 

Mr. Nichols. Ten per cent. 

Mr. Stewart. No; that is contained in another statute. That 
penalty is for failure to furnish full cars. This refers to an apart- 
ment car. The law makes the furnishing of an apartment car a 
condition precedent to earning the compensation for transporta- 
tion, and if you do not furnish the apartment car, under the existing 
law, the Assistant Attorney General has held that you would not 
get any pay for transportation of mail at all. That is under existing 
law, and it is more drastic than this. 

Mr. Nichols. I do not think he can show the law for it. I know 
the ruling is there. . 

Mr. Stewart. I will say that I have not imposed that kind of 
penalty for refusal to furnish a car. 

Mr. Nichols. I would not hesitate to go before any court on the 
law against the Postmaster General's contention on that point under 
the present law, but if this was law I would go to Canada. 

Mr. Stewart. Under the existing law we have the power to 
impose a fine, and that is what we do if you do not f irnish the car. 
There has never been, so far as I remember, any case where a fine 
was imposed where a road refused to provide a car because of not 
having one; we aim to give a company a reasonable time to obtain 
a car. We do not impose fines in such cases, yet we have the same 
power now that this provision confers. 

Mr. Nichols. I did not read it that way. 

Mr. Stewart. That is the correct reading of it. 

Mr. Nichols. My idea is that even in the department's ruling that 
such a fine as you will note in it has some relation to the pay or to 
the service which you fail to give them. But this proposition here 
puts the railroads absolutely at the- mercy of the department. 

Mr. Stewart. The provision is the same as it exists to-day. There 
is no change whatever, and if you will drop down to another para- 
graph you will see that it says : 

He may deduct the price of the value of the service in cases where it is not 
performed, and not exceeding three times its value if the failure be occasioned 
by the fault of the railroad company. 



1224 RAILWAY MAIL PAY. 

That is in the present statute also. 

Mr. Nichols. You make a case where you say if the service is the 
fault of the railroad company. In my case it might be a physical 
condition which I can not get over, which would be quite a different 
case to the aggravated case of a malicious refusal and a desire to 
hamper the Government. There ought to be a difference on that. I 
might incidentally handle a gun and kill a friend across the street, 
but it would be quite different than if I went hunting for him. 

Mr. Lloyd. Mr. Chairman, I think there is quite a difference in 
the two laws. The proposed law states — 

it shall be unlawful for any railroad company to refuse to perform mail service 
at the rates of compensation provided by law when and for the period required 
by the Postmaster General so to do, and for every such offense it shall be fined 
not exceeding $5,000. 

The existing law is — 

The Postmaster General may make deductions from the pay of contractors for 
failure to perforin service according to contract and impose fines upon them for 
other delinquencies. He may deduct the price of the trip in all cases where the 
trip is not performed and not exceeding three times the price if the failure be 
occasioned by the fault of the contractor or carriers. 

Mr. Nichols. That always applies where some carrier goes out and 
falls down and does not handle it, but leaves it. 

Mr. Lloyd. There does not seem to be much difference, except in 
one case it fixes the limit; it could not be more than $5,000, while 
under the existing law it says they may impose fines, but it does not 
say how much. 

The Chairman. Have you anything further, Mr. Nichols? 

Mr. Nichols. That is all, unless I can serve you further. 

The Chairman. We thank you for presenting your views to the 
commission. 

STATEMENT OF MR. W. B. DENHAM. 

The Chairman. Will you kindly state your name, your residence, 
and official position? 

Mr. Denham. W. B. Denham; residence, Jacksonville, Fla. I am 
general manager of the Ocala Northern Railroad. This is a new 
piece of property, a railroad that has been recently constructed within 
the last year or two by some local people who were originally mill- 
men. It was first started as a tramroad, and after it was extended 
they made a railroad of it. After being in operation for about a 
couple of years they got into trouble, and it is now in the hands of a 
receiver. A receiver was appointed last May, and I took charge of it 
as manager. The railroad at the present time is about 54 miles long, 
with a branch of about 10 or 15 miles, but that has not been put in 
operation, as it was under construction when it went into the hands 
of a receiver. We have two mail routes on that little line. 

Mr. Lloyd. Two each way ? 

Mr. Denham. No, sir. A round trip, with two mail routes; it is 
a straight line, but it has two mail routes — that is, we have one mail 
route from Ocala to Fort McCoy, about 20 miles, and from there we 
have another route from Fort McCoy to Palatka, The first 4.44 is 
over what is known as the Seaboard Air Line Railroad, over which 
we have trackage rights. The Government pays that little road $1.30 



RAILWAY MAIL PAY. 1225 

per mile per year for handling the mail over that 4.44 miles. The 
next 1.98 miles they pay $30.25. The next 13.22 miles they pay $42.75. 

The Chairman. A mile, or for the distance? 

Mr. Dbnham. Per mile per year. Then from Fort McCoy to 
Palatka, 33 miles and a fraction, they pay $42.75. 

The Chairman. All those figures you have stated are applicable to 
the mile per 3^ear ? 

Mr. Denham. Yes, sir. It costs this railroad at Ocala $150 a year 
to deliver the mail. We have to deliver it from the station to the 
post office. We also have to deliver the mail at Fort McCoy, at a 
cost of $12.50 per month. There is an item of $300 out of about $900 
we get on that route that goes for terminal service, not including any 
side service between these points; and from Fort McCoy to Palatka 
we have to handle the mail on that route, and when we get to Palatka 
we pay $15 a month, or $180 a year, to deliver the mail there. That is 
$480 which we have to pay out of the railway mail pay for service 
we perform for the Government for which you gentlemen can see on 
one line, the first 4.44 miles we get $1.30 a mile for. 

Mr. Lloyd. How is that; by special contract? 

Mr. Denham. Yes, sir ; it was a contract made when I took charge 
of the road. Those were the conditions. We handle the mail just 
the same; the same mail that comes to Ocala goes all over the road. 
I do not know how they ever arrived at $1.30, but at any rate it 
does not compensate the railroad company for what it does. 

Mr. Stewart. I will explain that. On that part of the road 
where they use the trackage of another road they are receiving pay 
at what is known as the lap rate — that is to say, the total amount 
paid to all of the companies using that part of the road as one rail- 
road equals the maximum rate provided by law for service over 
that road, and the pay of the route lapping the parent route is fixed 
at the difference between the maximum rate and the rate which the 
parent company receives. Mr. Denham's road gets the smaller 
amount of pay because the other company owns the road and has 
the maximum service. In this case, the mileage of tracks lapped 
by the Ocala Northern route happens to be land grant as well. 
This is by agreement. If the company refuses to accept these terms 
the department pays the maximum rates. 

Mr. Denham. I know, and so do you gentlemen, that it does not 
pay that road to handle the mail at $1.30 a mile. There is an in- 
justice right there. Not only that, but we have to pay $150 a year 
to deliver that mail up town. 

Mr. Lloyd. You mean this is $1.30 per mile per year? 

Mr. Denham. Per mile per year. 

Mr. Lloyd. And all the pay you get is a little over $5 for carrying 
that mail for 4 miles ? 

Mr. Denham. Yes. 

Mr. Stewart. The terminal charge relates to the whole line and 
not to the 4 miles. 

Mr. Denham. Yes. Here is another thing that I think is very 
clear. Why do we want two routes on that little line? There is 
some reason for that. 

Mr. Stewart. There are two contractors. That is it. 

Mr. Denham. It is the same contractor, one contract made by the 
same company. You all know, and so does Gen. Stewart, and he 
must admit why it is done. 



1226 KAIL WAY MAIL PAY. 

Mr. Lloyd. Why is it done ? 

Mr. Stewart subsequently furnished the following: 

The record shows that the reason for their being two routes stated 
in the name of the Ocala Northern Railway Co. is that service over 
the entire line was not in effect during the weighing in the spring of 
1912, the extensions between Fort McCoy and Palatka not taking 
effect until July 1, 1912, and January 6, 1913. During the weighing 
the only service of this company was between Fort McCoy and 
Ocala. Subsequent to the weighing the proposition to establish 
service over the extension to Kenwood came before the department 
and later to Palatka, and in accordance with the regular practice 
pay was fixed on them at the rate of $42.75 per mile per annum. 

Mr. Den ham. Because he does not pay anything for it when it 
comes to the Government. If he had to pay that $12.50 it would 
cost the Government something. They pay me at Palatka $22.50 
a year for delivering that mail which costs me $180. If this was 
only one case that would be an exception, but you will find a great 
many cases like that; the Government simply takes advantage of 
the little line like that when they know we can not perform the 
service for that amount. We will grind it down to every cent we 
can get out of it, but that is just as low as we can get anybody to 
carry it for, and I think they ought to be compensated for it. In 
addition to that they call on the company for a postal car. That 
little line is developing very fast; it opened a large area of good 
country. People are moving to that part of Florida as well as they 
are to all parts, and it is developing rapidly. I think it would be 
an advantage to the Government and to the railroad to have a postal 
clerk, but the question is where are we going to get that money? 
The road is in the hands of a receiver, the court has instructed the 
receiver that he can use what he makes to operate the road. That 
is what we must do, and besides pay any debts that are absolutely 
necessary for the* operation of the road, but they do! not authorize 
the road to go out and borrow anything. I notified the department 
that at present we did not have the means of supplying that car. 
I agreed with them that it would be an advantage so far as develop- 
ment is concerned to have the car, but at the same time we would 
have to furnish the car without any compensation, and under the 
present law we do not get anything for it. We would simply have 
to provide that car, haul a messenger, and furnish him all the con- 
veniences in that car and not get a dollar for it. 

Mr. Stewart. You mean you do not get any additional pay for it ? 

Mr. Denham. No, sir. 

Mr. Stewart. Because the law makes that one of the conditions 
precedent to earning the compensation for transportation. 

Mr. Denham. You are speaking of your understanding of the law, 
but I am speaking of the injustice of the law. We are not blaming 
anybody for what we get except that little $1.30, and I do not think 
that is right. If I had to do that I would dump the mail into the 
spring, but where you accommodate a lot of people you can not 
afford to do it. 

Mr. Stewart. Have you ever presented the matter to the depart- 
ment in any way ? 

Mr. Denham. I wrote the Department to increase it for carrying 
all of the parcel post, and they did not do anything ; but I know very 



RAILWAY MAIL PAY. 1227 

well we are handling a lot of parcel post. There are a great many 
people in there, and they all take advantage of it. You can not get 
any of these Georgia " Crackers " who do not know about the parcel 
post ; they know everything, and they take advantage of it. I think 
we ought to be compensated for what we do. If we are going to 
provide a mail car, I think we ought to get compensation for that. 
I have spent my life in the development of railroad property. I 
started with the first railroad south in Florida after the close of the 
war, first as an engineer, and then I have spent the balance of my life 
in the railroad business. I have done a great deal of developing, and 
we have been handling the mail for years without being properly 
compensated. 

The Chairman. What do you figure would be just compensation 
to you in those particular instances? 

Mr. Denham. I think we ought to be paid extra for the postal car. 

The Chairman. How much ? 

Mr. Denham. I never figured what amount. In addition, I think 
we ought to get paid for the mail handled, and I think we ought to 
be relieved of this terminal delivery. I do not think the Government 
ought to require a railroad company to deliver that mail itself and 
pay for it. We carry the mail to the end of the route, and of course 
we had to make a contract with somebody else to carry it. It is just 
as easy for the Government to do that as the railroad, and even bet- 
ter. Our corporate right and authority ceases when we deliver it at 
the end of the rails and we ought not to be responsible for carrying 
it to the post office, as none of our men have control over it. There- 
fore I think we should be compensated for that delivery, or the Gov- 
ernment should have it done itself. If they think we can do it 
cheaper, the railroads do not object to it if they are compensated 
fairly. 

The Chairman. Do you think the present system of railway mail 
pay by the Government to transportation companies can be im- 
proved upon, except in these instances you have mentioned, namely, 
relief from side service and compensation for apartment cars ? 

Mr. Denham. No, sir; I think, Mr. Chairman, the principle is 
right on which we perform the service and you pay us for what we 
do. The mails are weighed, but at the same time the pay for han- 
dling the mails has been decreased since my connection with the rail- 
road. Our pay has been decreased, but our expenses have been going 
up all the time. To-day the railroad expenses are at least 30 to 40 
per cent higher. 

The Chairman. Due to what — labor, increased taxes, etc. ? 

Mr. Denham. Increased labor, taxes, and everything we buy. 
Yet, in view of all these increases, our rate has been gradually de- 
creased until it has gotten to where there is really not a dollar in it 
to the railroad company, and we merely perform the service in order 
to develop the country. 

The Chairman. Are any rates of the short-line roads, according 
to your knowledge or information, satisfactory as proposed in the 
suggested plan of the department an'd provided in volume 8, or would 
they prefer a continuance of the present method of ascertainment? 

Mr. Denham. I think, so far as we have already discussed it, we 
think the present method, with the recommendations that were made, 
would be much fairer to us all. The principle involved in this new 

49396—14 85 



1228 RAILWAY MAIL PAY. 

law is contrary to all railroad practice. A man who has spent his 
life in the railroad business would not be approached by another 
who wants to run a car on a space basis. He would be refused and 
told that the railroad company did not do business that way. If 
you make him a rate, you would want to know what he was going 
to use the car for, and you would restrict the use so that you would 
get the highest possible rate out of him. 

Mr. Lloyd. Do you not rent your cars to persons who want as 
much as a full car, and do you not receive compensation per car for 
the use of it? 

Mr. Denham. No, sir; we have very little, if any, of that kind of 
business. In fact, we are not allowed to do it. 

Mr. Lloyd. Can you not furnish a car to a man who wants to 
move his household goods from one place to another, and can you 
not furnish him a full car in which to handle those household goods ? 

Mr. Denham. I can ; I do it ; but I will restrict the use of that car, 
and I will want to know what he has in it. 

Mr. Lloyd. That is, you will not allow him to put anything in 
there but furniture? 

Mr. Denham. Yes. If he puts furniture in there, I will go in and 
see what the furniture rate is per mile, according to the interstate- 
commerce rate, and he will pay the full rate for that car for a mini- 
mum carload and pay everything over it. 

Mr. Lloyd. You would let him have the car ? 

Mr. Denham. I would not let him have it unless he told me what 
he was going to use it for. I have to know that. 

Mr. Lloyd. After he takes the car for the purpose of putting the 
furniture into it, do you inquire about how much furniture he puts 
in it? 

Mr. Denham. Yes, sir; I do; and I have it weighed. We would 
be violating the law if we did not. 

Mr. Lloyd. Do you furnish the car at so much per car or do you 
furnish it at a rate per 100 pounds for what goes in the car? 

Mr. Denham. We charge them a rate per 100 pounds. There is 
no misquoting that rate, and we must know it is the advertised rate. 

Mr. Lloyd. Do you ship horses and cattle from your part of the 
country to the north? 

Mr. Denham. We do not over this road, but they do over any 
number of roads I have handled. 

Mr. Lloyd. Do you let a man have a car to haul a carload of 
horses ? 

Mr. Denham. Yes, sir ; but he pays a rate on that car of horses, 

Mr. Lloyd. Is that by the weight of the horses or by the size of the 
car, or what? 

Mr. Denham. Of course, the size of the car. Some of the States 
now prescribe the size of the car that shall contain so many horses 
and that is the carload rate. If a man ships less than a carload he 
pays more for it. If a man puts 5 horses in a car and wanted to 
have it shipped he would have to pay the carload rate. 

Mr. Lloyd. Do you mean to say if he shipped 5 horses in your 
country, he would pay more than if he shipped 18, proportionately? 

Mr. Denham. Yes. 

Mr. Lloyd. Do you weigh the horses ? 

Mr. Denham. No ; they are generally billed at a minimum rate. 



RAILWAY MAIL PAY. 1229 

Mr. Lloyd. The truth is that you furnish the space, which is a car, 
to haul the horses? 

Mr. Denham. But we get the full car, whatever the Government 
allows us to get. We get our full rate for it. 

Mr. Lloyd. But, after all, you are not transporting the horses 
according to weight, but you are transporting them according to the 
space, and the space in the car is what you sell ? 

Mr. Denham. No, sir. Everything above a certain rate should be 
in addition. 

Mr. Hitt. There is no such thing, or rather it is practically un- 
heard of, to charge for a car. There is a general impression in the 
minds of a good many people that if you have a carload of freight to 
ship the shipper will say I can charter a car and put my household 
goods and live stock in it. I do not think there are any cases in the 
files of the commission where there is any such basis as that. For 
instance, in the case of less than carload shipments of mules or horses 
they are billed on the basis of estimated weight of, say, 1,000 pounds 
or 1,500 pounds, as the tariff prescribes. On carload shipments they 
are based on a basis of 30,000 pounds, dependent upon the size of the 
car, whether it is a 36,000 or a 40,000 pound car. 

Mr. Lloyd. In our country we deal in horses, cattle, and mules, and 
if a man wants to ship a carload of mules he gets the car and he does 
not pay for anything else but the car. 

Mr. Scott. But the rate for the car is based upon so many 100 
pounds. 

Mr. Lloyd. The rate per car is based upon the capacity per car. 

Mr. Hitt. That is true, but you pay so much per 100 pounds for 
that capacity. 

Mr. Denham. The rates are made on so much per 100 pounds for 
capacity. They did not give you so much as a flat rate. 

Mr. Mack. I am sorry to say I can not tell you on the mule ques- 
tion, but I think I understand the process of ascertaining the special- 
car, rate as to freight. It is based primarily upon the minimum 
weight of the loading, with an extra rate of pay in excess of that 
loading, and on the passenger car it is not based on the car itself, but 
fixed on the number of passengers in the car. 

Mr. Lloyd. If I wanted to ship from Shelbina a carload of hogs I 
would not ship them by weight, but I would ship them by carload 
and pay so much per car. 

Mr. Mack. But the rate you get is based on the weight capacity. 

Mr. Lloyd. There might be half a dozen persons who would ship 
on the same day, and ship 12 cars, but each one would pay exactly 
the same amount per car. 

Mr. Mack. But that rate is based primarily upon the weight. 

Mr. Lloyd. I appreciate that, but you do not weigh the hogs. You 
have a car with the capacity. 

Mr. Baldwin. If you wanted to ship fancy horses 

Mr. Lloyd. I am not talking about fancy horses. 

Mr. Blomeyer. Mr. Chairman, if you will permit me, as an old 
traffic man, and having spent a great deal of my time in Missouri on 
railroads, I perhaps can enlighten you on the subject. The live-stock 
rate is based on a certain weight, depending upon the length of the 
car. If a car is 30 feet long the minimum weight for that car is 
24,000 pounds. Whether in recent years they have changed the prac- 



1230 RAILWAY MAIL PAY. 

tice of weighing live stock I do not know, but there is a weight de- 
pendent upon the length of ttut car and on that weight there is a 
rate per 100 pounds that fixes it. I believe if they think a man is 
crowding a car they will weigh it, but it is hard to crowd a car and 
get any excess over the minimum weight. 

Mr. Baldwin. Suppose you wanted a car on the basis of space for 
two or three horses, and put it on a passenger train, would there be 
any comparison between that and the weight per 100 pounds for 
horses generally? 

Mr. Blomeyer. No, there would not for this reason: When two 
or three or four animals are charged at a fixed rate per 100 pounds, 
and also based upon the valuation of the animal, some of the rates 
are fixed so that they charge a minimum of, we will say, four or five 
animals in the car, although you may put one in at a certain rate 
per 100 pounds, and they fix the weight of those single animals. 
However, the total charge for those four or five animals must not ex- 
ceed the rate charged for a carload of the same kind of animals. 

The Chairman. Are there any further comments you wish to 
make in reference to this matter ? 

Mr. Denham. I have figured what our pay would be under this. 

The Chairman. We would like to get that, the present pay, and 
what you would receive if given the adoption of the suggested plan 
under the application of the maximum rate to your line? 

Mr. Denham. The total length of the Ocala Northern Railroad is 
53.26 miles. The present service is by closed pouches, and the Post 
Office Department is demanding an apartment car now, which I 
suppose would be 10 feet. At the present rate we would get $995.34. 
The initial and terminal service, according to that, would be $287.96. 
The cost of the messenger service we are performing to-day is about 
$480, so that would make the pay of the route to-day about $1,763.30, 
and we get about $2,200. If I was going to build a car, I would 
never build a 10-foot car, and, as a matter of fact, I would not build 
less than a 30-foot car, because it is simply a question of a short 
time when we would outgrow the 10-foot car and the Government 
would demand something more, and it is better to go to the 30-foot 
car at once and give it to them. 

The Chairman. Then if you were asked by the Government for a 
10-foot car you would give them a 30-foot car? 

Mr. Denham. That is it exactly, because I know very well, taking 
the condition of the country and the growth of it, it would not be 
but a very short while before they would be calling for something 
more and that car would have to be torn to pieces. In a country like 
ours it is developing very rapidly, and it will only be a short time 
when they will want more space, and if you build a car for a certain 
small space you will have to tear it down and build it all over again. 

Mr. Stewart. The same condition exists to-day? 

Mr. Denham. The same condition exists to-day. 

Mr. Stewart. You have the closed-pouch service now ? 

Mr. Denham. Yes. 

Mr. Stewart. How do you figure that you would get less pay 
under the proposed law when we are going to relieve you of the side 
and terminal service? 

Mr. Denham. If you deduct the side and terminal service and we 
do not get anything for the mail car, it would make our pay about the 



RAILWAY MAIL PAY. 1231 

same as it is to-day. If we deduct $480 from $2,260 we would get, 
according to the new pay, about $1,700, according to the present 
application. 

Mr. Lloyd. You mean on the closed pouch ? 

Mr. Denham. Yes, sir; that is, I am figuring on the railroad pay. 

Mr. McBride. If it remained as a closed-pouch service you would 
get 5 per cent less. 

Mr. Denham. Yes. 

Mr. McBride. Your computation is made on the basis of furnish- 
ing a car. 

Mr. Stewart. But you would be relieved of the side and terminal 
service ? 

Mr. Denham. Yes. 

Mr. Stewart. That would be more than 5 per cent^ would it not? 

Mr. Denham. Yes. I think too, in regard to weighing the mail, 
that they ought to be weighed at least once every year. We know very 
well that our mail has been increasing rapidly. We know the law is 
not retroactive and the railroad company loses all that additional 
weight since the last weighing. 

Mr. Lloyd. Do you know the average weight of the mail you 
carry ? Would it be less than 200 pounds ? 

Mr. Denham. Yes. 

Mr. Lloyd. You do not carry much mail? 

Mr. Denham. No; it is a new road, just opened, you might say. 
I think the mail will increase as soon as they put on the postal car. 

Mr. McBrdde. Do you know what the increase was from 1908 to 
1912? 

Mr. Denham. No, sir ; I do not. That is what we are getting to- 
day. I think the road was first opened in 1912. 

Mr. McBride. You had no route in 1908 ? 

Mr. Denham. No. 

Mr. Lloyd. Under this proposed plan, as I understand, you would 
receive about the same compensation you receive under the existing 
law? 

Mr. Denham. Yes. 

Mr. Lloyd. Then, so far as the compensation is concerned, it would 
not make any difference to you. Now, what is your objection to the 
space plan on that theory, if it does not make any difference in com- 
pensation ? 

Mr. Denham. As my business increases 

Mr. Lloyd. As your business increases under the space system you 
get paid for space here? 

Mr. Denham. I do not know under what basis you are going to 
pay me. In the first place, I think the space basis is all wrong. 

Mr. Lloyd. Why? 

Mr. Denham. It is all wrong because there is no railroad in 
America to-day 

Mr. Lloyd. That is not proof to us as to what railroads do. 

Mr. Denham. Our common experience ever since we have been in 
the transportation business has been to have some man work out 
some other problem ; and I think the railroads have some of the finest 
traffic men in the world, but they have never yet figured on a space 
basis. 

Mr. Stewart. In the passenger service ? 



1232 RAILWAY MAIL PAY. 

Mr. Denham. No, sir. 

Mr. Stewart. You do not carry passengers on the weight basis? . 

Mr. Denham. We carry them at so much per mile. 

Mr. Lloyd. If you have them in a Pullman car you carry them on 
the space basis ? 

Mr. Denham. Yes. But we, at the same time, get our fare from 
them. The Pullman car is supplied by the Pullman Co., and that is 
an accommodation. The railroad company does not furnish the pas- 
senger. The Pullman Co. gets their revenue the same as the railroad, 
but the railroad has nothing to do with the Pullman people. 

Mr. Lloyd. So far as the passengers are concerned, you do not 
carry them on either a weight or space basis, strictly; but if you 
carry them on either, it is a space basis, because every passenger is 
entitled to a seat in a car ? 

Mr. Denham. Yes, sir. 

Mr. Lloyd. What is he entitled to when he buys his ticket? He 
is entitled to get on the train and entitled to a seat. 

Mr. Peters. He is entitled to be carried from where he gets on to 
the point to which he buys his ticket. Sometimes they are so crowded 
they can not give him a seat; he can not stop the train and make 
them put on a car. It may be you will not carry him with comfort ; 
you are overloaded and you can not give him a seat. That has been 
tested out. 

Mr. Lloyd. You will not question the fact that there may be 
emergencies where a man gets on a railroad train, and wants to ride 
from here to the city of New York, he does not get a seat and might 
have to stand up the whole distance to New York because the train 
might be crowded all the way, yet he has no right to expect from the 
railroad company that kind of accommodation. He is entitled to 
a seat,, but there may be an emergency where he would not secure it. 

Mr. Peters. As a rule he is entitled to a seat, but he buys the 
transportation and the railroad company must furnish it, and must 
carry him safely. 

Mr. Lloyd. But that transportation entitles him also to a seat. 

Mr. Peters. As a rule, yes. 

Mr. Denham. Then we classify. That is our highest class of rate. 
We classify everything else and the rate is based on that. We make 
one rate for one thing and one and another for another. 

Mr. Lloyd. Do not understand me as trying to make you show 
that the passenger traffic is based on space. It say it is based on 
neither, but it is more nearly based on space than on weight, because 
in such a case weight is not a factor at all. 

Mr. Denham. As Mr. Peters said, we may have one passenger in 
a coach but we are allowed to charge the highest rate for that 
passenger. 

Mr. Lloyd. To everybody. 

Mr. Denham. Yes. Especially the short line. For instance, in 
Florida, on this little road we are allowed to charge 4 cents a mile, 
while on another line they are only allowed to charge from 2£ to 
3 cents per mile. 

The Chairman. That is under a State law? 

Mr. Denham. Under a State law ; yes, sir. The reason they allow 
increased rates is on account of the sparsely settled territory we go 
through. We are allowed to increase our rates in order that we may 



EAILWAY MAIL PAY. 1233 

be compensated for the passenger business. Every class of freight 
we have is all classified and the rates made according to the value, 
or nearly, of the freight we are handling. That is the way it is 
classified. We have first-class rate, second-class rate, third class, 
then a commodity rate, on vegetables and all such as that. 

The Chairman. The passenger extreme rates are from 2i to 4 
cents, in Florida? 

Mr. Denham. Yes, sir. 

The Chairman. The short lines in sparsely settled territory being 
allowed to charge the higher rate ? 

Mr. Denham. Yes, sir. Some of the States classify the railroads 
and make their rates according to the classification. The roads are 
classified according to their earning power per mile, per year, and 
after you get to a certain earning capacity they put you in class A, 
so while they may reduce the rate a little in that particular class, 
it does not affect the others. 

The Chairman. Do you see any similarity between the mail busi- 
ness and passenger business, or the freight service and the express 
service ? 

Mr. Denham. They are all handled, that is, the mail service and 
passenger service on the same train — a first-class train — and that is 
the highest-class service that we have. The other service is based 
on second and third-class service. 

The Chairman. You think the mail service should be compensa- 
tion analagous to passenger compensation and should be so deter- 
mined. 

Mr. Denham. Yes, sir. I think it ought to be based on your 
highest first-class rate, because that is the kind of service we have to 
give, and you assume a lot of risk in handling your mail. If you 
take one of these little roads with the postal clerk in the car and 
you happen to hurt him, it is apt to bankrupt the railroad and that 
is the end of it. That is one reason I think the Post Office Depart- 
ment ought to take that risk themselves. 

Mr. Stewart. Is it not the same with the passengers ? 

Mr. Denham. Yes, sir ; but it is a little different in handling that. 
We do not take any risk with the express messenger. 

The Chairman. In answering Mr. Stewart what is the difference 
in handling the passenger and postal clerk in the mail service? 

Mr. Denham. One, of course, is carried in the mail car and the 
other is carried in the passenger car. 

Mr. Lloyd. They are both about the same weight, are they not? 

Mr. Denham. No. I think you will find the passenger car a little 
heavier. They may be the same with the mail in it. 

Mr. Lloyd. When a passenger car is filled it is considerably 
heavier ? 

Mr. Denham. Yes ; if it is filled it probably would be heavier, but 
just taking the two cars, the passenger car is a little heavier than the 
skeleton mail car. 

Mr. Lloyd. If we could ascertain how much you get on the average 
for hauling the passenger car, would it not be about right to pay 
the same amount for hauling the mail car ? 

Mr. Denham. Gentlemen, when you get down to figuring those 
things it is something almost impossible to figure. 



1234 KAIL WAY MAIL PAY. 

Mr. Lloyd. That is an easy question to answer. Here are two 
cars in a train — a mail car and a passenger car — and they are both 
about the same weight and it costs about the same to haul them; 
from a transportation standpoint the expense is the" same. If you 
get a certain sum, on an average, for carrying one and receive the 
same for carrying the other, would not that be about right ? 

Mr. Denham. You might classify other freight in the same way. 
Here is a carload of stone and here is a carload of silk; we do not 
handle the carload of stone and the carload of silk for the same 
money, by any means. 

The Chairman. That does not answer Mr. Lloyd's question at all. 

Mr. Denham. In your question you asked how I handled the mail 
car, and you also asked the question if the mail car ought to be 
handled the same as express. 

Mr. Lloyd. Would you not receive about the same compensation 
for pulling the mail car as you would the passenger car? The 
passenger coach is a little bit heavier and when loaded will be heavier 
still. 

Mr. Denham. But what is the revenue we are getting out of the 
passenger car? 

Mr. Lloyd. I am suggesting that you get the same amount of 
revenue from each. Would not that be right ? 

Mr. Denham. If you give the same amount of revenue I should 
think it would be right. The passenger comes to the train and gets 
on and off of it. 

Mr. Lloyd. I am talking about compensation for pulling the train. 

The Chairman. You are undoubtedly receiving more for the 
passenger service per car-mile than the mail service per car-mile. 

Mr. Denham. That is the same kind of service on the same train. 
I should think we certainly could pull them for the same pay. 

Mr. Lloyd. I think there would be a difference, but I think it would 
be in favor of the mail as against the passenger. 

Mr. Denham. Why do you think that ? 

Mr. Lloyd. I think there are some things in costs that would be 
charged to the passenger service that would not be chargeable to 
the mail service. 

Mr. Denham. Not at present, because we have to furnish the 
passengers water. 

Mr. Lloyd. You have to have ticket agents and service of that kind 
and overhead charges that you do not have on the mail. 

Mr. Denham. There is a big overcharge with the mail. We are 
relieved from selling the tickets; that is the only thing, but every 
other expense enters into the factor of handling of both cars. 

Mr. Coleman. Is it not true wherever you have a ticket seller you 
have men to handle the mail too ? 

Mr. Denham. Yes. 

Mr. Coleman. You do not have to deliver the passengers ? 

Mr. Denham. No. 

Mr. Coleman. You are not responsible for him after he leaves the 
step of the coach ? 

Mr. Denham. No. 

Mr. Lloyd. As a practical proposition you do deliver the passenger. 
He may jump on or off the train himself, but after all you put him on 
the train as a legal passenger, and you take him off of the train. 



RAILWAY MAIL PAY. 1235 

Mr. Denham. But there is no expense attached to that. 

Mr. Lloyd. There is the expense of your conductor to see that he 
gets off and on ; there is the brakeman and the box on which he has 
to step, and the helping of women and children out of the coach. 

Mr. Denham. There is the same responsibility so far as the mail is 
concerned ; that is. he has to see that the mail is put on. We perform 
the same service for both. 

Mr. Lloyd. You are conveying the idea that he did not perform 
any service for the passenger, but he does. 

Mr. Tuttle. Are the people in your part of the country inclined 
to think the railroads are paid more than they are entitled to for 
carrying the mails? 

Mr. Denham. No, sir. 

Mr. Tuttle. You think they are satisfied? 

Mr. Denham. We have been trying to educate the people down 
there. When we tell the people what the railroad pay is for carrying 
the mail they are surprised, and they say, " The Government is rob- 
bing you, and I agree with you." 

Mr. Stewart. Do you tell them you get $1.47 a ton-mile? 

Mr. Denham. No; I tell them we get $1.34 for hauling the mail 
those 4.44 miles. They say, "Why don't you throw it off of the 
train?" 

Mr. Stewart. You are getting $1.47 a ton-mile for your service on 
that road ? 

Mr. Denham. Even with that the road is losing money. 

Mr. Lloyd. Your road is not losing money because of the mail ? 

Mr. Denham. Yes, sir. It is there for the benefit of the public 
out in that county. 

The Chairman. Have you any further comments to make? 

Mr. Denham. No, sir. 

The Chairman. We thank you. 

Mr. Peters. Mr. Chairman, I would like to present Mr. Blomeyer. 

STATEMENT OF MR. E. F. BLOMEYER. 

The Chairman. Mr. Blomeyer, will you kindly state your name 
and your official occupation? 

Mr. Blomeyer. E. F. Blomeyer. Residence, Chattanooga, Tenn. 
I am vice president and general manager of the Tennessee, Alabama 
& Georgia Railroad. 

Mr. Chairman, I have not much to say in regard to this matter, 
but what I say I believe will be pertinent. I am. unfortunately, in 
charge of one of those roads Mr. Hardin spoke of this morning, 
although it is more so, if anything. My road is one of the poor 
reads of the South, and there are very near 30 of them in the State 
of Georgia, about 25 in the State of Alabama, some 15 or 20 in 
Florida — small, independent roads that were originally mostly log- 
ging roads, but when the timber was cut off, they developed into 
common carriers. The road I represent was formerly the Chatta- 
nooga Southern. It has had three receiverships, and I do not know 
what other trouble since it has been in existence, about 23 years. It 
runs from Chattanooga, Tenn., to Gadsden, Ala., a distance of about 
92 miles. Formerly, before Mr. Hitchcock introduced his econom- 



1236 RAILWAY MAIL PAY. 

ical divisor, the road was paid about $4,605 per annum, or at the rate 
of $48.75 per mile per annum. Now it is paid, under the present 
method of dividing, $42.75 per mile per annum. 

Mr. Lloyd. What is the amount? 

Mr. Blomeyer. The amount in dollars and cents is $3,944.04. It 
was $4,606.80, making a decrease of $662.76, due to the method of 
dividing established some years ago. We were decreased from 8 
cents per train mile, under the old method, to 6.8 per train mile, the 
present method. I took up with the department — with. General 
Stewart — several months ago the question with respect to the in- 
crease of 5 per cent authorized by Congress and was informed that 
the initial rate by reason of the parcel post on our line amounted to 
12 per cent, or 21 pounds; that under their weighing in the early 
part of 1912 our average weight was 183 pounds; that adding the 
increase of 12 per cent, or 21 pounds, it would make a daily weight 
of 204 pounds, so that they dropped the larger portion of the frac- 
tion of the 12 per cent figures and 21.96 pounds, and they dropped 
the ninety-six one-hundredths fraction of a pound and gave us only 
21 pounds, so that we are just below the 211-pound minimum. I 
contend that the increase is anywhere from 25 to 50 per cent, by rea- 
son of the parcel post. I have some statements from agents, besides 
my own observations. For instance, I have a written statement of one 
agent before the parcel post was established, where he states he handled 
about 50 pounds of mail per day, and he now handles from 150 to 
200 pounds per day. Others show various increases ranging from 
25 to 200 per cent. The best information our conductors got from 
the postal clerks was that the increase was about 25 per cent. I 
feel very certain it runs over 25 per cent. Had we been given the 
25 per cent we would have come under the next rate of pay, and it 
is a manifest injustice to permit a postal clerk or field agent, who- 
ever he is, to determine the increase in weights without some method 
of weighing, something to go by more than his visional judgment, 

The Chairman. Are all these computations, so far as you are 
aware, based on visional judgment, 

Mr. Blomeyer. The computations of my agents are based on rather 
lifting judgment, I should say, because they carry this mail to the 
post office from the railroad station along the line, and where they 
did carry it on their shoulders they now provide themselves with 
push carts and other methods of handling. That brings about the 
other matter which the railroads were up against, providing addi- 
tional pay for agents for handling the increased mail, or providing 
outside labor. 

The Chairman. If it will not disturb you, I would like to ask 
General Stewart what the method of the department was for mak- 
ing the computations. 

Mr. Stewart. You will recall that we recommended to Congress 
a weighing, but that it was not deemed advisable by Congress to 
provide for such, and we were authorized to allow not exceeding 5 
per cent additional to the pay then given to certain railroads. There 
must be some basis upon which to allow this $1,700,000. 

The Chairman. What was the basis? 

Mr. Stewart. No officer of the department can authorize the pay- 
ment of that amount of money without a basis, and, therefore, 
the only recourse we had was to secure the very best estimate of the 



KAIL WAY MAIL PAY. 1237 

increase in weights from our field officers, and they were made by 
the chief clerks and the superintendents in the field. 

The Chairman. Were they actual counts of the weights, or vis- 
ional ? 

Mr. Stewart. They utilized various methods to arrive at their 
conclusions, but probably not actual weights to any extent. 

The Chairman. In their report to you did they describe their 
method of ascertainment or determination? 

Mr. Stewart. I am not sure about that, but I think not. I would 
not say that there was any considerable weighing. 

As to the estimates of the agents of the railroad company, the 
agent can be very easily misled by the amount of the mail that 
he individually handles. It is not a question of how much goes 
on or off at one place, but the question of average daily weight over 
the whole length of the route, so that one man might be handling 
considerably over 25 per cent, but unless it was handled in the same 
proportion everywhere and carried in the same proportion over the 
whole route the average daily weight would be increased a very much 
less per cent, and that is not understood generally by the railroad men. 

Mr. Blomeyer. I understand that, Gen. Stewart, and I believe 
that is offset. We will say down at the other end of our line there is 
practically no increase, or we will say the increase is 15 per cent, while 
up here on the first 25 miles the increase is from 150 to 200 per cent. 
I claim that the large increase on the first 25 miles of the line, with 
the middle part of the line showing an increase of about 50 per cent, 
taking it as a whole, I am certain that the increase will run any- 
where from 25 to 50 per cent. Your estimate of 12 per cent pro- 
duces figures just 7 pounds below the next scale of pay and deprives 
us of the additional $6 per mile per annum, not to speak of the 5 
per cent increase. Gen. Stewart writes me that the average weight 
being 183 pounds, and the estimated increase only 12 per cent, it 
produces 204 pounds, that therefore we are not brought up within 
the next schedule of pay, and we are not entitled to any portion of the 
5 per cent increase. They stop 7 pounds short of the next schedule 
of pay. 

The Chairman. That might happen under the actual weighing? 

Mr. Stewart. We do not stop short. It is your weight that stops 
short. 

Mr. Blomeyer. That is where we differ, as to rates. 

Mr. Stewart. We could not arbitrarily increase your weight in 
order to give you a dollar more. 

Mr. Blomeyer. We could weigh it if you would permit it, but, as 
Mr. Hardin said this morning, we know that you will not permit it; 
but it could be readily determined by a weighing of one week, that 
we are not only entitled to the increased schedule, but entitled to the 
5 per cent in addition, and that is the contention that we are going to 
make. As to the proposed bill, I did not see this until to-day, but I 
have gone over it pretty carefully. We run an apartment car on 
our line with a mail compartment of 12 feet 2 inches. It stands to 
reason the department would cut that down to 10 feet, and here is the 
result : The old rate before the divisor was established was $4,606.80 
per annum. The present rate, under the present method or provision, 
is $3,944.04 per annum for 10 feet, which is ecmal to one-sixth of a 
KG- foot ear. 



1238 RAILWAY MAIL PAY. 

Mr. Lloyd. Forty feet is a full car? 

Mr. Blomeyer. I must have read this wrong, then. Do I under- 
stand, then, that we would get 10 feet, we will say, of a 60-foot car, 
or one-sixth of 18 cents per mile, or 3 cents per mile, for that 10-foot 
apartment ? 

Mr. Lloyd. How do you figure that ? 

Mr. Stewart. That is right; you prorate the space used to a 60- 
foot car basis. 

Mr. Blomeyer. Then I will show the result on that basis. 

Mr. Tuttle. The third paragraph on page 1058 provides for the 
payment of apartment cars. 

Mr. Blomeyer. Now, this is what we would get if we have an 
apartment of 12 feet. It stands to reason that the apartment would 
be cut down to 10 feet in order to have it conform to one of the 
general sizes established, and not increased to 15, which, perhaps, is 
not necessary. Therefore, 10 feet, on the basis of 18 cents per car 
mile for a 60-foot car and on the same equivalent for the $1.40 
per car terminal charge — we run only one mail train the round trip 
over the line and therefore we have the 4 terminals or starting 
points — therefore I have taken 4 times $1.40, which produces $5.60 
and one-sixth of that amount to 93 cents per day, and the whole 
thing would bring us compensation of $2,006.16 per annum, or a 
reduction from 6.8 cents per mile to 3i cents per mile, or a reduction 
in dollars and cents of from $3,944.04 to $2,006.16, or a decrease of 
$1,937.88. That is the result of the space basis. There may be 
cases where little roads of 20, 30, or 40 miles long, which run 4 or 5 
mail trains a day, where this charge would amount to something, but 
in our particular case with the two trains, or one round-trip service 
per day, you will see it means a reduction of mail pay to our road 
of 50 per cent. 

The Chairman. Mr. McBride, have you any comments to make 
on the correctness of that computation ? 

Mr. McBride. I have not followed the process. 

Mr. Lloyd. Mr. McBride figured that at 15 feet instead of 10. 

The Chairman. How do you assume, if the department has 12£ 
feet of space, that it requires, that they will be able to contract that 
into 10 feet. 

Mr. Blomeyer. I claim that it is more likely that 12 feet and 2 
inches will be reduced to 10 feet than it will be increased to 15 feet, 
for that makes 2 feet 8 inches one way as against 2 feet 2 inches the 
other way. 

The Chairman. How are you going to compress that in bulk? 

Mr. Blomeyer. That can be done from the arrangement of the 
car. While on that subject, allow me to make this statement : That 
while we would have this mail apartment of 12 feet 2 inches-, we 
have an express baggage department combined of IT feet 2 inches, 
the express takes about one-half of that 17-foot space and we earn, 
we will say, $5,650 as against $3,944 for 12 feet 2 inches. 

The Chairman. That is what you get from the express company 
as revenue for the business you perform according to that number 
of feet used ? 

Mr. Blomeyer. Yes, sir. My contention is that no pay to the 
small roads for an apartment less than one-half of the 60-foot car 
would be equitable. In other words, my contention is that not less 



RAILWAY MAIL PAY. 1239 

than 9 cents per car mile for any sized apartment would be fair. 
In other words, we should have the minimum for any sized apart- 
ment for the small roads in order to make the pay compare favor- 
ably with the express and with the passenger earnings. 

The Chairman. Your company has no interest whatever in the 
express company? 

Mr. Blomeyer. None whatever. 

The Chairman. I say you have no interest ? 

Mr. Blomeyer. No. 

The Chairman. So that your revenue is purely paid by the express 
companies, with no ownership in the express business on the part 
of your company to you for performing that service. 

Mr. Blomeyer. Entirely so. 

Mr. Lloyd. In that connection it might be interesting to know 
whether your express business has increased or decreased in the last 
12 months? 

Mr. Blomeyer. I endeavored to make a comparison the other day, 
but it was not satisfactory, for this reason. In August, 1912, we re- 
arranged our contract with the Southern Express Co, and where we 
formerly obtained 45 per cent of the gross revenue on express freight 
handled, under the contract, we were allowed 51 per cent of the 
express freight traffic that ran up an immediate increase, and there 
was an increase all through the year 1913 attributable largely to the 
increased percentage in the contract. I have yet to determine what 
effect the parcels post has on the express on our line, but that can be 
determined this year when we have a comparison against 1913. 

The Chairman. In that connection I would like to know how much 
you paid for side service. 

Mr. Blomeyer. You mean for the mail service? 

The Chairman. Yes. 

Mr. Blomeyer. That, so far, has not cost us anything because 
where we have agents they handle the mail, and at Chattanooga the 
Government takes care of the terminal service, and at Gadsden, the 
other end of our line, the porter takes care of our terminal service, 
so that the terminal and side service is of very little consequence to 
us. Our line is peculiar in that respect as compared with the other 
short lines in the South. 

Mr. Stewart. What is the average daily weight of your express 
matter ? 

Mr. Blomeyer. I really do not know. I want to say the reason 
our express has been holding up is that the whisky shipments out of 
Chattanooga, Georgia, and Alabama have been pretty active during 
the last year under some of the laws, and they can not go by parcels 
post. About everything else has gone by parcels post. 

Mr. Stewart. Can you make an estimate of the weight of your 
express matter? 

Mr. Blomeyer. Yes, I can. Whenever I have gone into the express 
car, all I would see is a bunch of these cartons of whisky going to 
Gadsden, Ala., into a dry county, and there is practically nothing else 
in the express car of late. 

Mr. Tuttle. Is not the Kenyon bill effective so that it prevents 
the shipment of liquor into dry States ? 

Mr. Blomeyer. Not in individual packages. 

Mr. Stewart. Does it fill up the car pretty well ? 



1240 RAILWAY MAIL PAY. 

Mr. Blomeyer. No. I should say it would not amount to more 
than three or four hundred pounds a day. That is my opinion, but 
the rate is pretty high. 

Mr. Stewart. Then in making a comparison between the revenue 
from express and mail, it should be understood that you are carrying- 
double the amount of express matter as of mail matter, for your 
average daily weight of mail is only 200 pounds. 

Mr. Blomeyer. That may be true, but^ as I stated, that is carried 
in little more than half the space taken by the Post Office Department. 

Mr. Stewart. How would you justify making a charge against 
the Government for 30 feet of car space to handle 200 pounds of 
mail matter? 

Mr. Blomeyer. I am not advocating the car space. In fact, I do 
not want car space. I want the pay to continue as at present, but I 
want to get the benefit of everything we are handling. Here is a 
case : We weighed this mail early in 1912, right at the time when 
everything was dead ; the ore mines opened up immediately after the 
weighing, and the mail got heavy all up and down the line, and on 
the weight determined in that weighing of 1912 we have to carry the 
mail at that same rate, notwithstanding the annual increase of 5, 10, 
or 15 per cent of the ordinary mail, outside of the parcel post. For 
the next four years we have to conform to the weight established in 
that period of 90 days in the first part of the four years. 

Mr. Lloyd. Have you examined the bill introduced with reference 
to the annual weighing? 

Mr. Blomeyer. No; I have not. I have not seen that. I think 
that is the only equitable method — an annual weighing and payments 
based upon the weight carried. I am speaking now for the short 
roads, and I do not know what the troubles of the large roads are. 

The Chairman. So far as you are concerned, that is the unanimous 
opinion of practically all of the short lines? 

Mr. Blomeyer. I know it to be, so far as I have talked to any of 
the short-line roads of the South. 

Mr. Lloyd. In your judgment, what should be the change in the 
existing law with reference to compensation to your railroads ? 

Mr. Blomeyer. It occurs to me that the first scale of 200 pounds, 
or 211 pounds, as they happen to be, should be $50 per mile per 
annum, the next schedule at $75, and as the weight increases the in- 
crease would be proportionately less. 

Mr. Lloyd. But you commence with $50 instead of $42.75. 

Mr. Blomeyer. Yes, sir. 

Mr. Lloyd. Do you insist, as the others do, upon pay for apart- 
ment cars? 

Mr. Blomeyer. I believe, just as Mr. Nichols said, when we rent 
the Government a house on wheels that they ought to pay a little 
rent for it. I think something ought to be paid for that. We pay 
the owners of other railroads for the use of their freight cars 45 
cents, and the cost for the upkeep of that car is considered along with 
the rate charged for freight traffic, and it ought to be considered in 
passenger, mail, and express. 

Mr. Lloyd. What do you think of the plan of the Government 
owning its own R. P. O. cars? Would not that relieve you people 
of a great deal of responsibility? 

Mr. Blomeyer. Yes. 



RAILWAY MAIL PAY. 1241 

Mr. Lloyd. Would not that be especially beneficial to these little 
small roads that can not buy these cars? 

Mr. Blomeyer. Yes ; if the Government would go into the matter 
of furnishing such cars as the roads require; that is, combination 
mail, baggage, and express, and in some cases combinations of all 
four, mail, baggage, express, and passenger, such as we have. We 
have a car divided into three parts — one-third mail, one-third ex- 
press, and one -third passenger. If the Government could provide 
such cars as R. P. O. cars for the roads, it seems to me it would relieve 
the railroads of a great deal of burden. 

Mr. Baldwin. How about the cost to the Government?. 

Mr. Blomeyer. Fortunately, we would not be concerned about 
that if they are going to build cars and furnish them to us rather than 
rent our cars. 

Mr. Baldwin. You would have to be paid for hauling them? 

Mr. Blomeyer. I do not know but what we ought to agree to haul 
them if they furnish them. That is the way I look at it. 

Mr. Tuttle. You would have to rent the passenger, baggage, and 
express space? 

Mr. Blomeyer. No; we would expect that free for hauling the 
mail car. 

Mr. Ttjttle. It would be a complicated system ? 

Mr. Blomeyer. It would be complicated ; yes, of course. 

The Chairman. Have you anything further, Mr. Blomeyer ? 

Mr. Blomeyer. No. 

The Chairman. We thank you for your views. 

STATEMENT OF MR. W. M. BLOUNT. 

The Chairman. Mr. Blount, will you kindly give your name and 
your official occupation ? 

Mr. Blount. Mr. Chairman, I am the president and owner of the 
Birmingham & Southeastern Railroad, which was built by individual 
capital and some borrowed money. We carried United States mail and 
in purchasing the road which we have there I notified General Stew- 
art of the conditions, and he very readily relieved me of the condi- 
tions. We found we were running at a loss of $20 a month, and I 
notified him and he very nicely relieved me of that. 

The Chairman. How long is that road? 

Mr. Blount. Fifty miles long. I am going to build 100 miles more. 
I have owned several roads in the South, and I find that these roads 
in the beginning have to carry mail, and the small amount of $42.50 
per mile is not commensurate with the service, for the reason that in 
one instance if a letter from Union Springs is sent over my line it can 
be mailed 3 hours later and reach New York 12 hours earlier than 
if sent by the trunk lines that run through my town and leave at 
6 o'clock. But there is not enough in that to warrant pay for it, 
because the mail between New York and the Springs is not so great. 
The point I want to discuss here is the financial standpoint. I am not 
an operator. If you will allow me to come right down to facts, I 
regard the space proposition as illogical from the standpoint that 
to-day I am paying more money than I did 10 years ago, and the 
prospects are the cost of operation has doubled. My ties to-day are 



1242 RAILWAY MAIL PAY. 

costing me twice as much and the cost of building a railroad is very 
much higher. We expect that increase to continue. 

When I went into the railroad business 15 years ago the cost of 
the railroad operation was half what it is now. Or, in other words, 
it costs twice as much to-day — that is, the cost of building and oper- 
ating. We are called upon by the Government to-day to keep our 
equipment in condition, right up to date. There is no objection to 
that, but we are required to. An inspector went out on one of my 
trains the other day, and he found 75 per cent of the air leaking. I 
have not a shop of my own, but I have to rely upon other people 
to take care of my equipment, but we have to carry more equipment 
than formerly. Instead of being able to build a road at $10,000 
per mile it is costing from $15,000 to $25,000 per mile. I paid 
$25,000 a mile for a little road the other day. These things are 
much higher, and from a sound financial standpoint we do not look 
for them to be decreased, and therefore the rates to-day, you might 
say, for space the next day would be much higher. The cost of car- 
rying a car increases yearly, and I think the weighing of the mails 
should be done yearly, otherwise I think it would be a very serious 
problem. 

The Chairman. Why does not your same objection apply to the 
weight ? 

Mr. Blount. It applies to the rate in this, that perhaps the amount 
we are getting for the mail is commensurate with the service, save 
that of weight, and we are preparing facilities to-day for four years 
ahead. I am building a road into a new territory that does not 
give much freight, because there is not much there. As we go along 
the Government has the advantage of a four-year's increase, which we 
calculate should be 10 per cent, therefore, at the end of the year we 
have performed services of 40 per cent less than they are willing to 
pay us for. I think it quite an injustice that we should not have 
a weighing once a year. 

The Chairman. Eeplying to }^our argument as to the benefit of 
space and weight, it seems to me the viewpoint is quite applicable to 
space. 

Mr. Blount. On the weight of the mail we get the benefit of the 
increase. For instance, in the Birmingham district in which I op- 
erate, we had probably the largest increase of any city, save Cleve- 
land, in the business there. We had to take care of that business 
for four years without having a reweighing. As to the space part 
of it, the space on that train to-day is worth very much more money 
than it was two years ago. We did not have a demand for space, 
we did not have the requirements, and we could sell our space for 
more to-day. 

The Chairman. Could you sell your weight for more to-day ? 

Mr. Blount. My line is a new line and I deal with the railroad 
commission of Alabama, and they very readily allow me to increase 
the rates when they see that it is low. " For instance, they made a 
ruling of fertilizer, and I know the president of the commission very 
well and I went to him and took my gross rate. I said, "If you 
apply the fertilizer rate to my whole tonnage, how much money 
would that produce ? " and he gave me the figures ; and then I said, 
"Where would I be with my operating expenses?" They very 



RAILWAY MAIL PAY. 1243 

readily changed that and gave us a better rate. There we can get 
relief, but when you put rates into law the Government can not 
change the rates. It is a very serious problem, and I would not 
want to invest my money in a railroad where the operation cost me 
more and the rate could not be changed on the possibilities of the 
return for that money. 

The Chairman. Is not your whole argument applicable to the de- 
sirability of an elastic rate — a cumulative rate or graduated rates 
commensurate with service performed and with changes in condi- 
tions — rather than to the question of whether space or weight should 
be the determinant factor? 

Mr. Blount. The point I suggest is this: That we have worked 
out this rate problem. I have no trouble in going to my general 
freight agent and saying to him, " I wish you would work out this 
rate and tell me about what you can afford to do it for." 

The Chairman. Then you would be an advocate of a scheme to 
go to a Postmaster General to make the rate for each road ? 

Mr. Blount. That might be, but there is such a large field in which 
he has to operate that you probably could not reach that for a long 
time. In the meantime your expenses are going ahead. It takes a 
long time to make an investigation from Washington away down in 
Alabama. I own a compress in Alabama, and we have had that be- 
fore the commission here — the operation of it for seven or eight 
years, bring it up before the Interstate Commerce Commission. In 
the meantime the press has made no money and could not make it. 
We have the press, but we have been pressed. There is one other 
thing I am interested in and that is, that the northern division of 
my line will probably always be a heavy mail line. The southern di- 
vision, owing to the number of lines it crosses, will always have very 
light mail. If I have an apartment coming down from Birmingham 
through to Milstead, say, 100 miles, and from Milstead down south to 
a contemplated line, what would we do? On the northern division 
we would have the heavy line, and on the southern division we would 
practically have nothing, because it is the cross-country line and we 
could not control the mails to the centers. 

Mr. Lloyd. On the space basis you would get paid for whatever 
you started with. 

Mr. Blount. I do not know how that was, but if you go down 
there 100 miles you say that might be put into a division, and when 
you go 100 miles further you have another division. 

The Chairman. It would be a division between the lean and the 
fat? 

Mr. Blount. Yes ; and we would have to have cars. 

The Chairman. And you are afraid you would get the lean? 

Mr. Blount. Yes. 

The Chairman. Would it not equalize? 

Mr. Blount. I think we would get the lean because we would be 
operating a car on the southern division as we are to-day, with a 
very light mail, and on the northern division I understand that the 
parcel post there has increased. It seems to me we are approaching 
a proposition that requires serious consideration from a financial 
standpoint. 

The Chairman. We have found that out for over a year ? 

49396—14 86 



1244 KAILWAY MAIL PAY. 

Mr. Blount. I am taking it individually. This is a new matter 
with me. I am a railroad builder ; that is my business, to build and 
operate a railroad, and finally to sell it to some trunk line, so they 
can operate it more profitably. I have been on this line for 12 years 
and I have my individual money in it and I am directly interested 
in it. 

Mr. Lloyd. Would you say, with reference to this bill, it would be 
applicable to the weight system, because your idea seems to be that 
your company ought to be helped to meet the additional expense from 
time to time? 

Mr. Blount. No. We have no apartment cars. As I see it, we 
would have to buy apartment cars. 

Mr. Lloyd. Would you want apartment cars pretty soon ? 

Mr. Blount. It might be, but we could not change an apartment 
car on a railroad that is going to get a 10-foot or 20-foot car. I 
think it is a very serious matter when you come to changing this 
system that has been so well tried out, 

Mr. Stewart. You would not have to supply an apartment car 
under the new law any quicker than you would under the old law ? 

Mr. Blount. I do not know anything about that, but I think we 
are really more at a loss to know, because we do not know much about 
this new law. 

Mr. Stewart. The proposed law would not make any great changes 
in the service. Take it just as we have it to-day, it would continue 
practically with the same plant we now have, with increases from 
time to time as the needs of the service grow. We would not call 
upon you for an apartment under the proposed law any sooner than 
we would call upon you for an apartment under the present law. 

The Chairman. Are there any other witnesses, Mr. Peters? 

Mr. Peters. No. We haven't anyone else, Mr. Chairman. 

The Chairman. Are there any further comments that any of you 
gentlemen desire to make to the commission at this session ? 

Mr. Peters. Mr. Chairman, in regard to the next meeting, on Tues- 
day, as I understood, Mr. Stewart was to bring out some new points 
in regard to express rates and express weights and he was also going 
into the broad field of freight rates. 

Mr. Stewart. Not freight rates, but we will discuss your division 
of expenses between passenger and freight, which involves the freight 
earnings to some extent. 

Mr. Peters. Mr. Chairman, we will want to answer that and dis- 
cuss it very freely. We do not want to prolong these hearings. Would 
it not be possible for Mr. Stewart to put his statement in the form of a 
brief, let us have a copy of it, let us study it and make our brief 
and submit it to him, and then come before you in two weeks or two 
weeks and a half and be prepared to settle these hearings when we 
come together, without asking for another statement, and let us try to 
close the hearings then ? 

The Chairman. It is the desire of the committee to come to a con- 
clusion as soon as possible, but I think you will agree the committee 
has evinced no desire to take advantage anywhere. 

Mr. Peters. You have been most fair to all of us. 

The Chairman. I think if we reserve decision in that matter until 
after we get the statement and see what it is, then you may be able 
to make your comment when the statement is submitted without any 



EAILWAY MAIL PAY. 1245 

desire for further time. If you require further time in order to 
familiarize yourself with the presentation made, so far as we can, I 
assume that the committee will be glad to extend to you a reasonable 
time, but it is the desire to come to a conclusion just as soon as 
possible and expedite matters. 

Mr. Peters. All of us would like to do that. The members of our 
committee come from a long distance — many of them from Chicago 
and St. Louis, men who have other work to do — and it requires a 
great deal of care, thought, and preparation to answer these state- 
ments that are going into the record under oath, and we want to 
know we are right from our position. I think if it was possible to 
have that statement presented here and printed and a copy sent to us 
we could study it and make our answer, and when we come here we 
would try and close the matter up. 

Mr. Lloyd. I think you have one wrong idea. Both sides seem to 
be working on the theory that this is a lawsuit; you must keep on 
filing pleadings. We are anxious to get through with the pleadings, 

Mr. Mack. Our thought, in the suggestion of Mr. Peters, was that 
when a statement is made and it is fresh in mind that we would be 
able to answer it and discuss it immediately, rather than at a sub- 
sequent time, and we thought it would be much more useful to your 
commission, and I might say personally in consideration for our- 
selves, in the matter of trouble. We believe this would be more useful 
to your commission than to have a statement made to-day or next 
Tuesday, and then the following week come along with an answer to 
it. What we are trying to do is to join the issue in order to thrash 
it out when the statement is made, and we think we will be able to do 
that if we have a statement before it is formally presented, and, if 
necessary, the discussion of the proposition at once rather than at 
two different times. I should think that would be an advantage to 
your commission, as it stands now. For instance, there is a statement 
made by the railroads and answered by the department at a sub- 
sequent time, and then a further answer by the railroads, and in that 
manner it just prolongs the joining of the issue. 

The Chairman. We will take an adjournment until Tuesday morn- 
ing at 10 o'clock. I think it would be wise for the representatives of 
the railroads to be here, and if it evolves that there are questions that 
develop which they want to take up later we can grant an extension 
of time. 

(Thereupon at 5 o'clock p. m. the hearing adjourned until Tuesdav, 
March 24, 1914, at 10 o'clock a. m.) 



LETTER FROM THE POSTMASTER GENERAL. 

Post Office Department, 
Office of the Postmaster General, 

Washington, D. C, March 24, 1914. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Postage on Second-class Mail Matter 
and Compensation for the Transportation of Mails, Congress of 
the United States. 
My Dear Mr. Chairman: I hand you herewith a statement pre- 
pared by the Second Assistant Postmaster General in reply to the 
statements made before the joint committee on February 26 and 
March 16, 1914, by the railroads' committee on railway mail pay 
respecting compensation for the transportation of the mails. 
Yours very truly, 

A. S. Burleson, 
Postmaster General. 

in 



A STATEMENT ON BEHALF OF THE POST OFFICE DEPARTMENT 
IN REPLY TO STATEMENTS OF FEBRUARY 26 AND MARCH 16, 
1914, BY THE RAILROADS' COMMITTEE ON RAILWAY MAIL 
PAY. 

The paper read by the chairman of the railroads' committee on 
railway mail pay before the joint committee of Congress February 
26, 1914, in reply to the department's statement of January 16, 1914, 
is an attempt at detraction from the official work of the officers of the 
Post Office Department presenting the matter under consideration 
and the reiteration of the. railroads' committee's contention re- 
garding the method of dividing expenses between the freight and 
passenger services and the assignment of space in passenger trains 
to the mail service. It is conspicuous for its failure to specifically 
reply to the material matters set out in the department's statement 
referred to. 

The officers of the department believe that the questions before this 
joint committee should be decided purely upon the facts and the 
merits and therefore decline to enter into a controversy with the rail- 
roads' committee concerning the relative merits of the personal work 
of those representing the railroads and those representing the depart- 
ment in fields of inquiry disassociated from the one under considera- 
tion. However, in reviewing the statements made by the railroads' 
committee, such notice will be taken of their statements of the char- 
acter referred to as may be necessary to correctly state the facts. 

The statement opens with an assertion that the officials of the Post 
Office Department showed — 

a lack of acquaintance with the proper method of pursuing the inquiry, a lack 
of familiarity with the factors employed, and a lack of appreciation of the 
financial elements which had to be dealt with. It is also evident that there 
was a lack of knowledge on their part as to the origin of the inquiry. 

So far as this statement relates to methods, factors, and elements 
the preceding paper of the department of January 16, 1914, amply 
disposes of such general and unsupported assertions. As to the claim 
regarding lack of knowledge as to the origin of the inquiry the only 
meaning this appears to have is gathered from the context in which 
reference is made to the Hubbard commission appointed under the 
act of July 12, 1876, and whose report was made April 1 and April 
5, 1878. The inference to be drawn is that the present inquiry before 
this commission is practically the inquiry which was commenced and 
reported upon by the Hubbard commission. As pointed out in the 
statement of January 16, 1914 (hearings, p. 1020, et seq.), the rail- 
roads' committee have been insistent upon connecting the present 

1247 



1248 RAILWAY MAIL PAY. 

inquiry with previous inquiries made by prior commissions in years 
past and upon totally different methods of securing and handling 
data. That these inquiries and their results 1 can have no controlling 
influence upon questions that are now presented before this commis- 
sion has been repeatedly pointed out by the department. Further- 
more, the statement in this connection, on page 1064, regarding the 
passage of the act of 1879 requiring the Postmaster General to re- 
quest certain data from the railroad companies carrying the mails 
and report the same to Congress with recommendations and the as- 
sertion that it was not until 30 years later that the Post Office De- 
partment submitted the required report would lead the joint com- 
mittee to believe that no steps were taken either by the department 
or by Congress during those years to comply with either the letter or 
the spirit of the law, as all mention is omitted of the effort of the 
department made immediately after the passage of the law of 1879 
to secure the information and its inability to do so because of the 
imperfect reports of the railroad companies and their neglect to 
comply with the department's requests, and also of the work of the 
several commissions authorized by Congress thereafter, special refer- 
ence to which may be found in the record and in the annual reports 
of the department. Are the railroads' committee unacquainted with 
these facts ? And if not, why were they not mentioned in this con- 
nection where they are material, if reference to any part of the subject 
is at all material? 

DOCUMENT NO. 105. 

Under the heading "The incompleteness and the inaccuracy of 
Document No. 105," the railroads' committee restate objections here- 
tofore presented and submit arguments based upon incomplete state- 
ments of fact or facts of a wholly inconsequential nature so far as 
the main inquiry is concerned. 

In their first paragraph on page 1065 they claim that the Post 
Office Department commenced preparations for the inquiry in 1906 r 
"and, therefore, were engaged upon it five years before Document 
No. 105 was published." From this statement and what follows it 
would be inferred that the subject matter of Document No. 105 as 
presented in the main was under preparation by the department for 
five years and that the railroad companies neither participated in 
the benefits of the five years' consideration nor were responsible for 
extending the period beyond what might have been a reasonable one. 
As a matter of fact these inferences are untrue. The department 
issued its first forms to the railroad companies on March 2, 1907, 
to all railroad companies carrying the mails. By these instructions 
they were required to furnish the department for a period of three 
months from July 1, 1907, certain information as to operation, re- 
ceipts, and expenditures. It soon became evident that without fur- 
ther instruction the scope of the inquiries would not be understood 
uniformly by the companies and requests were received from them 
to postpone the period until such time as representatives of leading 
companies would be able to confer with the department and among 
themselves and agree upon a uniform method of procedure and 
treatment (report Second Assistant Postmaster General, 1907, p. 7). 
This postponement was agreed to by the department's officers at the 



RAILWAY MAIL PAY. 1249 

request of representatives of the railroad companies following a con- 
ference had at the department. The officers of the department were 
diligent in pursuing the matter thereafter. On July 15, 1907, the 
Acting Second Assistant Postmaster General wrote to the assistant 
to the president of the Pennsylvania Railroad Co., whose special 
representative, Mr. Charles M. Sheaffer, had been one of the prin- 
cipal representatives of the railroad at the conference referred to, 
calling attention to the postponement and the desire of the depart- 
ment to secure the data to be furnished at the earliest practicable 
date and requesting to know what had been done by the companies 
in that respect. Again, by letter of January 20, 1908, the Second 
Assistant Postmaster General wrote to the assistant to the president 
of the Pennsylvania Eailroad Co., as follows: 

Referring to the correspondence relative to the preparation of reports cover- 
ing data as to the cost of mail service, etc., and your letter of July 17, 1907, 
I have now to inquire whether your committee has completed its work and 
will be ready soon to consult with the department upon the subject. It is very 
much desired that a time in the early future be fixed for securing this infor- 
mation, and I shall be obliged to you if you can have the matter given early 
consideration. 

The company replied to this under date of January 31, 1908. 

Again, on June 25, 1908, the Second Assistant Postmaster General 
addressed a further letter to the assistant to the president of the 
Pennsylvania Railroad Co., as follows : 

Kindly refer to the correspondence commencing in May, 1907, and continuing 
to last February, in regard to the result of the conference had at my office 
between Mr. Sheaffer and the representatives of other companies, upon the 
part of the companies, and Mr. 'Stewart, upon the part of the department, 
regarding the matter of arriving at an understanding as to the scope of the 
answers to be submitted by the railroad companies to the inquiries forwarded 
by the department asking for certain data showing the cost of operating the 
mail service, etc., as provided for by law. 

Nothing has been heard from you since your letter of January 31, 1908, in 
which you stated that the committee representing the accounting and trans- 
portation departments of your system had been giving the subject careful 
attention and outlining suitable blanks, etc., that it was assuming tangible shape, 
and that you felt that in the near future you would be prepared to have your 
representatives consult further with the department. 

The securing of these data has now been deferred almost a year, and it is 
felt that the department would not be warranted in further delay. The Post- 
master General has expressed a desire that the matter be taken up without 
delay and the information secured. 

The date for the commencement of the period during which the companies 
will be asked to keep their records has not been fixed, but will be decided upon 
at an early day. In the meantime I shall be pleased to hear from you in regard 
to any further representations you wish to make. 

In reply to this, on July 9, 1908, the Second Assistant Postmaster 
General received from the assistant to the president of the Pennsyl- 
vania Railroad Co. the following letter : 

Replying to your letter of June 25, relative to the furnishing of data by rail- 
road companies showing cost of operating mail service, etc., as provided for by 
law, I beg leave to state that we have not overlooked the subject. We have had 
a number of meetings of the committee 'composed of representatives of our 
lines east and west of Pittsburgh, and also of the New York Central lines, 
and recently the committee met and finally agreed upon the form which it was 
thought would meet the situation, both from a department and railroad point 
of view. I send you herewith a copy of the form, and would be glad to arrange 
for the committee to meet your department people whenever it may be con- 
venient. 



1250 RAILWAY MAIL PAY. 

In reply to this letter the Second Assistant Postmaster General on 
July 22, 1908, sent the following: 

Your letter of the 8th instant, forwarding copy of form prepared by your 
committee for adoption and use in furnishing data by the railroad companies 
showing cost of operating mail service, etc., is received. I shall be glad to have 
you arrange for your committee to meet our department people at this office 
some day early next week. Kindly advise me at your early convenience when 
this may be. 

Thereafter the conference so arranged was held in the office of the 
Second Assistant Postmaster General on August 4, 1908, at which 
there were present besides the officers of the department the represent- 
atives of the Pennsylvania Railroad, the Pennsylvania Co. West, the 
Northern Pacific Railway, the Minneapolis, St. Paul & Sault Ste. Marie 
Railway, the Wabash Railroad, and the Great Northern Railway for 
the railroad companies. At this conference Mr. Tomlinson, repre- 
senting the Pennsylvania Railroad, submitted to the department the 
suggestions agreed upon by the Pennsylvania Railroad and the New 
York Central & Hudson River Railroad, the railroads' committee at 
that time, and a thorough examination and discussion of the forms 
submitted by the parties present followed. On August 13, 1908, the 
department sent the forms suggested by the companies in modifica- 
tion of the department's plan to a number of railroad companies for 
suggestion, to which response was made during that and succeeding 
months. 

The preparation of the final forms was by the Second Assistant 
Postmaster General referred to a committee, who continued the work 
and conferred with the representatives of the Pennsylvania and New 
York Central & Hudson River Railroad'Cos., and reported in March, 
1909. The forms were finally completed, and the Postmaster Gen- 
eral, on August 6, 1909, authorized their issue for the securing of 
data from representative routes in the several classes of service. 
This was done, and afterwards the inquiry was extended to cover 
data for all railroad routes. 

It will be seen, therefore, that the inquiry was postponed at the 
request of the principal railroad companies, and there was mutual 
cooperation between them and the department to provide a plan 
which should be practicable, and that the benefits of such delay as 
occurred were participated in as fully by the railroad companies as 
by the department. 

It was not until after the last issuance of the forms above referred 
to that the present railroads' committee appear to have been organ- 
ized and became first known to the department. They held a con- 
ference in Washington on October 22, 1909, at which no representa- 
tive of the Post Office Department was present or invited to be 
present, at which time they drew up certain instructions which they 
afterwards sent to all the railroad companies, in which they directed 
them how to make their reports to the Post Office Department. In 
many of the instances these directions varied from the instructions 
given on the blanks sent out by the department. The railroad com- 
panies were requested by them to forward their reports to the Post 
Office Department in duplicate to the chairman of the railroads' 
committee in Chicago, and informed that after collating the same 
the originals would be returned to the railroads for transmission to 
the Post Office Department and the duplicates retained by the rail- 
roads' committee. 



RAILWAY MAIL PAY. 1251 

On page 1067 of the hearings they say that the railroads started 
in 1909 in a spirit of sincere cooperation with the Post Office De- 
partment, and, notwithstanding the rejection of their offer of assist- 
ance, endeavored to make a satisfactory response. It is presumed 
that the rejection mentioned of offer for further cooperation during 
the progress of the work refers to the specific offer of that committee 
to participate in the department's special work of checking the re- 
ports from the railroad companies and compiling the statistics there- 
from. The following are copies of letters from the chairman of the 
railroads' committee referring to the oral proposition made to the 
officers of the department : 

Chicago, February 5, 1910. 
Hon. Jos. Stewart, 

Second Assistant Postmaster General, Washington, D. C. 

Dear Str: I am advised by Mr. Baldwin and Mr. Hale of their interviews 
with the Postmaster General and with yourself in regard to the totaling of 
the reports from the various railroads made in accordance with the request of 
the department, and desire to confirm the proposition that we should be very 
glad indeed to furnish you with the totals which we are making, and should 
also be glad, in case you find it desirable, to send a representative from the de- 
partment here to check up our work. 

We are very much disappointed that you have not seen your way clear to 
accept this suggestion. I understand that the department's estimate for this 
work is $10,000, which can not be available until July 1. We are offering you 
the figures free, and we think they will be ready at a very much earlier date. 

Of course we are making this offer because we feel it absolutely essential to 
progress in this matter that our totals and the totals of the department shall 
be the same, but I am sure yon will agree that it will be of equal advantage to 
the department to eliminate any possible causes of controversy in details. 
Under the circumstances I trust you will be able to accept our totals and 
assure you we will welcome any precaution which you feel is essential to secure 
accuracy. 

Yours, truly, 

J. Krtjttschnitt, Chairman. 

Chicago, March 25, 1910. 
Hon. Joseph Stewart, 

Second Assistant Postmaster General, Washington, D. C. 
Dear Sir: Our committee would very much appreciate a reply from you to 
my letter of February 5, offering our cooperation in consolidating reports being 
made from the various railroads in compliance with the request of the Post 
Office Department. 
Will you kindly let me hear from you at your early convenience? 
Yours, very truly, 



To these letters the following reply was made : 



J. Kruttschnitt. 
W. A. W. 



March 29, 1910. 



Mr. J Kruttschnitt, 

Chairman Committee on Raihvay Mail Pay. 

Grand Central Station, Chicago. 111. 

Sir : I have your letter of the 25th instant, referring to an earlier one of 
February 5, offering your cooperation in consolidating reports from the various 
railroads, in compliance with the request of the Post Office Department. 

The proposition submitted has been given very careful consideration, and I do 
not think that cooperation in the manner suggested would be practicable or 
desirable. I think your committee will appreciate as fully as I do the fact that 
the duty of receiving, examining, checking, and compiling the information sub- 
mitted by the railroad companies devolves upon the department and that any 
determination reached in a different manner would fail to meet the require- 
ments of the law, which requires the Postmaster General to secure this informa- 
tion and transmit it to Congress with such recommendation as he may see fit 
to make. Accordingly the House of Representatives has incorporated in the 



1252 



RAILWAY MAIL PAY. 



pending appropriation bill an item appropriating $10,000 to enable the Postmas- 
ter General to do this work through the employment of temporary clerks under 
the supervision of this office. As soon as the bill passes the amount will become 
immediately available, and the work will be taken up accordingly Iu the 
meantime the department will give such attention to the reports as is practicable 
with our existing force. If the companies make returns of the information as 
requested by the department there will be no difficulty or delay in the handling 
of the information secured. 
Very respectfully, 

Joseph Stewart, 
Second Assistant Postmaster General. 

It will be observed from this correspondence that the railroads' 
committee sought to induce the officers of the department to accept 
the totals obtained by the employees of such committee instead of 
relying upon the independent efforts of the officers and employees 
of the department in ascertaining the same in accordance with their 
duty prescribed by law. In oral conferences it was pointed out to 
the representatives of that committee that such a course would vitiate 
any finding which the department might make and would be wholly 
inconsistent with the duty devolved upon the Postmaster General 
by law and by his obligations in the premises. This evidently is the 
cooperation which is referred to by the railroads' committee as that 
which was refused by the department. In my judgment the depart- 
ment's course was the only proper one, and, in view of the outcome, 
there can be no doubt about its wisdom. 

On pages 1066 and 1067 the railroads' committee discuss the state- 
ments made by the department that the results of Document No. 105 
show that it is possible to approximately divide the total operating 
expenses of the railroads between passenger and freight services and 
to ascertain the space relation between passenger proper, express, 
and mail services and assign to these several classes the direct ex- 
penses and apportion the unassigned expenses upon the ratio of the 
space devoted to each of the three classes of service. The discussion 
upon these statements amounts to nothing more than a quibble. 

In the first place, the railroads' committee separated the statement 
made by the department, which appears on page 988 as one sentence, 
divided only by a comma, into two separate and distinct propositions, 
placing one in a separate sentence upon one page and the other in a 
separate sentence upon another page, following each by a separate 
argument. This separation of the sentence destroyed to some extent 
the meaning of the paragraph, for, although each proposition made 
by the department is true taken separately, they were stated as one 
whole and were intended to be considered as such. 

It is needless to say that although the Pennsylvania Eailroad Co. 
and the Atchison, Topeka & Santa Fe Eailway Co. have made an 
effort for a number of years to separate expenses betv/een passenger 
and freight services, these facts in no wise discredit the department's 
statement that the results of Document No. 105 show that it is pos- 
sible to approximately divide these total expenses. When it is 
pointed out that out of the 430 reports submitted .to the department 
from railway companies and systems only 319 made any effort to 
make a division between freight and passenger expenses, although 
an effort ay as made by the railroads' committee to induce all of them 
to make such division on the basis which that committee suggested, 
and that only 124 furnished reports in the manner desired by the 
department, it will be seen that the problem of a division of such 



RAILWAY MAIL PAY. 1253 

expenses by the companies generally is given but little consideration 
by them. 

The criticism of the department's statement that it was shown to 
be possible to ascertain the space relation between passenger proper, 
express, and mail services, and assign to those several classes the direct 
expenses, and apportion the unassigned expenses upon the basis of 
the space devoted to each of the three classes of service, is based 
upon the small per cent of direct expenses assigned. It must be 
evident that the small amount of direct expenses assigned does not 
sustain a valid criticism against the statement that it was found 
possible to assign the direct expenses and apportion the others. 
Plainly the railroads' committee have not been able to understand 
the import of the plain language of the department's statement. 
Furthermore, the fact that only a small part of direct expenses for 
mail service were assigned can be a criticism only against the imper- 
fect and incomplete reports made by the companies themselves. 

The comments made on pages 1067 and 1068 with respect to the 
large per cent of gain shown in exceptional cases of short-line rail- 
roads must fail of any force upon an examination of the statistics 
upon which they are based. They are mathematically sound and 
are the inevitable result of the elements upon which the}^ are based. 
That there can be no valid criticism against the statistics of Docu- 
ment No. 105 arising from such isolated cases is shown by the fact 
that the railroads' committee have at all times been willing to accept 
the statistics modified by their own ascertainment of a division of 
expenses between freight and passenger services and of the space 
devoted to the mails. That an argument of this character should be 
presented to the commission, devoting its best efforts to ascertain the 
facts and to reach a solution of as serious and large a question as 
railroad-mail pay is to be regretted, but such is the character of 
much of the matter included in the railroads' committee's paper, 
found in volume 9 of the hearings. 

THE QUESTION OF OVERPAYMENT. 

There is nothing new on this subject presented in the paper of 
the railroads' committee. Their position is restated, and their 
claims reiterated, with respect to two elements involved in the ascer- 
tainment of Document No. 105, namely, the division of expenses 
between freight and passenger services and the assignment of pas- 
senger space to the mail service. These matters have been fully 
discussed by the department in the statement of January 16, 1914, 
volume 7 of the hearings, pages 1009 to 1020, inclusive, and pages 
1035 to 1049, inclusive, to which the attention of the joint committee 
is again respectfully invited. It is noteworthy that the railroads' 
committee have made no effort to discuss or to refute the statements 
made by the department in the pages above referred to except in the 
few remarks made on pages 1069,, 1070, and 1071 of their paper, 
and these remarks are principally predicated upon a letter written 
by Mr. Kruttschnitt, at one time chairman of the railroads' com- 
mittee, and dated December 20, 1911. 

The railroads' committee have apparently failed to keep up with 
the information which has been submitted to the joint committee 
upon these features of the inquiry. This is evidenced by the omission 



1254 RAILWAY MAIL PAY. 

of any discussion of the matters from time to time presented by the 
department and especially in the statement of January 16, 1914, and 
is further shown by such expressions as that found on page 1069, to 
the effect that " there was no publication of the expenses at railroad 
stations or of terminal service or of personal transportation of 
officers and employees of the Post Office Department, although this 
information was furnished to the Postmaster General." As early as 
January 17, 1913, the Post Office Department, replying to the docu- 
ment issued by the railroads' committee and published in the Prelimi- 
nary Keport pointed out that no items for these expenditures could 
be used specifically unless the individual accounts, including such 
expenditures, were also segregated and reported separately to the 
department in order that when the apportionment of expenditures on 
the car-foot-mile basis should be made the department should not 
participate in a double charge for the same service, and that the 
department had assigned to the mail service such expenses for those 
items as were reported by the companies in this manner and appor- 
tioned to it on the basis of car- foot miles performed in the mail serv- 
ice, a portion of the sum of such like expenses unaffected by the 
already assigned direct expenditures (Preliminary Eeport, p. 104). 
If these items had not been used in this manner the department 
would have participated in this charge twice. There were other 
valid reasons why the reports of the companies could not be accepted 
for the total of these items given by them, and these may be found 
on page 103, Preliminary Eeport. Furthermore, the sufficient rea- 
sons were stated in Document No. 105 and also in subsequent papers 
filed by the department as to why it was impracticable to deal 
specifically with the matter of personal transportation. 

The railroads' committee have presented to the joint committee 
new claims respecting underpayment for mail service, which vary 
as greatly in amounts as the methods by which they are reached are 
unreliable. Before the filing by the department of its statement of 
January 16, 1914 (hearings, vol. 7), clearly showing overpayment, 
the railroads were claiming underpayment of $15,000,000, although 
their own statistician, who filed for them a paper published in the 
hearings, claimed an underpayment of only about $3,000,000 per 
annum (hearings, p. 84) *. Now, we are told on page 1068 that the 
underpayment is nearly $38,000,000; on pages 1073 and 1074, by 
using the railroads' percentages, the result will show an underpay- 
ment of $29,000,000; on page 1074, by using one of the railroads' 
disputed percentages, the underpayment will be over $17,000,000, 
and that by using another it will be over $6,000,000, and finally, on 
page 1076, they declare that they are underpaid $15,000,000. And 
this is not all, for in an exhibit filed with their statement it is 
attempted to be shown that upon one basis the underpayment is 
over $20,000,000 and upon another over $13,000,000 (hearings, 
p. 1087).' 

What possible weight can be given to processes and the use of ele- 
ments which will produce such varying results and what value can 
be placed upon the results themselves? It is evident that the rail- 
roads' committee have no definite or accepted basis in which it has 

1 When Mr. Newcomb's figures are corrected they show a gain for the mail service of 
$1,271,586 with the elements he uses. The true gain was shown by the department to 
be $1,616,532 (hearings, p. 996). 



EAILWAY MAIL PAY. 1255 

sufficient confidence to commend unreservedly to the joint committee 
and rest its case thereon. 

The results obtained by the railroads' committee are based upon 
the application of two rates *per cent differing from those used by 
the department, namely, 34.42 per cent as that part of the total 
operating expenses and taxes divisible to the passenger service, 
and 9.32 per cent as that part of the passenger traffic operating ex- 
penses and taxes chargeable to the mails. The department used 
29.21 per cent as the first and 6.68 per cent as the second. 

The railroads' committee obtained the first rate per cent 34.42, as 
the share of operating expenses and taxes apportionable to the pas- 
senger service by reason of adhering to and insisting upon the use 
of the revenue train-mile ratio for the apportionment of the unas- 
signed operating expenses. 

This method was abandoned by the Interstate Commerce Commis- 
sion many years ago and, although it may be used to some extent 
by the companies at the present time for comparative purposes, it 
is believed that the results obtained thereby are not used for pur- 
poses of rate making (hearings, p. 883). The method is based on the 
theory that a passenger-train mile and a freight-train mile are 
equally expensive, " an unjustified assumption " as said by Dr. 
Lorenz. How incorrect and unreliable this is has been shown in the 
statement of the Post Office Department of January 16, 1914, and 
will be further considered hereinafter. 

The railroads' committee obtained the second rate per cent, namely, 
9.32, as that part of the passenger-train space devoted to the mails 
by charging against the mail service all portions of cars used in con- 
nection with the mail service where such space or operation exceeded 
the authorization or needs of the mail service and in disregard of 
the proper and equitable rules of the department limiting the charge 
to its proper scope. This will be given further consideration herein- 
after. Before passing, however, attention is invited to the fact that 
the railroads' committee have committed a serious error in the use 
of their percentages. In their computations to show underpayment 
they have substituted their per cent of 9.32 for the department's per 
cent of 6.68, thus showing a lack of understanding of the problem 
and the elements to be used. A discussion of this point appears on 
page 463 of the hearings. The 9.32 per cent claimed by the railroads' 
committee represents per cent of car-foot miles and is comparable 
with 7.18 per cent ascertained by the department and shown in Table 
6F, page 269 of Document No. 105. The 6.68 per cent used by the 
department in apportioning to the mail service a share of the pas- 
senger part of $599,635,450 (hearings, p. 996) represents per cent of 
passenger traffic operating expenses and taxes chargeable to the 
mail service (p. 280, Document No. 105) and not car-foot miles. On 
their theory of the correctness of 9.32 per cent as representing car- 
foot miles they should have used 8.409 per cent, which would approxi- 
mately represent the ratio of passenger operating expenses and the 
taxes chargeable to mail service. This error made a difference in the 
railroads' committee's figures of $7,658,175, being that much more 
than their own theory justified. 

Before submitting further, and it is believed, conclusive evidence 
that the railroads' committee are wrong in both their claims it will 
be permissible to notice and appropriately reply to certain assump- 



1256 RAILWAY MAIL PAY. 

tions of superior competency of railroad experts and reflections upon 
the officers of the department made by the railroads' committee and 
found on page 1075. The broad assumption is made that postal 
officials, even if fully competent to understand and apply the statis- 
tics of the postal business to postal operations, are not equally com- 
petent to render similar service respecting railroad statistics, and the 
inference is presented that their work in connection with this in- 
quiry suffers in a comparison with that of railroad experts. Their 
assumption would command reasonable consideration had the rail- 
roads' committee contributed anything whatever worthy of consid- 
eration in support of their contention for the rule for the division 
of all common and unassigned expenses which they followed, or if 
they had pointed out in what respect the department's nlan was in- 
ferior to their own or theirs entitled to higher consideration than the 
department's. This they have utterly failed to do. If railroad 
accounting and rate making stood commended before the public, the 
Interstate Commerce Commission and authorities on the subject, 
there would be at least prima facie grounds for the assumption of 
the railroads' committee that railroad men are most competent and 
reliable in those fields. Inasmuch as the question has been presented 
to the joint committee by the railroads' committee with the evident 
purpose of accrediting railroad methods and discrediting depart- 
mental methods it will be appropriate to call attention to at least 
one of the many criticisms by disinterested parties. Attention is 
respectfully directed to the paper " Certain considerations in railway 
rate making," by Hon. Balthasar H. Meyer, a member of the Inter- 
state Commerce Commission, published in the Railway Age Gazette 
of January 9, 1914, some quotations from which were set forth in the 
department's statement of January 16, 1914 (hearings, pp. 993, 1006, 
1007). Among other things Mr. Meyer says: 

One might suppose that the railways in this country would fairly vie with one 
another in producing the most scientific cost data in regard to their respective 
operations which the best talent can compile. With a few conspicuous excep- 
tions, the exact contrary is the fact. 

And again, in speaking of cost accounting and its application to 
railway transportation, he says : 

Institutional reforms are rarely effected from within and the railway is no 
exception. 

A most remarkable case of the unreliable handling of statistics 
and expense items by a railroad is discussed in the decision of the 
Interstate Commerce Commission of February 9, 1914, in " No. 933, 
St. Paul & Puget Sound accounts ; in the Matter of Kates, Practices, 
Accounts, and Kevenues of Carriers Subject to the Act to Eegulate 
Commerce." 

In an effort to support their assumption the railroads' committee 
refer to the presentation before the Hughes commission by the de- 
partment's officers of the case respecting the cost of carrying and 
handling second-class mail matter. After stating that the depart- 
ment's officers revised their estimates again and again to meet the 
repeated criticisms directed against them, with the final result that 
the distinguished commission entirely rejected the great ^ item of 
" General Post Office Service " expenses, the railroads' committee con- 
tinue : 

* * * It may be fairly contended that when they found that their efforts 
in their own familiar field were not sufficiently convincing to satisfy the Hughes 



BAIL WAY MAIL PAY. 1257 

commission, they would have been justified in entertaining some doubt in regard 
to the propriety of urging that their estimate of the proper division of railroad 
expenses should supersede the estimates of experienced railroad officials and 
railroad accountants. 

The truth of the matter is that the Hughes commission, after a 
most exhaustive analysis and searching examination by the commis- 
sion and attorneys for the periodicals of the data and tables presented 
by the officials of the department, accepted the department officers' 
apportionment of cost to second-class mail matter, of all expenses of 
railroad transportation, all other transportation, railway post-office 
car service, Railway Mail Service, rural delivery service, and miscel- 
laneous expenses directly assignable, these being all the items of ex- 
penses with the exception of that for general post-office service and 
for miscellaneous expenses not directly assignable, and did not make 
any finding w 7 ith respect to the latter items for the reason that a 
sufficient basis for apportionment was not presented, and this re- 
sulted not from any lack of ability on the part of the officers of the 
department to make such apportionment but solely because the post- 
masters' reports upon which it was necessary to rely in making such 
apportionment were insufficient and incomplete. It will therefore 
be seen that the results for which the officers of the department pre- 
senting the case were responsible were fully accepted by the Hughes 
commission, and the railroads' committee in making the reflection 
have been either unable to understand the report or so disregardful 
of facts as to inferentially misrepresent them. 

Frequent reference is made in the report of the Hughes commission 
to the work of the officers of the department in connection with the 
inquiry, and no word of condemnation is found in it. With respect 
to the original finding, the commission say : 

We shall have frequent occasion to refer critically to these records and com- 
putations, but it may now be said that it is entirely evident that the officers of 
the department devoted themselves to their difficult task with the sincere desire 
to use every means at their command to accomplish the purpose of Congress 
and to secure trustworthy results upon which an accurate determination and 
apportionment of cost could be made. (Message of the President of the United 
States, transmitting the report of the Commission on Second-Class Mail Matter, 
etc.. pp. 20 and 21). 

It is not to be supposed that in a controversy between the great 
periodical publishers' interests and the Post Office Department as to 
the cost of carrying and handling second-class mail matter the most 
strenuous efforts w T ere not made to break dow r n the department's 
finding. With respect to these and the judgment of the Hughes 
commission thereupon the following excerpt from the report is 
pertinent : 

Many objections have been made to various points in the methods of compu- 
tation and some of these have been argued with earnestness. Those which 
appear to the commission to be important have been discussed. With the 
others it is unnecessary to deal in detail. The fact tbat they are not mentioned 
does not mean that they have been overlooked. It is sufficient to say that in our 
judgment they rest upon misunderstandings of the evidence or of the methods 
adopted and their significance. Some of them were based upon the assumption 
that if a result could not be proved to be exactly accurate it must be valueless, 
whereas in matters where precise accuracy is of necessity unobtainable an 
approximation must be deemed satisfactory if the limits of error are too small 
to affect the value of the result for the purposes for which it is used. (Id., 
p. 81.) 

49396—14 87 



1258 EAILWAY MAIL PAY. 

If the facts were known to the railroads' committee it would 
appear the interpolation of reference to such matter in their state- 
ment, in the incomplete manner in which presented, could have no 
other intention than that of misleading the joint committee. 



It is appropriate now to examine further the claim of the rail- 
roads' committee that the operating expenses and taxes apportioned 
to the passenger service were 34.42 per cent of the total, instead of 
29.21 per cent as found by the department. The error of this claim 
will be shown by the following: 

(1) The claim of the railroads' committee is based solely upon an 
arbitrary method of apportioning common expenses between freight 
and passenger services upon the antiquated theory " that a passenger - 
train-miJe costs the same to run as a freight-train-mile." The 
claims in support of this method are discussed in the department's 
statement (hearings, pp. 1009 to 1013, inclusive) , and reasons briefly 
given as to why the method is unreliable and should not be accepted 
for such purpose. Furthermore, m Exhibit A to said statement 
(hearings, pp. 1035 to 1049, inclusive) the method is examined in 
greater detail and its application to specific systems shown to result 
in conclusions which are so palpably erroneous as to condemn the 
method employed. It is noteworthy, as stated hereinbefore, that the 
railroads' committee have made no attempt to answer the arguments 
and facts set forth in the exhibit and in the text of the statement. 

(2) Notwithstanding the assumption upon which the findings of 
34.42 per cent is based, namely, that it costs as much to run a pas- 
senger-train-mile as a freight-train-mile, a division of the total 
operating expenses and taxes on the basis which the railroads' com- 
mittee claim to be correct results in an ascertainment of a cost of 
$1,934 per freight-train-mile and $1,165 per passenger-train-mile. 
This result proves that this assumption is untrue. 

(3) The Pennsylvania Eailroad Co. shows by its annual report for 
1909 that on the basis of the division of expenses between freight and 
passenger services, to which general practice of the Pennsylvania Co. 
the railroads' committee has referred (hearings, p. 1066), it cost the 
company $2,449 per freight-train-mile and $1,394 per passenger- 
train-mile. 

(4) The railroads' committee applied its rule of division to the 
unassigned expenses, the per cent of which to the total expenses may 
differ widely for the different companies and systems. If the rule 
be true for such a considerable part of the expense it should be 
approximately true when applied to all of them. But if the rule 
be so applied to all operating expenses the result would be $1,508 
(the average cost per train-mile for both classes of service for the 
fiscal year 1910) as the cost of each freight and passenger train- 
mile. This would reduce to 5.186 cents per freight-car-mile and 
28.55 cents per passenger-car-mile. This result is obviously incor- 
rect and inconsistent with the result of the application of the rail- 
roads' committee's assumption of 34.42 per cent as the passenger 
ratio of cost resulting in an ascertainment of 6.65 cents as the cost 
of a freight-car mile and 22.07 cents as that of a passenger-car mile. 



EAILWAY MAIL PAY. 



1259 



(5) The application of the per cent claimed by the railroads' com- 
mittee, namely, 34.42, as the passenger share of total expenses and 
taxes produces a result as to surplus or deficit which is obviously 
incorrect and not sustained by any other data. This is made ap- 
parent by the following table of statistics for 1910 : 

Totals for railroads carrying mails. 



Total. 



Freight. 



Per cent. 



Passenger. Per cent. 



Revenue of mail-carrying roads l 

Unallocated revenue 2 

Operating expenses and taxes, rail- 
way mail pay committee basis 

Operating ratios 

Net revenue (taxes included in oper- 
ating cost), railway mail paycom- 
mittee basis 

Charges against income, railway mail 
pa 7 committee basis 

Surplus 



82, 610, 266, 694 
24, 198, 477 

1,842,594,096 
70.59 



767, 672, 598 

599, 635, 450 

168,037,148 

(Net.) 



SI, 856, 421, 673 



1,208,354,751 
65.09 



648,066,922 

393, 240, 928 
2 272, 195, 661 



71.12 
65.58 



^'729,646,544 



84.43 

65.58 
161.99 



634,239,345 
86.93 



95, 407, 199 

206, 394, 522 
f 2 104,158, 513 
1 (Deficit.) 



27.95 



34.42 



12. 43 

34.42 
61.99 



1 Total revenue for mail roads, based on statistics for fiscal year 1910, Interstate Commerce Commission, 
p. 71, and mail-revenue statistics, Report of Second Assistant Postmaster General, 1910, p. 15. 

2 Result after adding to allocated revenue the $24,198,477 unallocated revenue apportioned on ratio of total 
allocated revenues for' freight and passenger. 

It is thus seen that on the theory of the railroads' committee the 
passenger service on railroads carrying mails appears to have been 
operated in 1910 at a loss of $104,158,513, and that the freight service 
on such railroads produced a surplus of $272,195,661, an amount 
sufficient to pay the deficit in the passenger service revenue and pro- 
duce a net surplus of $168,037,148. Furthermore, on the same theory, 
it appears that the passenger service on all railroads (I. C. C. statis- 
tics for 1910 and 1911) was operated at a loss of $111,420,950, and 
that the freight service was operated at a plus of $283,481,156, an 
amount sufficient to offset this vast deficit in the passenger-service 
revenue and produce a net surplus of $172,051,206 ; and yet the rail- 
roads are now before the Interstate Commerce Commission petition- 
ing for an increase in freight rates on the theory that railroad rates 
are inadequate. It must be evident that the two propositions can not 
be true and that the above application of the railroads' committee's 
theory demonstrates the reductio ad absurdum. 

(6) The operating ratio (the relation of all operating expenses 
and taxes to revenue) for the fiscal year 1910 — 

Per cent. 

For railroads carrying the mails was 70. 59 

For all railroads 70.04 

The operating ratios deduced from the railroads' committee's 
apportionment between freight and passenger services were — 

Per cent. 
For freight 65. 09 

For passenger 86. 93 

And for all railroads — 

Per cent. 
For freight 64. 59 

For passenger 86. 25 



1260 RAILWAY MAIL PAY. 

The operating ratios deduced from the department's apportion- 
ment were — 

Per cent. 

For freight 70. 26 

For passenger 73. 77 

It is evident that the ratios resulting from the department's di- 
vision of expenses are more in agreement with businesslike adminis- 
tration of the railroads than are those presented by the railroads' 
committee. It would not be impossible for the operating ratio of 
one main class of service to be radically different from that of the 
other, but the presumption is strongly against such an average con- 
dition as a result of long years of businesslike administration of the 
railroads, and it appears improbable when no other data can be 
found which will support it. 

(7) The general average cost per passenger-car-mile, according to 
the special reports made to the Interstate Commerce Commission for 
the year ended June 30, 1912, by 64 railroads, was 19.41 cents, and this 
notwithstanding the fact that the prevailing method used by them for 
dividing expenses between freight and passenger services was revenue 
train-miles. (Hearings, p. 883.) Dr. Lorenz states that this was 
somewhat lower that it would have been for all roads. On pages 
887 and 888 of the hearings Dr. Lorenz shows the minimum as 17.50 
cents and the maximum somewhat over 19.41 cents. Compare these 
results with the result deducible from the railroads' committee's con- 
tention presented here, namely, 22.07 cents, and it is apparent that 
the latter can gain no support from the examples of actual cost so 
reported by the companies. 

(8) The effect of the use of 34.42 per cent instead of 29.21 per cent 
is shown in the following: 

The accounts to which the train-mileage ratios are applied by the 
railroads' committee in making a division of expenses to the two 
classes of traffic aggregate over 50 per cent of the total operating 
expenses ($9,21,297,048) , which, divided on the basis of revenue train- 
mileage (all roads), gives 46.56 per cent to passenger service. This 
makes an apportioned passenger cost of $428,955,905. But if the 
total ($1,842,594,096) be divided on the basis of 34.42 per cent to 
passenger service, it gives the total cost of passenger service as 
$634,239,345, which shows the amount of $205,283,440 as that part 
of the passenger cost w^hich may be assigned to passenger service on 
a basis of fact. The department's total charge to passenger service 
was $538,224,224. Subtracting the $205,283,440 therefrom, leaves 
$332,940,784 as the apportioned part, but the railroads' committee 
used revenue train-mileage as a basis, which apportioned $428,955,905, 
a difference of $96,015,121, or 17.84 per cent increase in passenger 
cost due solely to the use of revenue train-mileage as a basis of appor- 
tionment. 

From the foregoing considerations it will be evident that the as- 
sumption of the railroads' committee that the passenger portion of 
the operating expenses and taxes is 34.42 per cent of the whole is 
unsupported by and is contrary to all conclusions deducible from the 
facts and, furthermore, in its application produces in every instance 
an absurd result. 



EAILWAY MAIL PAY. 1261 



The other erroneous rate per cent used by the railroads' committee 
in reaching its results which it has submitted to the joint committee 
is that used as representing the per cent of operating expenses and 
taxes of passenger service apportioned to the mails. This as used 
by the railroads' committee is 9.32 per cent instead of 6.68 per cent, 
as used by the department. 

As pointed out hereinbefore the 9.32 per cent represents the claim 
of the railroads' committee of car-foot miles in the mail service, and 
not per cent of operating expenses and taxes of passenger service 
apportioned to the mail service. It is therefore not comparable with 
the rate per cent (6.68) used by the department for this purpose, 
and if any comparison is to be made it should be made with 7.1 8 per 
cent, that being the per cent of car-foot miles in the mail service 
as ascertained by the department. (Table 3, p. 59, Doc. No. 105.) 
The error in using 9.32 per cent in the computations of the railroads' 
committee instead of a reduced per cent representing per cent of 
operating expenses and taxes, resulted in an erroneous charge against 
the department in their computations of $7,658,175 upon their own 
theory of the case as pointed out hereinbefore. 

But the 9.32 per cent is itself incorrect, because it represents the 
car-foot miles of alleged mail service computed upon the maximum 
space and operation of train service reported by the railroad com- 
panies without regard to the needs of the service, the authoriza- 
tions of space and the equitable rules of the department governing 
the fair charge. This matter has been thoroughly discussed not 
only in the oral hearings but particularly in the department's state- 
ment of January 16, 1914, pages 1013 to 1017, inclusive. There will 
be given here, however, additional reasons and data which will make 
it apparent that the railroads' result can not be considered. 

(1) The 9.32 per cent is materially affected by the nonmail car- 
foot miles which were either not reported to the railroads' committee 
or which, having been reported, were erroneously charged to the 
mail service. Of the total of 26,864,608 nonmail car-foot miles of 
roads which rendered reports to the railroads' committee, 14,990,260 
car-foot miles were not reported to the committee, so far as the de- 
partment is aware, but were obtained by departmental inquiry 
thereafter. Of the 11,874,348 nonmail car-foot miles which were 
reported to the railroads' committee, the committee erroneously 
charged 2,486,600 of the same to mail service. There were 2,779,617 
nonmail car-foot miles otherwise reported upon inquiry made by 
the department of roads that did not report to the railroads' com- 
mittee. When these corrections are made they affect the railroad's 
figures given on page 71 of the hearings by reducing their mail 
per cent to 9.28 from 9.32 as stated thereon. Even if the railroad's 
basis could be accepted, this change would further affect the rate 
per cent of operating expenses and taxes chargeable to the mail 
service reducing it to 8.383 and making a further reduction of 
$218,564 in their estimate on page 1073. 

(2) Again, their per cent of 9.32 is shown to be erroneous by a 
comparison of the results to which it leads as to the average load per 



1262 RAILWAY MAIL PAY. 

car and the estimated car-mile earning when compared with the 
known facts in regard to these items. For instance, we have the 
actual pound miles per annum for all mail service ascertained by a 
special tabulation as of April 30, 1913. This gives 510,827,522 ton- 
miles per annum. Dividing this into the total mail pay per annum 
(annual rate) as of that date, gives a ton-mile rate of 10.04 cents. 
The estimated car miles of mail service on a prorated 60- foot 
car basis on November 30, 1913, were 225,633,845, which gives an 
average load per car of 2.264 tons. Applying the rate per ton-mile 
this produces an estimated rate per car mile of 22.73 cents. These 
are approximately exact figures. Now, let us take the prorated car 
miles in the mail service November, 1909, as claimed by the railroads' 
committee, and which are based on the 9.32 per cent referred to. 
Increasing this number by 7.95 per cent (being the rate per cent of 
increase in railroad mail revenue to the railroads from November, 
1909, to September 30, 1913) produces prorated car miles of 274,- 
824,911. This divided into the tons per annum given above gives 
1.859 tons are the average load per car, and applying the 10.04 cents 
per ton-mile thereto, gives 18.66 cents as the estimated rate per car 
mile based on the railroads' committee's assumption of 9.32 per 
cent as representing the car-foot miles in the mail service. The mate- 
rial discrepancy between these unit figures — that is, the 2.264 tons 
and the 1.859 tons and the 22.73 cents and the 18.66 cents, the 2.264 
and the 22.73 being known factors, discloses that there is without 
reasonable doubt serious error in the elements by which the latter 
series is obtained. This error, of course, is in the car-foot miles rep- 
resented by the 9.32 per cent claimed by the railroads' committee. 

(3) Again, it is evident that either the car-foot miles represented 
by 9.32 per cent, as charged against the mails by the railroads' com- 
mittee are excessive or that the rates proposed by the department 
in the suggested bill are on the average too high and should be mate- 
rially reduced. By applying the average cost per car mile under the 
suggested bill (20.91 cents) to the 274,824,911 car miles (the railroads' 
committee's prorated car miles of November, 1909, raised 7.95 per 
cent to the basis of November, 1913, as above stated) produces an 
annual pay of $57,465,888.89 as against the actual compensation re- 
ceived as of that date at an annual rate of $55,410,775.28. 

From the above considerations it is clearly seen that the per cent 
of car space charged to the mail service by the railroads' committee 
is excessive. As frequently pointed out this arises from the fact that 
the railroads' committee made unwarranted and excessive charges 
against the mail service for space. The sole claim in defense of these 
figures is that the department's per cent of 7.18 is too low because of 
the rejection of certain dead space and the charge of the same to the 
passenger service. The rules under which the tabulation was made 
nave been fully set out at different times in the record (preliminary 
report, p. 102, hearings, pp. 1015, 1016) and have been discussed dur- 
ing the hearings. The precise character of the space which was re- 
ported by the railroad companies and charged to the mail service by 
the railroads' committee, but charged as " dead space " by the depart- 
ment, can not be ascertained for every route or system and specifically 
placed before the joint committee for examination without a com- 
plete retabulation of the thousands of sheets at a great expenditure 
of time and labor, which are not available. However, in order to 



RAILWAY MAIL PAY. 1263 

present the joint committee with a fair example of the department's 
tabulation of space the Missouri Pacific system has been selected and 
a complete reexamination of the sheets has been made. This system 
was selected because it was mentioned at the hearings and the depart- 
ment undertook to make an examination of the record and submit 
the result. The complete statement of the differences between apart- 
ment and full railway post-office car space reported by the com- 
panies comprising the Missouri Pacific system, and as tabulated by 
the department, snowing the reasons for the charges to " dead space," 
is set forth as Appendix A hereto. It must be remembered that the 
statement does not cover any case where the space was tabulated as 
reported. An examination of this statement will convince the mem- 
bers of the joint committee that the changes made by the department 
in the tabulation of the car-foot miles, with the very few exceptions 
which have been noted therein, were proper and in accordance with 
the facts as known to the department and will, it is thought, be 
equally convincing as showing that the companies did not overlook 
any space that might under their conception of the matter be charged 
to mail service. 

The review and recalculations made have not taken into consider- 
ation the changes in closed-pouch space due to the application of the 
department rule or those changes in the car-foot mileage resulting 
from errors in distance or in multiplication, of which there were a 
considerable number, although their effect was slight when compared 
with the total results. 

THE CHARGE OF SPACE TO THE MAIL SERVICE. 

As shown hereinbefore the claims of the railroads' committee as 
to the total car-foot miles chargeable to the mail service are un- 
reliable, when tested by the general results produced by the use 
of the per cent so claimed. 

As to specific claims regarding the charge of space to mail, " dead- 
head " or " dead space," nothing further need be said as to the 
reiterations of the claims of the railroads' committee other than to 
specifically refer to the statements heretofore made by the depart- 
ment, especially pages 1013 to 1017, inclusive. The statement of 
the railroads' committee on this point confuses the elements to be 
dealt with and the manner in which they were treated by the depart- 
ment, mingling error with statement of fact and irrelevant matter. 
For instance, statements on page 1079 would lead to the belief that 
the department did not credit the return movement of a 60-foot 
authorized car, if it were not used for mail purposes or if it were 
used in lieu of an apartment car, whereas it was the rule in such 
cases to give full credit for the return movement where the run- 
ning was necessary for the maintenance of the authorized car service 
(hearings, p. 1016). Again, on page 1079, it is stated that apart- 
ment-car service is not " authorized " in the sense that the term is 
really employed because such cars are not specifically paid for. 
This is wholly irrelevant to the discussion. In connection with 
full-car service the railroads' committee claims that the present 
method of authorization is not in accord with the rules employed in 
tabulating the space in Document No. 105, the latter having been 
more liberal in such credit of space. If this is at all relevant to 



1264 RAILWAY MAIL PAY. 

the subject, it is clearly in favor of the action of the department 
in the credit given in Document No. 105. 

Concerning mail-storage cars, the claim is made that a large 
amount of space necessary in the operation of storage cars was 
disallowed by the department. The department credited all storage- 
car space where it was used for mail purposes. Where it was not 
so used it was charged to " dead space." It is believed that the 
railroad companies use such storage cars for their own purposes 
in many cases. The claim of the railroads' committee therefore 
that a large portion of this space should have been charged to mail 
is a claim unsupported by any definite evidence as to amount and 
should not be given serious consideration. 

As to closed-pouch space, and the rule followed by the department 
whereby the excessive space claimed by the railroad companies 
under the instruction of the railway-mail pay committee was dis- 
allowed and charged to passenger service, much has been said during 
the hearings and in the papers filed. If anything further may be 
necessary to support the reasonableness of the department's rule, 
it is found in the views of one of the largest and most conserva- 
tive railroad companies, and which is represented upon the rail- 
roads' committee, namely, the Pennsylvania Railroad Co. When it 
was observed that the reports of the railroads being received by the 
department showed great differences in the charge of space to the 
mail for the closed-pouch service, the Second Assistant Postmaster 
General addressed a communication to each of the companies re- 
questing information as to the rule followed in determining the 
space reported. Most of them replied that they were following the 
rules laid down by the railway-mail pay committee (referred to 
herein most frequently as the railroads' committee). The Pennsyl- 
vania Railroad Co., however, did not follow those rules, and de- 
scribed the method they used in a letter from Mr. Sheaffer, super- 
intendent of passenger transportation, dated July 13, 1910, addressed 
to Mr. Postlethwaite, assistant of the president of the Pennsylvania 
Railroad, and forwarded by him to the Second Assistant Postmaster 
General, as follows : 

The average linear space used for express and mails was determined by a 
daily report made by the conductor of each train during the month of Novem- 
ber, 1909, showing the square feet of space occupied. The results thus obtained 
were averaged for the month or such period as the train ran, and to this 
result, the square feet used, was added 40 per cent for aisle space and doorway 
space, and the ultimate result reduced to linear feet. This result was then 
entered on form 2601 as being the daily average, and in turn worked out for the 
month or for the period during which the train ran. 

The allowance of 40 per cent for aisle space and doorway space for handling 
mails was determined after an investigation showing the usual amount of 
space devoted in all baggage cars for working purposes, i. e., the aisle way 
through the car and a clear space at the doorway. 

It is perhaps proper to explain that in order that the baggage master might 
be able to have access to all material carried in his car and be able to both 
receive and deliver at all stations, that he must leave a space at each of the 
side doors vacant and also a small aisle- way from end to end of car. 

The standard 60-foot baggage car as used on the Pennsylvania Railroad and 
by nearly all of the railroads in the country has two doors on each side, each 
4 feet 6 inches wide. The inside dimensions of the cars are 60 feet long 
by 9 feet 6 inches wide, making a total of 570 square feet of floor space. The 
doorway space with the two doors on each side 4£ feet wide amounts to 85$ 
square feet, and the aisle-way space 3 feet wide and 51 feet long, eliminating 
the doorway space, amounts to 153 square feet, making a total of 238£ square 
feet devoted to working purposes, which is 41.8 per cent of the entire floor 



EAILWAY MAIL PAY. 1265 

space in the car. A similar examination of shorter baggage cars and the bag- 
gage room in combined passenger and baggage cars developed that the amount 
of working space in all cases was equivalent to at least 40 per cent, and this 
ratio was therefore adopted for general use. In figuring out the amount of 
space devoted to either mail, express, or baggage, the actual square feet used 
was taken and then 40 per cent added to this as its proper pro rata of work- 
ing space. 

It will be seen that the average linear space used by the mails was 
determined by a daily report from the conductor of each train show- 
ing the square feet of space occupied, and that to this there was 
added 40 per cent for aisle and doorway space and the ultimate 
result was reduced to linear feet. Now it must be admitted that if 
the linear space obtained in this manner, allowing for all the space 
actually used and 40 per cent additional, ascertained by the railroad 
officials themselves, approximated the linear space which they were 
entitled to under the rules prescribed by the department, it is a com- 
plete and unanswerable verification of the fairness and sufficiency 
of the department's rule. The fact is that the report of the Pennsyl- 
vania Railroad Co. and that of the New York Central & Hudson River 
Railroad Co., both of which used the rule above mentioned, showed less 
linear space for closed-pouch service than the computations made by 
the department upon the statistics of closed-pouch mails taken during 
the month of November entitled them to. It is submitted that no 
more conclusive argument need be advanced in favor of the suffi- 
ciency and fairness of the department's rule in that respect. 

THE GAUGE OF RAILROAD MAIL PAY. 

Under the heading " Shall the gauge of railroad mail pay be a 
strictly commercial rate," the railroads' committee attempt to answer 
the suggestions made by the department in its statement on pages 
998 to 1005, inclusive. It is submitted by the department that the 
answer is insufficient. Mcst of it is a reprint of considerations sub- 
mitted by the railroads' committee June 26, 1913, before the specific 
claims of the department were set forth in detail and with particu- 
larity and with reasons and authorities in support of the same. 

Whether the question of public utility shall enter into the deter- 
mination of rates is a matter of public policy which must be declared 
by Congress. What are these considerations which may be urged 
under this principle? They are set forth in Prof. Adams's state- 
ment found on pages 1001 and 1002 of the hearings. At the risk 
of repetition they may be summarized briefly as follows : 

The Postal Service has a sovereign character and its administra- 
tion must be such as to safeguard the enduring and the collective 
rather than the temporary and the personal interests of the people. 
Because of the quasi public character of the railways the Govern- 
ment has the right to regulate charges for all classes of service ac- 
cording to the principle of public utility. 

The railroads undoubtedly have, the right to receive reasonable 
compensation for mail service, but, on the other hand, the Govern- 
ment has the right to insist that the transportation of mail is an 
essential social function; that it is imperative not alone to the present 
advantage of the public but to the healthful and permanent develop- 
ment of the State. It has the right openly, publicly, and without 
apology to put in practice, in the interest of the public at large, a 



1266 RAILWAY MAIL PAY. 

rule universally acknowledged by railway men in the development 
of their property. Railways are willing to carry special commodi- 
ties at very low rates, even at the risk of incurring loss, because they 
are potential in industrial development and the loss thus incurred 
becomes a gain in the transportation of other commodities which the 
distribution of the one renders possible. In the same way the trans- 
mission of intelligence is an essential consideration in the growth 
and development of the country which sustains the railroad, and 
without which railroad construction and operation would be of 
small practical importance. Such transmission is amenable in the 
highest degree to the consideration of public utility and justifies 
an unusually low rate for mail transportation, provided that by this 
adjustment the gross revenue of railways is not so depressed as to 
deprive investors of property. 

That such depression would not result from any reasonable reduc- 
tion from a commercial rate is apparent from a consideration of 
the very small per cent mail earnings are of the total operating reve- 
nues of railways, constituting in 1910, even at the rates paid, only 
1.78 per cent. No railroad of any importance could be successful 
in its operations without the regular, certain, and speedy transmis- 
sion of the mails over its line. It is a truism which no one will 
controvert, that practically all commercial and industrial enterprises, 
as well as social intercourse extending beyond the neighborhood, 
depend absolutely upon the mails. As the community thus primarily 
depends upon the mails, in a greater degree railroads so depend, as 
they must rely wholly upon the communities for whose business they 
are constructed and operated. It must, therefore, be apparent that 
no commodity transported is entitled to as great consideration in 
the matter of rate making as the United States mails. 

Attention is respectfully invited again to the full text of the 
department's presentation under this heading on pages 1001, 1002, 
1003, and 1004, inclusive. 

However, it does not require any declaration of public policy to 
justify giving weight to the considerations of (1) the certainty, con- 
stancy, and homogeneity of the traffic; (2) the certainty and regu- 
larity of payment; (3) the fact that railroads are not built primarily 
to carry the mails ; and (4) the protection to their mail trains which 
railroads as Governmental agencies receive against unlawful acts in 
interference with or obstruction of the mails carried. These are 
elements which would enter into the question of rate making if the 
railroad companies were dealing with a private patron. Many other 
considerations, some of which are not as general in their application, 
are given weight by railroads in fixing rates for traffic; and there 
is no reason why the Government should not receive as much con- 
sideration in the determination of such a question as private patrons 
have received in the history of the growth of railroad rates. 

The railroads' committee have attempted to minimize some of these 
considerations, and in such attempt have used language which is 
misleading to those who are not familiar with the subject. For 
instance, in referring to the claims for the certainty and regularity 
of payments statements are made regarding the discretion of the 
Postmaster General as to the amounts which may be paid, fines and 
deductions which may be assessed, and deliberation in the verifica- 
tion and settlement of accounts. From this it would be inferred that 



KAILWAY MAIL PAY. 1267 

the amounts fixed by the orders of the Postmaster General are varied 
at the discretion of the officers of the department, are subject to fines 
and deductions without sufficient cause or dereliction on the part of 
the railroads, and that settlements are delayed more than in com- 
mercial business. None of these assumptions is true. The amounts 
due are fixed by orders upon bases prescribed by statute and are not 
changed unless those bases are changed; fines are imposed only for 
delinquencies, and deductions are made only for failures to perform 
service ; and settlements are made regularly, the accounts being stated 
promptly after the close of the month for which payment is to be 
made, under the following conditions: 

For railroad transportation service payments are made monthly. 
On the routes of the large systems the accounts are stated promptly 
after the close of the month for which payment is being made if 
the companies' affidavits covering service during the second preced- 
ing month on the routes involved have been received. On these 
routes the warrants are usually mailed to the companies within a few 
days after the accounts are stated, so that ordinarily the warrants 
in payment should be received by the companies within 15 days or 
less after the close of the month for which the warrant is in payment. 

On routes of small independent companies the accounts are not 
stated for payment until a certificate has been received from the 
division superintendent of Railway Mail Service, showing whether 
the service was in operation throughout the month. Certificates 
are made by the division superintendents as soon as practicable 
after the close of the month for which the payment is to be made 
and usually reach the department so that the accounts can be 
stated prior to or by the middle of the month following that for 
which payment is being made. The warrants ordinarily are mailed 
about six days later. Like the routes of the large systems the ac- 
counts on these small routes are dependent upon the affidavits of 
the second preceding month being at hand. 

The affidavits mentioned are prepared by the railroad companies 
for each route for the purpose of showing what failures, if any, to 
perform scheduled mail-train service have occurred. These affi- 
davits are transmitted by the companies to the division superin- 
tendent of Railway Mail Service and by him transmitted to the 
department with a statement as to whether they are correct, and if 
not correct, with a statement as to the discrepancies. Upon receipt 
of these affidavits deduction cases are prepared to cover any failures 
of service that may be shown. These deductions are ordinarily 
taken from the pay of the company for the second month following 
that covered by the affidavit. For instance, failures occurring in 
January are charged against the pay for the month of March. 

The imposition of fines does not affect the date of the payments 
for the performance of the service, as the stating of the accounts is 
not held up pending the receipt of reports covering delinquencies 
which occurred during the month for which payment is made, but 
the fine cases are prepared as soon as practicable after the receipt 
of the reports of the delinquencies and the amounts of the fines 
withheld in making payments for succeeding months. 

For railway post-office car service the accounts are not stated for 
payment until the companies' affidavits covering the performance of 
the service during the month for which payment is to be made have 



1268 BAIL WAY MAIL PAY. 

been received. These affidavits are transmitted by the companies to 
the division superintendents of Railway Mail Service and by them 
checked with their records and forwarded to the department with 
proper certification as to the correctness of the affidavits. 

Where deductions are necessary for failures to perform service 
properly, deduction cases are prepared before the accounts are 
stated and the amounts of these deductions are taken from the pay- 
ment for the month in which the failures occurred. It is not pos- 
sible to state specifically how soon after the close of the month the 
payments are made, because of the fact that they vary from month 
to month. However, it may be stated generally that on a majority 
of the routes the warrants are mailed to the companies within from 
one to two months after the close of the month for which the* pay- 
ment is made. In some cases where the companies forward theif 
affidavits promptly the warrants are mailed in less than a month. 

The reason for having a different rule for stating the accounts in 
this service from that in the transportation service is on account of 
the restrictions placed by law upon payments for the operation of 
postal cars with reference to the character of the cars and their 
sanitary condition, it being deemed necessary to have evidence of a 
compliance with the law at hand before the payments are made. 

ANNUAL WEIGHINGS, SIDE AND TERMINAL SERVICE, APARTMENT CARS, ETC. 

The railroads' committee have not presented anything worthy of 
consideration in reply to the department's statement under these 
headings set forth on pages 1018 to 1025, inclusive, to which atten- 
tion is again invited. 

The department has there shown that the claims of the railroads' 
committee for annual weighings and for apartment-car pay have no 
merit, because the present rates of pay are ample to cover the increase 
in weights during the four-year period and to compensate, on the 
average, for space in apartment cars as well as in full cars. 

As to the act of March 2, 1907, reducing the pay, this, too, has been 
shown to have been justified, because the pay since such reduction 
is ample. 

As to the application of order No. 412, of June 7, 1907, it may also 
be said that this did not reduce the pay below a fair rate for the 
reasons above stated. Furthermore, as before fully set out and 
wholly unanswered as to substance and merit, the new divisor is the 
correct and equitable one. In this connection it is noted that the 
railroads' committee have been unable to understand the significance 
of the use of the whole number of days in the weighing period in 
producing the exact mathematical average for every day in the year 
of 365 days. For their information it may be stated that dividing the 
total weight of mails during the weighing period by the whole num- 
ber of davs in such period produces an exact mathematical average, 
and that this exact mathematical average is an average for every day 
in that weighing period and therefore for every day in a year of 365 
days, as distinguished from an average for 313 days in the year 
secured by dividing the weights by the number of week days in the 
period. 

Before dismissing the matter under this heading a misstatement 
regarding the weighing of the mails should be corrected in order that 



KAILWAY MAIL PAY. 1269 

the record may show the facts. On page 1081 the railroads' com- 
mittee states that — 

for many years following the passage of that law (of 1873) it was the practice 
of the department to take the weights every four years on the side lines, where 
the mail tons were light, and every year or two on the heavy lines, where 
increased growth was more noticeable and burdensome. In recent years, how- 
ever, the department has changed the practice and, as a rule, has taken the 
weights only every fourth year. 

This statement finds no justification in the facts. An examination 
has been made of the annual reports of the department with the fol- 
lowing result : 

Following the act of 1873 " the proprietors of all the railroad 
routes in the country" were called on to submit reports of weight 
carried for 30 days, commencing October 1, 1873, the readjustment 
to be made thereon to take effect from July 1, 1873. (Annual Report 
of the Postmaster General, 1873, p. 12.) 

In the report of the following year the Postmaster General states 
the call of the department was very generally responded to, and upon 
the returns submitted pay from July 1, 1873, has been readjusted 
upon 415 routes. At the time of the issuance of this report some of 
the routes had not been heard from. (Annual Report of the Post- 
master General, 1874, p. 18.) 

The Postmaster General states in his report of 1875 that the read- 
justment under the act of 1873 on routes on which the necessary 
returns had not come to hand when the previous report was issued, 
" and also on routes in States in which a new contract term com- 
menced July 1, 1875," as well as the readjustment on certain new 
routes, is shown in Table F of that report. (Annual Report of the 
Postmaster General, 1875, p. 8.) 

In the annual report of the Postmaster General for 1876 he says 
that returns showing the weight of mails and other particulars re- 
specting the service performed on railroad routes in States in which 
a new contract term commenced July 1, 1876, as well as in other 
States and Territories, are given in tables contained in the report. 
These tables show adjustments made to take effect from various dates, 
some as far back as July 1, 1873, such adjustments evidently being 
those on which the railroads had not theretofore responded to his 
first call. (Annual Report of the Postmaster General, 1876, p. 7.) 

In the annual report of 1877 the Postmaster General says the read- 
justment of pay in New England and the States of New York, New 
Jersey. Pennsylvania, Delaware, Maryland, Virginia, and West Vir- 
ginia for the regular contract term of four years, commencing July 
1, 1877, and on certain routes in other States and Territories shows a 
reduction in rate, etc. (Annual Report of the Postmaster General, 
1877, p. 10.) The New England States and the other States named 
are the same States now included in the first contract section, on 
which the last contract term expired June 30, 1913. The term re- 
ferred to in the report of 1877 as having expired that year is 36 years 
prior to 1913, or 9 contract terms of i years each. It is also to be 
observed that it is four years after 1873 and is therefore the first full 
contract term occurring after the passage of the act of that year. 

In the annual report of 1878 the Postmaster General refers to the 
readjustment of pay on railroad routes in the States of Kansas, 
Nebraska, Arkansas. Louisiana, Texas, Colorado. Nevada, California, 



1270 RAILWAY MAIL PAY. 

and Oregon, and in the Territories of Utah, Dakota, and Washington 
for the " regular term of four years, commencing July 1, 1878," and on 
certain routes in other States. (Annual Report of the Postmaster 
General, 1878, p. 8.) The States and Territories mentioned comprise 
the section of the country now included in the fourth contract sec- 
tion, in which the present quadrennial term will expire June 30, 1914. 
It will be observed nine full terms of four years will have occurred 
between 1878 and 1914. 

In the annual report of 1879 no reference is made by the Post- 
master General to the readjustment of pay on railroad routes. How- 
ever, Table F of that report shows the readjustment of rates of pay 
on railroad routes in States in which the contract term expired June 
30, 1879, also in other States and on new routes. (Annual Eeport of 
the Postmaster General, 1879, p. 132.) The Postal Laws and Regula- 
tions, edition of 1879, section 574, together with an examination of 
this table, shows the contract section referred to was composed of the 
States of Illinois, Michigan, Wisconsin, Minnesota, Iowa, and 
Missouri. This corresponds closely with the territory included in 
the present third contract section, in which the current term will 
expire June 30, 1915. 36 years, or 9 full terms of 4 years each, 
after 1879. 

Neither the Postmaster General nor the Second Assistant Post- 
master General refer to the readjustment of compensation on railroad 
routes in the body of their reports for 1880. However, Table E of 
the latter report gives the same information as is set forth in the 
paragraph next above for the railroad routes in the States in which 
the contract term expired June 30, 1880. The Postal Laws and 
Eegulations, edition of 1879, section 574, together with an examina- 
tion of this table, shows the contract section referred to was composed 
of the States of North Carolina, South Carolina, Georgia, Florida, 
Alabama, Mississippi, Tennessee, Kentucky, Ohio, and Indiana. With 
the exception of the States of Ohio and Indiana, now included in 
the third contract section, the States named correspond with the 
States included in the present second contract section, in which the 
current term will expire June 30, 1916, 36 years, or 9 full terms of 
4 years each, after 1880. 

From the foregoing it is seen that after the law of 1873 was enacted 
instructions were issued to weigh the mails and readjust pay from 
July 1 of that year on all railroad routes throughout the country and 
that thereafter it became the rule to weigh the mails on the routes of 
only one section each year. It is true there were exceptions to this 
rule, notably in the cases of service on newly established routes, where 
it was the practice to authorize the transportation of the mails on the 
line and thereafter to fix the pay for the service on the basis of 
weights taken after the mails had been attracted to the new lines, but 
it was the general practice to weigh only those routes included in the 
contract section on which the term was expiring. As early as 1881 
the Second Assistant Postmaster General speaks of the " regular 
weighing" (Annual Eeport of the Postmaster General, 1881, p. 100), 
and in 1885 the practice to weigh the routes only during the time of 
the regular weighing for the section in which they were located had 
become so well settled that the Second Assistant Postmaster General 
felt called on to note in his annual report that during that year, by 
reason of certain contracts made between the department and the 



RAILWAY MAIL PAY. 1271 

Chicago, Burlington & Quincy and the Chicago, Milwaukee & St. 
Paul Railroads for fast mail trains, a " special reweighing " of the 
mails carried on these and on parallel and competing roads was 
ordered in compliance with the conditions of the contracts, and read- 
justments of pay thereon were made. (Annual Report of Postmaster 
General, 1885, p. 243.) In his annual report for the following year 
the Second Assistant Postmaster General, in commenting on the 
comparative reduction in the annual increase in cost for railroad 
transportation, makes the following statement: 

The explanation of this reduction, it is confidently believed, is to be found, 
first, in the fact that during the past fiscal year there were no special vv T eighings 
outside of the regular quadrennial weighings, although numerous applications 
were made by railroad companies for such special weighings, which were de- 
clined, the department not perceiving their justice or their necessity. These 
special weighings necessarily result in an increase of cost. (Annual Report of 
the Postmaster General, 1886, p. 181.) 

In the report of 1888 a change is noted in the heading of the table 
showing readjustment of rates of pay on railroad routes. In the 
earlier reports this table was designated Table F } and showed the 
readjustment on routes in States in which the contract term ex- 
pired during the year in which the table was published, also in other 
States and on new routes. It having become the settled practice to 
weigh only the routes in the States in which the contract term ex- 
pired, the heading of this table was changed in 1888 so as to omit 
the statement that it contained a list of the readjustments on routes 
in other States than those in which the contract term had expired. 
At a later date the present plan of fixing pay on new routes by 
agreement with the operating company at a rate within the maxi- 
mum that may be paid without a weighing was inaugurated and the 
former practice of establishing the service on such lines and there- 
after weighing the mails carried and fixing pay on the basis of such 
weights was abandoned. 

COMPARISON BETWEEN REVENUE RECEIVED BY RAILROAD COMPANIES FOR 
EXPRESS AND FOR MAIL SERVICES. 

Since submitting the statement of February 12, 1914, accompanied 
by a tentative draft of suggestions for recommendation for legisla- 
tion and regulation of railroad mail service and compensation there- 
for, an investigation has been made of express rates between certain 
points fixed by Interstate Commerce Commission Opinion No. 2408, 
of July 24, 1913, and a comparison made between those rates and the 
rates of compensation paid to the railroad companies for trans- 
porting a like weight of mails between the same points. A further 
investigation has been made of the revenue derived by railroad com- 
panies from the service rendered the express companies as a whole 
before the order of the Interstate Commerce Commission above re- 
ferred to became effective, and a comparison made between the same 
and the revenue received by the railroad companies as a whole from 
the Post Office Department for the mail service on their lines. 

The results are so remarkable as to justify their submission to 
the joint committee for consideration in connection with the rates 
which have been suggested in the tentative draft above referred to 
and the contentions of the railroads' committee that such proposed 
rates are too low. The railroads' committee have named certain 



1272 



RAILWAY MAIL PAY. 



differences claimed between the two services, but these differences 
have not been appraised at any specific value. Furthermore these 
differences would be considerably reduced if the department's sug- 
gested plan be adopted. 

In this connection it should be remembered that the compensation 
paid the railroads for mail service is for all classes of mail service, 
including the transportation of first-class mail, while the compensa- 
tion received by the railroads from express companies is for the 
transportation of articles of merchandise principally. 

COMPARISON OF EXPRESS AND MAIL RATES BETWEEN SPECIFIC POINTS. 

Below will be found a table giving a comparison of actual first- 
class express rates as prescribed by Interstate Commerce Commission 
Order No. 2408, above referred to, per 100 pounds between repre- 
sentative points; the actual average rates of pay per 100 pounds 
weight of mails to the railroad companies operating railroad mail 
routes between such points ; 50 per cent of the express rates, respec- 
tively, the amounts assumed as received by the railroad companies 
for the service ; and the excess of the mail rate over the 50 per cent 
of the express rate, or the reverse where it exists. 

Comparison of express and mail rates per 100 pounds. 

















Excess 


Excess 








First- 




Excess 




of mail 


of 50 








class 


Mail 


of mail 


50 per 


rate 


per cent 






Length 


ex- 


rate 
(aver- 
age). 


rate 


cent of 


over 


of ex- 


From— 


To— 


of mail 


press 


over 


ex- 


50 r»er 


press 






routes. 


rate, 
I. C, C. 


ex- 


press 


cent of 


rate 








press 


rate. 


ex- 


over 








order. 




rate. 




press 
rate. 


mail 
rate. 






Miles. 














Akron, Ohio 


Pittsburgh, Pa 

New York, N. Y.... 
Washington, D. C... 


132.06 
326.86 
748.20 


$1.00 
1.40 
2.90 


$0.75 

.88 

2.53 




$0.50 

.70 

1.45 


$0.25 

.18 

1.08 




Altoona, Pa 




Anniston, Ala 




Asheville, N. C 


do 


476. 17 


2.20 


1.97 




1.10 


.87 




Ashland , Kv 


Cincinnati, Ohio 

Boston, Mass 


145.71 
496.90 


1.15 
1.60 


.56 
1.37 




.58 
.80 


'"".&" 


$0.02 


Buffalo, N. Y 




Burlington, Vt 


do 


247.34 


1.15 


1.52 


$0.37 


.58 


.94 




Burlington, Iowa 


Chicago, 111 


205.57 


1.25 


.58 




.63 




.05 


Cedar Rapids, Iowa. . 


do 


218.36 


1.25 


.71 




.63 


.08 




Charleston, W.Va.... 


Washington, D. C... 


387. 71 


1.75 


1.44 




.88 


.56 




Chattanooga, Tenn. . . 


Cincinnati, Ohio 


338.15 


1.85 


1.40 




.93 


.47 




Chicago, 111 


Boston, Mass 

Kansas City, Mo 

Milwaukee! Wis 

Minneapolis, Minn. . 
New York, N. Y.... 
Boston, Mass 


1,019.08 
454.00 
85.00 
423. 79 
909. 12 
980. 48 


2.50 
2.10 
.90 
2.00 
2.40 
2.45 


2.81 
1.52 
.29 
1.19 
2.53 
2.77 


.31 

'"".13 
.32 


1.25 
1.05 
.45 
1.00 
1.20 
1.23 


1.56 

.47 

*"".'i9* 

1.33 
1.54 




Do 




Do 


.16 


Do 




Do 




Cincinnati, Ohio 




Do 


Chicago, 111 


303. 50 
113.61 
751.33 
310. 64 
339.36 
276.43 


1.25 
.90 
2.15 
1.40 
1.50 
1.25 


1.05 
.41 

2.09 
.90 

1.28 
.97 




.63 
.45 
1.08 
.70 
.75 
.63 


.42 

"""i.'oi' 

.20 
.53 
.33 




Do 


Louisville, Kv 

New York, N. Y.... 

Pittsburgh, Pa 

St. Louis, Mo 

Washington, D. C... 


.04 


Do 




Do 




Do 




Clarksburg, W.Va... 




Corinth, Miss 


Memphis, Term 


93.59 


1.20 


.53 




.60 




.07 


Council Bluffs, Iowa. 


Chicago, 111 


493.89 
357. 76 


2.25 
1.80 


1.26 
1.17 




1.13 
.90 


.13 
.27 




Des Moines, Iowa 






Deshler, Ohio 


Pittsburgh, Pa 


264. 66 


1.25 


1.40 




.63 


.77 




Dubuque, Iowa 


Chicago, 111 


181.97 


1.00 


.66 




.50 


.16 




Elmira,N.Y 


New York, N.Y.... 


273.08 


1.25 


1.13 




.63 


.50 




Do. 


Scranton, Pa 


119.08 


.90 


.51 




.45 


.06 




Enid, Okla 

Fort Wayne, Ind 


Kansas City, Kans. . 
Chicago, 111 


392. 19 


2.00 


2.75 


.75 


1.00 


1.75 




148. 18 


1.00 


.42 




.50 




.08 


Grafton, W. Va 

Grand Rapids, Mich. 


Washington, D. C... 


253.93 


1.25 


.87 




.63 


.24 




Chicago, 111 

New York, N. Y.... 


177.51 


1.00 


.76 




.50 


.26 




Harrisburg, Pa 


195.57 


1.00 


.53 




.50 


.03 




Hattiesburg, Miss 

Hinton, W. Va 


Washington, D. C... 


1,001.71 


3.60 


3.85 


.25 


1.80 


2.05 




do 


291.21 


1.55 


1.65 


.10 


.78 


.87 




Indianapolis, Ihd 


Rochester, N. Y 


534.31 


1.90 


1.77 




.95 


.82 





RAILWAY MAIL PAY. 



1273 



Comparison 


of express and 


mail rates per 100 


pounds — Continued 


















Excess 


Excess 








First- 




Excess 




of mail 


of 50 








class 


Mail 
rate 
(aver- 
age). 


of mail 


50 ner 


rate 


per cent 






Length 


ex- 


rate 


cent of 


over 


of ex- 


From — 


To— 


of mail 


press 


over 


ex- 


50 per 


press 






routes. 


rate, 


ex- 


press 


cent of 


rate 








I. CC. 


press 


rate. 


ex- 


over 








order. 




rate. 




press 
rate. 


mail 
rate. 






Miles. 














Knoxville, Term 


Cincinnati, Ohio. . . 


291. 56 


$1.90 


$1.58 




$0.95 


$0.63 




La Crosse, A is 


Chicago, 111 


282. 99 
129. 12 


1.35 

.90 


.81 
.41 




.68 
.45 


.13 




Lafayette, Ind 


do 


$0.04 


Lancaster, Pa 


New York, N. Y.... 


159. 82 


1.00 


.43 




.50 




.07 


Madison, Wis 


Chicago, 111 


129. 70 
106. 09 


1.15 
.90 


.48 
.31 




.58 
.45 


... ..... 


.10 


New London, Conn. . 
Northfield, Vt 


Boston, Mass 




do 


197. 24 


1.15 


1.09 




.58 


.51 




Omaha, Nebr 


Chicago, 111 


488. 89 


2.25 


1.26 




1.13 


.13 




Parkersburg, W. Va. 
Pittsburgh, Pa 


V, ashington, D. C... 


357.88 


1.50 


1.31 




.75 


.56 




Chicago, 111 


468. 43 


1.70 


1.34 




.85 


.49 




Rouses Point, N. Y. . 


Boston, Mass 


391.63 


1.15 


1.41 


$0.26 


.58 


.83 




St. Louis, Mo 


New York, N. Y.... 


1,061.60 


2.60 


2.98 


.38 


1.30 


1.68 




Do 


Philadelphia, Pa 

Boston, Mass 


970.03 


2.55 


2.73 


.18 


1.28 


1.45 




St, Paul, Minn 


1, 432. 87 


3.70 


4.01 


.31 


1.85 


2.16 




Do 


Chicago, 111 


413. 79 
334. 77 


2.00 
1.75 


1.19 
1.05 




1.00 
.88 


.19 
.17 




Salisbury, N. C 


Vi ashington, D. C... 




Sayre, Pa 


New York, N. Y. . . . 
Atlanta, Ga 


269.35 
132.03 


1.25 
1.40 


1.34 
2.96 


*""i.'56* 


.63 
.70 


.71 
2.26 




Selma, Ala 




Do 


Washington, D. C... 
New York, N. Y.... 
Hartford, Conn 


778.40 
135. 23 


3.30 
1.00 


5.08 
.61 


1.78 


1.65 
.50 


3.43 
.11 




Scranton, Pa 




Washington, D. C 


335.87 


1.60 


.95 




.80 


.15 




Do 


Huntington, W. Va. 


438.51 


1.90 


1.65 




.95 


.70 




Do 


Jersey City , N . J 

New York, N. Y.... 
Philadelphia, Pa 


226. 96 
226. 96 
135.39 


1.25 
1.25 
1.00 


.63 
.63 
.38 




.63 
.63 

.50 






Do 






Do 




.12 


Do 


Pittsburgh, Pa 


369. 69 


1.40 


.97 




.70 


.27 




Do 


Providence, R. I 

Rochester, N. Y 

St. Louis, Mo 

Wheeling, W. Va... 


412. 22 
392. 60 
892. 59 
354. 54 


1.70 
1.60 
2.45 
1.50 


1.16 
1.81 
3.38 
1.79 


-------- 

.93 
.29 


.85 

.80 

1.23 

.75 


.31 
1.01 
2.15 
1.04 




Do 




Do 




Do 




Do 


Worcester, Mass 

Chicago, 111 


422. 28 
274. 94 
167. 18 


1.70 
1.65 
1.15 


1.79 
1.00 
1.15 


.09 


.85 
.83 
.58 


.94 
.17 

.58 




Waterloo, Iowa 




Wells River, Vt 


Boston, Mass 




Wilkes-Barre, Pa 

Zanesville, Ohio 




174.34 


1.00 


.88 




.50 


.38 




Pittsburgh, Pa 


152. 49 


1.00 


.72 




.50 


.22 





WESTERN SECTION. 
[In this table the mail rates in all cases excepting those marked (a) are average rates for the respective 
mail routes. Those marked (a) are top rates for the respective mail routes. Immediately following 
this table will be found another table for the western section in which all mail rates are average rates 
for the respective mail routes.] 



Aberdeen, S. Dak 

Albany, Oreg 

Albuquerque, N. Mex 

Bakersfield, Cal 

Beaumont, Tex 

Billings, Mont 

Bismarck, N. Dak 

Cheyenne, Wyo 

Colton, Cal 

El Reno, Okla 

Everett, v\"ash 

Fargo, N. Dak 

Fort Smith, Ark 

Great Falls, Mont 

Havre, Mont 

Huron, S. Dak 

Do 

Kalispell, Mont 

La Junta, Colo 

Lewiston, Idaho 

Livingston, Mont 

Medford, Oreg 

Minidoka, Idaho 

Minot, N.Dak 

Missoula, Mont 

Nampa. Idaho 

Oklahoma, Okla 

Pasco, Wash 

Phoenix, Ariz 

Pocatello, Tdaho 

Portland, Oreg 

Roseburg, Oreg 

49396—14 



St. Paul, Minn 

Chicago, 111 

Kansas City, Mo. .. 

Chicago, 111 

New Orleans, La... 

Chicago, 111 

St. Paul, Minn 

Chicago, ill 

.do. 



Kansas City, Mo. .. 

Chicago, 111' 

Minneapolis, Minn 

St. Loins, Mo 

Chicago, 111 

do 

do 



:-'t. Paul, "'inn 

Chicago, 111 

Kansas City, Mo... 
Chicago, 111 



do 

do 

St. Paul, Minn... 

Chicago, 111 

do 



Kansas Citv, Mo. 

Chicago. Ill 

St. Louis, Mo 

Chicago, 111 

do 

do 



295 01 


$,.80 


a$0 73 




$0. 90 




2, 362. 41 


•J. 25 


a „. 20 




4.63 


$1.58 


905. 36 


4.25 


2.83 




2.13 


.70 


2,491.10 


8.60 


a 5.45 





4.45 


1.00 


280. 38 


1.80 


1.28 




.90 


.38 


1,304. 16 


5.40 


«314 




2.70 


.44 


355. 06 


2.45 


a 1.02 




1.23 




997. 78 


4.15 


2.73 




2.08 


.65 


2,191.37 


8.60 


O5.40 




4.30 


1.10 


382.1? 


2.25 


a 1.04 




1.13 




2, 229. £3 


8.60 


a 5. 29 




4.30 


.99 


231. C4 


l.€0 


.82 




.80 


.02 


513.71 


2.25 


2.40 


$0. 15 


1.13 


1.27 


1.538. £3 


6. 25 


o4. 42 




3.13 


1.29 


i . 3 ,7. 26 


5. 55 


a 3. 55 




2.78 


.77 


046.19 


3.00 


a 1.69 




1.50 


.19 


297.33 


1.80 


o.75 




.90 




1, 631. 59 


6.80 


a 4. 29 




3.40 


.89 


556. 87 


3.00 


1.58 




1.50 


.08 


2, 064. 76 


8.05 


a 4. 93 




4.03 


.90 


1,343.45 


5.95 


a 3. 40 




2.98 


.42 


2, 497. 70 


- 9.90 


a 6. 48 




4.95 


1.53 


1,614.52 


7.15 


o4.ll 




3.58 


.53 


523. 51 


2.80 


a 1.33 




1.40 




1,585.59 


6.90 


a 3. 93 




3.45 


.48 


1,800.70 


7.85 


a 4. 61 




3.93 


.68 


400. 83 


2.25 


1.59 




1.13 


.46 


2,070.29 


8.20 


a 4. 80 




4.10 


.70 


1,783.42 


7.40 


a 4. 90 




3.70 


1.20 


1,553.23 


7.00 


4.44 




3.50 


.94 


2,281.92 


8.85 


7.03 




4.42 


2.61 


2, 628. 63 


9.40 


a 6. 85 




4.70 


2.15 



.15 



.07 



1274 



RAILWAY MAIL PAY. 



Comparison of express and mail rates per 100 pounds — Continued. 
WESTERN SECTION— Continued. 

















Excess 


Excess 








First- 




Excess 




of mail 


of 50 








class 


Mail 
rate 
(aver- 
age). 


of mail 


50 per 


rate 


per cent 






Length 


ex- 


rate 


cent of 


over 


of ex- 


From— 


To— 


of mail 


press 


over 


ex- 


50 per 


press 






routes. 


rate, 
I. C. C. 


ex- 


press 


cent of 


rate 








press 


rate. 


ex- 


over 








order. 




rate. 




press 

rate. 


mail 
rate. 






Miles. 














Reno, Nev 


San Francisco, Cal . . 


243. 88 


$1.60 


a $0. 64 




$0.80 




$0.16 


Seattle, Wash 


Chicago, 111 


2, 323. 24 


8.60 


7.29 




4.30 


$2.99 




Do 


St. Paul, Minn 

Chicago, 111 


1, 824. 76 
1,923.85 
2,319.94 


7.90 
7.75 


6.10 
6.06 




3.95 
3.87 


2.15 
2.19 




Spokane, Wash 

Tacoma, Wash 




do 


8.60 


o5.47 




4.30 


1.17 




Walla Walla, Wash.. 


do 


2, 101. 57 


8.10 


a 5. 52 




4.05 


1.47 




Wenatchee, Wash — 


do 


2,073.00 


8.30 


a 5. 45 




4.15 


1.30 




Wichita, Kans 


Kansas City, Mo 


228. 25 


1.60 


.68 




.80 




.12 


Williston, N. Dak.... 


St. Paul, Minn 


644. 25 


3.20 


a 1.65 




1.60 


.05 





The following table shows the average mail rates for the respective 
mail routes : 

Comparison of express and mail rates per 100 pounds. 

WESTERN SECTION. 



From- 



To— 



Length 
of mail 
routes. 



First- 
class 
express 
rate, 
I. C. C. 
order. 



Mail 
rate 
(aver- 
age). 



Excess 

of mail 

rate 

over 

express 

rate. 



50 per 

cent of 

express 

rate 



Excess 
of mail 

rate 
over 50 
per cent 
of ex- 
press 
rate. 



Excess 
of 50 

per cent 
of 

express 
rate 

over the 
mail 
rate. 



Aberdeen, S. Dak 

Albany, Oreg 

Albuquerque,N.Mex. 

Bakersfield, Cal 

Beaumont, Tex 

Billings, Mont 

Bismarck, N. Dak. . . 

Cheyenne, Wyo 

Colton, Cal 

El Reno, Okla 

Everett, Wash 

Fargo, N. D 

Fort Smith, Ark 

Great Falls, Mont 

Havre, Mont 

Huron, S. Dak 

Do 

Kalispell, Mont 

La Junta, Colo 

Lewiston, Idaho 

Livingston, Mont 

Medford, Oreg 

Minidoka, Idaho 

Minot, N.Dak 

Missoula, Mont 

Nampa, Idaho 

Oklahoma, Okla 

Pasco, Wash 

Phoenix, Ariz 

Pocatello, Idaho 

Portland, Oreg 

Roseburg, Oreg 

Reno, Nev 

Seattle, Wash 

Do 

Spokane, Wash 

Tacoma, Wash 

Walla Walla, Wash.. 

Wenatchee, Wash 

Wichita, Kans 

Williston, N.Dak.... 



St. Paul, Minn 

Chicago, 111 

Kansas City, Mo . . 

Chicago, 111 

New Orleans, La. . . 

Chicago, 111 , 

St. Paul, Minn 

Chicago, 111 

do 



Kansas City, Mo... 

Chicago, 111 

Minneapolis, Minn. 

St. Louis, Mo 

Chicago, 111 

do 

do 

St. Paul, Minn 

Chicago, 111 

Kansas City, Mo. . . 

Chicago, 111 

do 

do 

do 

St. Paul, Minn 

Chicago, 111 

do 



Kansas City, Mo . . . 

Chicago, 111 

St. Louis, Mo 

Chicago, 111 

do 

do 

San Francisco, Cal . 

Chicago, 111 

St. Paul, Minn 

Chicago, 111 

do 

do 

do 

Kansas City, Mo. . . 
St. Paul, Minn 



Miles. 

295.01 
2,362.41 

905. 36 
2,491.60 

280. 38 
1,304.16 

355.06 

997. 78 
2,191.37 

382. 12 
2,229.93 

231.04 

513. 71 
1,538.53 
1,367.29 

646. 19 

297. 33 
1,631.59 

556. 87 
2,064.76 
1,343.45 
2,497.70 
1,614.52 

523. 51 
1, 585. 59 
1,800.70 

400. 83 
2,070.29 
1, 783. 42 
1,553.23 
2, 281. 92 
2, 628. 63 

243. 88 
2,323.24 
1,824.76 
1,923.85 
2,319.94 
2,101.57 
2,073.00 

228. 25 

644.25 



$1.80 
9.25 
4.25 
8.90 
1.80 
5.40 
2.45 
4.15 
8.60 
2.25 
8.60 
1.60 
2.25 
6.25 
5.55 
3.00 
1.80 
6.80 
3.00 
8.05 
5.95 
9.90 
7.15 
2.80 
6.90 
7.85 
2.25 
8.20 
7.40 
7.00 
8.85 
9.40 
1.60 
8.60 
7.90 
7.75 
8.60 
8.10 
8.30 
1.60 
3.2 



$1.38 
7.38 
2.83 
7.34 
1.28 
4.00 
1.38 
2.73 
6.99 
1.63 
7.10 

.82 
2.40 
8.55 
4.40 
3.04 
1.56 
5.52 
1.58 
7.26 
4.39 
7.13 
4.64 
1.79 
5.20 
5.29 
1.59 
6.67 
8.31 
4.44 
7.03 
7.67 

.74 
7.29 
6.10 
6.06 
7.71 
7.06 
6.71 

.68 
2.19 



$0.15 
2.30 



.04 



$0.90 
4.63 
2.13 
4.45 

.90 
2.70 
1.23 
2.08 
4.30 
1.13 
4.30 

.80 
1.13 
3.13 
2.78 
1.50 

.90 
3.40 
1.50 
4.03 
2.98 
4.95 
3.58 
1.40 
3.45 
3.93 
1.13 
4.10 
3.70 
3.50 
4.42 
4.70 

.80 
4.30 
3.95 
3.87 
4.30 
4.05 
4.15 

.80 
1.60 



$0.48 
2.75 

.70 
2.89 

.38 
1.30 

.15 

.65 
2.69 

.50 
2.80 

.02 
1.27 
5.42 
1.62 
1.54 

.66 
2.12 

.08 
3.23 
1.41 
2.18 
1.06 

.39 
1.75 
1.36 

.46 
2.57 
4.61 

.94 
2.61 
2.97 



2.99 
2.15 
2.19 
3.41 
3.01 
2.56 



$0.06 



12 



.59 



EAILWAY.MAIL PAY. 



1275 



Below is set forth a like table based upon 40 pounds instead of 
100 pounds weight, the 40 pounds being assumed as the average 
weight of an express parcel. The average weight of an express 
parcel in 1910 as reported by the Interstate Commerce Commis- 
sion in Statistics of Revenue Tonnage for the months of April, 
August, and December, 1909, was 32.8 pounds (First Annual Report 
of the Statistics of Express Companies in the United States, 1909, 
p. 18). Since the inauguration of parcel post many of the smaller 
express packages have been lost to the express and are carried in 
the mails, and it is believed that this has raised the average weight 
of express parcels to approximately 40 pounds. 

Comparison of express and mail rates per JfO pounds. 



From— 


To— 


Length 
of mail 
routes. 


First- 
class 
ex- 
press 
rate, 
I. O C. 
order. 


Mail 
rate, 
(aver- 
age.) 


Excess 
of mail 
rate 
over 
ex- 
press 
rate. 


50 per 
cent of 
ex- 
press 
rate. 


Excess 
of mail 
rate 
over 
50 per 
cent of 
ex- 
press 
rate. 


Excess 
of 50 

per cen t 
of ex- 
press 
rate 
over 
mail 
rate. 




Pittsburgh, Pa 

New York, N. Y.... 
Washington, D. C. 

do 

Cincinnati, Ohio 

Boston, Mass 


Miles. 
132. 06 
326.86 
748. 20 
476. 17 
145. 71 
496.90 
205. 57 
247.34 
218. 36 
387. 71 
338. 15 

1,019.08 
454. 00 
85. 00 
423.79 
909. 12 
980. 48 
303. 50 
113.61 
751.33 
310.64 
339. 36 
276.43 
93.59 
493.89 
357.76 
264. 66 
181.97 
273. 08 
119.08 
392. 19 
148.18 
253. 93 
177.51 
195.57 

1,001.71 
291.21 
534. 31 
291.56 
282. 99 
1 29. 12 
159. 82 
129.70 
106.09 
197. 24 
488. 89 
357. 88 
468. 43 
391.63 

1,061.60 
970. 03 

1,432.87 
413.79 


$0. 52 
.68 
1.28 
1.00 
.58 
.76 
.62 
.58 
.62 
.82 
.86 
1.12 
.96 
.48 
.92 
1.08 
1.10 
.02 
.48 
.98 
.68 
.72 
.62 
.60 
1.02 
.84 
.62 
.52 
.62 
.48 
. 92 
.52 
.62 
.52 
.52 
1.56 
. 74 
.88 
.88 
.66 
.48 
.52 
.58 
.48 
.58 
1.02 
.72 
.80 
. S>3 
1.16 
1.14 
1.60 
.92 


$0.30 
.34 

1.01 
.79 
.22 
.55 
.23 
.61 
.28 
.58 
.56 

1.12 
.61 
.12 
.48 

1.01 

1.11 
.42 
.16 


"kb'.bd 
"' ,'6i" 


$0.26 
.34 
.64 
.50 
.29 
.38 
.31 
.29 
.31 
.41 
.43 
.56 
.48 
.24 
.46 
.54 
.55 
.31 
.24 
.49 
.34 
.36 
.31 
.30 
.51 
.42 
.31 
.26 
.31 
.24 
.46 
.26 
.31 
.26 
.26 
.78 
.37 
.44 
.44 
. 33 
.24 
.26 
.29 
.24 
.29 
.51 
.36 
.46 
.29 
.58 
.57 
.80 
.46 


$0.04 








Anniston, Ala 

Asheville, N. C 


.37 

.29 

-------- 

"'".'32' 
-------- 

.13 
.56 
.13 

'".'()2~ 

.47 
.56 
.11 

""."35 

.02 
.15 

.08 

""'.05 

.25 


'""$6.07 


Buffalo, N. Y 

Burlington, Iowa 

Burlington, Vt 

Cedar Rapids, Iowa.. 
Charleston, W. Va. . . 
Chattanooga, Tenn... 


.08 


Boston, Mass 


.03 


Washington, D.C... 

Cincinnati, Ohio 

Boston, Mass 

Kansas City, Mo 

Milwaukee, Wis 

Minneapolis, Minn . . 
New York, N. Y.... 

Boston, Mass 

Chicago, 111 




Do 




Do 


.12 


Do 




Do... 




Cincinnati, Ohio 

Do 




Do 


Louisville, Ky 

New York, N. Y.... 

Pittsburgh, Pa 

St. Louis, Mo 

Washington, D.C... 

Memphis, Tenn 

Chicago, 111 


.08 


Do... 


.84 

.36 

•51 

.39 

■21 

.50 




Do 




Do 




Clarksburg, W. Va. . . 


.09 




.01 


Pes Moines, Iowa 

T'eshler, Ohio 


Pittsburgh, Pa 

Chicago 111 


.47 
.56 
.26 






Elmira, N. Y 

Do 

Enid, Okla 


New York, N. Y.... 

Scranton, Pa 

Kansas City, Kans.. 
Chicago, 111 


•45 

.20 

1.10 ; .18 

.17 

.35 

. .30 


.14 

'".'04" 

""".'64' 
.04 

'".'76' 
.29 
.27 
.19 


'".04 


Fort »\*ayne, Ind 

Grafton, W. Va 

Grand Rapids, Mich. 

Harrisburg, Pa 

Hattiesburg, Miss 

Hint on W Va 


.09 


Washington, D. C... 




New York, N. Y.... 
Washington, D. C... 
do 

Rochester, N. Y 

Cincinnati, Ohio 


.21 
1.54 
.60 
.71 
.63 
.32 




.05 


Indianapolis, Ind 

Knoxville, Tenn 







.'6i 


Lafayette, Ind 

Lancaster, Pa 

Madison, Wis 


do 

New York, N. Y.... 

Chicago, 111 

Boston, Mass 

do 

Chicago. Ill 

Washington, D. C... 


.16 

!l9 

.12 

.44 

.50 

.52 

.54 

.56 

1.19 

1.09 

1.60 

.48 


"".'03' 


.08 
.09 
.10 
.12 


Northfield, Vt !." 

Omaha, Nebr 

Parkersburg, W. Va.. 

Pittsburgh, Pa 

Rouses Point, N. Y.. 
St. Louis, Mo 

Do 

St. Paul, Minn 

Do 


.15 

'".'i(V 

.14 
.27 
.61 

.52 
.80 
.02 


.01 


Boston, Mass 

New York, N. Y.... 

Philadelphia, Pa 

Boston, Mass 

Chicago, 111 


:...::: 



1276 RAILWAY MAIL PAY. 

Comparison of express and mail rates per 40 pounds — Continued. 

















Excess 


Excess 








First- 




Excess 




of mail 


of 50 








class 


Mail 
rate 
(aver- 
age). 


of mail 


50 per 


rate 


per cent 






Length 


ex- 


rate 


cent of 


over 


of ex- 


From— 


To- 


of mail 


press 


over 


ex- 


50 per 


press 






routes. 


rate, 
I. C. C. 


ex- 


press 


cent of 


rate 








press 


rate. 


ex- 


over 








order. 




rate. 




press 


mail 
















rate. 


rate. 






Miles. 














Salisbury, N. C 


Washington, D. C... 


334. 77 


$0.82 


$0.42 




$0.41 


$0.01 




Sayre, Pa 


New York, N. Y. . . . 


269. 35 


.62 


.54 




.31 


.23 




Selma, Ala 


Atlanta, Ga 


132. 03 


.68 


1.18 


$0.50 


.34 


.84 




Do 


Washington, D. C... 
New York, N. Y.... 

Hartford, Conn 

Huntington, W. Va. 


778. 40 
135. 23 
335. 87 
438. 51 


1.44 
.52 
.76 

.88 


2.03 
.24 
.38 
.66 


.59 


.72 
.26 
.38 
.44 


1.31 




Scranton, Pa 


$0.02 


Washington, D. C 




Do 


.22 




Do 


Jersey City, N. J 


226. 96 


.62 


.25 




.31 




.06 


Do 


New York, N. Y.... 
Philadelphia, Pa 


226. 96 
135.39 


.62 
.52 


.25 
.15 




.31 

.26 




.06 


Do 


.11 


Do 


Pittsburgh, Pa 

Providence, R. I 

Rochester, N. Y 

St. Louis, Mo 

Wheeling, W. Va... 
Worcester, Mass 


369. 69 
412.22 
392. 60 
892. 59 
354. 54 
422. 28 


.68 

.80 

.76 

1.10 

.72 
.80 


.39 
.46 
.72 
1.35 
.72 
.72 


""".'25" 


.34 
.40 
.38 
.55 
.36 
.40 


.05 
.06 
.34 
.80 
.36 
.32 




Do 




Do 




Do 




Do 




Do 




Waterloo, Iowa 


Chicago, 111 


274. 94 


.78 


.40 




.39 


.01 




Wells River, Vt 


Boston, Mass 


167. 18 


.58 


.46 




.29 


.17 




Wilkes-Barre, Pa 


New York, N. Y.... 


174. 34 


.52 


.35 




.26 


.09 




Zanesville, Ohio 


Pittsburgh, Pa 


152. 49 


.52 


.29 




.26 


.03 





WESTERN SECTION. 

[In this table the mail rates in all cases excepting those marked («) are average rates for the respective 
mail routes. Those marked (o) are top rates for the respective mail routes. Immediately following 
this table will be found another table for the western section in which all mail rates are average rates 
for the respective mail routes. J 



Aberdeen, S. Dak 

Albany, Oreg 

Albuquerque, N.Mex. 

Bakersfield, Cal 

Beaumont, Tex 

Billings, Mont 

Bismarck, N. Dak . . . 

Cheyenne, Wyo 

Colton, Cal 

El Reno, Okla 

Everett. Wash 

Fargo, N. Dak 

Fort Smith, Ark 

Great Falls, Mont 

Havre, Mont 

Huron, S. Dak 

Do 

Kalispell, Mont 

La Junta, Colo 

Lewiston, Idaho 

Livingston, Mont 

Medford , Oreg 

Minidoka, Idaho 

Minot, N. Dak 

Missoula, Mont 

Nampa, Idaho 

Oklahoma, Okla 

Pasco, Wash 

Phoenix, Ariz 

Pocatello, Idaho . 

Portland, Oreg 

Roseburg, Oreg 

Reno, Nev 

Seattle, Wash 

Do 

Spokane, Wash 

Tacoma, Wash 

Walla Walla, Wash.. 

Wenatchee, Wash 

Wichita, Kans 

Williston,N. Dak.... 



St. Paul, Minn 

Chicago, 111 

Kansas City, Mo . . . 

Chicago, 111 

New Orleans, La.., 

Chicago, 111 

St. Paul, Minn 

Chicago, 111 

do 



Kansas City, Mo . . . 

Chicago, 111 

Minneapolis, Minn. 

St. Louis, Mo 

Chicago, 111 

Chicago, 111 

do 

St. Paul, Minn 

Chicago, 111 

Kansas Citv, Mo... 

Chicago, 111 

do 

do 

do «... 

St. Paul, Minn 

Chicago, 111 

do 



Kansas City, Mo... 

Chicago, 111 

St. Louis, Mo 

Chicago, 111 

do 

do 

San Francisco, Cal. 

Chicago, 111 

St. Paul, Minn 

Chicago, 111 

do 

do 

do 

Kansas Citv. Mo... 
St. Paul, M'inn 



295. 01 


$0.84 


a $0. 29 




$0.42 




2,362.41 


3.82 


a 2. 48 




1.91 


$0.57 


905. 36 


1.82 


1.13 




.91 


.22 


2,491.60 


3.68 


a 2. 18 




1.84 


.34 


280. 38 


.84 


.51 




.42 


.09 


1, 304. 16 


2.28 


a 1.26 




1.14 


.12 


355. 06 


1.10 


a. 41 




.55 




997. 78 


1.78 


1.09 




.89 


.20 


2,191.37 


3.56 


a 2. 16 




1.78 


.38 


382. 12 


1.02 


a. 42 




.51 




2, 229. 93 


3.56 


a 2. 12 




1.78 


.34 


231. 04 


.76 


.33 




.38 




513.71 


1.02 


.96 




.51 


.45 


1,538.53 


2.62 


a 1.77 




1.31 


.46 


1,367.29 


2.34 


a 1.42 




1.17 


.25 


646. 19 


1.32 


0.68 




.66 


.02 


297.33 


.84 


a. 30 




.42 




1,631.59 


2.84 


a 1.72 




1.42 


.30 


556.87 


1.32 


.63 




.66 




2,064.76 


3.34 


ol.97 




1.67 


.30 


1.343.45 


2.50 


a 1.36 




1.25 


.11 


2.497.70 


4.08 


a 2. 59 




2.04 


.54 


1.614.52 


2.98 


a 1.64 




1.49 


.15 


523.51 


1.24 


a. 53 




.62 




1.585.59 


2.88 


a 1.57 




1.44 


.13 


1,800.70 


3.26 


a 1.84 




1.63 


.21 


400. 83 


1.02 


.64 




.51 


.13 


2.070.29 


3.40 


a 1.92 




1.70 


.22 


1,783.42 


3.08 


a 1.96 




1.54 


.42 


1.553.23 


2.92 


1.77 




1.46 


.31 


2.281.92 


3.66 


2.81 




1.83 


.98 


2.628.63 


3.88 


o2.74 




1.94 


.80 


243.88 


.76 


o.26 




.38 




2,323.24 


3.56 


2.92 




1.78 


1.14 


1,824.76 


3.28 


2.44 




1.64 


.80 


1,923.85 


3.22 


2.42 




1.61 


.81 


2,319.94 


3.56 


o2.19 




1.78 


.41 


2,101.57 


3.36 


o2.21 




1.68 


.53 


2.073.00 


3.44 


02. 18 




1.72 


.46 


228.25 


.76 


.27 




.38 




644. 25 


1.40 


0.66 




.70 





13 



.09 



12 



EAILWAY MAIL PAY. 



1277 



The following table shows the average mail rates for the respec- 
tive mail routes : 

Comparison of express and mail rates per 40 pounds. 

WESTERN SECTION. 



From- 



To— 



Length 
of mail 
routes. 



First- 
class 

express 
rate, 

I.C.C. 

order. 



Mail 
rate 
(aver- 



.hxcess 
of mail 
rate 
over 
express 
rate. 



50 per 

cent of 

express 

rate. 



Excess 
of mail 

rate 
over 50 
per cent 
of ex- 
press 
rate. 



Excess 
of 50 

per cent 
of 

express 
rate 

over the 
mail 
rate. 



Aberdeen, S. Dak 

Albany, Oreg 

AlbuquerqueJST.Mex . 

Bakersfield, Cal 

Beaumont, Tex 

Billings, Mont 

Bismarck, N. Dak ... 

Cheyenne, Wyo 

Colton, Cal 

El Reno, Okla 

Everett, Wash 

Fargo, N. Dak 

Fort Smith, Ark 

Great Falls, Mont 

Havre, Mont 

Huron, S. Dak 

Do 

Kalispell, Mont 

La Junta, Colo 

Lewiston, Idaho 

Livingston, Mont 

Medford, Oreg 

Minidoka, Idaho 

Minot, N. Dak 

Missoula, Mont 

Nampa, Idaho 

Oklahoma, Okla 

Pasco, Wash 

Phoenix, Ariz 

Pocatello, Idaho 

Portland, Oreg 

Roseburg, Oreg 

Reno, Nev 

Seattle, Wash 

Do 

Spokane, Wash 

Tacoma, Wash 

Walla Walla, Wash.. 

Wena tehee, Wash 

Wichita, Kans 

Williston, N. Dak.... 



St. Paul, Minn 

Chicago, 111 

Kansas City, Mo . . . 

Chicago, 111 

New Orleans, La. . . 

Chicago, Bl 

St. Paul, Minn 

Chicago, 111 

do 



Kansas City, Mo . . . 

Chicago, Rl 

Minneapolis, Minn. 

St. Louis, Mo 

Chicago, 111 

....do 

....do 

St. Paul, Minn 

Chicago, 111 

Kansas City, Mo . . . 

Chicago, 111 

do 

....do 

....do 

St. Paul, Minn 

Chicago, 111 

do 



Kansas City, Mo . . . 

Chicago, HI 

St. Louis, Mo 

Chicago, 111 

do 

do 



San Francisco, Cal . 

Chicago, 111 

St. Paul, Minn 

Chicago, JJ1 

do 

do 



do 

Kansas City, Mo . 
St. Paul, Minn... 



Miles. 

295. 01 
2,3G2.41 

905. 36 
2, 491. GO 

280. 38 
1,304.16 

355.00 

997. 78 
2,191.37 

382. 12 
2, 229. 93 

231.04 

513.71 
1,538.53 
1,367.29 

646. 19 

297.33 
1,631.59 

556.87 
2,064.76 
1,343.45 
2,497.70 
1,614.52 

523.51 
1,585.59 
1,800.70 

400.83 
2,070.29 
1,783.42 
1,553.23 ' 
2,281.92 
2,628.63 

243.88 
2,323.24 
1,824.76 
1,923.85 
2,319.94 
2,101.57 
2,073.00 

228. 25 

644.25 



$0.84 
3.82 
1.82 
3.68 

.84 
2.28 
1.10 
1.78 
3.56 
1.02 
3.56 

.76 
1.02 
2.62 
2.34 
1.32 

.84 
2.84 
1.32 
3.34 
2.50 
4.08 
2.98 
1.24 
2.88 
3.26 
1.02 
3.40 
3.08 
2.92 
3.66 
3.88 

.76 
3.56 
3.28 
3.22 
3.56 
3.36 
3.44 

.76 
1.40 



SO. 55 
2.95 
1.13 
2.93 

.51 
1.60 

.55 
1.09 
2.79 

.65 
2.84 

.33 

.96 
3.42 
1.76 
1.22 

.62 
2.21 

.63 
2.90 
1.75 
2.85 
1.86 

.72 
2.08 
2.12 

.64 
2.67 
3.32 
1.77 
2.81 
3.07 

.30 
2.92 
2.44 
2.42 
3.08 
2.82 
2.69 

.27 

.87 



.24 



$0.42 
1.91 

.91 
1.84 

.42 
1.14 

.55 

.89 
1.78 

.51 
1.78 

.38 

.51 
1.31 
1.17 

.66 

.42 
1.42 

.66 
1.67 
1.25 
2.04 
1.49 

.62 
1.44 
1.63 

.51 
1.70 
1.54 
1.46 
1.83 
1.94 

.38 
1.78 
1.64 
1.61 
1.78 
1.68 
1.72 

.38 

.70 



1.23 
.50 
.81 
.37 
.10 
.64 
.49 
.13 
.97 

1.78 
.31 
.98 

1.13 

i'.u 

.80 

.81 

1.30 

1.14 

.97 



$0.05 



.03 



These statistics show that in most cases the revenue received by the 
railroad companies for the carriage of 100 pounds and 40 pounds of 
mail matter between the points named is in excess of the revenue 
received from the express companies for the carriage of express 
packages of 100 pounds and 40 pounds, respectively, between the 
same points. The differences in the rates vary considerably but in 
a majority of cases the excess of the mail rate over the compensation 
from the express is material. 

It should be remembered also that the mail rates named in these 
tables are for transportation alone and do not include the revenue 
received by the railroad companies for railway post-office cars oper- 
ated over the routes. Such cars are operated over most if not all of 
the routes between the points named. The total compensation for 
railway post-office cars paid the railroads is approximately 10 per 



1278 BAIL WAY MAIL PAY. 

cent of the total pay including transportation and railway post-office 
cars, but it would not follow that this ratio of pay would exist upon 
each individual route. No attempt has been made to ascertain for 
each route the part of the railway post-office car pay apportioned to 
the specific weight of mail for the reason that although the result 
would be approximately correct it would not be exact, and these 
tables are submitted to show exact and uncontrovertible results. 

COMPARISON Or REVENUE TO RAILROADS FROM EXPRESS AND MAIL SERV- 
ICES AS A WHOLE. 

A careful analysis of available statistics has been made in an en- 
deavor to reach an approximately accurate comparison between the 
total revenue received by railroad companies from the express serv- 
ice and that which they would receive from the mail service if the 
railroad rate per ton-mile so received from the express service were 
applied to the ton-miles of mail service. 

Eecourse has been had to the First Annual Eeport of the Statis- 
tics of Express Companies in the United States for 1909, pages 18 
and 19, and to opinion No. 1967, of June 8, 1912, of the Interstate 
Commerce Commission in case No. 4198, " In the Matter of Express 
Eates, Practices, Accounts, and Eevenues." On pages 501 and 502 of 
said report there is presented an analysis of freight revenue of 
Adams Express Co. as of August 18, 1909, and an analysis of freight 
revenue of United States Express Co. as of December 22, 1909; the 
statement showing traffic averages for character of traffic moved. 
For the Adams Express Co., the statement covers the movement of 
traffic between 206 points for which mileage could be assigned, be- 
tween which, in general, 100 or more pieces moved. It represents 
15.48 per cent of the total number of pieces, 15.70 per cent of the total 
weight, and 13.98 per cent of the total revenue on business handled 
as of August 18, 1909. For the United States Express Co., the state- 
ment covers the movement of traffic between 218 points for which 
mileage could be assigned, between which, in general, 100 or more 
pieces moved. It represents 14.66 per cent of the total number of 
pieces, 13.77 per cent of the total weight, and 13.26 per cent of the 
total revenue on business handled as of December 22, 1909. 

The average charge per ton per mile ascertained from the statis- 
tics of the Adams Express Co. is 15.30 cents (I. C. C. Eept,, in the 
matter of express rates, etc., p. 501), and the average charge per 
ton per mile ascertained from the statistics of the United States 
Express Co. was 18.37 cents. (Id., p. 502.) Original exhibits from 
which these statistics were computed by the Interstate Commerce 
Commissiou show that the average charge per ton per mile for both 
companies for express matter handled was 16.84 cents. Apportion- 
ing 47.53 per cent (First Annual Eeport of the Statistics of Express 
Companies, etc, for 1909, p. 19) as that part of their receipts from 
operation paid by the express companies to the railroad companies, 
we have 8.004 cents per ton-mile as the average rate which the rail- 
road companies receive from the express service. By reference to 
the hearings, page 122, it is observed that Mr. V. J. Bradley, repre- 
senting the Pennsylvania Eailroad Co., has practically accepted lower 
figures, apparently based upon similar data. He also states that 
the Bureau of Eailway Economics in its study of the parcel post 
quoted the results of its calculations as 7.7 and 7.5 cents per ton-mile. 



RAILWAY MAIL PAY. 1279 

The ton-miles per annum in the mail service computed as of April 
30, 1913, were 510,827,522. Applying the ton-mile rate of revenue 
received by the railroad companies from the express service, namely, 
8.004 cents, we obtain a total of $40,886,63-4.86 as the mail revenue 
computed on the revenue per ton-mile received by the companies 
from the express service. 

But it may be said that this comparison is solely upon the basis 
of weight and does not take into consideration any variation in space 
per unit of weight; that is, for density of loading. To compensate 
for this the pay based on ton-miles must be translated into pay based 
on space. The average haul of 1 pound of express matter by the 
Adams Express Co., as shown by the table above referred to, was 
166.57 miles, and the average haul of 1 pound of express matter by 
the United States Express Co., as shown by the same table, was 
206.60 miles. The average haul of all express matter was ascertained 
to be 183.72 miles for each pound. 1 The average load of a 60-foot 
express car was ascertained to be 2.57 tons. 2 It is estimated that 
there were 225,633,845 car-miles pro rated to 60-foot car basis per 
annum performed in the mail service as of November, 1913. This 
divided into the ton-miles per annum, 510,827,522 (Hearings, p. 
852) gives a density of load of 2.26 tons. Therefore, to compensate 
for the difference in density of load we may state the proportion as 
follows: 2.57 is to 2.26 as the compensated mail pav is to $40,886,- 
634.86. This produces a result of $46,494,978.58. the annual rate 
of pay for transportation of mails and for railway post office cars on 
June 30. 1913, was $51,466,030. 

It will be remembered that these figures are based upon the ex- 
press rates before they were reduced by the order No. 2408 of the 
Interstate Commerce Commission effective February 1, 1914. It 
has been estimated that this reduction was approximately 16 per cent. 
The department has no other information on this point and can 
not say how reliable this estimate is, but it is lower than that men- 
tioned by the railroads' committee. Applying this reduction to the 
last ascertained amount produces an annual compensation of 
$39,055,782.01. The annual rate of pay for transportation of mails 
and for railway post office cars on June 30, 1913, was $51,466,030. 

It must be remembered, as hereinbefore stated, that this is placing 
the mail service on the basis of the express service and not account- 
ing for the value of such differences between them as may exist. 

1 This is obtained from the original exhibits of the Interstate Commerce Commission, 
showing the total weight carried for the Adams Express Co. and the United States Ex- 
press Co., and the total of both was thus ascertained. The exhibits also showed the 
pounds carried 1 mile for each company, and the total pounds per mile was thus ascer- 
tained. Dividing the pounds carried 1 mile by the total weight, the average haul per 
pound was obtained. 

2 This is obtained as follows: The express car-foot miles (Table 3, Doc. No. 105, 
p. 59) are stated as 1,379.396,873 car-foot miles. The express revenue for the roads rep- 
resented in Table 3 was ascertained by a tabulation from the Interstate Commerce Com- 
mission statistics for 1910. The total annual revenue for the roads listed in Table 3 was 
found to be .$58,973,885. One-twelfth of this amount represents the express revenue 
for one month, or §4,914,490. Dividing this amount by the car-foot miles in the 
express service produces an express revenue per car-foot mile of 3.56278 + mills. The 
total average express revenue per month for the three months of April, August, and 
December, 1909, as shown on page 19 of the 'Statistics of Express Companies, 1909, was 
$5,921,999.90. Dividing this revenue by the revenue rate per car-foot mile for the roads 
represented in Table 3 gives 1,662,184,166 express car-foot miles for the express service 
for one month. The average ton-miles for one month, obtained by multiplying the pounds 
carried, 776,447,397 pounds, average of one month (Statistics of Express Companies, 
1909), by the average haul of 183.72 miles, gives 142,648,915,777 pound-miles, or 71,- 
324,457.88 ton-miles. This average ton-mileage Is comparable with the express car-foot 
miles above shown. Dividing the ton-miles by the car-foot miles gives the average load 
per car. 



1280 BAIL WAY MAIL PAY. 

Furthermore, it is placing the entire subject matter of the mail 
service upon the same basis as the subject matter of the express 
service. 

REPLY TO CRITICISMS OF THE RAILROADS' COMMITTEE RESPECTING THE 

SUGGESTED BILL. 

The statements submitted to the joint committee at the hearings 
held on March 16 and 17, 1914, by Messrs. Peters, Baldwin, and 
Mack, representing the railroads' committee, with reference to the 
tentative draft of a suggested bill for the regulation of railroad- 
mail pay prepared by the department and presented to the joint 
committee February 12, 1914, have been examined. 

In general the statements referred to are a reiteration of the 
claims of the railroads' committee that the railroads are underpaid 
for mail service and a depreciation of any plan which will change 
the present system of adjusting railroad-mail pay, excepting as sug- 
gested by themselves or which will not result in an increase in pay. 
Consequently their presentation is devoid of any fair discussion of 
the provisions of the suggested plan, but makes strenuous objections 
to the provision giving the Postmaster General the power to secure 
information from the Interstate Commerce Commission as to the 
revenue received by railroad companies from express companies for 
service rendered in the transportation of express matter, and to 
arrange for the transportation of mail matter other than first class 
at rates not exceeding those so ascertained ; to that authorizing him 
to petition the Interstate Commerce Commission for the determina- 
tion of a postal carload or less than postal-carload rates for trans- 
portation of mail matter of the fourth class and periodicals and to 
provide for and authorize such transportation at such rates and 
other salutory . provisions, and denounces the provision requiring 
railroad companies to carry the mails under penalty of $5,000. 

It seems to be the idea of the railroads' committee that all those 
powers which would give the Postmaster General authority to pro- 
vide for the transportation of the mails on railroads in the most 
businesslike manner and in the greatest interest of the public should 
be withheld from him. Their objection to the salutary provisions 
which give him the power to invoke the assistance of the Interstate 
Commerce Commission and thereafter to fix equitable and fair rates 
for certain classes of service is without merit. 

With respect to their objection to the provision that all railroad 
companies shall carry the mails, and their argument that the pro- 
vision is unnecessary and drastic, it is sufficient reply that the de- 
partment has been in receipt of a number of communications from 
railroad companies either declining to continue the mail service or 
threatening to do so unless the department accedes to their terms 
for the same, and that it is confronted with a serious problem as to 
how the mail service may be maintained under such conditions. As 
stated at the hearings this condition has been partially brought 
about by the campaign of publicity carried on by the railroads' 
committee, in which they disseminated unwarranted statements calcu- 
lated to disturb the relations which have heretofore existed between 
the railroad companies and the Post Office Department. It is not be- 
lieved by the officers of the department that railroad companies have 



RAILWAY MAIL PAY. 1281 

the public and moral right to decline to carry the mails, and such 
constitutional power as Congress may have in the premises should 
be expressed in some provision requiring the carriage of the mails. 

Such discussion of the proposed plan as has been presented by the 
railroads' representatives is largely directed against the discretion 
reposed in the Postmaster General with respect to the conduct of the 
service. The main features will be examined. 

The objection against the continuance of the present provision of 
law providing that the Postmaster General shall pay rates "not 
exceeding" those named has no merit, and if accepted and those 
words omitted from the statute the Postmaster General would be 
without power to provide in an economical and businesslike way for 
many conditions that arise in the service. If rates were absolutely 
fixed from which the Postmaster General could not vary, there would 
be innumerable instances in the usual conduct of the service where 
disputes would arise between the railroad companies and the Post 
Office Department as to the precise amount due for the service, and 
the usual order of the Postmaster General, which, if it fixes the rate 
within the maximum prescribed by law, has been held by the courts 
to be final, would only mark the beginning of lawsuits, which would 
be numerous and vexatious. 

From the point of view of economical administration such a pro- 
vision is necessary. This is illustrated by instances such as the 
following : 

In the case of competing railroads between common points where 
the mileage differed, in the absence of such provision the depart- 
ment would be compelled to always dispatch the competitive mails 
by the cheaper route, with disastrous results financially to the route 
of longer mileage. A concrete instance may be cited between New 
York and Chicago, where the route of the Pennsylvania Railroad is 
some 50 miles shorter than that of its principal competitor for through 
business. If rates were absolutely fixed the department would be com- 
pelled to send all through mails via the Pennsylvania line, and trans- 
fer thereto mails carried by more expensive lines. We now continue 
the service by the carrying companies who equalize the rates. Under 
the "not exceeding" clause the department is enabled to propose 
to the more expensive line that it carry the competitive mails at the 
lower rate available to the department over the shorter line. It also 
enables a carrying line to retain the haulage of such mails if it 
desires to meet the terms. This is the practice under the existing 
law, and the new plan contemplates its continuance. 

It is submitted that in a service subject to the mutations and 
fluctuations inherent in the mail service a wide latitude of discretion 
for the supervisory officers of the service is necessary if the service 
is to be efficiently and economically administered. Furthermore, the 
language is that of the present law and there does not appear to be 
any valid reason or justification for divesting the Postmaster General 
of a discretion which he has always had and which has never been 
abused. 

The railroads urge that the new plan, by increasing the amount 
of service to be paid for on a space basis, will make the pay of rail- 
roads largely dependent upon the opinions of inspectors anxious to 
make a record and with their superiors slow to disregard recommen- 
dations that may produce possible economies, the railroads will nof 



1282 - EAILWAY MAIL PAY. 

know with definiteness or certainty what its compensation is to be. 
In reply to this it should be said that it must be granted by all that 
the determination of the space needed must necessarily be left with 
the officers of the department. The railroads could not expect the 
Government to accept their statements in such matters. The officers 
of the department are responsible to the Congress and the people for 
the administration of the service^, must render to them an account- 
ing thereof, and could not in their conduct of the service rely upon 
any other reports than those of the departmental field officers in im- 
mediate supervision of the lines. 

Past experience has demonstrated that the causes for disagree- 
ment between the railroads and the department have usually been 
those relating to the construction of the laws and regulations govern- 
ing the authorization of railway post-office car space, particularly 
as to the factors taken into consideration in determining what amount 
of space for purposes for which additional payment is contemplated 
by the statute is needed on a particular train. The department has 
promulgated certain regulations and standards to govern the ques- 
tion, with which the railroad representatives do not agree and to 
some parts of which there have been strenuous objections offered by 
them. The department maintains that the additional payment for 
car space authorized by the statute is for distribution space in cars, 
space for the storage of working and registered mails and those for 
local delivery, and under this construction frequently authorizes pay- 
ment for 40 or 50 feet of space and the company operates a 60 or 70 
foot car in satisfaction of such authorization. 

The companies in most such cases assert that they are running a 
60-foot car and that the department is using the entire space therein 
and therefore should pay for 60 feet instead of the lesser space 
authorized. It may be true that the entire space in the car is util- 
ized, but the excess over the authorized space is occupied by storage 
mails, compensation for which is paid on the weight basis, and 
which, if not carried in the mail car, would necessarily be carried in\ 
the baggage car. The companies have objected to the department's 
construction as to what constitutes mail for local delivery, and this 
has been a frequent cause for disagreement in connection with car 
space. The department takes the ground that mails for local deliv- 
ery comprise that for stations along the line in insufficient quantity 
to warrant a separation, and that if there is a sufficient amount for 
any station or junction point to warrant a separation in piling, it 
becomes storage mail and additional payment for its space is not 
warranted. Objection has also been made to the practice of the de- 
partment on long runs of transferring worked mail from working 
car to storage or baggage car and working mail in the reverse move- 
ment, but it is thought that no one will contend that the department 
ought to pay for space to store mails to be worked several hundred 
miles distant from the initial point of the car run. The department 
is willing and does pay for sufficient space to store the working mails 
necessary to employ the clerks over a reasonable length of run. 

These details of the railroads' objections to the space proposition 
have been given in order to show that under the proposed bill the causes 
for the disagreements as to construction of regulations will largely 
disappear, inasmuch as all the space used will be paid for whether it 
is occupied by distribution requirements, by working mails, regis- 



EAILWAY MAIL PAY. 1283 

tered mails, local-delivery mails, or by storage mails. If the entire 
space in a 60-foot car is occupied by the mails in any way a 60-foot 
car will be authorized under the proposed plan. The present 
authorization in that particular car may be but 40 feet or 50 feet, but 
under the new plan it will be entitled to 60- foot pay and will receive 
that pay in each direction. 

The proposed plan will also eliminate the " half line " and the 
" agreement line," about which so much has been said by the railroad 
representatives, and thereby the differences of opinion between the 
companies and the department with reference thereto will no longer 
exist. 

It is interesting to observe that all the objections which the rail- 
roads' committee have urged against the present system of authori- 
zation of car space and against the proposed bill hold w T ith equal 
force against the railroads' committee's proposed plan to extend the 
pay for space to cover apartment cars. This inconsistency appar- 
ently has not occurred to them. 

With respect to the statement of Mr. Mack that the adoption of 
a five-unit plan would be more complicated than the present plan as 
to the weight feature, as now the mails are simply weighed to the 
route and the daily average ascertained, but the new plan maintains 
this method as to 37 per cent of the routes and as to all others re- 
quires separate weighing of all trains which do not have full railway 
post-office or apartment mail cars, and then as to trains having such 
cars it is necessary that the weight be taken of the mail placed in 
each car for determining the proposed loading rates, it may be said 
that the continuance of the present weighing and adjustment on 37 

Ser cent of the routes does not assume the proportions indicated by 
[r. Mack. The mail car-foot-mileage of the closed pouch routes 
shown in Table 6-F, Document No. 105, was 0.192 per cent of the mail 
car-foot-mileage on all routes. Therefore its insignificance from a 
weighing standpoint is apparent. Furthermore, the weighing on such 
routes is of the simplest character and is principally done by the post- 
masters without cost to the department. This applies with almost 
equal force to the weighing of closed-pouch trains on lines having 
railway post-office and apartment-car service. On most lines of this 
character the closed-pouch trains carry but little mails, and the 
weighing arrangements are simple and inexpensive. They can be 
handled with equal facility under the new plan. As to the weighing 
at terminals to determine the basis for loading charges, the depart- 
ment does not anticipate any difficulty or complication in securing 
these weights. As a matter of fact, mails are now separated at a ma- 
jority of stations and at practically all terminals for the several cars 
of a train, and the weights for each particular car can be ascertained 
and determined without trouble. Under present methods of weigh- 
ing and the system of truck tickets in vogue the separate weights 
per car are available if desired. 

Answering the criticism of Mr. Mack as to the further complica- 
tion that might ensue under the operation of the new plan if mails 
due to ordinarily connect a mail or storage car missed connection and 
were transported in a following train upon which there was no mail 
or storage car, the pay for the latter train being on a weight basis, 
there would be no compensation to the company for the carriage of 
the delayed mails, it may be stated that in such a case the pay for 



1284 RAILWAY MAIL PAY. 

the mail or storage car would not be reduced because of the missed 
connection; furthermore, there would be as much probability of 
missed connections during the statistical period as otherwise, and, 
therefore, the company would be adequately compensated on the 
weight basis. 

Mr. Mack further states in this connection that it would be possible 
for the mail to be confined or limited during the weighing period 
to trains paid for on a space basis and thereafter to be carried on 
trains on which the mail carried is paid for on a weight basis, and 
as the mails transferred to such train were not carried thereon dur- 
ing the period of weighing the company would receive no compen- 
sation for its carriage. This criticism involves the assumption that 
the officers of the Government will be guilty of sharp practices in 
order to reduce the compensation to the railroads. The department 
does not wish any railroad to carry mails without compensation, 
neither would it countenance such practices as would be necessary to 
warrant the fears of Mr. Mack. The exigencies and demands of 
the service would govern and affect the action of the department in 
determining what mails were proper to handle in closed-pouch trains, 
and those influences would be as potent during the nonweighing 
period as during the weighing period. Undoubtedly previous to the 
weighing period steps would be taken to insure all mails possible 
being carried in the space paid for, and the maintenance of the 
policy of good faith with the railroads which the department has 
always endeavored to follow would dictate that the conditions ex- 
isting during the weighing period should continue thereafter in so 
far as the fluctuating demands of the service will permit. 

The assumption of Mr. Mack that a single route might have every 
factor represented in the service thereon and that consequently 67 
separate and distinct computations would be necessary in order to 
ascertain the compensation on a route is an exaggeration. It is so 
improbable as to amount to a negligible consideration. The officers 
of the department are satisfied that the process of ascertainment of 
the compensation of a railroad will be much simpler than under the 
present system. In the first place there will be relief from the 
greater part of the expensive and annoying weighings, with the 
resulting voluminous consolidations and computations to ascertain 
the average daily weights and the rates per mile. The proposed plan 
continues the weighings on closed-pouch routes and trains, but, as 
pointed out hereinbefore, such service is but a small part of the 
whole service. On the railway post-office apartment and storage 
cars it simply involves the collection of data as to space, frequency, 
mileage, and load at terminals. With these data at hand the com- 
putations will be simple and the compensation can be readily ascer- 
tained without difficulty. Tables of rates, constant and loading 
terminal charges for different weights, etc., can be prepared, further 
simplifying the work of adjustment. The department views with 
equanimity the question of alleged complicated rates, and submits 
that even if Mr. Mack's contention were true it would be a poor 
argument in condemnation of the plan if it were scientific otherwise. 
No service as extensive and fluctuating as the great mail service of 
the country can expect to be administered upon a single basis. The 
efforts of the department in the study of the subject have been 
directed toward devising a plan that would be as simple as possible 



E AIL WAY MAIL PAY. 1285 

in a service of such complex and varying character, and believes that 
the tentative plan presented in volume 8 is such a plan. 

The criticisms with regard to the changes in the plans proposed 
by the department since the commencement of the present inquiry 
are not valid arguments against the merits of the suggested bill. 
These are evidence, rather, of the disposition of the department's 
officers to present the best results of study and judgment. This 
should be appreciated r.ather than depreciated. It is to be regretted 
that the railroads' committee have not reached some advanced posi- 
tion beyond that at which it started, or that it could not have con- 
tributed something constructive to the solution of the problem. 

The papers of the railroads' representatives discuss in general 
terms the rates named in the suggested bill, and claim that they are 
noncompensatory, discriminatory, and confiscatory. In view of the 
presentation of the department on the subject of compensation, it is 
unnecessary to give any further attention to such claims. 

The railroads' representatives further contend that the car-mile 
rate provided in the bill for apartment cars should be relatively the 
same as that paid for full railway post-office cars, on the ground that 
the expense to the companies is relatively the same in each case, and 
that if any distinction is to be made it should rather be in an in- 
creased rate for apartment cars, because of the retail character of the 
service performed by the latter, and, further, because in many cases 
the requirement of the running of an apartment car necessitates the 
operation of an extra 60-foot car, the remainder of which can not be 
utilized by the companies for their own purposes. 

Adequate reply to this has been frequently made at the hearings 
and set forth in the department's statement heretofore filed. The 
operation of an entirely independent car in a train as a full railway 
post-office car can not be considered the same as the operation for 
the department of an apartment in a car which must be run and 
part of which is occupied by the railroad company for its own uses. 
Furthermore, the construction of a full car is, as a rule, much more 
expensive. In view of all of the considerations there is no warrant 
for paying as high for an apartment in a car, part of which is used 
by the railroad company for its own purposes, as for a full car which 
is operated in a train solely for the use of the department. 

In his statement as to what would be necessary in the line of con- 
struction of cars by the companies under the requirements of the new 
plan, Mr. Mack seeks to convey the impression that the conditions in 
the service would radically change from those at present existing 
and to meet them the companies would find it necessary to construct 
and keep on hand a stock of each and every size of car specified in 
the tentative draft in order to meet the demands of the department. 
This was negatived at the hearing, but brief reference may be made 
to it again. The railroad representatives apparently base their asser- 
tion upon the theory that under the administration of the tentative 
plan, if it becomes law, the service at present being performed will 
be radically changed and that the department will at once proceed to 
cut down the postal-car service to a minimum, and in doing this will 
make demands on the railroads for the furnishing of cars of every 
size on every road. Anyone familiar with the Railway Mail Service 
will at once see that the view is unwarranted. As the departmental 



1286 BAILWAY MAIL PAY. 

officers view the probable application of the provisions of the sug- 
gested draft of law to the service, it will in most cases simply be a 
continuation of the present facilities furnished with such readjust- 
ments of space and authorization as seem to be required. There will 
be no radical disruption of present conditions. The cars now running 
will continue to run; new cars will not be necessary. The tendency 
will be, as explained at the hearings, to concentrate the mails on a 
train in the mail car or compartment where it can be done rather than 
to continue the loading of storage mails in the baggage car or com- 
partment. This policy will undoubtedly justify the allowance of the 
full space in most cars or apartments now operated of a size in excess 
of the space needed for distribution and allied purposes, which only 
can be specially compensated for under the present law. The fears of 
the railroads as expressed in this respect are not well founded. 

CONCLUSION. 

. The Post Office Department, believing that this extended examina- 
tion of its data and conclusions has substantially verified them, 
respectfully submit the whole to the consideration of the joint com- 
mittee. 

Joseph Stewart, 
Second Assistant Postmaster General. 



APPENDIX A. 

Statement of Differences Between Apartment and Full Railway Post 
Office Car Space Reported by the Companies Comprising the Missouri 
Pacific System and as Tabulated by the Department Showing Reasons 
For Charges to " Dead Space." 

apartment-car space. 

Route 145040, Pleasant Hill to Joplin, Mo., Missouri Pacific Railroad : 
Company reported 30 feet distribution space and 25 feet deadhead in trains 
207 and 208, evidently operating a 55-foot car.- Thirty feet is all that was 
needed in either train. It could hardly be contended that the department should 
pay for deadhead space in each direction. The car-foot miles representing this 
deadhead movement was charged to " dead space." 

Between C. & W. Junction and Webb City 22 feet deadhead apartment-car 
space in each direction in trains 631 and 632 was charged by company. No 
apartment-car service in these trains, and the car was apparently run by com- 
pany for its own purposes. Charged by department to "dead space." 

Five feet of storage space charged by company in the 30-foot apartment car 
operated in train 209, but which Railway Mail Service stated was not needed, 
was charged by the department to "dead space." 

Total "dead space" on route, 235,148 car-foot miles, none of which could be 
legitimately charged as mail space. 

Route 145042, Sedalia to Warsaw, Mo., Missouri Pacific Railroad : 
Company charged 20 feet apartment-car space in trains 636 and 637 daily, 
Including Sunday, whereas service not required on Sunday. Also charged .5 
foot closed-pouch space on each day, whereas closed-pouch service only per- 
formed on Sunday. Necessary and proper revisions charged 6,776.46 car-foot 
miles to " dead space." 

Route 145047, Jefferson City to Bagnell, Mo., Missouri Pacific Railroad: 
Company charged 16 feet apartment-car space daily, including Sunday. No 
postal-car service on Sunday, but closed pouches carried. Necessary and proper 
revisions charged 5,558.63 car-foot miles to " dead space." 

Route 145092, Cole Junction (n. o.) and Myrick Station (n. o.), Mo., Missouri 
Pacific Railroad: 

Company reported 19 feet apartment-car space and 9 feet storage space in 
train 5 and 19 feet apartment-car space and 8 feet storage space in train 6. 
Railway Mail Service reported 15 feet only necessary in either train. Company 
also charged 5 feet space in baggage car in each of trains 631 and 632. Depart- 
ment charged mail service with 15 feet apartment space in each direction and 
1.25 feet closed-pouch space in train 631 and 0.83 foot in train 632 and charged 
remainder to " dead space " — 88,537 car-foot miles. 
Route 145100, Webb City to Granby, Mo., Missouri Pacific Railroad: 
Company reported 22 feet apartment-car space in two trains over route daily, 
except Sunday. No postal-car service on this line. Space charged to " dead 
space," 27,772.80 car-foot miles. 
Route 155031, Osowatomie to Deering, Kans., Missouri Pacific Railroad : 
Company reported 30 feet deadhead apartment-car space in trains 103 and 
104 between Osawatomie and Yates Center, in addition to regular 30-foot apart- 
ment car. Not used or necessary for postal purposes. Charged to " dead 
space," 121,140 car-foot miles. 

Route 155036, Fort Scott to Kiowa, Kans., Missouri Pacific Railroad: 
Company reported 23 feet apartment-car space in trains 407 and 408, 703 
and 704, and 20 feet in trains 705 and 706. Space necessary to handle all mails 
as reported by Railway Mail Service was 20 feet in trains 407 and 408 and 14 
feet in other trains. Balance of space, 83,847.24 car-foot miles, charged to 
" dead space." 

1287 



1288 RAILWAY MAIL PAY. 

Route 155040, Atchison, Kans., to Omaha, Nebr., Missouri Pacific Railroad: 
The company reported 26 feet apartment-car space in trains 131 and 132 and 
23 feet of distribution space and 1 foot of storage space in trains 137 and 138. 
The space actually needed in trains 131 and 132 was reported by the Railway 
Mail Service to be 20 feet. No postal-car service operated in trains 137 and 
138, the only mail service on those trains being closed-pouch service. The 
department charged to " dead space " on this route 52,231.32 car-foot miles, rep- 
resenting the items above detailed. 

Route 155046, Eldorado to McPherson, Kans., Missouri Pacific Railroad : 
Company reported 16 feet apartment-car space in trains 749 and 762. Rail- 
way Mail Service reported 12 feet actually needed. The residue, amounting to 
12,812.80 car-foot-miles, was charged to "dead space." 

Route 155067, Ottawa, Kans., to Towner, Colo., Missouri Pacific Railroad : 
Company reported 22 feet apartment-car space used by the mails. Railway 
Mail Service reported 20 feet as ample for all purposes. The residue, amount- 
ing to 13,563.68 car-foot-miles, charged to " dead space." 

Rouse 155067, Ottawa, Kans., to Towner, Colo., Missouri Pacific Railroad: 
Company reported 30 feet apartment-car space and 30 feet deadhead space 
in each of four trains. 30-foot apartment car answered all needs of these 
trains. Apparently company operated 60-foot car and charged mail service 
with fufll space on this route ; 1,390,806 car-foot miles charged to " dead space," 
representing the deadhead space reported by the company. 
Route 155074, Conway Springs to Larned, Kans., Missouri Pacific Railroad: 
Company reported 18 feet apartment-car space in two trains. Railway Mail 
Service reported 16 feet ample for all needs of the service; 12,740.40 car-foot- 
miles charged to " dead space," representing the balance of space reported by 
the company not needed by the department. 

Route 155080, Rich Hill, Mo., to Fort Scott, Kans., Missouri Pacific Railroad : 
Company reported 23 feet apartment-car space in trains 407 and 408. Rail- 
way Mail Service reported 20 feet ample for all purposes. The balance, 4,899.6 
car-foot-miles, charged to "dead space." 

Route 155084, Kansas City, Mo., to Atchison, Kans., Missouri Pacific Railroad : 
Company reported 26 feet of apartment-car space in trains 131 and 132. 
Railway Mail Service reported 20 feet ample for all purposes. The balance, 
representing 14,682.72 car-foot-miles, charged to " dead space." In closed-pouch 
service on this route the company reported 6 feet of space in train 101 to ac- 
commodate a maximum of 69 and a minimum of 25 pouches and sacks in the 
car at one time, and, in train 102, 7 feet of space to accommodate a maximum 
of 6 pouches and a minimum of 1 pouch and sack in a car. Under depart- 
mental rules the allowance in train 101 was 5.83 feet, and in train 102, 0.83 foot. 
Balance charged to passenger space. 
Route 155091, Kansas City, Mo., to Ottawa, Kans., Missouri Pacific Railroad : 
Company reported 30 feet of apartment-car space in each of trains 1, 2, 3, 4, 
103, 104, 105, and 106, and 30 feet deadhead apartment-car space in each of 
trains 1, 2, 3, 4, 103, and 104. The Railway Mail Service reported that 30 feet 
of space was ample in any one of these trains. Apparently the company oper- 
ated 60-foot cars and charged full space to the mails. The car-foot-miles, 
401,544, represented by this deadhead movement, were charged to " dead space." 
Route 155094, Warwick, Kans., to Prosser, Nebr., Missouri Pacific Railroad: 
Company reported 14 feet of apartment-car space in trains 643 and 644. 
Railway Mail Service reported 12 feet ample for the needs of those trains. The 
balance was charged to "dead space" and equaled 7,528.56 car-foot-miles. 
Route 155095, Gypsum to Marquette, Kans., Missouri Pacific Railroad: 
Company reported 30 feet of apartment-car space in trains 1 and 2 and 30 feet 
deadhead apartment-car space in same trains. Railway Mail Service reported 
30 feet ample for all mail purposes in those trains; the balance, amounting to 
48,348 car-foot-miles, charged to " dead space." Apparently company operated 
60-foot car and charged full space to mail service. 

Route 157038, Omaha to Auburn, Nebr., Missouri Pacific Railroad : 
Company reported 23 feet apartment-car distribution and 5 feet storage 
space in trains 137 and 138, and 16 feet apartment-car space in trains 645 and 
and 648. Railway Mail Service reported 12 feet of space sufficient in trains 
137 and 138 and 15 feet in trains 645 and 648. That amount of space was 
charged to the mail service, and the balance, equaling 67,517.84 car-foot-miles, 
charged to " dead space." 

Route 157040, Union to Lincoln, Nebr., Missouri Pacific Railroad : 
Company reported 16 feet apartment-car distribution space and 2 feet storage 
space in trains 633 and 634 and 16 feet of distribution space in trains 638 and 



BAIL WAY MAIL PAY. 1289 

639. Fifteen feet reported by Railway Mail Service as being ample in all 
trains. This was charged to the mail service and the balance, equaling 9,907 
car-foot miles, charged to " dead space." 

Route 157059, Talmage to Crete, Nebr., Missouri Pacific Railroad: 

Company reported 16 feet appartment-car space in trains 645 and 648. Fifteen 
feet ample for postal purposes in those trains, which was charged to mail 
service. The balance, equaling 3,019.64 car-foot miles, charged to " dead space." 

Route 165036, Towner to Pueblo, Colo., Missouri Pacific Railroad : 

Company reported 30 feet distribution apartment-car space in each of trains 
1, 2, 3, and 4, and 30 feet deadhead space in each of the same trains. Thirty 
feet ample for all postal purposes. Apparently company operated 60-foot car 
and charged all space to mail service. The space reported by company as 
deadhead space, equaling 541,584 car-foot miles, was charged to " dead space." 

Route 147009, Nashville to Hope, Ark., Missouri Pacific Railroad : 

Company reported 16 feet of space in each of four trains. Fifteen feet 
needed by department. Balance, amounting to 2,838.08 car-foot miles, charged 
to " dead space." 

Route 147051, Paris to Fort Smith, Ark., Missouri Pacific Railroad : 

Company reported 14 feet apartment-car space daily, including Sunday. 
Postal-car service on week days only, closed-pouch service being performed on 
Sundays. Charge against mail service was revised accordingly and resulted 
in charging to " dead space " 4,868.64 car-foot miles. 

Route 147002, Helena to Clarendon, Ark., Missouri Pacific Railroad : 

Company reported 15 feet apartment-car space in trains 829 and 830 daily, 
including Sunday. No postal-clerk service on these trains on Sundays, closed- 
pouch service only being performed on that day. The charge against mail serv- 
ice was revised accordingly and resulted in a charge to " dead space " of 
5,491.41 car-foot miles. 

Route 147017, Smithton to Pike, Ark., Missouri Pacific Railroad : 

Company reported 18 feet apartment-car space in trains 1 and 2. Railway 
Mail Service reported 15 feet sufficient for postal purposes in these trains. The 
balance, amounting to 3,447 car-foot miles, charged to " dead space." 

Route 165001, Pueblo to Trinidad, Colo., Denver & Rio Grande, Missouri 
Pacific System: 

Company reported 30 feet of apartment-car space in trains 109 and 114, 
Department reported 15 feet ample for postal purposes in those trains. Com- 
pany also reported 6 feet storage space in train 115 in addition to the 30-foot 
apartment car. Railway Mail Service reported as not necessary. The sur- 
plus space was charged to " dead space," and amounted to 91,268 car-foot miles. 

Route 165004, Mears Junction to Espanola, N. Mex., Denver & Rio Grande, 
Missouri Pacific System: 

Company reported 25 feet distribution apartment-car space and 20 feet storage 
space in trains 115 and 116; 20 feet apartment-car space in trains 317 and 
318; 20 feet apartment-car space and 3 feet storage in train 425, and 20 feet 
apartment and 4 feet storage space in train 426. Railway Mail Service reported 
25 feet sufficient in trains 115 and 116, 15 feet in trains 317 and 318, and 12 feet 
in trains 425 and 426. The surplus space, amounting to 108,278 car-foot miles, 
charged to "dead space." 

Route 165012, Salida to Grand Junction, Colo., Denver & Rio Grande, Missouri 
Pacific System : 

Company reported 20 feet of apartment-car space and 3 feet of storage space 
in train 315, Salida to Montrose, and 30 feet of apartment-car space in same 
train, Montrose to Grand Junction, 30 feet apartment-car space in train 316 
between Grand Junction and Montrose, and 26 feet, Montrose to Salida, and 
20 feet apartment-car space in trains 317 and 318, Salida to Mears. Railway 
Mail Service reported 20 feet sufficient in trains 315 and 316, and 15 feet in 
trains 317 and 318. This amount of space was charged to mail service and 
the balance, equaling 46,444 car-foot miles, charged to " dead space." 

Route 165018, Glen wood Springs to Aspen, Colo., Denver & Rio Grande, Mis- 
souri Pacific System : 

Company reported 30 feet apartment-car space in trains 227 and 228. Rail- 
way Mail Service reported 10 feet sufficient. The balance was charged to 
" dead space " and equaled 51,240 car-foot miles. 

Route 165019, Denver to Newcastle, Colo., Denver & Rio Grande, Mis- 
souri Pacific system : 

Company reported 30 feet of apartment-car space and 20 feet storage space 
in train 5 as necessary, a total of 50 feet. Railway Mail Service reported 

49396—14 89 



1290 RAILWAY MAIL PAY. 

that 40 feet space was sufficient. The balance was charged to "dead space" 
and equaled 77,658 car-foot miles. 

Route 185025, Delta to Somerset, Colo., Denver & Rio Grande, Missouri 
Pacific System: 

Company reported 21 feet of apartment-car space in trains 377 and 378. 
Railway Mail Service reported 10 feet sufficient for postal purposes. The 
balance, 11 feet, was charged to "dead space" and equaled for the period 
28,030 car-foot miles. 

Route 165037, Montrose to Ouray, Colo., Denver & Rio Grande, Missouri 
Pacific System: 

Company reported 20 feet apartment-car space in train 367 and 26 feet in 
train 368. Railway Mail Service reported 15 feet sufficient in each train, which 
was charged. The balance, equaling 17,230.50 car-foot miles, charged to " dead 
space." 

Route 165042, Newcastle to Grand Junction, Colo., Denver & Rio Grande, Mis- 
souri Pacific System: 

Company reported in trains 3 and 5, in addition to 30 feet apartment- 
car space, 1 foot storage space in train 3 and 5 feet storage in train 5. 
Railway Mail Service reported that this space was not necessary, and it was 
therefore charged to " dead space." which equaled 13,841 car-foot miles. 

Route 167002, x\ntonito to Silverton, Colo., Denver & Rio Grande, Mis- 
souri Pacific System : 

Company reported 20 feet apartment-car space in trains 115 and 116 be- 
tween Antonito and Durango and in the same trains between Durango and 
Silverton. Railway Mail Service reported 10 feet of space ample between 
Durango and Silverton. Surplus space charged to " dead space," 27,108 
car-foot miles. The car in these trains between Durango and Silverton was 
not the same car operated between Antonito and Durango. 

Route 167011, Espanola to Santa Fe, N. Mex., Denver & Rio Grande, Mis- 
souri Pacific System: 

Company reported 20 feet apartment-car space, while Railway Mail Service 
reported 12 feet sufficient for all purposes. Balance, amounting to 14,032 
car-foot miles, charged to " dead space." 

Route 169002, Grand Junction, Colo., to Ogden, Utah, Denver & Rio Grande, 
Missouri Pacific System: 

Company reported 21 feet apartment-car space in trains 409 and 410 be- 
tween Springville and Salt Lake. Railway Mail Service reported 15 feet suffi- 
cient for postal purposes. Company also reported 4 feet storage space addi- 
tional to 30-foot apartment car in train 5 between Grand Junction and Ogden. 
Railway Mail Service stated 30 feet ample for all postal purposes. The surplus 
space, amounting to 57,228 car-foot miles, charged to " dead space." 

Route 169015, Springville, Utah, to Silver City, N. Mex., Denver & Rio Grande, 
Missouri Pacific System: 

Company reported 21 feet apartment-car space in trains 409 and 410. Rail- 
way Mail Service reported 15 feet sufficient for postal purposes. The balance, 
amounting to 16,232.40 car-foot miles, charged to " dead space." 

Route 150008, Houston to Columbia, Tex., International & Great Northern, 
Railway, Missouri Pacific System : 

Company charged mail service with 17 feet apartment-car space in trains 
404 and 405. Railway Mail Service reported 15 feet ample for postal pur- 
poses'. The balance amounting to 5,233.28 car-foot miles, charged to "dead 
space." 

Route 150032, Mineola to Troup, Tex., International & Great Northern Rail- 
way, Missouri Pacific System: 

Company reported 21 feet apartment-car space in trains 205 and 206. Fifteen 
feet reported sufficient by Railway Mail Service. Balance, amounting to 
15,912 car-foot miles, charged to " dead space." 

Route 150126, San Antonio to International Boundary, Texas, International 
& Great Northern Railway, Missouri Pacific System: 

Company reported 30 feet apartment-car space and 37 feet storage in train 
5, and 30 feet apartment-car space and 30 feet deadhead space in train 4. 
Railway Mail Service reported 30 feet apartment-car space and 15 feet storage 
sufficient in train 5, and 30-foot apartment car sufficient in train 4. Company 
apparently operated 60-foot car. Forty-five feet was charged to mail service in 
train 5 and 30 feet in train 4. The balance, amounting to 240,052.80 car-foot 
miles, charged to " dead space." 



RAILWAY MAIL PAY. 1291 

Route 149056, F. & S. Junction (n. o.) to Monroe, La., Little Rock & Monroe 
Railway Co., Missouri Pacific System: 

Company reported 16 feet apartment-car space and 6 inches closed-pouch 
space daily, including Sunday. Railway Mail Service reported 15 feet apart- 
ment-car space used by mail service daily except Sunday and closed-pouch 
space Sunday only. The correct assignment of space resulted in charging to 
" dead space " 7,018.20 car-foot miles. 

Route 147067, P. B. & W. Junction (n. o.) to Benton, Ark.. Pine Bluff & West- 
ern Railroad Co., Missouri Pacific System. 

Company reported 23 feet apartment-car space daily, including Sunday. 
Railway Mail Service reported 15 feet of space sufficient and only used daily 
except Sunday, closed-pouch service being performed on Sunday. Reassign- 
ment of space on this basis resulted in charge to " dead space " of 26,552.49 
car-foot miles. 

Route 145027, Cairo, 111., to Poplar Bluff, Mo., St. Louis, Iron Mountain & 
Southern Railway Co., Missouri Pacific System: 

Railroad reported 20 feet apartment-car space in trains 431 and 436. Railway 
Mail Service reported 15 feet ample for postal purposes. The balance, amount- 
ing to 22,086 car-foot miles, charged to " dead space." 

Route 145034, Bismarck, Mo., to Columbus, Ky., St. Louis, Iron Mountain & 
Southern Railway Co., Missouri Pacific System : 

Company reported 26 feet apartment-car space in trains 422, 423, 410, and 
425. Railway Mail Service reported 20 feet ample in trains 422 and 423 and 
none needed or used in trains 410 and 425. In the first two trains the balance 
was charged to " dead space " and amounted to 43,488 car-foot miles. In trains 
410 and 425 the space reported was thrown into passenger space and was not 
tabulated separately. Departmental rule was not followed here. 

Route 145062, Springfield to Crane, Mo., St. Louis, Iron Mountain & Southern 
Railway Co., Missouri Pacific System : 

Original statement of company reported only two trains on this route. 
Investigation disclosed the fact that four additional trains were operated, 
which upon being reported to the company brought forth a supplemental re- 
port for such trains, which added 406,440 car-foot miles to the passenger 
service. 

Route 147004, Halley to Warren, Ark., St. Louis, Iron Mountain & Southern 
Railway Co., Missouri Pacific System : 

Company reported 18 feet apartment-car space in trains 825 and 826 daily, 
including Sunday. Railway Mail Service reported a car used for postal pur- 
poses daily except Sunday, no mail service of any kind being performed on 
Sunday, and that 15 feet of space was sufficient on week days. The balance, 
amounting to 13,389 car-foot miles, charged to " dead space." 

Route 147012, Knobel to Helena, Ark., St. Louis, Iron Mountain & Southern 
Railway Co., Missouri Pacific System: 

Company reported 21 feet of apartment-car space and 4 feet of storage space 
in trains 9 and 10, and 20 feet of apartment-car space in trains 309 and 310. 
Railway Mail Service reported 20 feet of space ample for postal purposes in 
all trains. The balance, amounting to 28,032 car-foot miles, charged to " dead 
space." 

Route 147023, Memphis, Tenn., to Bald Knob, Ark., St. Louis, Iron Mountain 
& Southern Railway Co., Missouri Pacific System: 

Company reported 20 feet of apartment-car space in trains 223 and 204, and 
16 feet of apartment-car space and 3 feet storage space in train 205, 16 feet 
apartment-car space in train 202, and 30 feet apartment car and 2 feet storage 
in train 931. Railway Mail Service reported 15 feet of space ample for all 
postal purposes in the first four trains named and 30 feet in train 931. Sur- 
plus space was charged by the department to " dead space," and amounted to 
44,640 car-foot miles. 

Route 147044, McGehee, Ark., to Clayton Junction, La. ; St. Louis, Iron 
Mountain & Southern Railway Co., Missouri Pacific System : 

Company reported 18 feet apartment-car space in trains 825 and 826 daily, 
including Sunday. Railway Mail Service reported 15 feet apartment-car space 
utilized only on week days, with closed-pouch service on Sundays. Reassign- 
ment of space on this basis resulted in charge to "dead space" of 2,699.52 
car-foot miles. 

Route 147057, Arkansas Southwestern Railway Junction (n. o.) to Womble, 
Ark. ; Gurdon & Fort Smith Railway, Missouri Pacific System : 



1292 RAILWAY MAIL PAY. 

Company reported 18 feet apartinent-car space in trains 1 and 2. Railway 
Mail Service reported 15 feet sufficient for postal purposes. The balance, 
amounting to 7,090.20 car-foot miles, was charged to " dead space." 

Route 147060, Arkansas City to Trippe Junction (n. o.), Ark.; St. Louis, Iron 
Mountain & Southern Railway Co., Missouri Pacific System: 

Company reported 15 feet apartment-car space in each of four trains daily, 
including Sunday. Postal-clerk service in these trains on week days only, 
closed-pouch service being performed on Sundays. Reassignment of space on 
this basis charged to " dead space," 4.256.48 car-foot miles. 

Route 153005, Fort Smith, Ark., to Coffeyville, Kans. ; St. Louis, Iron 
Mountain & Southern Railway Co., Missouri Pacific System : 

Company reported 30 feet apartment-car space and 30 feet "deadhead 
space" in each of trains 103 and 104. Railway Mail Service reported 30 feet 
apartment-car space all that was needed in those trains. Company apparently 
operated 60-foot car and charged department with full space. The surplus 
was charged to "dead space," and amounted to 295,002 car-foot miles. 

Route 147026, Little Rock to Altheimer, Ark.; St. Louis Southwestern Rail- 
way Co., Missouri Pacific System : 

Company reported 26 feet of apartment-car space in trains 31 and 32 daily, 
including Sunday, and the same amount of space in trains 35 and 36. Railway 
Mail Service reported 15 feet ample on each train, and that postal-clerk service 
was performed in trains 31 and 32 daily, except Sunday, closed-pouch service 
being performed on Sunday. Reassignment of space on basis of needs resulted 
in charging to " dead space " 63,699.79 car-foot miles. 

Route 147030, Stuttgart to Gillett, Ark.; St. Louis Southwestern Railway 
Co., Missouri Pacific System : 

Company charged mail service with 26 feet apartment-car space in trains 
25 and 26. Fifteen feet reported sufficient for postal purposes. Balance 
•charged to " dead space," amounting to 23,123 car-foot miles. 

Route 147042, Cairo, 111., to Texarkana, Tex.; St. Louis Southwestern Rail- 
way Co., Missouri Pacific System : 

Company reported 26 feet apartment-car space, trains 1 and 2 between Alden 
and Jonesboro, and 4 feet storage space additional in train 2. Railway Mail 
Service reported 15 feet ample for postal purposes. Also reported 30 feet 
"deadhead space" in trains 3 and 4 between Fair Oaks and Maiden. Rail- 
way Mail Service reported this space not needed in either train. Company 
evidently operated 60-foot car and charged mail service with all space. Com- 
pany also reported 26 feet apartment-car space in trains 25, 26, 31, and 32, 
in which trains Railway Mail Service reported 15 feet ample for postal pur- 
poses. The surplus space was charged to " dead space," and amounted to 
280,808.40 car-foot miles. 

Route 149019, Lewisville, Ark., to Shreveport, La. ; St. Louis Southwestern 
Railway Co., Missouri Pacific System : 

Twenty-six feet apartment-car space charged to mail service in trains 23 
and 24. Fifteen feet reported ample for postal purposes. The balance, equal- 
ing 35,361 car-foot miles, charged to " dead space." 

Route 150164, Corsicana to Hillsboro, Tex., St. Louis Southwestern Railway 
•Co., Missouri Pacific System : 

Company reported 25 feet of apartment-car space in trains 503 and 504 daily, 
including Sunday. No postal-clerk service on these trains on Sundays; closed- 
pouch service being performed; and 15 feet ample on week days. Rearrange- 
ment of space on this basis resulted in charging to " dead space " 29.663.80 car- 
foot miles. 

Route 150067, Mount Pleasant to Fort Worth, Tex., St. Louis Southwestern 
Railway Co., Missouri Pacific System : 

Company reported 26 feet apartment-car space in each of trains 101, 102, 103, 
and 104. Railway Mail Service reported 25 feet necessary in train 101, and 
20 feet in each of the other trains, which was charged by the department to the 
mail service. The balance, amounting to 88,224.60 car-foot miles, was charged 
to " dead space." 

An error was made here in that 25 feet was not charged to mail space in 
train 102, the return movement of train 101. Had this been properly charged 
it would have reduced the charge to " dead space " 23,217 car-foot miles. 

Route 150025, Texarkana to Waco, Tex.; St. Louis Southwestern Railway 
Oo., Missouri Pacific System : 

Company reported 30 feet apartment-car space in trains 3 and 4. This was 
reduced to 20 feet by the department, except in train 4 between Mount Pleasant 



E AIL WAY MAIL PAY. 12 93 

and Texarkana. It appears that in this case the department made an error 
and should have charged only 20 feet between Mount Pleasant and Texarkana, 
instead of 30 feet. The readjustments actually made charged to dead space 
136,470 car-foot miles. This should have been increased 18,138 car-foot miles 
making a total of 154,608 car-foot miles. 

Route 150042, Noel Junction to Dallas, Tex. ; St. Louis Southwestern Railway 
Co., Missouri Pacific System : 

Company reported 26 feet of apartment-car space in each of trains 201, 202, 
205, and 206. Railway Mail Service reported 25 feet necessary in train 201, 
and 20 feet in the other trains, which was charged to mail service by the de- 
partment, the balance going to " dead space." 

An error was made here in that 25 feet of space should have been charged 
to mail service in train 202. This would have reduced the amount of car-foot 
miles charged to dead space 2,120 car-foot miles, making the total 5,S60, instead 
of 7,980 car-foot miles. 

Route 150144, Tyler to Lufkin, Tex.; St. Louis Southwestern Railway Co., 
Missouri Pacific System : 

Company reported 22 feet apartment-car space in trains 403 and 404. Rail- 
way Mail Service reported 15 feet sufficient for postal purposes. The balance, 
amounting to 37,636.20 car-foot miles, charged to " dead space." 

Route 150060, Commerce to Sherman, Tex.; St. Louis Southwestern Railway 
Co., Missouri Pacific System : 

Company reported 26 feet apartment-car space in trains 203 and 204. Rail- 
way Mail Service reported 15 feet ample for postal purposes. Balance, amount- 
ing to 34,452 car-foot miles, charged to " dead space." 

Route 150127, Waco to Gatesville, Tex. ; St. Louis Southwestern Railway 
Co., Missouri Pacific System : 

Company reported 22 feet apartment-car space in trains 1 and 2. Railway 
Mail Service reported 15 feet sufficient. Balance charged to " dead space," 
equaling 19,740 car-foot miles. 

Route 149002, New Orleans, La., to Marshall, Tex. ; Texas & Pacific Railway 
Co., Missouri Pacific System : 

Company reported 25 feet apartment-car space in trains 55 and 56 between 
New Orleans and Addis, and in trains 57 and 58 between Shreveport and Mar- 
shall. Railway Mail Service reported 20 feet ample in the former trains, and 
do postal-clerk service in the two latter trains. Readjustment of space by the 
department charged to "dead space" 76,791 car-foot miles. 

Route 149017. Cypress to Shreveport, La. ; Texas & Pacific Railway Co., Mis- 
souri Pacific System : 

Company reported 25 feet apartment-car space in trains 75 and 76 daily, in- 
cluding Sunday. No postal-clerk service in those trains on Sunday; closed- 
pouch service only being performed, and 15 feet reported ample for postal pur- 
poses. Reassignment of space on this basis resulted in charging to "dead 
space " 62,222 car-foot miles. 

Route 149018, Addis to Ferriday, La., Texas & Pacific Railway Co., Missouri 
Pacific System. 

Company reported 25 feet apartment-car space in trains 61 and 62 between 
Addis and Ferriday, and 55 and 56 between Addis and Torras. Railway Mail 
Service reported 15 feet ample in first two trains, and 20 feet in trains 55 and 
56. Surplus space charged to "dead space" and equaled 85,008 car-foot miles. 

Route 149034, Simmesport to Bunkie, La., Texas & Pacific Railway Co., Mis- 
souri Pacific System : 

Company reported 11 feet apartment-car space daily, including Sunday. No 
postal-clerk service on this train on Sunday, closed-pouch service only being 
performed on that day, and 10 feet was ample for postal purposes. Reassign- 
ment of space on this basis charged to " dead space," 3,570 car-foot miles. 

Route 149035, Junction to Macksville, La., Texas & Pacific Railway Co., 
Missouri Pacific System: 

Company reported 11 feet of apartment-car space in each of four trains 
daily, including Sunday. No postal-clerk service in these trains on Sunday, 
and 10 feet of space ample for postal purposes. Readjustment of space on 
this basis charged to "dead space," 2,464 car-foot miles. 

Route 149039, Texarkana, Ark., to Shreveport, La., Texas & Pacific Railway 
Co., Missouri Pacific System : 



1294 KAILWAY MAIL PAY. 

Company reported 25 feet apartment car daily, including Sunday. No 
postal-clerk service on this train or closed-pouch service on Sunday. The 
space charged by company for Sunday service was transferred to " dead space " 
and amounted to 15,322 car-foot miles. 

Route 149059, Simmesport to Melville ; Texas & Pacific Railway Co., Missouri 
Pacific System : 

Company reported 11 feet apartment car daily, including Sunday. No 
postal-clerk service on this train Sunday, closed-pouch service only being per- 
formed, and 10 feet apartment-car space sufficient. Readjustment of space 
on this basis charged to " dead space,"' 3,145.80 car-foot miles. 

Route 150073, Whitesboro to Fort Worth, Tex. ; Texas & Pacific Railway Co., 
Missouri Pacific System : 

Company reported 25 feet apartment-car space in trains 31 and 32. No 
postal-clerk service on this route, closed-pouch service only being performed. 
This apartment car is the car run in the Texarkana & Whitesboro R. P. O., 
trains 31 and 32, and is run through to Fort Worth, but is not used for postal 
purposes. The car-foot miles represented by this movement equaled 106,995 
car-foot miles, which was charged to "dead space." 

Route 145070, Tower Grove Station (n. o.) to Kirkwood Branch Connection 
(n. o.),Mo. ; St. Louis, Iron Mountain & Southern Co., Missouri Pacific System: 

Company reported 26 feet apartment-car space in train 23, and 28 feet in 
train 22 (St. Louis & Columbus R. P. O.). Railway Mail Service reported 20 
feet ample for postal purposes. Balance, equaling 2,982 car-foot miles, charged 
to "dead space." 

Route 147041, Kirkwood Branch Connection (n. o.), Mo., to Texarkana, Ark.; 
St. Louis, Iron Mountain & Southern Railway, Missouri Pacific System. 

Company reported 26 feet distribution and 2 feet storage apartment-car space 
in trains 22 and 23 between Kirkwood Branch Connection and Bismarck (St. 
Louis -& Columbus R. P. O.). Railway Mail Service reported 20 feet sufficient 
for postal purposes. Balance representing 28799.4 car-foot miles, charged to 
"dead space." 

Company also reported 25 feet apartment-car space in trains 9 and 10 be- 
tween Poplar Bluff and Knobel. Twenty feet only needed in these trains. 
Balance should have been charged to " dead space," but through error was not 
deducted ; so car-foot-miles reported by company was charged to " mail service." 
By this error 9,894 car-foot miles were erroneously charged to mail service. 

Route 150007, Longview to San Antonio, Tex.; International & Great North- 
ern Railroad, Missouri Pacific System: 

Company reported 30 feet apartment-car space in train 2 between Palestine 
and Longview. Closed-pouch service only on this train; 68,096 car-foot miles 
charged to " dead space." This car is the return movement of 30 feet apart- 
ment-car run in train 5 between the same points, which train takes the full 
car to San Antonio brought from Longview on train 7. Full car returned over 
route in train 4. While the charge made by the department was in accordance 
with the rule, the company might have been credited with the space used in 
this return movement. Company reported 30 feet apartment-car space in trains 
7, 8, and 9. Railway Mail Service reported 15 feet sufficient for postal purposes 
in train 7 and 20 feet in trains 8 and 9. Difference, amounting to 231,525 car- 
foot miles, charged to " dead space." 

Route 150009, Texarkana, Ark., to El Paso, Tex., Texas & Pacific Railway, 
Missouri Pacific System : 

Company reported 30 feet apartment-car space in trains 3 and 4 between 
Big Spring and El Paso. Railway Mail Service reported 15 feet sufficient in 
train 3 and 20 feet in train 4. Balance, amounting to 259,695 car-foot-miles, 
charged to "dead space." Department 'probably should have charged mail 
service with 20 feet in each train. This would have reduced the charge to 
" dead space " 51,939 car-foot miles, leaving a remainder of 207,756 car-foot 
miles as correct " dead-space " charge. 

Route 145001, St. Louis to Kansas City, Mo., Missouri Pacific Railway : 

Company reported 19 feet apartment-car space and 9 feet storage space in 
train 5 and 19 feet apartment-car space and 8 feet storage space in train 6 
between Jefferson City and Kansas City. Railway Mail Service reported 15 
feet ample for postal purposes. Balance 1 , representing 6,618.60 car-foot miles, 
charged to " dead space." This should have been 1,443.60 car-foot miles more, 
as the computation was not carried through for one train. 

Company reported 30 feet apartment-car space and 5 feet storage in train 
212, 30 feet apartment-car space and 25 feet deadhead space in trains 214 and 



EAILWAY MAIL PAY. 



1295 



215 between Kansas City and Pleasant Hill, Mo. Thirty feet in each train 
reported by Railway Mail Service as sufficient. Remainder charged to " dead 
space," 56,859 car-foot miles. 

Company reported 20 feet apartment-car space, in trains 621 and 622 and 
25 feet apartment-car space in trains 623 and 624 between Independence and 
Kansas City, Mo. Railway Mail Service reported 15 feet sufficient in each 
train. Balance of space, 9,144 car-foot miles, charged to " dead space." 

Company reported 26 feet apartment-car space in train 23 and 28 feet apart- 
ment-car space in train 22 between St. Louis and Tower Grove station (n. o.), 
Mo. Twenty feet reported as sufficient by Railway Mail Service. Balance of 
space, 1,213.S0 car-foot miles, charged to " dead space." 

Statement of dead space as revised on routes of the Missouri Pacific System. 

APARTMENT-CAR SPACE. 



Route No. 


Dead space 
car-foot miles 

charged by 
department. 


Dead space 

car-foot miles 

incorrectly 

charged by 

department 

and which 

should have 

been charged 

as deadhead 

space. 


Mail space 
charged by 
department 
which should 
have been 
charged as 
dead space. 


Dead space 
charged by 
department 
which should 
have been 
charged to 
mail space. 


Dead space 

car-foot miles 

properly 

chargeable 

upon 
revision. 


145040 


235,148.00 

6,776.46 

5,558.63 

88, 537. 00 

27, 772. 80 

121,140.00 

83,847.24 

52, 231. 32 

12,812.80 

13,563.68 

1,390,806.00 

12, 740. 40 

4, 899. 60 

14,682.72 

401,544.00 

7,528.56 

48,348.00 

67,517.84 

9,907.00 

3,019.64 

541,584.00 

2,838.08 

4,868.64 

5,491.41 

3,447.00 

91,268.00 

108,278.00 

46, 444. 00 

51,240.00 

77, 658. 00 

28, 030. 00 

17,230.50 

13,841.00 

27, 108. 00 

14,032.00 

57, 228. 00 








235, 148. 00 

6,776.46 

5,558.63 

88,537.00 

27, 772. 80 

121,140.00 


145042 








145047 








145092 








1 45100 








155031 








155036 








83,847.24 


155040 








52,231.32 


1 55046 








12, 812. 80 
13, 563. 68 


155060 








155067 








1,390,806.00 
12, 740. 40 
4, 899. 60 


155074 








155080 








155084 








14, 682. 72 

401,544.00 

7, 528. 56 


155091 








155094 








155095 








48,348.00 


157038 








67, 517. 84 


157040 








9,907.00 
3,019.64 


157059 








165036 








541,584.00 


147009 








2, 838. 08 


147051 








4,868.64 
5,491.41 


147002 








147017 








3,447.00 


165001 








91,268.00 


165004 








108, 278. 00 


165012 








46, 444. 00 


165018 








51,240.00 


165019 








77, 658. 00 


165025 








28, 030. 00 


165037 








17,230.50 


165042 








13, 841. 00 


167002 








27, 108. 00 


167011 








14, 032. 00 


169002 








57, 228. 00 


169015 


16,232.40 
5,233.28 

15, 91?. 00 
240, 052. SO 
7,018.20 
26, 552. 46 
22,086.00 
43,488.00 








16, 232. 40 


150008 








5,233.28 


150032 








15,912.00 


150126 . 


240,052.80 
7,018.20 


149056 . . 








147067 . . 








26,552.46 
22,086.00 


14."027 . . . 








145034 








43, 488. 00 


145062 I 










147004 


13,389.00 
28,032.00 
44,640.00 
2, 699. 52 
7,090.20 
4,256.48 

rr-5,oo">.oo 

63, 699 79 








13,389.00 


147012 








28, 032. 00 


147023 








44,640.00 


147044 . . 








2, 699. 52 


147057 . . 








7,090.20 


147060. . . 








4,256.48 


153005.. . 








295,002.00 


147026.. . 








63,699.79 


1<*7030 


23, 123.00 

280,808.40 








23,123.00 


147012 








280, 808. 40 



406 440 added to passenger space on this route, but not tabulated here 



1296 



RAILWAY MAIL PAY. 



Statement of dead space as revised on routes of the Missouri Pacific system — Con. 

APARTMENT-CAR SPACE. 



Route No. 


Dead space 

car-foot miles 

charged by 

department. 


Dead space 

car-foot miles 

incorrectly 

charged by 

department 

and which 

should have 

been charged 

as deadhead 

space. 


Mail space 
charged by 
department 
which should 
have been 
charged as 
dead space. 


Dead space 
charged, by 
department 
which should 
have been 
charged to 
mail space. 


Dead snace 

car-foot miles 

properly 

chargeable 

upon 

revision. 


149019 


35,361.00 
29, 663. 80 
88,224.60 
136,470.00 

7,980.00 
37,636.20 
34,452.00 
19,740.00 
76,791.00 
62,222.00 
85,008.00 

3,570.00 

2, 464. 00 
15,322.00 

3,145.80 
106,995.00 

2,982.00 

28, 799. 40 

299,621.00 

259,695.00 

6,618.60 
56,859.00 

9, 144. 00 

1,213 80 








35,361.00 


150064 








29,663.80 

65,007.60 

154,608.00 

5,860.00 
37,636.20 
34,452.00 
19, 740. 00 
76,791.00 
62,222.00 
85,008.00 

3, 570. 00 


150067 






23,217.00 


150025 




18, 138. 00 


150042 




2, 120. 00 


150044 






150060 








150127 








149002 








149017 








149018 








149034 








149035 








2,464.00 


149039 








15,322.00 


149059 








3,145.80 


150073 








106,995.00 


145070 








2,982.00 


147041 




9,894.00 




38,693.40 


150007 


231,525.00 
51,939.00 




68,096.00 


150009 






207, 756. 00 


145001 


i 1, 443. 60 




8,062.20 








56,859.00 










9,144.00 










1,213.80 












Net reduction 


6,248,262.05 


283,464.00 


29,475.60 


25,337.00 


5,968,936.65 
279,325.40 















i Error in computation. 
Railway post office car space. 

ROUTES 145001 (PART)-145070-147041 (PART)— ST. LOUIS, MO., TO LITTLE ROCK, ARK. 



Train 
No. 



Space authorized 
by department. 



Space reported by 
company. 



Space as charged by 
department. 



Charged 
to dead 
space 

depart- 
ment. 



Car-foot 

miles of 

dead space. 



Car-foot 
miles of 
space in- 
correctly 
charged 
to dead 
space. 



28-10 



One 60-foot car. 
One 40-foot car. 



One 60-foot car. 
One 40-foot car. 



One 60 foot car. 
One 60-foot car. 



One 60-foot car. . 



One 60-foot car. 
One 40-foot car. 



One 40-foot car. 
; One 40-foot car. 



560 feet. 



One 60-foot 
One 40-foot 

29-foot 
One 60-foot 
One 40-foot 

22-foot 
One 60-foot 
One 60-foot 

38-foot 
One 60-foot 
One 60-foot 
1-foot 
One 60-foot 
One 40-foot 

20-foot 
One 40-foot 

20-foot 
One 40-foot 

20-foot 

770 feet. 



dist 

dist 

storage. . . . 

dist '. 

dist 

storage 

dist 

dist 

storage. . . . 

dist 

D.H 

storage. . . , 

dist 

dist 

storage 

dist 

storage — 

dist 

storage. . - 



One 60-foot 
One 40-foot 

15-foot 
One 60-foot 
One 40-foot 

15-foot 
One 60-foot 
One 60-foot 

30-foot 
One 60-foot 



dist 

dist 
storage. 

dist 

dist 

storage. 

dist 

dist 

storage. 
dist 



Feet. 



One 60-foot dist. 
One 40- foot dist. 



One 40-foot dist. 



146,483.40 
73,241.70 
83, 704. 80 

633,047.10 

209,262.00 

207,528.00 
99,522.00 



627,786.00 



'99,522.00 



620 feet. 



150 1,452,789.00 727,308.00 



1 Return of 60-foot car authorized south bound erroneously charged to " dead space." 

2 40 feet distribution and 20 feet storage charged Little Rock to Poplar Bluff, and 40 feet distribution 
and 20 feet dead space, Poplar Bluff to St. Louis. Should have been charged as 60 feet distribution 
whole distance, being return of a 60-foot authorization. 



RAILWAY MAIL PAY. 



1297 



Railway post office car space — Continued. 

ROUTE 147041— LITTLE ROCK TO TEXARKANA, ARK. 



Train 
No. 



Space authorized 
by department. 



Space reported by 
company. 



Space as charged by 
department. 



Charged 

to dead 

space 

depart- 
ment. 



Car-foot 

miles of 

dead space. 



Car-loot 
miles of 
space in- 
correctly 
charged 
to dead 
space. 



One 40-foot car. 



fOne 60-foot car. 
fOne 60-foot car. 



One 40-foot car. 



I One 60-foot car. 



(One 60-foot car. 



One 40-foot 

20-foot 

14-foot 

One 60-foot 

4-foot 

One 60-foot 

40-foot 

One 40-foot 

20-foot 

One 60-foot 

4-foot 

One 60-foot 

2-foot 



dist 

storage, 
storage, 
dist.... 
storage. 

dist 

storage. 

dist 

storage. 

dist 

storage, 
dist.... 
storage. 



One 40-foot dist 

15-foot storage. 



One 60-foot dist. 



One 60-foot dist 

40-foot storage. 
One 40-foot dist 



One 60-foot dist . 
One 60-foot dist . 



Feet. 
19 

4 
None. 
20 
4 
2 



82,427.70 
17,353.20 



86, 766. 00 
17,353.20 
8,676.60 



320 feet. 



424 feet. 



375 feet. 



49 



212,576.70 



ROUTE 150009 (PART)— TEXARKANA, ARK., TO LONGVIEW, TEX. 



3 


f One 40-foot car.. 


5 


/One 50-foot car.. 


4 


(One 40-foot car.. 


6 


/One 50-foot car.. 


m 


[One 50-foot car.. 




{::::::;:::::::::: 


)4 


(One 50-foot car.. 







280 feet. 



One 40-foot 

21 -foot 
One 50-foot 

11-foot 
One 40-foot 

20-foot 
One 50-foot 

10-foot 
One 50-foot 

10-foot 

27-foot 
One 50-foot 

10-foot 



dist.... 
storage. 

dist 

storage. 

dist 

storage. 

dist 

storage. 

dist 

storage . 
storage. 

dist 

storage . 



One 40-foot dist 

10- foot storage. 

One 50-foot dist 

11 -foot storage. 

One 40-foot dist 



One 50-foot dist. 



One 50- foot dist 

20-foot storage. 



One 50-foot dist. 



389 feet. 



321 feet. 



11 

None. 

20 

10 

17 

10 



68 



29.828.70 



147.684.00 
26.940.00 

37.716.00 

27.117.00 



249.285.70 



ROUTE 150009 (PART)— LONGVIEW TO FORT WORTH, TEX. 



fOne 40-foot car.. 



(One 50-foot car. 



(One 40-foot car. 
(One 50-foot car. 



180 feet. 



One 40-foot 

21 -foot 
One 50-foot 

11 -foot 
One 40-foot 

20-foot 
One 50-foot 

10-foot 



dist.... 
storage. 

dist 

storage . 

dist 

storage. 

dist 

storage. 



242 feet. 



One 40-foot dist 

5-foot storage. 

One 50-foot dist 

11-foot storage. 
One 40-foot dist 



One 50-foot dist. 



196 feet. 



} 16 

> None. 
} 20 



46 



75,043.00 



f 107.604.00 
\ 40.080.00 

46.902.00 



269.629.00 



ROUTE 150007— LONGVIEW TO SAN ANTONIO, TEX. 



7-5 



fOne 50-foot car.. 



(One 50-foot car.. 



One 50-foot dist 

10-foot storage 

27-foot storage 

One 50-foot dist 

10-foot storage 



One 50-foot dist 

25-foot storage.. 



One 50-foot dist. 



12 



10 



93.204.00 
29.268.00 

77.670.00 
24.390.00 



100 feet. 



147 feet. 



125 feet. 



22 224.532.00 



1298 



RAILWAY MAIL PAY. 



Railway post office car space — Continued. 

ROUTE 145001— ST. LOUIS TO KANSAS CITY, MO. 



Train 
No 



12 



Spaceauthorized 
by department. 



fOne 60-foot car.. 
/One 60-foot car.. 



Two 6C-footcars 
'Three 60-foot cars 
One 40-foot car 



Two 60-foot cars 
One 60-foot car.. 
One 40-foot car.. 



One 60-foot car. 
One 50-foot car. 



rOne 50-foot car. 
\One 60-foot car. 



Space reported by- 
company. 



One 



One 
Two 



60-foot dist 

10-foot storage. . . 

60-foot dist 

14-foot storage. . . 

60-foot dist 

Three 60-foot dist 

One 40-foot dist 

20-foot storage... 

70-foot storage... 
2-foot storage... 

Two 60-foot dist 

Two 60-foot dist. D.H. 
One 70-foot 
D.H. 

2-foot storage 

One 60-foot dist.. 
One 50-foot dist. . 

14-foot storage 

One 60-foot dist.. 
One 60-foot D. H. 



as charged by 
department. 



One 60-foot dist 

10-foot storage. 

One 60-foot dist 

14-foot storage. 

Two 60-foot dist. .. . 

Three 60 -foot dist.... 

One 40-foot dist 

60-foot storage. 



Two 60-foot dist 

One 60-foot D. H.... 
One 40-foot D. H.... 



One 60-foot dist.. 
One 50-foot dist.. 
14-foot storage — 
One 50-foot dist.. 
One 60-foot D. H. 



Charged 
to dead 
space 

depart- 
ment. 



Feet. 
None. 

None. 
None. 

32 

None. 
92 

None. 
10 



Car-foot 

miles of 

dead space. 



271,180.80 



779,644.80 



84,744.00 



Car-foot 
miles of 
space in- 
correctly 
charged 
to dead 
space. 



900 feet. 



132 feei,. 



998 feet. 



134 



1,135,569.60 



Grand total dead space railway post-office car service shown in above table 3, 544, 382 

* Deadhead space" erroneously charged as "dead space" 727,308 

Total " dead space" correctly charged upon revision 2, 817, 074 

Recapitulation. 

APARTMENT AND RAILWAY POST-OFFICE SPACE COMBINED. 



Classification. 



Charged by 
company to 
mail space. 



Tabulated by 
department as 
"dead space." 



As reviewed 

and revised by 

department. 



Difference er- 
roneously 
charged to 
"dead space" 
should have 
been charged 

as "dead- 
head" space. 



Apartment 

Railway post office 

Total 



6,248,262.05 
3,544,382.00 



6,248,262.05 
3,544,382.00 



5,968,936.65 
2,817,074.00 



279,325.40 
727,308.00 



9,792,644.05 



9,792,644.05 



8,786,010.65 



1,006,633.40 



Adding to this revised total of 8,786,010.65 dead space car-foot miles 16,208.28 
car-foot miles of dead space charged on routes not listed in the foregoing tabu- 
lation, the total dead space for the system is found to be 8,802,218.93 instead of 
©,808,852.33 car-foot miles, as given in Document No. 105. Using the former 
figure and increasing the deadhead space and passenger space in accordance 
with the results shown hereinbefore, the comparison of car-foot miles in the 
several services with those given in Document No. 105 is as follows : 



Classification of space. 





Per cent 


Car-foot miles 


of car-foot 


as revised. 


miles as 




revised. 


46,097,323.63 


8.98 


2,367,739.40 


.46 


48,465,063.03 


9.44 


422,764,786.91 


82.26 


8,802,218.93 


1.71 


431,567,004.84 


83.97 


33,833,154.93 


6.59 



Car-foot miles 

in Document 

No. 105. 



Per cent as 
shown in 

Document 
No. 105. 



Mail 

Deadhead 

Total mail 

Passenger 

Dead space 

Passenger and dead 
Express 



46,097,323.63 

1,361,106.00 

47, 458, 429. 63 

422,358,346.91 

9,808,852.33 

432,167,209.24 

33,833,154.93 



.27 
9.25 

82.25 
1.91 

84.16 
6.59 



RAILWAY MAIL PAY. 1299 



TUESDAY, MARCH 24, 1912. 

Committee on Second-Class Mail Matter, etc., 

Washington, D. C. 

The Committee met, pursuant to adjournment, at 2 o'clock p. m. 

Present: Hon. Jonathan Bourne, jr. (chairman). Senator John W. 

Weeks, and Representatives James T. Lloyd and William E. Tuttle, jr. 

The following gentlemen were present and sworn by the chairman : 

Representing the railway-mail-pay committee: 

Mr. W. A. Worthington, acting chairman, and assistant director 
maintenance and operation, Southern Pacific Co. 

Mr. H. L. Fairfield, supervisor of mail traffic, Illinois Central and 
Central of Georgia Railroads. 

Mr. W. W. Safford, general mail and express agent, Seaboard Air 
Line Railway. 

Mr. A. H. Rowan, assistant to vice president, New York Central 
Railroad. 

Mr. H. E. Mack, manager mail traffic, Missouri Pacific Railway. 

Mr. C. A. Searle, manager mail traffic, Rock Island Lines. 

Mr. S. C. Scott, vice president's assistant, Pennsylvania Railroad. 

Mr. J. P. Lindsay, manager mail traffic, Santa Fe Lines. 

Mr. V. J. Bradley, general supervisor mail traffic, Pennsylvania 
Railroad. 

Mr. R. H. Snead, manager of express traffic, Chesapeake & Ohio 
Railway. 

Mr. F. E. Campbell, traveling agent transportation department, 
Norfolk & Western Railway. 

Mr. J. P. Connolly, supervisor of mail traffic, Central Railroad of 
New Jersey. 

Col. W. B. Thompson, counsel. 

Ex-Senator Charles J. Faulkner, counsel. 

Mr. John N. Drake, secretary-treasurer Short Line Railroad Asso- 
ciation. 

Mr. B. C. Prince, assistant to vice president, Seaboard Air Line. 

Mr. James Peabody, statistician, Atchison, Topeka & Santa Fe 
Railway. 

Mr. W. S. Baskerville, general agent mail traffic, Great Northern 
Railroad. 

Mr. J. C. McCahan, jr., supervisor of mail traffic, Baltimore & Ohio 
Railroad. 

Representing Post Office Department: 

Hon. Joseph Stewart, Second Assistant Postmaster General. 
Mr. C. H. McBride, Superintendent Division Railway Adjustments. 
Mr. George E. Bandel, Assistant Superintendent Division of Rail- 
way Adjustments. 

Mr. A. N. Prentiss, clerk. 

Mr. M. O. Lorenz, statistician, Interstate Commerce Commission. 

Mr. Worthington. Mr. Chairman, is my understanding correct, 
that we are meeting here to hear something further from Mr. Stewart ? 
The Chairman. Yes. 



1300 KAIL WAY MAIL PAY. 

Mr. Worthington. Is it the desire that we should ask any ques- 
tions during the reading of the paper or should we wait until Mr. 
Stewart finishes ? 

The Chairman. Unless General Stewart asks not to be interrupted 
until he finishes his statement, in which event you will have full 
opportunity to discuss his statement after he has finished. If there 
is no objection on the part of the witness we would be glad to have 
a running debate and every gentleman present who has been sworn 
may ask questions during the submission of the testimony without 
reference to the committee itself, for the purpose of getting a full 
view of the subject. 

Mr. Worthington. From the mass of material that Mr. Stewart 
has in front of him I would like to ask if anj^thing new is presented, 
something technical which we could not possibly digest at once, 
whether we would be given another opportunity or ample time to 
answer it ? 

The Chairman. That will depend on the development from what is 
submitted and the position you gentlemen take in reference to 
requiring or desiring reasonable time in which to post yourselves on 
the new matter. However, the desire of the committee is to expe- 
dite the proceedings now and close the hearings at the earliest pos- 
sible date in order that we may go into executive session and com- 
mence our constructive work and determination. 

Mr. Stewart. Mr. Chairman, I ask the same privilege that was 
accorded the railroads' committee, and that is the privilege of reading 
my paper before discussing it. 

The Chairman. You prafer not to be interrupted until the whole 
paper is put into the record? 

Mr. Stewart. I would rather not enter into a discussion of the 
matter until I have completed the reading of the paper. 

(Mr. Stewart proceeded to read his paper, and the following dis- 
cussion occurred immediately after the reading of paragraph 5, on 
page 1259 of the printed report:) 

Senator Weeks. May I suggest that the costs of railroading have 
materially increased, and there are various increases in the way of 
employees and other things that might account for a large part of 
that deficit? 

Mr. Stewart. I do not think that would vitiate these results. 
These results are based on the known statistics for 1910, and the 
application of the railroad committee's per cent of 34.42, as the share 
of the passenger service. The result obtained by an apportionment 
on this basis would be true of any given set of figures, whatever 
might be the changes in the relation between revenue and expense. 

Senator Weeks. What I was referring to particularly was the 
necessity for an increase in rates at this time which might not have 
existed in 1910. 

Mr. Stewart. That is very true. 

Senator Weeks. For instance, in the case of the Boston & Maine 
Kailroad there has been a sufficient increase in pay since 1910 to 
equal 9 ner cent on the common stock of that railroad, without any 
increase in rates at all. I do not know but what the relative figures 
would be the same, but I do not think it necessarily means that the 
request for the increase in rates at this time is absurd or necessary, 
because the figures in 1910 might show that it was. 



RAILWAY MAIL PAY. 1301 

Mr. Worthington. Might I ask that a correction be made in the 
statement as to passenger traffic that it is claimed by the railroad com- 
mittee to have been operated at a loss of $111,000,000 ? When did the 
railroads' committee ever claim that? 

Mr. Stewart. If you object to that form of expression, I will be 
very glad to change it. The claim consists in the application of your 
percentage of 34.42 as the percentage for dividing the operating 
expenses. 

Mr. Worthington. That result rests very largely on your appor- 
tionment of charges against income on the railway mail pay commit- 
tee basis, which, as I understand, you made yourself. The committee 
never made any such apportionment as that, and the railroads never 
returned any such figures as that to you. 

Mr. Stewart. These figures are all based on the application of your 
per cent of 34.42. 

Mr. Worthington. But the figures which were sent in by the rail- 
roads as to the fixed expenses include only interest charges, and they 
have never presented any figures of that kind. 

Mr. Stewart. As I said to you, the statement there is a necessary 
result of the application of your per cent of 34.42. I shall be glad to 
change the text in order to make that entirely clear. 

Mr. Worthington. In other words, you are simply taking the fixed 
expenses or other charges against income and apportioning them on 
the same basis by which you have apportioned operating expenses and 
taxes. Is not that it? 

Mr. Stewart. Yes, sir. 

Mr. Wortbxngton. I wanted that to be made clear. 

(Mr. Stewart continued the reading of his paper, when the follow- 
ing discussion occurred, immediately after the reading of paragraph 
marked (1) on page 1261 of the printed record.) 

Senator Weeks. Is that due to the fact that you have allowed 
them car-foot miles only on that amount of space which has actually 
been used and they have taken the amount of space that was avail- 
able for use ? 

Mr. Stewart. No; that is due to the fact that this element of 
nonmail car-foot miles, which can not be in dispute at all as to its 
use, was either not used by the railway mail pay committee, they 
not having the data or was erroneously charged to the mails in cases 
where they did have the data. It is all nonmail car-foot miles on 
trains or routes that did not carry mail at all; the space is not in 
dispute as to its use; it was not devoted to the mails. 

Senator Weeks. It does not seem to me it would be a difficult 
thing on a comparatively small road to determine exactly the relative 
space used for passenger, mail, and express service. 

Mr. Stewart. These roads did not carry mail. That is the diffi- 
culty here. 

Senator Weeks. Did not carry mail at all ? 

Mr. Stewart. No. 

(Mr. Stewart continued the reading of his paper, and the following 
occurred during the reading of Appendix A:) 

Dr. Lorenz. Haven't you some figures showing the total of each 
kind of dead space for the Missouri Pacific ? 

Mr. Stewart. Yes. There was one case where we found the de- 
partment made a mistake in not crediting the company with the 
return of a 60-foot car. 



1302 RAILWAY MAIL PAY. 

Mr. Mack. There are several cases of that kind on the Missouri 
Pacific and Iron Mountain. 

Mr. Stewart. There is just one case of that kind in the R. P. O. 
car service. I have the figures here. 

Mr. Mack. It will not take long to settle that question if you 
desire to do it. 

Mr. Stewart. The totals referred to by Dr. Lorenz are found in 
the recapitulation. 

The Chairman. You allow 889,000 car-foot miles less than what 
the Missouri Pacific claimed. Is that it ? 

Mr. McBride. The revision resulted in a net reduction of that 
number of car-foot miles of "dead space/' and its transfer to " dead- 
head space." 

Mr. Stewart. It makes a change of about 0.16 per cent in the 
total car-foot miles of the system charged to mail service. 

Mr. Mack. And the dead space in dispute represents about 20 per 
cent, so if we would take 1.79 per cent off of the 20 per cent, what does 
that leave ? 

Mr. Stewart.- We did not calculate that, because your hypothesis 
is absolutely wrong, and we have so shown in this detailed statement. 

Mr. Mack. There may be some errors in your statement which you 
say would approximate 889,000 feet. This 889,000 feet you concede 
should now be credited to the company to correct the department's 
error. 

Mr. McBride. There is a table at the end of the statement 
showing the car-foot miles for each service as revised, with a compari- 
son of the percentages with those shown in Document 105. 

The Chairman. This 889,000 car-foot miles you did not allow in 
Document 105, but subsequently you did allow it? 

Mr. McBride. We charged them to "dead space" in Document 
105, but the revision changed them to " deadhead space" and eventu- 
ally to mail service. 

The Chairman. Debited it to the mail service and credited it to 
the Missouri Pacific on that computation ? 

Mr. McBride. Yes. 

Dr. Lorenz. You did not attempt to classify the dead space which 
you now charge against the Missouri Pacific space so as to show the 
different types of dead space ? 

Mr. Stewart. Yes. I think that is shown in here. 

Mr. McBride. You mean an analysis of the return movement, etc. ? 

Dr. Lorenz. Yes; we are unable to judge of the significance of 
this statement unless we know how much of each of these specific 
illustrations you mentioned are in the total, how much of each kind 
of dead space you would charge against the department, and how 
much was erroneously reported by the railroad companies. 

Mr. Stewart. That is clearly shown by the detailed statement of 
the character of the car movements. This statement here shows the 
specific amount that was transferred and the reasons therefor. 

Dr. Lorenz. It is perfectly clear that if the company charged the 
department with car-foot miles run on Sunday when there was no 
mail service on Sunday, it is a kind of dead space which you rightly 
charged as dead space; but let us take the case of return empty stor- 
age movement where the department was responsible for the move- 
ment of the car; that is a different kind of dead space. I should 
think that this statement in order to be most helpful, ought to set out 



RAILWAY MAIL PAY. 1303 

the relative totals of each one of those kinds of dead space to see the 
maximum error under each theory. 

Mr. Stewart. That information is all contained in the detailed 
statement in Appendix A. In each individual case the facts are 
noted under the route number, which data are summarized in the 
tabulated statements. Where changes were found proper they are 
indicated in the statement. The information asked for by Dr. 
Lorenz could be tabulated and submitted as an additional exhibit. 

The Chairman. With regard to Exhibit A, the number of car- 
foot miles that the Missouri Pacific claimed was due them, the number 
of car-foot miles that you allowed them in Document 105, and the 
number of car-foot miles that you allowed them on the road, as I 
understand, you allowed them nearly 900,000 more car-foot miles in 
your revised statement than in Document 105 ? 

Mr. Stewart. I have already read that into the record. 

The Chairman. I would like to have it read again. 

Mr. McBride. The amount you name represents the car-foot miles 
transferred from "dead space" to " deadhead space" by our re- 
examination. 

Mr. Stewart. This covers the cases which are in dispute here. 

The Chairman. Taking the cases in dispute, are the number of 
car-foot miles the Missouri Pacific claims, the number of car-foot miles 
you allowed them in Document 105 and the number of car-foot miles 
you allowed them in your revision of Document 105 ? 

Mr. Stewart. The total of the charge by the company to the mail 
service of these items in dispute was 9,792,644.4 car-foot miles. 

The Chairman. That is, the Missouri Pacific claimed credit for 
that number of car-foot miles ? 

Mr. McBride. That is the original charge by the department for 
dead space which the company reported as mail space. 

The Chairman. What I want to get at is this : The number of car- 
foot miles the Missouri Pacific claimed they were entitled to pay for, 
the number of car-foot miles that you allowed them credit for in 
Document 105 and then the number that you allowed them in your 
revision of Document 105 ? 

Mr. Stewart. That would necessitate going to Document 105 and 
compiling those. These are just the items in dispute and it does not 
cover the rest of the service. 

Mr. Bradley. Document 105 would credit to the Missouri Pacific 
road, including dead space, about 57,000,000 car-foot miles. 

Senator Weeks. This would give them 1.7 per cent more than that. 

Mr. Bradley. I take it that the correction would amount to 
about 900,000 as applying to a total of about 57,000,000. 

Dr. Lorenz. We can read the figures the Senator has asked for 
by joining these two statements together. 

The Chairman. I would like to get it. 

Dr. Lorenz. The total car-foot miles claimed by the Missouri 
Pacific was 57,000,000, of which the department rejected 9,800,000. 

The Chairman. That is in Document 105 ? 

Dr. Lorenz. Yes, sir. 

The Chairman. And afterwards, in your revision of Document 
105, you added 900,000 car-foot miles. Is that right ? 

Mr. Stewart. Yes, sir; 889,000. 

Mr. McBride. Transferred it from dead space to deadhead space ? 



1304 RAILWAY MAIL PAY. 

The Chairman. But you credited it to the Missouri Pacific 1 

Mr. McBride. Charged it to the mail service on the Missouri 
Pacific. The result increased the per cent of car-foot miles made in 
mail service on the system from 9.25 to 9.40 per cent or 0.16 of 1 
per cent. 

Mr. Mack. The only figures I have here are from St. Louis to 
Kansas City and from Kansas City to Texarkana, and I want to 
point out that between St. Louis and Kansas City the report we 
made showed 10,068,079 car-foot miles, the department disallowed 
2,118,526 car-foot miles. That refers to space that was unques- 
tionably in use, or return equipment, amounting to 130 car-foot 
miles a day, and for the year 1,133,640 car miles. I do not think 
there is a possible question about a foot of it because it refers to the 
return movement, the maximum movement, and the return of the 
cars that were used outbound. So, with respect to that one case, 
the difference is eliminated instantly, and there are other cases 
here. I will analyze them. 

Mr. Lloyd. Mr. Chairman, I do not know how you feel about it, 
but I would rather have Mr. Mack's answer by itself. I do not want 
to get his answer mixed up with this statement. 

The Chairman. He is going to file an answer. 

Mr. Lloyd. We want to find out what Mr. Stewart has to say about 
this thing, and then we will come to Mr. Mack's statement. 

Mr. Mack. This statement of Gen. Stewart's ought not be used in 
detail without an explanation from the company, showing how the 
department changed our reports. 

Mr. Lloyd. My explanation is this : Since they singled out the Mis- 
rouri Pacific and made a correction of the computations, showing a 
different statement from what they made in Document 105, I think 
it is only fair to Mr. Mack, representing his road, that he should have 
an opportunity to make a detailed statement in reply. 

The Chairman. I think the opportunity will be given him. 

Mr. Lloyd. Speaking for myself only, I would prefer, if Mr. Mack 
is going to make a statement at all, that he should make a statement 
having all parts of it together and not have part of it mixed up with 
Mr. Stewart's statement and part in another place. 

(Mr. Stewart continued the reading of his paper, and the following 
discussion occurred just before the reading of the table on page 1272 
of the printed record.) 

The Chairman. These rates are all based on the recent rates put 
into operation by the Interstate Commerce Commission for the 
express companies ? 

Mr. Stewart. Yes. 

Mr. Worthington. Is it not a fact that to obtain these express 
rates you quote that it is necessary to make shipments of not less 
than 100 pounds? In other words, these relate always to heavy 
shipments ? 

Mr. Stewart. The first table relates to 100 pounds. I have not 
read the second sheet. 

Mr. Worthington. You haven't any comparison at all, because the 
regulations do not permit the shipments of mail or parcel post, for 
example, in any such lots as that. 

Mr. Stewart. You have not waited until I have finished my 
statement. 



RAILWAY MAIL PAY. 1305 

Senator Weeks. In almost all those cases I understand the mail 
rate is materially higher than the express rate. 

Mr. Stewart. Yes, sir. 

Senator Weeks. Now, if all this express business was turned over to 
the mail, how are the people of the country going to benefit by its 
being done if they have to pay that materially higher rate of trans- 
portation ? 

Mr. Stewart. Well, I am not presenting this as an argument in 
favor of taking over the express companies, but merely as a com- 
parison between express and mail rates. 

Mr. Lloyd. Mr. Chairman, as I understand the statements, the 
charge to the man who sends the express is greater by express than it 
is by mail, but the railroad company only receives half of that amount 
for its transportation. 

Mr. Stewart. Yes, sir; that is the fact. 

Mr. Bradley. Might I ask, Mr. Chairman, what principle Gen. 
Stewart deduces from this tabulated statement, if any. 

Mr. Stewart. I have not finished my statement as yet, Mr. Brad- 
ley, and if my conclusion is not clear, when I finish I shall be glad to 
answer your question. 

(Mr. Stewart continued the reading of his paper, when the follow- 
ing discussion occurred, just before the reading of the table " Com- 
parison of express and mail rates per 40 pounds," on page 1275 of 
the printed record.) 

Mr. Stewart. This is the table of like statistics showing compara- 
tive rates between same points as in the first table, and you will find 
in almost every instance that the excess of the mail rate over 50 per 
cent of the express rate is considerable. 

Dr. Lorenz. May I ask how the figures were selected — whether 
they were taken at random? 

Mr. Stewart. The table was originally prepared to show the rates 
for shipments between points where the department shipped empty 
equipment by mail during the holiday season, under the provision 
of law which allows the Postmaster General, during that season, to 
utilize the mail trains instead of the freight trains for expedition. It 
was afterwards supplemented by the selection of certain other points 
to make it a little more representative. 

Dr. Lorenz. Was there any attempt to make it representative 
with respect to long and short hauls % These are mostly long hauls ? 

Mr. Stewart. The additions to the table, I think, attempted to 
equalize that. There are many short hauls, but not many below 100 
miles. There are some over 100 miles, and a few below 100 miles. 

The Chairman. Would you consider those tables as typical of the 
whole service, express and mail ? 

Mr. Stewart. We thought so. 

Mr. W t orthington. Is it ii ot true that the 40 pounds in this case 
represent a shipment by express of 40 pounds and not under, and the 
shipment of the mail represents all .shipments of mail, including the 
packages of 1 , 2, and 3 pounds, or whatever the weight is ? It is not a 
fair comparison ? 

Mr. Stewart. It is a fair comparison, because we would not ship 
mail on those routes in 1, 2, 5, or 10 pound packages. Mail would go 
over these routes always in greater weight than 40 pounds and 100 

49396—14 90 



1306 RAILWAY MAIL PAY- 

pounds. We never have mail in a smaller quantity than is repre- 
sented in these tables. 

Mr. Worthington. You would not, perhaps, but the shipper by 
parcel post would, and he would also ship by express in the same way. 
In other words, if you take all the shipments handled by the express 
companies, you should surely include all their shipments, their light 
as well as their heavy shipments. 

Mr. Stewart. I have taken 40 pounds as the average weight of the 
parcels in order to meet the suggestion that you have made. 

Mr. Worthington. The express rates are much higher on the 
lighter packages. 

(Mr. Stewart thereupon continued the reading of his paper and the 
following discussion occurred immediately after the reading of the 
paragraph following the table on page 1277 of the printed record.) 

Senator Weeks. Did you figure the total percentages ? 

Mr. Stewart. I hardly thought that the percentages obtained from 
the footings of these columns would be fair per cents. 

The Chairman. Why, if that is a typical table ? 

Mr. Stewart. That can be readily done. We have the figures, but 
I did not feel like using them. 

The Chairman. What I wanted was the reason why, if that is a 
typical table of those services. I want your reasons why the compila- 
tions would not be fair if the tables themselves are fair. 

Mr. Stewart. That is a question that I have not given very thor- 
ough consideration to and I was not sure that the per cent obtained 
that way would be a fairly representative one, so I did not pursue 
it. I can go into it. 

Senator Weeks. From that table it looks to be 15 or 20 per cent 
higher for the mail than the express ? 

Mr. Stewart. There is no doubt about that, but I show that in the 
subsequent computations I am going to present. 

Senator Weeks. I am wondering what would happen if the express 
companies paid that additional compensation to the railroads when 
they show profits, of the last year, to the express companies, of about 
$4,000,000. 

Mr. Stewart. I will leave that to the railroad companies to answer. 

The Chairman. Before we leave that phase of it I want to know 
the trend of your mind as to why the percentages would not be fair 
if the tables are fair and illustrative of the two services. 

Mr. Stewart. That is just the point. I am not prepared to say 
at this time. I have not given that enough consideration to say 
that the percentage arrived at in that way would be entirely fair. 

The Chairman. I may have misunderstood you; but I understood 
you to say you did not present the percentages because you did not 
think that was fair. 

Mr. Stewart. I was not sure that it was representative. 

(Mr. Stewart continued the reading of his paper, and after finish- 
ing the reading the following occurred :) 

The Chairman. Mr. Worthington, have you any questions to ask ? 

Mr. Worthington. Mr. Chairman, I would like to make a few 
general remarks, but it seems to me, inasmuch as General Stewart 
has submitted a large amount of new evidence, that it is only fair 
that the railway mail pay committee should be allowed time and 
opportunity to prepare a reply, and that that reply should not be 



BAILWAY MAIL PAY. 1307 

submitted as a written brief, but it should be read to your committee 
in the same way that General Stewart's paper has been read, because 
it loses very much of its effect unless read. 

The Chairman. You mean it loses its effect if there are interrup- 
tions ? 

Mr. Worthington. No. It seems to me we should have another 
hearing and it should be read to yourselves then. 

The Chairman. For discussion ? 

Mr. Worthington. For discussion; yes. 

The Chairman. There is much force in that, undoubtedly. 

Mr. Worthington. You must realize it would be very difficult to 
analyze offhand the various statistics and arguments that are con- 
tained in Mr. Stewart's paper. 

The Chairman. I think the committee would like to get all possible 
light, and as opportunity presents itself, if there are any points while 
General Stewart is here, which you desire to ask him or discuss with 
him or his assistants in reference to the paper he has submitted, I 
think it would be well to utilize this time. 

Mr. Lloyd. Mr. Stewart's statement presents only two things that 
are new, as I understand it, and we want to get to the end of the 
hearings some time. There are only two things, one, the specific 
statement with reference to the Missouri Pacific Railroad and the 
other the comparison that he makes between the mail and express. 
Those two things, as I remember it, are the only things that can be 
considered new in his statement and the only things which the railroad 
companies now should be permitted to answer. 

The Chairman. Am I to understand, it is your idea or desire to 
confine the railroad companies in their reply? 

Mr. Lloyd. Yes; to those two things. Mr. Mack should make 
his reply for the Missouri Pacific, but it looks to me as though there 
is nothing we should have from the general committee except refer- 
ence to the comparison between mail and express. 

The Chairman. Would it be your idea to stop them if any new 
viewpoint would occur to them, if it would not delav their report 
at all ? 

Mr. Lloyd. Not at all. We have shown a disposition to want all 
the light we can get, but we have to limit the scope sometime; and if 
we do not, we will never come to the end. 

Mr. Mack. With regard to the Missouri Pacific statement, I would 
like to ask General Stewart if he thinks that is representative of the 
reports that were received from all roads ? 

Mr. Stewart. I should say so. 

Mr. Mack. I recall that we were complimented when the reports 
came in as having rather unusually good reports. If that statement is 
representative, all right. If it is not, it is not of any special value 
except as to the Missouri Pacific figures. 

Mr. Stewart. I should think it is representative. 

The Chairman. Am I to understand that, so far as the department 
is concerned, the reply of the Missouri Pacific would be indicative of 
all the roads and, so far as the department is concerned, they would 
be willing to act in accordance with the demonstration made ? 

Mr. Stewart. I did not understand there was any proposition of 
that kind. 



1308 RAILWAY MAIL PAY. 

The Chairman. He asked if this was demonstrative and illus- 
trative, or typical of all the lines. 

Mr. Stewart. I understood his question to go to this point, as to 
whether the Missouri Pacific statistics were fairly representative of 
the statistics that were submitted to us ? 

The Chairman. The Missouri Pacific statistics under discussion 
are peculiarly an apportionment of dead space? 

Mr. Stewart. That was the only question we were discussing. 

Mr. Mack. That was the point I raised, whether they were char- 
acteristic of all reports that were received by the department as to 
space cut out by the department and classed as "dead space." 

The Chairman. And whatever conclusions we might come to with 
reference to the Missouri Pacific, you think would be illustrative of 
all the mail service on that particular phase ? 

Mr. Stewart. I think so. At any rate, representative of the 
reports of those companies who prepared the information in accord- 
ance with the instructions of the railway mail pay committee of the 
railroads. 

Mr. Worthington. Is it not a fact that under your proposed bill 
in volume 8 you proposed to pay for a good deal more space than 
you have charged to the railroads in your computation in volume 
No. 7, in which you have estimated their expenses for mail serv- 
ice? If you had based the expense estimates in volume No. 7 
on the space used in volume No. 8, the amounts chargeable to the 
mail service would be considerably more than shown ? It seems only 
fair if we are making an estimate of railroad expenses for the mail, 
we should put in everything which properly allocates to that service. 

Mr. Stewart. I do not think the two things are comparable, for 
the reason that if Congress provides for this new system the depart- 
ment's administration of it might be different than the administra- 
tion of . the service under the law in effect in 1909. A necessity which 
does not now exist would arise at once for a very close scrutiny of 
the use of space, for instance, in the apartment-car and storage-car 
service, so that it would not be fair and it would not be particularly 
illustrative of anything before us now to make an application of the 
rules laid down under the proposed law to the conditions existing in 
1909. 

Mr. Worthington. I would like to read a little memorandum on 
that special subject which I have prepared. 

MEMORANDUM ON RAILWAY-MAIL PAY. 

Volume No. 7 submitted by Post Office Department contains tables on pages 994 
and 995 reaching the following conclusions, based on apportionment of space and 
expenses shown in House Document No. 105: 

Total expenses chargeable to mail service $47, 685, 685 

Total revenue received by the railroads for year 1910 49, 302, 217 

Excess over apportioned cost 1, 616, 532 

This would mean a ratio of expenses to revenue of 96.72 per cent. 

Table 7 of Document 105, which is the basis for the Post Office Department's results, 
shows for November, 1909, a revenue from mail service of $3,607,773, aud 870,567,702 
car-foot miles for mail service, which is an average of 4, 144 mills per car-foot mile. This 
is equivalent to 24.86 cents of revenue for a 60-foot mail car. Applying the ratio of 
expenses to revenue of 96.72 per cent shown by the Post Office Department figures, 
we find it necessary to obtain 96.72 per cent of 24.86 cents, or 24.04 cents for 60 foot 
miles to equal the railroad expenses chargeable to the mails shown by the Post Office 



KAIL WAY MAIL PAY. 1309 

Department statement. Yet the Post Office Department in volume No. 8 proposes 
the following pay for 60 car-foot miles: 

Cents. 

For full R. P. 0. service 20 

For apartment-car service : 

Wooden cars 18 

Steel cars 19 

For storage-car service 18 

The inadequacy of these figures is proven by the department's own calculations. 

SECOND PROOF. 

Volume No. 7, brief of Post Office Department, shows on pages 995 and 996, based 
on conclusions in House Document 105: 

Operating expenses and taxes chargeable to mails (based on Table 7, 

Doc. 105) $32, 193, 563 

Estimate of operating expenses and taxes for omitted mileage 3, 791, 866 

Total operating expenses and taxes 35, 985, 430 

Other charges against income apportioned to mails 11, 700, 255 

Total expenses chargeable to mails 47, 685, 685 

Ratio of other charges against income to operating expenses and taxes, 32.51 per 
cent. 

Table 7 in Document 105 shows for November, 1909, operating expenses and taxec 
chargeable to the mails as §2,682,798 for 870,567,702 car-foot miles, or 3.082 mills per 
car-foot mile. This is equivalent to 18.49 cents per 60 car-foot miles. Now, if the 
other charges against income are estimated by the Post Office Department to be 32.51 
per cent, as much as the operating expenses and taxes, we should add 32.51 per cent 
of 18.49 cents or 6.01 cents per 60 car-foot miles for the other charges against income. 
Adding this sum to 18.49 cents would produce 24.50 cents per 60 car-foot miles re- 
quired to cover the mail expenses as they are estimated by the Post Office Depart- 
ment on pages 995 and 996 of volume 7. Yet the Post Office Department in volume 
No. 8 proposes, as stated, to pay the railroads as follows for 60 car-foot miles: 

Cents. 

For full R. P. O. service 20 

For apartment-car service: 

Wooden cars 18 

Steel cars 19 

For storage-car service , 18 

In other words, taking your own figures in volume 7 and your own 
calculations it is shown that it costs the railroads 24J cents for oper- 
ating expenses and fixed charges. That is due to the fact that you 
eliminate certain space in your calculations in No. 7 which you in- 
clude in No. 8. 

Mr. Stewart. No. In the first place you have left out of your 
calculations all consideration whatever of the loading and the ter- 
minal charges which would raise your rate quite considerably. 

Mr. Worthington. Very slightly. 

Mr. Stewart. It would make it about 21 cents. 

Mr. Worthington. Admitting that it is 21 cents, it would still be 
much below your own calculation of passenger- train operating ex- 
penses and other charges against income for 60 car-foot miles. 

Mr. Stewart. If, under the bill set forth in volume 8, we were pro- 
posing to pay you at the same rates that you are now receiving, it is 
to be admitted, I think, that the average rate for the car mile would 
be higher than we have provided for in the suggested bill. 

Mr. Worthington. That is, 20, 18, and 19. 



1310 RAILWAY MAIL PAY. 

Mr. Stewart. It is practically 21 cents on the average. The point 
which Mr. Worthing ton is bringing out is that on the statistics in 
Document 105 it is shown that the railroads are receiving a larger 
rate for a prorated 60-foot car mile than we are proposing to pay on 
the average in the suggested bill. We admit that. 

Mr. Worthington. That is the real difference between the esti- 
mates of the railroads and the department; it rests practically on the 
two percentages, firstly, on the space percentage which we have gone 
over time and again and which General Stewart does not see from his 
position, and the railroads do not think he has been fair to them. 
In making any estimate of railway expenses it is necessary to include 
dead space which we handle in connection with the mails, and in the 
same way dead space for passenger and express service is included. 
The second difference is due to the apportionment of expenses 
between passenger and freight service. Mr. Stewart states that the 
Interstate Commerce Commission abandoned the apportionment 
used by the railroads, but it did actually use that apportionment for 
a number of years and abandoned it because they expressed them- 
selves at that time, or rather the statisticians did, that he did not 
know of any sufficiently accurate method. 

They never, however, used the apportionment fixed upon by the 
Post Office Department which, as I understand it, apportions less to 
the mail service than any known apportionment. It is a fact that of 
the railway operating expenses at least 50 per cent have to be appor- 
tioned on some arbitrary basis to passenger or freight train service 
and a large part of these expenses are comprised under the headings of 
maintenance of way and structures; that is, the upkeep of the track 
and structures, repairs of buildings, etc. It is a well-known fact to 
all railway operating officers that it is absolutely necessary to main- 
tain much higher standards for passenger-train service than it is for 
freight-train service. Most of our double tracks are attributable to 
the passenger-train service, as well as the large expensive passenger 
terminals. A much lower standard would be required for freight 
traffic only, and we consider it perfectly fair to apportion that class 
of expenses on a train-mile basis. The basis of the department was to 
take those joint expenses and assume that they should be apportioned 
in the same way as the other operating expenses. The other operating 
expenses happen to be much greater per train mile for freight trains 
than for passenger-train service, due to the fact that freight trains 
consume more fuel because they are longer, the wages paid are higher, 
because the speed is slower. This is the cause of the difference 
between the department and the railroads on the apportionment of 
the expenses. We believe our basis is certainly entitled to as much 
consideration as that used by the department. 

Mr. Lloyd. As I understand you, you figure the difference to be 
the difference between about 21 cents and 24 cents on the car-foot 
mile ? 

Mr. Worthington. As to the question of the express rates, I 
think anyone can go through the express tariffs and find a great 
many cases where the express rates may be even lower than freight 
rates, for example, but a railroad company does not receive 50 per 
cent of each individual express rate. A railroad company makes a 
contract with the express company, by which it receives 50 per cent 
of its entire express revenue for its system, and those rates are fixed 



RAILWAY MAIL PAY. 1311 

by the express company the same as railroad freight rates are fixed, 
they are fixed to develop the business, and some must necessarily 
be lower than others. 

The Chairman. You would not want to develop a losing business ? 

Mr. Worthington. It is very easy to pick out the lowest express 
rates and compare them with 

Mr. Stewart. We have not done that. Do you not think the 
rates between New York and Chicago are fairly representative of 
the business? 

Mr. Bradley. That leads up to the very question I wanted to ask 
General Stewart sometime ago, and that is as to the principle upon 
which that tabulation was made. I think all of the members of the 
committee will remember that there was a statement printed in 
volume 5, at page 783, showing an analysis by Dr. Lorenz of a state- 
ment made by Prof. Adams many years ago, and repeated more 
recently by Senator Ashurst. He illustrated the difference between 
express and mail rates as between New York and Buffalo and New 
York and Chicago, the illustration being based upon a rate for a 100- 
pound package, and it was shown in the analysis made, especially in 
the analysis made by Dr. Lorenz, that that was not a representative 
case. Therefore, except that there may possibly be something new 
in the text of General Stewart's presentation on that subject, it would 
seem as though this array of instances is simply multiplying that old 
example by the number of times the case is presented. 

Dr. Lorenz. Did I show that was not a representative case? I 
thought I corrected it or supplemented it by taking a 30-pound ship- 
ment instead of a 100-pound shipment and showing that in that case 
the express pay was brought more nearly up to the mail pay; in other 
words, that they were similar but still the express pay was slightly 
below the mail pay. 

Mr. Bradley. Of course, in legard to the general subject as to 
whether the railways as a whole get a better return out of express 
than they do out of the mail, there are a number of statements pre- 
sented throughout the hearings that we can refer to in our deliberate 
statement that, I think, demonstrate that as a rule the revenue 
received by the railroad companies from the express companies is 
higher than the revenue from the mail, and even when that statement 
is made it has to be supplemented by the fact that there are many 
services which the express companies render for themselves in con- 
nection with the transportation of express traffic. 

Mr. Worthington. I would add to that, further, that if it was nec- 
essary for General Stewart to reach that conclusion in the way he has, 
he could take his car-foot mileage, which he gives in Document No. 
105, for express and divide that into the total express revenue, and he 
would find by doing that that the average receipts for a 60-foot car 
would be 23 cents. 

The Chairman. On express ? 

Mr. Worthington. On express. 

Mr. Prentiss. It is 21 cents. You have made a mistake in your 
calculation. We have been able to obtain the express revenue from 
the Interstate Commerce Commission's statistics for 1910. 

Mr. Worthington. I would want to question that, because the 
railway mail pay committee itself reached almost identically the same 



1312 RAILWAY MAIL PAY. 

car-foot miles that was reached in Document No. 105, and divide that 
into revenue for the same roads and find a return of 23 cents. 

Mr. Bradley. The mail was 19.36 and the express 23.13. 

Mr. Worthington. Counting all of the space for mail which the 
railways claim was allotted to the mail. 

Dr. Lorenz. I would like to ask whether this revenue in which you 
divide the car-foot miles was the actual cash payment by the express 
companies, or did it include allowance for services ? 

Mr. Worthington. That was actual cash payment. 

Dr. Lorenz. It evidently makes some difference as to how you 
make your calculation, because I think in one statement I submitted 
to the committee I estimated the revenue received by the express 
companies was 21 cents. That was obtained by taking the portion 
of express car-foot miles, applying that to the total passenger train 
car-foot miles to get the express car miles and dividing that into the 
actual revenue for 1910 obtained by the railroads from the express, 
and that gives the result of 21 cents. 

Mr. Worthington. The allowance you speak of would simply 
increase the railway companies' compensation from express. For 
instance, with the Southern Pacific we have a 40 per cent contract, 
having received a cash and stock bonus in lieu of a 55 per cent con- 
tract, yet on our line some years ago we asked the express company 
to compute for us the ton-mileage of express in order to determine 
what we received, and we found we were receiving an average rate of 
about 5 cents per ton-mile and we were carrying an average of nearly 
5 tons to the car, and that was on a 40 per cent basis. 

Dr. Lorenz. Did not your statement submitted to the committee 
show that you were receiving less per car-mile on the express than on 
the mail ? 

Mr. Worthington. It might have because of the 40 per cent con- 
tract. 

Mr. Bradley. I would like to call attention to this phase of the 
matter, that in making a comparison one has got to be very, very 
careful, because the revenue received by the railroad companies 
is a percentage of the gross receipts of the express companies. If 
you are comparing that, for instance, on a ton-mile basis, you are 
comparing it with an average for the whole country, as ascertained 
by the Post Office Department, so the question of the average haul 
would be of supreme importance. I have an illustration here, for 
instance, that on a 1 -pound package, the receipts of the railway com- 
pany from the express company for a 50-mile haul would be at the 
rate of $4.20 a ton-mile, while the receipts from the same package for 
1,000 miles would be 24 cents a ton-mile. When we pass to the 20- 
pound package, the receipt of the railroad company on a 50-mile haul 
would be at the rate of 15| cents per ton-mile, and for a thousand- 
mile haul it would get down as low as 2 cents a ton-mile. So you see 
how very important it is to establish the average length of haul and 
to contemplate the total expanse of the business, rather than to pick 
out particular examples that are not really representative, although 
the number quoted makes them appear to be representative. 

Mr. Prentiss. Mr. Chairman, I think I can show that the depart- 
ment did the very thing which Mr. Bradley has just suggested. We 
wanted to get the revenue from express comparable with the car-foot 



RAILWAY MAIL PAY, 



1313 



miles from express and make a comparison with the revenue from 
mail and the car-foot miles of the mail service as given in Table 3, 
House Document 105. We obtained like data for the express service, 
based on a per annum rate for the same period as for the mail 
service, so that we have comparable figures. I would like to read 
these rates showing average monthly express revenue. In 1910 it 
was $5,800,000. In 1909 it was $5,300,000. Table 3, in Document 
105, which represents more car-foot miles than is represented by the 
calculation of the railroad companies, shows revenue of approximately 
$4,900,000 and the railroads (p. 71 of the hearings) for the same 
period show $5,075,000 for less mileage. To bring this revenue up to 
the same standard it would show about $6,000,000 revenue for the 
roads. There is a 25 per cent increase shown by the railroads' fig- 
ures, which accounts for the difference of 21 cents and the 23 cents 
per car-mile. 

Mr. Worthington. I do not think there is any question but what 
the railroads would be very willing to handle the mails on the express 
basis and receive 50 per cent of the tariff rates now charged by the 
express companies, and to perform the service under the same con- 
ditions with the same kind of equipment. As you know, the express 
cars are much lighter than mail cars. They are not weighted down 
with post-office fixtures, and there are a great many conditions 
required of one service that are not required in the other. When 
you speak of a heavier ton-mile for express, you speak of the heavy 
class of traffic. In the mails the parcels are a bulky class of traffic. 
For a fair comparison you should take the same class of traffic that 
you are handling through the parcel post and determine the revenue 
if shipped by express. I would like to say that I was shown by one 
of the express companies that the railway earnings on a day's business 
of parcels from 1 to 20 pounds in parcel post zone No. 2 would be 
about 34 cents a ton-mile, due to the fact that we receive 50 per cent 
of the rate, no matter what weight the package is. If shipped by 
mail in the parcel post we receive about 7 cents a ton-mile rate on 
that class of traffic. The figures in document No. 1 05 relate to Novem- 
ber, 1909. The conditions have changed materially since that time, 
and I would like to file a small statement showing the railway earnings 
from mail and express for the five years 1909 to 1913, inclusive. 



Annual railway receipts. 



Year ending June 30— 


Mails. 


Express. 


1909 


$49,869,375 
49,405,311 
50, 583, 123 
51,691,301 
51,959,388 
4 


$64,032,127 


1910 


69,917,562 


1911 


73,936,018 
78,522,747 


1912 . 


1913 


83,872,497 
31 




Increase 1913 over 1909 


per cent.. 



Authority: Page 47, 1913 Annual Report of Postmaster General; reports of Interstate Commerce Com- 
mission on operations of express companies. 

Unfortunately the units of service are impossible to obtain, but I 
think it is an approximately fair conclusion that the services ren- 
dered have increased along parallel lines. It proves that the depart- 
ment has gradually taken over a part of our express business which 



1314 KAIL WAY MAIL PAY. 

has paid the railroads fairly well, and in taking over that business 
they should expect to compensate the railroads for handling it. 

Dr. Lorenz. That would not account for the five-year increase ? 

Mr. Worthington, The smaller increase in five years from 1913 
to 1909 in the case of the mail is due to the restrictions as to rates, etc. 

Dr. Lorenz. My opinion is that that may simply show that you 
were overpaid for carrying the mails in 1909 rather than that the 
pay has not adequately increased, so that this statement could not 
prove anything at all. 

Mr. Worthington. It is interesting as showing that, compared 
with mail and express, the revenue from express has increased very 
largely and increased hardly at all from handling the mails. 

Mr. Snead. In connection with the rate per ton-mile I would like 
to call attention to the fact that the contract between the railroads 
and the express companies also includes the shipment of money and 
valuables, which have a special rate and show in the statement 
General Stewart made as to the ton-mile for express that covers the 
weight feature only, and does not cover 50 per cent of transporation 
for money and valuables. 

Mr. Worthington. I think the rate of 8 cents per ton-mile for 
express is not typical. 

Mr. Stewart. It is higher than the figures given heretofore in 
the hearings by Mr. Bradley, and higher than the figures given by 
the Bureau of Railway Economics. 

Mr. Worthington. However, dividing that rate into car-mile 
earnings, which happens to be 23 cents, according to our figures, it 
would produce an average load of express in a car of only 2\ tons, 
which is only the same load as we carry of mail. I do not think there 
is any question but what the express load in a car is double that of 
the load in the mail cars, due to the fact that we have no post-office 
fixtures to limit the weight we can carry in an express car. 

Mr. Stewart. You carry heavy safes and package trunks and mes- 
senger safes. You have a large number of them in the service ? 

Mr. Worthington. Is it not your own opinion that the space 
occupied in a car by the postal fixtures is greater than the space 
occupied by the safes and impediments of the express service ? 

Mr. Stewart. I do not think so. It might be that the density is 
heavier. 

Mr. Bradley. I have asked experienced transportation officers 
about that, as to what proportion of space might be occupied by the 
equipment of trunks and so on in the express business and the replies 
I got would indicate about 1 per cent of the total space. Of course, 
that is an opinion, but from experienced officers. 

Mr. Worthington. I know that our own weight is 5 tons as 
determined by accurate statistics. 

Dr. Lorenz. Is that the total loaded and empty car mileage 
weight % 

Mr. Worthington. Both. 

Mr. Prentiss. I have some statistics on that point. There were 
reported to the Interstate Commerce Commission (statistics of ex- 
press companies, 1909) 1,403 large stationary safes handled in the 
express cars, remaining in the cars all the time; there were 13,765 



RAILWAY MAIL PAY. 1315 

small safes used by the express messengers and 23,815 packing 
trunks. The weights of these various safes and trunks have been 
averaged; the large safes at 1,000 pounds, the small safes at 125 
pounds, and the trunks* at 50 pounds, the total weight of which is 
estimated as 6,000,000 pounds. 

Mr. Worthington. How much per car-mile ? 

Mr. Prentiss. That is not car-miles at all. This express equip- 
ment is carried in the cars every day. Compared with that 6,000,000 
pounds, we have 776,000,000 pounds of express matter carried on the 
trains during one month. 

Mr. Worthington. As against that I would like to place the dead 
weight of the mail car as against the express car, the difference being 
10 to 20 tons to the car. 

Mr. Prentiss. The express equipment represents a daily weight 
that is in the cars all the tune; approximately 6,000,000 pounds and 
776,000,000 pounds represent the weight of express parcels for one 
month. 

Mr. Baskerville. It is not a question of weight. The safe is only 
of a small size, but the racks occupy the whole side of the car. 

Mr. Peabody. I think Mr. Stewart's assumption is that the rail- 
roads are satisfied with their receipts from the express companies. I 
think he has overlooked the fact that the rates which he has quoted 
are rates compelled by law. So far as that is concerned, under the 
decision, the railroads were not allowed to intervene and present 
their case, and, further, I doubt if there is a railroad company in the 
United States that would renew its contract to-day on the basis of 
the present contract. I will say so far as the Santa Fe is concerned 
we will not renew our contracts in 1916 at any such rate as 55 per 
cent. 

Mr. Stewart. Our figures of 8 cents plus a ton-mile are based on 
the rates before they were revised by the Interstate Commerce Com- 
mission. 

Mr. Peabody. We would not renew on the 55 per cent basis, the 
old rate. 

Mr. Stewart. In answering your question without regard to the 
fact that the comparison is made with rates before the reductions 
were made, I think it is a fair assumption that the railroads ought to 
carry the mails for the United States Government at no greater cost 
than that for which they enter into an agreement to carry express 
matter for the express companies, making proper allowance for the 
differences in the services. 

The Chairman. Do you claim the services are alike ? 

Mr. Stewart. I have pointed out that there are differences in the 
service, and I have said that the railway mail pay committee has 
suggested some of those differences, many of which will disappear if 
we go on this new basis; but I have said further that they have not 
put any monetary value on those differences as yet. They can not 
tell the commission at the present time how much of this difference 
between thirty-nine million and fifty-one million, for instance, is rep- 
resented by these differences. 

The Chairman. Have you ? 

Mr. Stewart. I have not. T think the railroad people should do 
that. 



1316 RAILWAY MAIL PAY. 

The Chairman. From the presentation that you have made rela- 
tive to the express charges, what conclusions have you come to in 
your own mind as to their application in the question we have under 
consideration, railway-mail pay ? 

Mr. Stewart. I think they have an application that is very direct. 
I think they prove without any question whatever that the rates that 
have been suggested by the department are not too low. I have 
serious doubt in my mind whether those rates are not too high, in 
view of the facts we have presented in regard to express revenues to 
the railroad companies. 

Senator Weeks. General Stewart, I wish you would have Mr. 
Prentiss sometime assume that the Government takes over all the 
express business and apply his mail rates to that and see how much 
the Government would be losing on the express business, simply for 
transportation. 

Mr. Stewart. What kind of rates would we get for carrying it ? 

Mr. Lloyd. The same rates you get now from the parcel post. 
You have got the parcel-post limit at 50 pounds. 

Mr. Mack. Mr. Chairman, there was a statement at the close of 
volume 9, page 1106. I submitted- a memorandum showing the 
increased postal revenue and the railway mail pay revenue for a 
period of five years. I would like to have the privilege of having this 
memorandum quote the authority for the figures. I have also gone 
one year further and have developed another interesting comparison, 
as the report for 1913 is now available and I have taken a six-year 
period also. 

Mr. Stewart. You know you can not rely on a report of one year 
to take statistics of that kind, but you must go to subsequent reports 
to get subsequent payments on account of previous fiscal years. 
Your first memorandum was deficient in this respect. 

Mr. Mack. The first memorandum I had was for four years 
instead of five. 

The further statement I would like to add is as follows : 

Add to volume 9, page 1107: 

Note. — The Postmaster General's Report is the authority for the statement made, 
as to comparison of postal revenue and railway mail pay for the five-year period, 
and seemingly ought not to be subject to question: 

Postal revenue. 

Postal revenue for fiscal year ended June 30 — 

1912 $246,744,015 

1907 183,585,005 

Increase in postal revenue for five years 63, 159, 010 

(Postmaster General's Report, 1913, p. 46.) 

Railway mail pay. 

Railway mail pay, including postal-car pay, fiscal year ended June 30 — 

1907 $51,008,111 

1912 50, 703, 323 

Decrease in railway mail pay, same period 304, 788 

(Postmaster General's Report, 1913, p. 156.) 



RAILWAY MAIL PAY. 1317 

Since the original memorandum was made the results for another 
year to June 30, 1913, are available for a six years' comparison, as 
follows : 

Postal revenue. 

Postal revenue for fiscal year ended June 30 — 

1913 $266, 619, 525 

1907 183,585,005 

Increase in postal revenue 83, 034, 520 

(Postmaster General's Report, 1913, p. 46.) 

Railway mail pay. 

Railway mail pay, including postal-car pay, fiscal year ended June 30— 

1913 $51, 466, 030 

1907 51, 008, 111 

Increase in railway mail pay, same period 457, 919 

(Postmaster General's Report, 1913, p. 156.) 

This latter comparison is astounding, when considered with postal 
conditions in 1897, only 16 years previous. In the year ended June 
30, 1897, the entire postal revenue of the country was less than the 
increase alone for the past six years, the whole postal revenue for 
that year being $82,665,462 (Post Office Auditor's Report, 1913, p. 5), 
and the past six years' increase alone being $83,034,520, as stated; 
yet for the transportation of mail represented by the postal revenue 
in 1897 the railroads received pay amounting to $33,876,521 (Post- 
master General's Keport, 1913, p. 156), while the increase in mail pay 
to the railroad during the past six years amounted to only $457,919. 

This seems most convincing evidence that the railroads have not 
received increasing pay with the tremendous increase in the volume 
of mail business transported for the Government, and, besides, not 
only was this great increase carried by them, but during that six 
years' period service was established on 21,381 miles of entirely new 
railroad service, and there was increased frequency and facilities 
represented by an increase of 84,001,924 annual miles of service. 
(Postmaster General's Report, 1913, p. 265.) 

The Chairman. Gentlemen, General Stewart's statement submit- 
ted this afternoon and read has been sent to the printer, and we 
expect to have copies of it to-morrow morning, so that you will be 
able, if we are not disappointed by the printer, to have them here by 
9 o'clock. I refer to the statement which was read, which was sent 
down without any discussion with reference to it, so that you will 
have that in a short time. We will now adjourn the hearing until 
Wednesday, April 1, 1914, at 10 o'clock a. m. 

(Thereupon, at 5.40 o'clock p. m., the hearing adjourned, to be 
resumed Wednesday, April 1, 1914, at 10 o'clock a. m.) 



WEDNESDAY, APRIL 1, 1914. 

Committee on Second-Class Mail Matter, 

Washington, D. 0. 

The committee met, pursuant to adjournment, at 10 o'clock a. m. 

Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W. 
Weeks, and Representatives James T. Lloyd and William E. Tut- 
tle, jr. 

The following gentlemen were present and sworn by the chairman : 

Mr. Ralph Peters, chairman railway mail pay committee, presi- 
dent Long Island Railroad Co. 

Mr. W. A. Worthington, vice president and assistant director of 
maintenance and operation, Southern Pacific Railroad. 

Mr. A. H. Rowan, assistant to vice president, New York Central 
lines. 

Mr. H. E. Mack, manager mail traffic, Missouri Pacific Railway. 

Mr. S. C. Scott, vice president's assistant, Pennsylvania Railroad. 

Mr. Y. J. Bradley, general supervisor mail traffic, Pennsylvania 
Railroad. 

W. W. Safford, general mail and express agent, Seaboard Air Line 
Railway. 

Mr. R. H. Snead, manager express traffic, Chesapeake & Ohio 
Railway. 

Mr. F. E. Campbell, traveling agent transportation department, 
Norfolk & Western Railway. 

Mr. J. P. Connolly, supervisor mail traffic, Central Railroad of 
New Jersey. 

Col. W. B. Thompson, counsel. 

Mr. John N. Drake, secretary-treasurer, Short Line Railroad Asso- 
ciation. 

Mr. James Peabody, statistician, Atchison, Topeka & Santa Fe 
Railroad. 

Mr. W. S. Baskerville, general agent mail traffic, Great Northern 
Railroad. 

Mr. J. C. McCahan, supervisor of mail traffic, Baltimore & Ohio 
Railroad. 

Mr. H. M. Wade, agent mail traffic, Erie Railroad. 

Representing Post Office Department: 

Hon. Joseph Stewart, Second Assistant Postmaster General. 

1319 



1320 RAILWAY MAIL PAY. 

Mr. C. H. McBride, Superintendent Division of Eailway Adjust- 
ments, Post Office Department. 

Mr. A. N. Prentiss, clerk, Post Office Department. 

Mr. Frank McFarland, Superintendent Eailway Mail Service, St. 
Louis, Mo. 

Mr. S. M. Gaines, Superintendent Railway Mail Service, Fort 
Worth, Tex. 

Mr. M. H. Blackwell, Assistant Superintendent Railway Mail 
Service^ Omaha, Nebr. 

Dr. M. O. Lorenz, associate statistician, Interstate Commerce Com- 
mission. 

The Chairman. This is a meeting for hearing the railroad repre- 
sentatives in reply to the department's statement submitted at the 
last meeting, Tuesday, March 24, 1914, and printed in volume 11. 

Mr. Peters. Mr. Chairman, we have prepared a statement in reply 
to the Post Office Department, which will be a final statement on the 
part of the committee on railway mail pay. [Reading :] 

Closing Statement from the Committee on Railway Mail Pay 
to the Joint Congressional Committee in Reply to the State- 
ment or the Post Office Department of March 24, 1914. 

The committee representing the railroads would have preferred 
to have rested its case before your honorable committee with its 
statement of February 26, volume No. 9, because a careful review 
of the statement of the Post Office Department submitted on March 
24 does not bring up any important features that require elucidation 
for the information of your committee, but it is realized that the 
testimony already printed is voluminous and that the reiteration 
in the Post Office Department's statement of certain claims already 
refuted may not be conveniently associated with the refutation or 
with the explanation. 

In view of the announcement by the chairman that this will be the 
closing meeting of an investigation that has lasted 18 months, it is 
both interesting and instructive to recall that the last previous joint 
committee of Congress to study this question found a somewhat 
similar situation before it. 

The investigation of the Wolcott-Loud commission extended from 
1898 to 1901. Representative Moody, of Massachusetts, a member 
of that commission (and subsequently a justice of the United States 
Supreme Court) , made a speech in the House of Representatives on 
February 5, 1901, reviewing the work of the commission. He said : 

When we began the work there were in existence, and supposed to be true, 
certain statistics which had largely affected public opinion. The statistics came 
from the Post Office Department itself. Gentlemen who based their reasoning 
upon those statistics had good excuse for doing so, because they were issued 
and put in circulation by the department itself. By these statistics it appeared 
that the average rate paid to railroads for transporting the mails was 6.58 
cents per pound and that the average haul was 328 miles, and that we paid, on 
an average, 40 cents per ton per mile to the railroads for transporting the mails. 
Gentlemen may carry these figures, if they please, in their minds, as they are 
important. We went staggering along under the weight of those statistics 
until the summer of 1899. While we suspected that they were false, there did 
not seem to be anybody who could demonstrate that they were not true. 



EAILWAY MAIL PAY. 1321 

Later on in his speech he says that a special weighing for 35 days 
in October and November, 1899, showed that mail equipment con- 
stituted 48 per cent of the mail matter sent by the railroads, although 
the department had previously claimed that the percentage of equip- 
ment was about 9J per cent. He says elsewhere in his speech : 

It has been supposed that we were paying Qh cents per pound for the aver- 
age payment to the railroads for the transportation of mails. In point of fact 
we were paying 2| cents per pound. 

Later, he says : 

Further, we found that the haul instead of being 328 miles was 438 miles. 
We further found, what is most important of all, that instead of paying 40 
cents per ton-mile we were only paying 12.56 cents per ton-mile. In other 
words, we were not paying one-third as much as the Post Office Department 
had led the people of the country to believe we had been paying. 

While the comments of Mr. Moody describe plainly and frankly 
the very grave statistical errors made by the Post Office Department, 
no one questioned for one moment the honesty or conscientiousness of 
the postal officials who had given authority and currency to those 
figures. The refutation was largely the result of the work of Prof. 
Henry C. Adams, the statistician of the Interstate Commerce Com- 
mission, whose services were secured by the joint congressional com- 
mittee for that special work. 

Document No. 105 and the Hughes commission inquiry. — Since 
the report of the Wolcott-Loud commission, in 1901, the Post Office 
Department has undertaken two very important and complicated 
tasks. The first was the ascertainment of cost to railroad companies 
of transporting the mails and the incidental services in connection 
therewith during the month of November, 1909, the results of which 
were published in House Document No. 105. The other was the 
earnest effort by the Post Office Department to analyze for the 
Hughes commission in the year 1911 the expenses of postal opera- 
tions so as to determine the specific cost of handling and transporting 
second-class mail matter. 

The inquiry of November, 1909 (H. Doc. No. 105), was from its 
nature a railroad problem more than a Post Office Department 
problem, whereas the ascertainment for the Hughes commission was 
entirely a problem resting on postal statistics. In the former, the 
cooperation and continuous advice of the railroad companies was 
quite essential to obtain correct results, whereas in the other the 
Post Office Department was not obliged to rely on any efforts and 
statements other than those of its own officers and its own post- 
masters and employees. 

It should also be pointed out that these two inquiries were funda- 
. mentally different in their respective paths of procedure, because 
the inquiry of November, 1909, was conducted to ascertain certain 
percentages or ratios which would subsequently be applied to large 
sums of money, representing many millions of dollars ; on the other 
hand the inquiry before the Hughes commission dealt with the sub- 
division of large sums of money -with the object of focusing the 
several amounts to the respective classes of mail matter, finally reach- 
ing a result of a few cents per pound. 

The Hughes commission dealt with the postal expenses for the 
year 1908, which were $210,000,000. The original calculation of the 
department's estimated cost per pound of second-class mail was 

49396—14 91 



1322 RAILWAY MAIL PAY. 

9.235 cents ; consequently it was in the ratio of about 1 cent for each 
$22,000,000 of expenses. In other words, an error of over $20,000,000 
could be disregarded Avithout affecting the final result more than 1 
cent. In the Hughes commission report, page 82 (footnote), it is 
shown that the department's revised computations showed a mini- 
mum cost of 8.263 cents per pound as compared with the original 
calculation of 9.235 cents per pound. The conclusions of the Hughes 
commission, on page 89 of their report, announce the following de- 
cisions : 

First. That the evidence submitted does not justify a finding of the total 
cost of transporting and handling the different classes of second-class mail 
matter. 

Fifth. That upon the basis of their apportionment for the fiscal year 1908, 
as modified by subsequent reductions in the expense of railroad transportation, 
the cost of paid-at-the-pound-rate matter for the services above mentioned is 
approximately 5£ cents a pound. 

That is, the decision rests on only part of the postal expenses, 
omitting the general post-office service expenses, $86,000,000, and mis- 
cellaneous expenses not directly assignable, $30,000,000, or a total of 
$89,000,000 omitted. In the Hughes commission report, on page 73, 
referring to the general post-office service expenses, for which it 
could not obtain satisfactory statistics, the following remarks are 
quoted : 

It seems hardly worth while to include the subsidiary tables from which 
these later results are taken or to criticize the details, as the commission has 
little confidence in their accuracy. 

And later, on the same page, the commission says : 

In view of the errors and inconsistencies in which the returns from the 
post offices abound — we do not extend this report to review them — our examina- 
tion has convinced us that the computation is not sufficiently accurate to base 
an apportionment of the cost of the general post-office service. 

The Hughes commission, therefore, preferred to make an incom- 
plete report and rest their decision upon an ascertained cost of 5J 
cents a pound for second-class matter rather than accept the findings 
of the Post Office Department for the apportionment of the remain- 
ing 3 cents. 

Our purpose in alluding to this case is to emphasize the fact that 
the division of expenses in a calculation to ascertain specific cost is 
a delicate and difficult problem even for those who are familiar with 
the statistics that are necessarily employed. We also hope that we 
can say, without meaning any discourtesy to the officers of the de- 
partment, that when an able and distinguished body such as the 
Hughes commission refused to accept the department's subdivision 
of the postal expenditures because they produced an uncertain varia- 
tion in the final amount of 3 cents or less, we are probably justified 
in questioning the ratios arrived at by the Post Office Department 
in regard to railroad expenditures when small discrepancies in ratios 
or percentages would lead to final differences of many millions of 
dollars. 

The expression of these views is not inconsistent with the apprecia- 
tion we entertain for the enterprise, the industry, and the tenacity of 
purpose which the Post Office Department officials have exhibited 
in the prosecution of these two important inquiries. 



KAIL WAY MAIL PAY. 1323 

The inquiry of November, 1909, and the committee on railway mail 
pay. — The history of the inquiry of November, 1909, resulting in 
House Document No. 105, has been so fully explained and the view 
of the railroads' committee has been so fully set forth in regard to 
the deficiencies and inaccuracies of Document No. 105, that there is 
no disposition to refer to the subject again. It seems advisable, 
however, to note in the record an expression of regret that the Sec- 
ond Assistant Postmaster General, in publishing the correspondence 
between the department and the committee on railway mail pay 
during 1910, should make the comment as he does on page 1252, that — 

It will be observed from this correspondence that the railroads' committee 
sought to induce the officers of the department to accept the totals obtained 
by the employees of such committee instead of relying upon the independent 
efforts of the officers and employees of the department in ascertaining the 
same in accordance with their duty prescribed by law. 

Your committee will note that in the published letter of February 
5, 1910, from Mr. Kruttschnitt, chairman of the committee on railway 
mail pay, that the assurance was given by Mr. Kruttschnitt to the 
Second Assistant Postmaster General that the committee would wel- 
come any precaution which the department felt was essential to 
secure accuracy. 

The Second Assistant Postmaster General intimates, on page 1252, 
that the acceptance of cooperation from the railroad committee would 
vitiate any finding which the department might make and would be 
wholly inconsistent with the duty devolved upon the Postmaster Gen- 
eral by law and by his obligations in the premises. 

This statement ignores the fact that the law of March 3, 1879, did 
not prescribe in detail the operations and precautions which the Post- 
master General should employ, and consequently the Post Office 
Department was free to cooperate and free to adopt any precautions 
deemed necessary to insure trustworthy and accurate returns. From 
the very nature of the inquiry all of the information had to be sup- 
plied by the individual railroads, and it was the work of assembling 
this information and the work of coordinating it and interpreting it 
intelligently that the Post Office Department sought to do alone, with 
the unfortunate results that have been explained to your committee 
during the past year. 

The Second Assistant Postmaster General says, page 1252 : 

In my judgment the department's course was the only proper one, and, in 
view of the outcome, there can be no doubt about its wisdom. 

In the view of the railroad committee it was not a question of pro- 
priety that governed the attitude of the Post Office Department, but 
rather questions of policy. If the department felt that cooperation 
would vitiate any finding which the department might make, it 
thereby confesses its unsuitability to be intrusted with the responsi- 
bility. When the law of March 3, 1879, was passed the Interstate 
Commerce Commission was not in existence. If the inquiry of No- 
vember, 1909, had been conducted under the auspices of the Inter- 
state Commerce Commission, we believe there would be no hesitancy 
or reluctance on the part of that commission to confer with the rail- 
roads and to cooperate in the ascertainment of correct statistics and 
in the proper interpretation of them. 



1324 RAILWAY MAIL PAY. 

But even if it be conceded that the Post Office Department for rea- 
sons of policy should have proceeded alone and made its own tabu- 
lation, there could be no good reason why, when this work was com- 
pleted, they should not have conferred with the railroads again to 
match the respective totals, to discuss the differences, and to remedy 
the inadequacy of statistics, which in some cases were insufficiently 
given because of misunderstanding, such as would naturally arise in 
an extensive inquiry instituted for the first time. If such conferences 
had resulted in unreconcilable differences, these could have been sub- 
mitted to Congress for final determination. 

Aside from all of the important criticisms that have been justly 
made against the statistical presentation and conclusions drawn from 
Document No. 105, it can not be lost sight of that the department 
passed judgment upon the statistics of a single month, upon the im- 
perfect results of a single and new inquiry, and failed to observe 
those precautions of prudential precedure which might properly be 
expected from any department of the General Government when 
dealing with a case involving the property and rights of the citizens. 

No statement of contrary views and no reiteration of such state- 
ments by a bureau officer of the Government will debar the railroads' 
committee from insisting upon its right to be heard when it makes 
statements in regard to the division of the railroads' total operating 
expenses and the space relation necessary under operating conditions 
between the passenger, express, and mail services, notwithstanding 
the fact that the Second Assistant Postmaster General, on page 1252, 
says that the railroads' discussion upon these statements amounts to 
nothing more than a quibble. 

The question of underpayment. — There seems to be nothing in the 
department's statements relating to overpayment or underpayment 
that calls for further comment. The department alludes to varying 
estimates made by the railroads as to the total amount of underpay- 
ment, but your committee understands very well that estimates based 
upon the comparative growth of freight revenue, or passenger reve- 
nue, or postal revenue are simply illustrative of tendencies which 
might be expected to be reflected in railway mail pay, especially if 
the national conditions are such as to warrant the belief that the 
volume and tonnage of mail transportation is at least keeping equal 
pace with other traffic. We believed that these incidental illustra- 
tions would assist the judgment of your committee in determining the 
fairness of the railroads' claim that the amount of underpay is at 
least $15,000,000. 

Under this head the Post Office Department also alludes to the 
efforts made before the Hughes commission to apportion the postal 
expenditures for second-class mail matter, and concludes by saying : 

If the facts were known to the railroads' committee it would appear the 
interpolation of reference to such matter in their statement, in the incomplete 
manner in which presented, could have no other intention than that of mis- 
leading the joint committee. 

We have already dealt adequately with that subject by making 
precise quotations from the Hughes commission report, and we take 
pleasure in referring your committee to the document itself, i. e., 
House Document No. 559, Sixty-second Congress, second session. 

Short-line railroads. — On page 1253 the department mentions the 
criticism by the railroads of Table 7, Document No. 105, as showing 



EAILWAY MAIL PAY. 1325 

a large per cent of gain for short-line railroads, and says the results 
came from the statistics used ; that " they are mathematically sound 
and the inevitable result of the elements on which they are based J1 
and are " isolated cases." 

Our criticism was not based upon the inevitable mathematical re- 
sult of the figures used, but upon the acceptance of that result and 
the publication of it ; and further, the cases are not isolated. 

Table 7 of Document No. 105 shows 99 railroads charged with 
making a profit of from 100 per cent to 2,918 per cent on their mail 
service. Of these 99 railroads, 84 roads are 50 miles or less in length. 

In some cases the department reached its result by cutting out part 
of the space charged to the mails. In other cases the little railroads 
apparently did not understand the department's forms and failed to 
make complete or correct reports, and this would have been evident to 
persons acquainted with the railroad service. The reports should 
have been verified and corrected before being published. 

Observe on page 32, preliminary report of the joint committer 
where Mr. Frazer of the Bellefonte Central Kailroad, 19.51 miles' 
long, shows that his road loses $1,521 a year, although the department 
attributed to him a profit of $575 a year. The department said he 
made a profit of 97 per cent. He says he had a loss of 61 per cent. 

Observe in volume No. 5 (p. 750) that the East Broad Top Kail- 
road reports a cost for side and terminal messenger service of $823 a 
year, although in Table 7, Document No. 105, the department credits 
only $5.80 for November, 1909, equivalent to $69.60 a year, or about 
one-twelfth of what the company claims. That road is shown in 
Table 7 as making a profit of 2,374.52 per cent. 

The ratio of total operating expenses to passenger-train service — ■ 
Railroad, 3h.l$ per cent; Post Office Department, 29.21 per cent (p. 
1258).— On pages 1258 and 1260 the Post Office Department under 
the caption "The railroads' committee's erroneous 34.42 per cent," 
endeavors to disprove the correctness of the railways' assignment to 
passenger-train service of operating expenses and taxes in favor of 
the department's assignment, which apportions only 29.21 per cent 
of these expenses to passenger-train service. 

No valid argument is made for rejecting the railroads' appor- 
tionment of operating expenses and taxes or for supporting that of 
the department. As has been before explained, about one-half of the 
railway operating expenses and approximately all of the taxes 
are not directly assignable to any class of traffic and must be ap- 
portioned arbitrarily. As to these expenses the department adopted 
a method of apportionment which allocated a lower estimate of ccst 
chargeable to the mails than would have been obtained by any recog- 
nized plan of apportionment. Certain expenses which may be 
directly allocated to freight and passenger service are higher per 
train-mile for freight than for passengei, such as fuel, wages of train- 
men, car repairs, etc. The operating expenses first referred to, which 
are of an indivisible nature, have no relation whatever to the ex- 
penses last named. Notwithstanding this fact, these expenses, to an 
aggregate of about 40 per cent of the total operating expenses, were 
assigned by the department in the same way as the direct charges. 
As a result of this, such expenses as the large sums incurred for 
maintaining roadbeds and track, according to the department's ap- 
portionment, would be far lower per train-mile for passenger than 



1326 RAILWAY MAIL PAY. 

for freight- train service. As passenger-train service is operated at 
faster speed, requires higher standard of maintenance, including 
more double track, expensive terminals, etc., and its presence in- 
creases the cost of freight operation because of delays to the latter, 
the reasoning of the department in this respect is fallacious, while 
the method used by the railways in apportioning these expenses is 
far more entitled to consideration. The railroads apportion, on a 
train-mileage basis, only the expenses which can not be directly 
assigned. This apportionment has been frequently termed by the 
department as arbitrary and antiquated. What may be said of the 
department's apportionment, based on the theory that because fuel 
for locomotives and wages of trainmen cost more per freight-train 
mile than per passenger-train mile, the same relative lower cost per 
passenger-train mile exists as to expenses of an entirely different 
nature, such as renewal of ballast, labor cost of repairing roadbed 
and track, cost of tunnel repairs, expense of maintenance of high- 
way crossings of various kinds, etc. ? There is good foundation for 
the railways' assumption that as these expenses are incurred for 
train service as a whole they may be justly apportioned on the basis 
of train mileage, but absolutely no justification for the application 
of the method used by the Post Office Department. The insufficiency 
of the department's allowance for passenger-train expenses may be 
further understood by considering certain expenses incident to pas- 
senger-train operations which have been charged wholly to freight 
service, such as delay to freight trains because of preference given 
passenger trains (this being one reason for increased wage cost per 
freight-train mile) and to the charging to freight- train service of 
the whole cost of handling company freight. 

This freight, consisting of rails, lumber, and other material for 
maintenance, fuel, etc., is handled for passenger-train service as well 
as for freight, and a substantial part of the freight- train expense 
should, on this account, be transferred to passenger-train service. 
Analysis of annual reports for the year ending June 30, 1910, for 
108,801 miles of road, moving approximately one-half of the freight 
traffic of the United States, showed that ton-mileage of company 
freight comprised 11.85 per cent of the total ton-mileage handled by 
freight trains. A transfer of a proper share of the cost of handling 
this tonnage to the passenger-train service would largely increase the 
Post Office Department's estimate of passenger-train expenses. 

On page 1260 the department concludes that the ratio of operating 
expenses and taxes to revenue for passenger-train service is only 
slightly more than for freight. The erroneous nature of this result 
is obvious when it is considered that revenue, which is the divisor, 
was for the year under discussion $2.86 per train-mile for freight 
trains and only $1.30 for passenger trains. 

Mr. Stewart expresses the view that his figures are more in accord 
with a businesslike administration of the railroads, which may be 
true, but he forgets that the rates and conditions of service which 
produce the existing results are out of the control of the carriers. 
For many years railway wages and material prices have been going 
up. The railways have been able to partly recoup themselves 
through better car and train loading in the freight service, but with 
different conditions in passenger-train service a similar improve- 
ment in loading has not been possible. This is illustrated by the 



KAILWAY MAIL PAY. 1327 

trend of revenue from passenger service as compared with the op- 
erating cost. During the 20 years from 1890 to 1910 the operating 
expenses and taxes per total train-mile for all railways in the United 
States increased 56 cents. Compared with this the passenger-train 
revenue per train-mile increased only 22 cents, in 1890 the passenger 
revenue per train-mile being 8 cents higher than the operating cost 
per total train-mile, whilst in 1910 it was 26 cents lower. 

In this connection attention should again be drawn to the fact that 
all of the calculations of the department as to railway-mail ex- 
penses are based on the statistics obtained for November, 1909, 
whilst statement submitted by the committee on railway-mail pay 
(p. 1085) showed that during the four years ending 1913 railway 
operating expenses increased 29.6 per cent per mile of road oper- 
ated, taxes increasing during this period 34.6 per cent per mile of 
road, net revenue after taxes decreasing 6.9 per cent, whilst the 
ratio of operating expenses to revenue, which in 1909 was 65.5 per 
cent, had increased in 1913 to 71.2 per cent. This further empha- 
sizes the necessity for permitting the railways, under a fair plan of 
mail compensation, to secure some advantage through reduced oper- 
ating cost per ton-mile by better car loading to offset the effect of 
rises in labor and material prices. It may be remarked incidentally 
that a space basis for payment is directly opposed to this theory, 
in that the shipper receives all the advantage of better car loading, 
whilst the railway expenses are increased without any compensa- 
tion therefor. 

The charge of space to the mail service. — The department's de- 
fensive statements under this head do not meet squarely the argu- 
ment of the railroad committee, as set forth in volume No. 9, in 
regard to the unfairness of picking out and disallowing so-called 
" dead space " in connection with the mail service without taking 
similar note of so-called " dead space " in the passenger and express 
services. In regard to full R. P. O. cars, the department quotes its 
rule that it was the intention to credit the mail service with the 
return movement of the maximum space authorized outbound, and 
the railroads do not doubt that this was the intention, but the ques- 
tion remains as to whether this intention was carried out. It may be 
noted that in volume No. 2 (p. 415) it is shown for the Pennsylvania 
Railroad system that after the first publication of Document No. 105 
the department made a correction upon representations of the rail- 
road company so that 5,706,000 car-foot miles was credited to the 
mail service for R. P. O. cars which had not been treated accord- 
ing to the department's rule. It is possible that if other railroad 
companies had made similar analysis of the details, further credits 
might have been called for and obtained, as was done in the case of 
the Pennsylvania Railroad system. There is the further point to 
be made that while the department's intention as to R. P. O. cars 
may have seemed perfectly fair from the department viewpoint, 
yet it failed to recognize the necessity of uniform standard sizes 
which the railroad company is operating and which would be 
incumbent upon the department itself if it owned the R. P. O. cars. 

On page 1264 the department says : 

Concerning mail-storage cars, the claim is made that a large amount of 
space necessary in the operation of storage cars was disallowed by the depart- 
ment. The department credited all storage-car space where it was used for 



1328 RAILWAY MAIL PAY. 

mail purposes. Where it was not so used it was charged to " dead space." It 
is believed that the railroad companies use such storage cars for their own 
purposes in many cases. The claim of the railroads' committee, therefore, that 
a large portion of this space should have been charged to mail is a claim un- 
supported by any definite evidence as to amount and should not be given serious 
consideration. 

In this the department gives a very narrow meaning to the word 
" used " when they say that they credited all storage-car space where 
it was used for mail purposes. The inevitable return movement of 
empty storage cars that were loaded outbound with mail is part of 
the use made of the car equipment, and the department itself recog- 
nizes this principle in its proposed bill in volume No. 8, where it is 
said that payment will be ma4e for the round trip. 

As to the suggestion that this claim is unsupported by any definite 
evidence as to amount and should not be given any serious consider- 
ation, attention is called to the statement by the Pennsylvania Rail- 
road system in volume No. 2 of the hearings (p. 411), where it is 
clearly shown that the department disallowed 11,523,000 car-foot 
miles for the month of November, 1909, for deadhead storage cars 
returning, which were not used in the company's business. It is 
probable that the total amount of storage-car space disallowed by 
the department for all railroads for November, 1909, would be not 
less than 50,000,000 car-foot miles. 

The department under this head does not discuss fairer allowances 
for mail- apartment cars. It has previously intimated that a revision 
of its figures for this class of service might be justified, but has never 
stated definitely the amount of additional allowance of space which 
its further consideration of the subject would lead it to grant. 

As regards closed-pouch space, the department quotes the rule em- 
ployed on the Pennsylvania Railroad lines during November, 1909, 
and then makes the following statement on page 1265 : 

The fact is that the report of the Pennsylvania Railroad and that of the 
New York Central & Hudson River Railroad Co., both of which used the rule 
above mentioned, showed less linear space for closed-pouch service than the 
computations made by the- department upon the statistics of closed-pouch 
mails taken during the month of November entitled them to. It is submitted 
that no more conclusive argument need be advanced in favor of tbe sufficiency 
and fairness of the department's rule in that respect. 

In reply to this statement of the department just quoted, it is 
learned that the records of the Pennsylvania Railroad Co. show for 
closed-pouch service during November, 1909, 2.774,460 car-foot miles, 
of which the Post Office Department allowed only 2,122,106.18. The 
Post Office Department in this case disallowed 652,353.82 car-foot 
miles, or about 23J per cent. The same figures for the Pennsylvania 
Railroad system, as shown in the companies' records for closed-pouch 
service, was 7,231,969 car-foot miles, of which the department allowed 
5,044,839, thus disallowing 2,187,130 car-foot miles, a disallowance of 
30 per cent. 

As regards the New York Central & Hudson River Railroad Co_. 
the company reported 3,406,641.67 car-foot miles and the department 
allowed 1,453,829.34. The department disallowed 1,952,812.33 car- 
foot miles, or 74.45 per cent. 

It would therefore seem that th'e department's idea is erroneous 
that these companies reported less than the department's computa- 
tions showed them to be entitled to. 



RAILWAY MAIL PAY. 1329 

This whole subject of the charge of space to the mail service would 
have been greatly clarified if the request from the railroad's side of 
a year ago had been complied with, namely, that the department be 
called upon to analyze the so-called " dead space " so as to show 
whether it was chargeable to R. P. O. car space, or storage-car space, 
or apartment-car space, or closed-pouch space. The Second Assist- 
ant Postmaster General indicated at that time that this analysis 
could not be made without additional clerical force which would 
have cost about $1,500, and that he was unable to proceed with the 
analysis unless the joint congressional committee would authorize 
that expense. 

The gauge of railway mail fay. — The department contends that 
the reply of the railroads' committee to their question " Shall the 
gauge of railroad mail pay be a strictly commercial rate?" is in- 
sufficient, and they again invite attention to their argument which 
appears in volume No. 7 (pp. 998-1004). The considerations which 
the department ask to be given weight (see p. 998) are the following: 

1. The certainty, constancy, and homogeneity of traffic. 

2. The certainty and regularity of payment. 

3. Railroads are not built primarily to carry mails. 

4. The protection to their mail trains which railroads, as Govern- 
ment agencies, receive against unlawful acts in interference with or 
obstruction of the mails carried. 

5. The principle of public utility. 

The railroad committee believe that in volume No. 9 (pp. 1076- 
1078) it made a sufficient reply on the whole subject, and specifically 
with reference to considerations 1, 2, and 4. If the joint committee 
desires further discussion of these considerations it will give us 
pleasure to cover the subject more extensively, but, in our opinion, 
this is not necessary. 

In preparing our reply that was published in volume No. 9 we re- 
frained from presenting some quotations and some discussion which 
may now be briefly submitted in response to the insistence of the 
department's representative. 

The department, in volume No. 7 (p. 1000), makes the following 
statement : 

3. Railroads arc not built primarily to carry mails. — Railronds are pro- 
jected and built for the purpose of securing passenger and freight traffic. It 
is doubtful if the question of the carriage of the mails ever enters into the 
calculations of any railroad enterprise. After its construction the mail natur- 
ally follows, and the companies usually secure that business without solicita- 
tion. This is a strong argument in favor of treating the carriage of the mail 
as a by-product, and to charge it with a participation in all of the costs of the 
road is very liberal policy. 

After perusing this statement the reader would naturally pause to 
consider that as the United States mail had been an important article 
of transportation fully 50 years before any railroads were built in the 
United States, it would be quite likely that the builders of railroads 
would have in mind all possible traffic that could be obtained and 
would certainly include the mails in their calculation. 

However, we find at the foot of page 1002 the following assertioi 
by the Post Office Department : 

No railroad of any importance could be successful in its operations without 
the regular, certain, and speedy transmission of the mails over its line. It is 
a truism which no one will controvert, that practically all commercial and 



1330 RAILWAY MAIL PAY. 

industrial enterprsies, as well as social intercourse extending beyond the 
neighborhood, depend absolutely upon the mails. As the community thus pri- 
marily depends upon the mails, in a greater degree railroads so depend, as 
they must rely wholly upon the communities for whose business they are con- 
structed and operated. It must, therefore, be apparent that no commodity 
transported is entitled to as great consideration in the matter of rate making 
as the United States mails. 

Here we have the assertion that the mails are so essential to the 
community and to the railroad that it could not be successfully op- 
erated without them, in apposition to the statement previously made 
that it is doubtful if the question of the carriage of the mails ever 
enters into the calculations of any railroad enterprise. 

But we recall that something was said on this subject in the hear- 
ings of May 14, 1913. Turning to volume No. 5 (p. 659) we find 
that the Second Assistant Postmaster General was asked what would 
be the probable revenue to the Government from first-class mail 
matter if there were no railroad service. The Second Assistant 
Postmaster replied as follows : 

Of course, it would be greatly reduced. We are all glad to admit, and it 
is not an admission, for we are glad to say that the railroad companies perform 
a wonderful service for the Government and for the people ; and if it were not 
for the railroads mail service would be a very insignificant thing. 

We respectfully submit that the views expressed by the depart- 
ment's representative on both sides of the question are sufficiently 
comprehensive to relieve the railroads' committee from offering any 
comment or argument. 

In response to the fifth consideration, namely, "the principle of 
public utility," it is to be observed that the main dependence of the 
department in volume No. 7 is a quotation from Prof. Henry C. 
Adams in the report which he made to the Wolcott-Loud commission 
on February 1, 1900. The department makes two quotations from 
Prof. Adams and omits a number of other quotations which might 
have been made with more effect, because they are more significant 
of Mr. Adams as a statistician and as a student at that time of the 
railroad mail service. For example, in Senate Document No. 89, 
part 2, Fifty-sixth Congress, second session, pages 190-200, Prof. 
Adams reaches the conclusion that ton mileage or weight multiplied 
into distance is the proper basis for determining railway-mail com- 
pensation. 

On page 182 Prof. Adams insists that the ascertainment of cost 
by analysis of operating expenses is not practicable, and says : 

It can not be recognized as a proper method of arriving at reasonable com- 
pensation for the transportation of the mail. 

On pages 203-206 Prof. Adams gives a useful interpretation of the 
law of 1873, which he discusses with marked approval as to the 
general arrangement of rates. 

Again, on page 419, he expresses the opinion that postal officials 
and employees when traveling in passeneger cars should certainly 
have their fare paid by the Government. 

On page 442, discussing side messenger service, he says : 

In equity the Government ought to assume the expense of this service. 

None of these opinions of the eminent statistician are quoted by 
the Post Office Department in either volume No. 7 or volume No. 
11 of the hearings. 



KAIL WAY MAIL PAY. 1331 

The opinion of Prof. Adams that is quoted by the Post Office De- 
partment is his discussion of the principle of public utility which 
he introduced in his report to the Wolcott-Loud commission, not be- 
cause it was appropriate to his position as statistician of the Inter- 
state Commerce Commission, but rather as a development of his 
studies as professor of political economy in the University of Ann 
Arbor, Mich. 

It may be said on behalf of statistician Adams that whatever 
views he held as professor of political economy and felt tempted to 
express in his official report did not in any way influence the definite 
recommendations which he made to the Woicott-Loud commission 
in regard to the amount of railway-mail pay. His conclusion was 
that the railroads at that time were not grossly overpaid, although 
they were receiving about 35 per cent of the postal revenues. His 
study of the subject led him to believe that the railroads carrying 
an average daily weight of over 30,000 pounds were somewhat over- 
paid. He proposed a level reduction of 5 per cent for all railroads, 
with an additional reduction of from 1 to 12 per cent on all roads re- 
ceiving in excess of 20 per cent per ton per mile. He also recom- 
mended further investigation, because he believed that if the aver- 
age load in mail cars could not be materially increased his recom- 
mendations for a reduction in pay would have to be withdrawn. 
When his report was under review by the Wolcott-Loud commission 
and he was under cross-examination he admitted that his recommen- 
dations for reduction and at the same time for further investigation 
were inconsistent with each other; he also admitted that his recom- 
mendation for a reduction of 5 per cent for all roads was inconsistent 
with his conclusion that the roads carrying less than 30,000 pounds 
a day were not overpaid. 

He finally revised his statement and declared that his conclusions 
as to reductions in pay were all based on the idea that the joint com- 
mittee desired to eliminate the postal deficit, and he thought the 
greatest contribution which the railroads could be justly expected to 
make toward reducing the postal deficit would be approximated 
$3,000,000 out of a total railway mail pay at that time of $34,000,000. 

The conclusion of the joint committee was that Prof. Adams had 
not sustained his recommendation for the reduction in pay which he 
proposed and they, therefore, reported to Congress that the railroads 
were not overpaid. It will thus be seen that the action of Congress 
as well as the recommendations of Prof. Adams were in accordance 
with the recognized customary constitutional relations existing be- 
tween the Government and those citizens from which it purchased 
service. 

Prof. Adams's theory regarding the principle of public utility was 
considered to have a strong tendency toward general socialism. In 
this connection it is interesting to quote from his cross-examination 
at the hearing of April 7, 1900, page 436 : 

Mr. Loud. Does it not lead right up to, the German system as operated to- 
day — the Government ownership of railroads, supported by taxation, and levy- 
ing such tariffs upon articles as they see fit, and then recouping from another? 

Mr. Adams. Yes ; it leads to the determination of the entire schedule of rail- 
road rates upon the principle of public utility. 

It is suggested that the so-called principle of public utility, the full 
consideration of which would bring into contemplation the total so- 



1332 BAILWAY MAIL PAY. 

cial structure and governmental relations of the whole American 
people, has no proper place in the discussion of a question of simple 
business administration, i. e., reasonable compensation for the per- 
formance of a service that is almost entirely commercial. 

In closing this question of public utility it is only fair to Prof. 
Adams to restate the most significant paragraph of the quotation 
which the department employs in volume 7, page 1002, but omits to 
quote verbatim in its statement contained in volume No. 11. This 
reads as follows: 

The position of this report is that the private interest in railway charges is 
limited to the claim that the gross revenue of railways should be adequate to 
cover operating expenses, fixed charges, and a fair return to stockholders; but 
this sum having been guaranteed, the manner in which the gross amount is 
collected from the shippers is a matter of public policy and not of private 
interest. 

Senator Weeks. May I ask you right here how much of an au- 
thority you consider Prof. Adams in these matters ? 

Mr. Peters. Prof. Adams is a very deep student; a very earnest, 
honest, and sincere man. When Document 105 came out we asked 
him to analyze the method used for dividing expenses and give us a 
paper on it. He did so. We studied it very thoroughly, but never 
submitted it, because he made the statement that you never could 
exactly allocate expenses, but they could only be approximated. 
All or us have been allocating expenses and have been endeavor- 
ing in one manner and another to ascertain cost expenses, some of 
us on the train mileage basis, some on a basis used in the West, 
but all were methods of estimating, and it had to be estimated. 
Prof. Adams said that costs could be estimated, but you could not 
accurately determine them, and therefore you could not determine 
pay on a cost basis because you could not ascertain the exact cost. 
It was a very long and able paper, and I do not know but what it 
might be a good thing some time to put it into the record as a matter 
of instruction, because Prof. Adams has been looked up to as a great 
authority on this question of analyzing accounts and is an authority 
in political economy. 

The Chairman. Have you got it here with you? 

Mr. Peters. No; I have not. 

The Chairman. How soon could you send it over here ? 

Mr. Peters. As soon as I return home. However, like doctors, all 
political economists differ, as statisticians differ. 

Senator Weeks. I understand that ; but Prof. Adams has for many 
years been quoted as an authority on this general subject, and I 
wanted your view as to his competency. 

Mr. Lloyd. Are you willing that his statement go into the record 
as coming from your side, or would you want it in as an independent 
statement ? 

Mr. Peters. If it goes into the record it should go in as presented 
by our committee, but we felt that putting it into the record arid 
bringing up this question of the inability to make a comparative 
statement of costs by an arbitrary allocation of expenses or distri- 
bution of expenses would cloud the discussion and cause every one 
of you to get into a whole lot of detailed disputes and arguments 
over the question of distributing the expenses. You know the dis- 
cussion that has arisen between the department and ourselves; there 



KAILWAY MAIL PAY. 1333 

have been differences in the methods used, and Prof. Adams said 
there is no possible way of exactly distributing costs. 

Mr. Lloyd. Is that the only difference between your view and that 
of Prof. Adams? 

Mr. Peters. That was the difference. Many of our committee 
objected to our going on record with a statement from any expert 
that it was not possible to make a reasonably fair allocation or dis- 
tribution of expenses to obtain a fairly reasonable comparison of 
cost. 

Senator Weeks. Will you please have it sent over ? 

Mr. Peters. I will. 

Mr. Ttjttle. Do you refer to Prof. Adams's statement in 1900? 

Mr. Peters. No. I refer to one he made for our committee. 

Mr. Ttjttle. How recently ? 

Mr. Peters. Nearly four years ago when we started the study of 
Document 105. 

Mr. Lloyd. It is a statement based on Document 105. 

Mr. Peters. Yes. We also had a statement from Mr.' Woodlock, 
a statistician in New York City, and also one from the editor of the 
London Statist, Mr. W. M. Ackworth. 

The Chairman. How elaborate were their examinations ? 

Mr. Peters. They were not near so elaborate as that of Prof. 
Adams, but his discussion was on the ability to exactly and accu- 
rately distribute expenses into the different classes of service. 

The Chairman. In view of the fact that you have introduced in 
your testimony the information that Prof. Adams, at your request, 
has prepared for your committee, after examination and study, a 
report on Document 105, I think the committee would appreciate 
it if you would send such report to us in order that we may have the 
benefit of same in our consideration and determination, and also to 
enable us to determine whether we will have it printed or not. 

Mr. Peters. I will be glad to send it, and we will also send the 
one from Mr. Woodlock, which is short. [Keading :] 

It will be observed that Prof. Adams insists upon an allowance not 
only to cover operating expenses, but also to cover fixed charges and 
a fair return to stockholders, these last two important specifications 
representing factors that were entirely omitted in House Document 
No. 105. Your committee will also not fail to see the significance 
of the clause which reads " but this sum having been guaranteed." 
The Post Office Department in its statements discussing the principle 
of public utility in either volume No. 7 or volume No. 11 does not 
indicate whether in their opinion the General Government should 
guarantee the interest on all the railroads' securities in advance of 
asking Congress to approve the principle of public utility, which 
would be applicable to freight and passenger service, as well as to 
the mail service. 

While we have thus responded to the urgent insistence of the Post 
Office Department for further discussion of these general considera- 
tions, it seems proper to state that none of this general discussion 
would have been necessary if the Post Office Department had not 
overlooked in Document No. 105 the necessity of providing for the 
capital cost — that is, a return upon the railroad property utilized 
in the performance of the mail service. 



1334 RAILWAY MAIL PAY. 

In Document No. 105 there are three letters of transmittal; one 
signed by the former Postmaster General, Mr. Frank H. Hitchcock, 
the second signed by the Second Assistant Postmaster General, Mr. 
Joseph Stewart, and the third signed by the committee of Post Office 
Department officials who were charged with the duty of considering 
the results of the information secured from the railroad companies 
and to report thereupon to the Postmaster General One can search 
in all these letters in vain for any statement that shows a conscious- 
ness of the necessity of providing for this fundamental item of cost. 

When this omission was fully developed before your joint com- 
mittee the Post Office Department admitted their error by conceding 
in letter of January 9, 1913, to the chairman of the joint committee 
that — 

In addition to the operating expenses and taxes apportionable to the mail 
service and 6 per cent thereto, companies may be allowed such additional 
amounts, if any be necessary, as shall render the whole a proper proportion 
of a fair and reasonable return on the value of the property necessarily em- 
ployed in connection, with the mail service. 

The phrasing of this concession represents the beginning of the 
development of the line of thought which has culminated in these 
later discussions regarding the alleged certainty, constancy, and 
homogeneity of the traffic, and the other features that lead up to 
the so-called principle of public utility. 

None of these considerations were apparently in the minds of the 
Post Office Department officials when Document No. 105 was sub- 
mitted, and there was apparently no thought of treating this ques- 
tion except on the basis of reasonable compensation and in accordance 
with the commercial principle. If there had been, surely there would 
have been some allusion to it in these several letters of transmittal. 

Comparison between revenue received by railroad companies for 
express and for mail services. — Preliminary to any remarks from 
the railroads' side regarding the statements made by the Post Office 
Department (pp. 1271-1278) relative to the comparative compensa- 
tion received by the railroad companies from the express traffic and 
the mail traffic, it should be noted by your committee that this sub- 
ject is now introduced for the first time by the Post Office Depart- 
ment officials, although Document No. 105 was published over two 
years ago and your committee has been collecting evidence and hear- 
ing testimony for the past 18 months and have now arrived at the 
last days of the investigation. 

In Document No. 105 none of the letters of transmittal say one 
word on this subject. The tables published in Document No. 105 
fail to state the amount of revenue received by the railroad companies 
from the express business or the passenger business, although this 
information was given to the department by the railroads for the 
month of November, 1909, and the railroads have complained of the 
failure of the department to publish the amounts for the information 
of Congress. 

The statement of the Post Office Department made under date of 
January 16, 1914, contained in volume No. 7 of the hearings, was 
apparently intended as a complete recital of the department case 
and was written after six months' delay for the purpose of review- 
ing the data and the hearings, and yet we can not find one word in 



RAILWAY MAIL PAY. 1335 

it relating to any comparison with express traffic or the revenue re- 
ceived by the railroad companies from express and from mail. 

Now, at this late date, March 24, 1914, the Post Office Department 
lays before your committee a lot of undigested material, and con- 
cludes by saying, on page 1278 : 

It must be remembered, as hereinbefore stated, that this is placing the mail 
service on the basis of the express service and not accounting for the value 
of such differences between them as may exist. Furthermore, it is placing 
the entire subject matter of the mail service upon the same basis as the subject 
matter of the express service. 

We believe that it is evident to your committee, before we make any 
explanation on the subject, that it would be impracticable to make 
any satisfactory comparison without several months for additional 
investigation. 

The two services are on an entirely different basis. In the case of 
the express traffic, the railroads receive a percentage of the gross re- 
ceipts varying from, perhaps, 40 per cent to 55 or 58 per cent. The 
Interstate Commerce Commission in its report for 1909 stated that 
the average percentage was 47.53 per cent. The mail service is paid 
for mainly on the basis of weight multiplied by distance or ton- 
mileage. The total ton-mileage of the express traffic is not known, but 
whether the comparison is made between the express and mail on the 
basis of relative returns from ton-mileage or relative returns from car 
space, there would have to be a precise appraisal of the differences in 
the relations, because the express companies in connection with their 
railroad transportation perform many services for themselves which 
the Post Office Department requires from the railroad companies. 
Also, the express companies make many payments for rent of station 
facilities, and as sharing in the wages of railroad employees for 
which there is no similar contribution from the mail service. In 
addition to this, the express companies perform many services for the 
railroad companies, as in the transportation of railroad companies' 
express packages, the collection and forwarding of money, the dis- 
tribution and transportation of railroad tickets, etc., for which there 
are no precise ascertainments or even estimates as relating to the 
entire railroad mileage upon which the mails are also carried. To 
obtain this information it would be necessary to start a new inquiry 
and to obtain in detail from each company the terms of its contrac- 
tual relations with the express company operating over its lines and a 
definite appraisal of these various services. 

Information regarding express traffic already in the record. — In 
the hearings held before your committee during the past year there 
are a number of contributions from the committee on railway mail 
pay which enable you to obtain a general idea regarding the relative 
pay to the railroads from express and mail traffic. In volume 1 
(pp. 51-52) the committee on railway mail pay showed that, accord- 
ing to their ascertainment for the month of November, 1909, covering 
178,709 miles of railroad, the relative earnings on the car-foot mile 
basis were, from mail, 3.228 mills, and from express 3.855 mills. For 
a 60-foot car this would show an earning from mail of 19.36 cents and 
from express 23.13 cents. The railroads, therefore, earned from the 
express traffic, on the space basis, 19 per cent more than from the 



1336 RAILWAY MAIL PAY. 

mail, notwithstanding the fact that the mail service is known to be 
much more expensive for the railroads to operate. 

In volume No. 1 (p. 122) a statement was submitted showing that 
on inadequate data it appeared as though the earnings of the rail- 
roads per ton-mile express as compared with the ton-mile earnings 
from mail were not far apart, being somewhere between 7 and 8 
cents for either. This conclusion must also be received with the 
same reservation that the express tonnage can be loaded more com- 
pactly and economically than the mail tonnage, and that the service 
is less expensive to the company than the performance of the mail 
service. 

In volume No. 2 (p. 325) Dr. Lorenz computes the respective car- 
mile earnings to railroad companies from mail and express. It ap- 
pears in his calculation that the railroad earnings per car-mile are 13 
per cent higher from the express if the gross mail space reported in 
Document No. 105 for mail is credited to the companies. It also 
shows that if the gross space as published by the Post Office Depart- 
ment is not credited, but only the net space taken, the earning from a 
60-foot mail car would be 9 per cent greater than the earning from 
an express car of similar length. In this case the railroads would 
point out that even the gross amount of space published in Document 
No. 105 as reported against the mail service does not represent the 
correct total as reported by the companies. Also, that in this illus- 
tration, as in the others, it would be necessary to make allowances 
for the greater economy to the railroads of performing the express 
business both in operations and in incidental services rendered by 
the express companies themselves. 

In volume No. 2 (p. 335) Mr. Worthington, on behalf of the South- 
ern Pacific road, showed' that on the very low contract basis of 40 
per cent of express earnings the mail traffic showed only 4J per cent 
greater earnings than the express traffic, whereas on the Union 
Pacific, where the usual contract was in operation, the express space 
showed 11 per cent greater earning than the mail space. 

In volume No. 2 (p. 419) Mr. Bradley, reporting for the Pennsyl- 
vania Railroad system, showed that on the company's compilation 
of space the earnings from express traffic were 22 per cent greater 
than from the mail traffic. He also showed that the Post Office De- 
partment credited a mail earning to the Pennsylvania Eailroad sys- 
tem of 3.873 mills, while the earning from express on the company's 
showing was 3.898 mills, so that even here there was a small ad- 
vantage from the express traffic independent of the modifications that 
would be subsequently necessary on account of the more economical 
performance of service and an appraisal of the express company's 
contributions toward the work and expenses. 

In volume No. 2 (pp. 437-438) there is stated in parallel columns a 
number of differences in the relations which the railroad company 
bear to the express companies and to the Post Office Department, 
showing that these relations are much more favorable both finan- 
cially and in operating performance with the express traffic than they 
are with the mail traffic. 

In volume No. 2 (p. 526) Mr. Peabody, on .behalf of the Atchison, 
Topeka & Santa Fe Railway, shows that on the space basis the mail 



KAIL WAY MAIL PAY. 1337 

earnings are about 4 per cent higher than from the express traffic, but 
explains that this is due to a contract which will not be renewed. It 
will be noted in this case that the railroad company will be able in 
due time to revise this contract, which would not be the case in rela- 
tion to mail service, where the rates and conditions of service are 
fixed by statute or by Post Office Department regulations having the 
same force. It is also to be noted that Mr. Peabody's finding would 
require further modification if the comparative relations as to econ- 
omy of operation in connection with the express traffic as compared 
with the mail traffic were fully set forth. 

In volume No. 2 (pp. 747-758) there is published a statement on 
behalf of 21 short-line railroads which shows respective earnings 
from express and mail traffic. The summary indicates that the re- 
ceipts from express traffic are about 30 per cent greater than from 
mail traffic, but as the units of service, such as ton-miles or relative 
amount of car space, are not stated, one can only get a general impres- 
sion. It will thus be seen that the subject has not been overlooked 
in the testimony offered by the representatives of the railroads, and 
that a review of the testimony indicates quite plainly that the express 
traffic is somewhat more remunerative to the railroads as a whole than 
the mail traffic. 

Comparative gross receipts. — At the hearing of March 24, 1914, Mr. 
Worthington, on behalf of the committee on railway mail pay, sub- 
mitted a memorandum of the annual receipts of the railroad com- 
panies from mail traffic and express traffic for the years 1909 to 1913, 
inclusive. For the first and last of these years the figures are as 
follows : 



Mail traffic. 



Express 
traffic. 



Year ending June 30— 

1909 $49,869,375 

1913 $51 , 959, 388 

Increase, 1913 over 1909 $2,090,013 

Increase in per cent 4 



$64,032,127 

$83,872,497 

$19,840,370 

31 



Comparison of express and mail rates between specific points. — The 
Post Office Department submits a list of comparative express and mail 
rates per 100 pounds between specific points. The table submitted 
contains 114 illustrations, and the whole number of illustrations are 
without value to your committee, because they are all based upon the 
minimum express rate, i. e., the rate per 100 pounds. 

Suppose that the railroad companies had been submitting a similar 
illustration and based it upon the maximum express rate, namely, the 
rate for 1 pound. What would be thought of the fairness of the 
presentation ? 

To illustrate this point we have prepared a statement based on the 
first 15 examples quoted by the department in its 100-pound table on 
page 1272, and show on successive lines the rate which the department 
has worked out for each package of 100 pounds in weight in compari- 
son with what the rate would be if it were based upon 100 1-pound 
packages. The ton mileage in both cases would be the same. 

49396—14 92 



1338 



EAILWAY MAIL PAY. 



Comparison of express and mail rates per 100 pounds. 

First. At the rate for 100 pounds (in one package) used by the Post Office Department. 

Second. At the rate for 100 pounds (in one hundred 1-pound packages) used by the railroad company. 





Length 
of mail 
routes. 


First 
class 
express 
rate for 
one 100- 
pound 
pack- 
age. 


First 
class 
express 
rate for 
one hun- 
dred 1- 
pound 
pack- , 
ages. 


Mail 

rate. 


50 per 

cent of 

express 

rate. 


Excess 

of mail 

rate 

over 

50 per 

cent of 

express 

rate. 


Excess 
of 50 
per 
cent of 
express 
rate 
over 
mail 
rate. 


Per 
cent of 
excess 
of mail 

rate 

over 
50 per 
cent of 
express 

rate. 


Per 

cent of 

excess 

of 50 

per 

cent of 

express 

rate 

over 

mail 

rate. 


Akron, Ohio, to Pittsburgh, 
Pa.: 
Post Office Department. 




















132. 05 


$1.00 




$0.75 


$0.50 


$0.25 




50 




Railroad company 

Altoona, Pa., to New York, 


132. 05 




821. 00 


.75 


10. 50 




$9.75 




1,300 




















N. Y.: 




















Post Office Department. 


326". 86 


1.40 




.88 


.70 


.18 




26 




Railroad company 


326. 86 




22.00 


.88 


11.00 




10.12 




1,150 


Anniston, Ala., to Washing- 




















ton, D. C: 




















Post Office Department. 


748. 20 


2.90 




2.53 


1.45 


1.08 




74 




Railroad companv 


748. 20 




23.00 


2.53 


11.50 




8.97 




355 


Asheville, N. C.,to Wash- 




















ington, D. C: 




















Post Office Department. 


476. 17 


2.20 




1.97 


1.10 


.87 




79 




Railroad company 


476. 17 




22.00 


1.97 


11.00 




9.03 




458 


Ashland, Ky., to Cincin- 




















nati, Ohio: 




















Post Office Department. 


145. 71 


1.15 




.56 


.58 




.02 




4 


Railroad company 


145. 71 




21.00 


.56 


10.50 




9.94 




1,775 


Buffalo, N. Y.,to Boston, 




















Mass. : 




















Post Office Department. 


496. 90 


1.60 




1.37 


.80 


.57 




71 




Railroad company 


496. 90 




22.00 


1.37 


11.00 




9.63 




703 


Burlington, Vt., to Boston, 
Mass.: 
Post Office Department. 




















247. 34 


1.15 




1.52 


.58 


.94 




61 




Railroad company 


247. 34 




21.00 


1.52 


10.50 




8.98 




591 


Burlington, Iowa, to Chi- 




















cago, 111.: 




















Post Office Department. 


205. 57 


1.25 




.58 


.63 




.05 




9 


Railroad company 


205. 57 




22.00 


.58 


11.00 




10.42 




1,797 


Cedar Rapids, Iowa, to Chi- 




















cago, 111.: 




















Post Office Department. 


218. 30 


1.25 




.71 


.63 


.08 




13 




Railroad company 


218. 30 




22.00 


.71 


11.00 




10.29 




1,449 


Charleston, W. Va., to 




















Washington, D. C: 
Post Office Department. 




















387. 71 


1.75 




1.44 


.88 


.56 




64 




Railroad company 


387. 71 




22.00 


1.44 


11.00 




9.56 




664 


Chattanooga, Term., to Cin- 




















cinnati, Ohio: 




















Post Office Department. 


338. 15 


1.85 




1.40 


.93 


.47 




51 




Railroad company 


338. 15 




22.00 


1.40 


11.00 




9.60 




686 


Chicago,Ill.,to Boston,Mass.: 




















Post Office Department. 


1,019.18 


2.50 




2.81 


1.25 


1.56 




125 




Railroad companv 


1,019.18 




23.00 


2.81 


11.50 




8.69 




309 


Chicago, 111., to Kansas City, 
Mo.: 
Post Office Department. 




















454. 00 


2.10 




1.52 


1.05 


.47 




45 




Railroad company 


454. 00 




22.00 


1.52 


11.00 




9.48 




623 


Chicago, 111., to Milwaukee, 
Wis.: 
Post Office Department. 




















85.00 


.90 




.29 


.45 




.16 




55 


Railroad company 


85.00 




2i. 66 


.29 


10.50 




10.21 




3,520 


Chicago, 111., to Minneapolis, 
Minn.: 
Post Office Department. 




















423. 79 


2.00 




1.19 


1.00 


.19 




19 




Railroad company 


423. 70 




22.00 


1.19 


11.00 




9.81 




824 



It will be seen by comparing the last two columns that the depart- 
partment finds that the railroad company received from the mail 
traffic a greater revenue than from express traffic, ranging from 13 
per cent to 125 per cent, whereas the last column, based upon one 
hundred 1-pound packages, shows that the railroads received from 



E AIL WAY MAIL PAY. 



1339 



the express traffic a higher revenue than from mail, ranging from 
309 per cent to 3,520 per cent. 

Taking one specific instance — Chicago to Milwaukee — the depart- 
ment admits a higher earning to the railroad company from the 
express of 55 per cent at the 100-pound rate, while our statement 
shows greater earnings of 3,520 per cent, or 60 times as great, based 
on the 1 -pound rate. 

A similar illustration will be made of the first 15 examples shown 
on page 1274 in the table headed " Comparison of express and mail 
rates per 40 pounds." The department shows an excess of earnings 
to the railroad company from the mail varying from 4 per cent to 
110 per cent, while we show T , on the basis of forty 1-pound packages, 
that there is a greater earning from express traffic, ranging from 311 
per cent to 3,400 per cent. 

Comparison of express and mail rates per 40 pounds. 

First. At the rate for 40 pounds (in 1 package) used by the Post Office Department. 
Second. At the rate for 40 pounds (in forty 1-pound packages) used by the railroad com- 
pany. 







First- 


First- 






Excess 


Excess 
of 50 


Per 

cent of 


Per 

cent of 






class 


class 






of mail 


excess 


of 50 

per 
cent of 
express 

rate 




Length 
of mail 
routes. 


express 
rate for 
one 40- 
pound 


express 
rate for 
forty 1- 
pound 


Mail 
rate. 


50 per 

cent of 

express 

rate. 


rate 

over 

50 per 

cent of 


cent of 

express 

rate 

over 


of mail 
rate 
over 

50 per 






pack- 


pack- 






exnress 


cent of 






age. 


ages. 






rate. 


rate. 


express 
rate. 


mail 
rate. 


Akron, Ohio, to Pittsburgh, 
Pa.: 
Post Office Department. 




















132. 05 


$0.52 




$0.30 


$0.26 


$0.04 




15 




Railroad company 

Altoona, Pa., to New York, 
N. Y.: 
Post Office Department. 
Railroad company 


132. 05 




$8. 40 


.30 


4.20 




$3.90 




1,300 




















326. 86 


.68 




.34 


.34 










326. 86 




8.80 


.34 


4.40 




4.06 




1,194 


Anniston, Ala., to Wash- 




















ington, D. O: 




















Post Office Department. 


748. 20 


1.28 




1.01 


.64 


.37 




57 


. .. 


Railroad company 


748. 20 




9.20 


1.01 


4.60 




3.59 




355 


Asheville, N. O, to Wash- 




















ington, D. O: 




















Post Office Department. 


476. 17 


1.00 




.79 


.50 


.29 




58 




Railroad comoanv 


476. 17 




8.80 


.79 


4.40 




3.61 




457 


Ashland, Ky., to Cincin- 




















nati, Ohio: 




















Post Office Department. 


145.71 


.58 




.22 


.29 




.07 




31 


Railroad company 


145.71 




8.40 


.22 


4.20 




3.98 




1,809 


Buffalo, N. Y., to Boston, 




















Mass.: 




















Post Office Department. 


496. 90 


.76 




.55 


.38 


.17 




45 




Railroad company 


496. 90 


8. 80 


.55 


4.40 




3.85 




70O 


Burlington, Vt., to Boston, 
Mass.: 
Post Office Department. 
Railroad company 




1 














247. 30 


.58 


61 


.29 


.32 




no 




247.30 




8.40 


.61 


4.20 




3.59 




589 


Burlington, Iowa, to Chi- 




















cago, 111.: 




















Post Office Department. 


205.57 


.62 .. 


.23 


.31 




.08 




35 


Railroad company 


205. 57 


8.80 


.23 


4.40 




4.17 




1,818 


Cedar Rapids, Iowa, to Chi- 
cago, 111.: 




1 






























Post Office Department. 


218.30 


.62 I 


.28 


.31 




.03 




11 


Railroad company 


218.30 


i 8. 80 


.28 


4.40 




4.12 




1,471 


Charleston, W. Va., to 


















Washington, D. O: 




1 














Post Office Department. 


387. 71 


.82 \ 


.58 


.41 


.17 




41 




Railroad company 


387. 71 


,..! 8.80 


.58 


4.40 




3.82 




659 


Chattanooga, Term., to Cin- 


















cinnati, Ohio: 




1 














Post Office Department. 


338. 15 


.86 i 


.56 


.43 


.13 




30 




Railroad company 


338. 15 




8.80 


.56 


4.40 




3.84 




686. 



1340 RAILWAY MAIL PAY. 

Comparison of express and mail rates per 40 pounds — Continued. 







First- 


First- 






Excess 


Excess 
of 50 


Per 
cent of 


Per 
cent of 






class 


class 






of mail 


excess 


excess 
of 50 
per 
cent of 
express 
rate 
over 
mail 
rate. 




Length 
of mail 
routes. 


express 
rate for 
one 40- 
pound 


express 
rate for 
forty 1- 
pound 


Mail 
rate. 


50 per 

cent of 

express 

rate. 


rate 

over 

50 per 

cent of 


cent of 

express 

rate 

over 


of mail 
rate 
over 

50 per 






pack- 


pack- 






express 


cent of 






age. 


ages. 






rate. 


rate. 


express 
rate. 


Chicago, 111., to Boston, 




















Mass.: 




















Post Office Department. 


1,019.18 


$1.12 




$1.12 


$0.56 


$0.56 




100 




Railroad company 


1,019.18 




$9.20 


1.12 


4.60 




$3.48 




311 


Chicago, 111., to Kansas 
City, Mo.: 






































Post Office Department. 


454. 00 


.96 




.61 


.48 


.13 




27 




Railroad company 


454. 00 




8.80 


.61 


4.40 




3.79 




621 


Chicago, 111., to Milwaukee, 
Wis.: 
Post Office Department. 




















85.00 


.48 




.12 


.24 




.12 




100 


Railroad company 


85.00 




8.40 


.12 


4.20 




4.08 




3,400 


Chicago, 111., to Minneapo- 
lis, Minn.: 




















Post Office Department. 


423. 79 


.92 




.48 


.46 


.02 




4 




Railroad company 


423. 79 




8.80 


.48 


4.40 




3.92 




8i(3 



Now, neither of these calculations would give a fair idea to your 
committee of this subject, because the truth is somewhere between the 
two extremes, but we do not feel required to submit an apology for 
stating the maximum earnings when it seems to be necessary to illus- 
trate the unfairness of the Post Office Department in making their 
comparison on the minimum earnings. 

The importance of the average haul. — The Interstate Commerce 
Commission has attributed to the average express package a haul of 
about 200 miles. The Post Office Department has asserted that the 
average haul of mail, including equipment, is about 620 miles. If 
these estimates are accepted it must be assumed that the radial 
activity of the mail traffic is three times as great as the express 
traffic. 

It would also have to be borne in mind that the express rates pre- 
scribed by the Interstate Commerce Commission start with 21 cents 
for the first pound and then go through a process of declension 
according to increasing weight and increasing distance. It is easily 
demonstrable that the return received by the railroad company from 
an express package weighing 1 pound is at a higher ton rate than 
the revenue received from the mail even for a transcontinental haul. 

It is also easily demonstrable that the railroad company receives 
for an express package of 100 pounds a higher rate than from the 
mail on a haul of over 100 miles, but we are not able to say at what 
weight and at what distance the neutral point would occur as between 
the express traffic and the mail traffic. This would require a long 
and intricate investigation, and even after it was made it would still 
be necessary to make allowances between the two services by apprais- 
ing the differences in the contractual relations and operating condi- 
tions already alluded to. 

However, it should not escape notice that in the list of specific 
shipments quoted by the Post Office Department on pages 1272- 
1276 only two are under 100 miles, while 112 are over 100 miles ; also 



RAILWAY MAIL PAY. 1341 

that 93 of the instances are over 200 miles as compared with 21 in- 
stances under 200 miles. 

We may conclude the statement by remarking that if the railroads 
receive 50 per cent of the gross postal revenue as they do of the ex- 
press companies, the amount of railway-mail pay for the year 1913 
would have been $133,000,000 instead of $51,466,000. Instead of 
getting 50 per cent of the postal revenues the railroads receive only 
about 19 per cent. 

THE SPACE BASIS. 

In connection with the very ample testimony already submitted by 
the railroads relating to the unavoidable complexities and causes of 
irritation that would be inherent in the department's proposal that 
the pay be adjusted on the basis of car space authorized, we deem 
it important to call your attention to two or three facts : 

First. Those who have previously investigated the subject and 
concluded that space rather than weight would be a fairer basis were 
either unaware or unfamiliar with the administrative difficulties that . 
would be encountered in connection with any space basis of pay. 

Second. The Elmer, Thompson, and Slater committee, composed of 
high officers of the Post Office Department, recommended the space 
basis, but were careful to insist that for the protection of the Govern- 
ment it must be coupled with a prescribed average weight to justify 
a certain amount of space. 

Third. None of the previous investigators who reached a conclusion 
in favor of the space basis could have had in contemplation the 
present condition of the Parcel Post Service that already deals with 
packages weighing as much as 50 pounds, with intimations of still 
further increase in the weight limit, thus placing the Post Office De- 
partment in competition with the railroad companies and the express 
companies in the transportation business. 

Any law fixing rates and terms on a space basis would leave the 
measure of pay for transportation to be interpreted by the Post Office 
Department according to the discretion it must necessarily have as 
to the amount of space it would authorize, and this power, coupled 
with the power already held to increase the weight limit indefinitely 
and to lower rates indefinitely, would make it impossible for the 
railroads to secure a compensatory basis of pay except at the pleasure 
of the department. 

It is proper to call the attention of the joint committee to the 
injustice of a space basis to the heavy traffic routes on which mail 
is largely handled in expedited fast mail trains. These trains are 
costly to operate, conduct a heavier load of mail in generally heavier 
cars, at faster speed than the average transportation, and the pro- 
posed space pay would be so inadequate as to make the operation 
of these trains very unattractive. There are 40 mail routes in the 
United States handling 56 per cent of the ton-mileage of mail, for 
which service these routes would receive on a space basis only about 
34 per cent of the compensation, receiving no more per car-mile than 
lighter traffic routes, although the average load per car on the 40 
heavy traffic routes is two and one-half times as great as on other 
routes. 

A space basis is not only unjust to the larger roads, but is unfair 
to the railways as a whole in denying to them the privilege of some 



1342 RAILWAY MAIL PAY. 

return from operating economies due to the larger car loading, all 
of which would inure to the Government. Under the present law 
the benefits of heavier car loading would be shared by both — the rail- 
roads receiving more pay for the increased tonnage, but performing 
the service at a decreased ton-mile rate. Under a space basis for 
payment the railroads would be limited to a fixed revenue per car- 
mile, regardless of tonnage and the extent to which the Post Office 
Department might enlarge the weight limit of the parcel post and 
load cars with 15 to 20 tons each without additional compensation 
to the railroads. A future situation might even be imagined under 
which carload traffic might be handled in this way on passenger trains 
at rates per ton-mile no higher than ordinary freight rates. 

The cost of operating a train-mile in the last 20 years has increased 
50 per cent. To meet these advancing costs of labor and material the 
railways are justly entitled to a fair share of the greater revenues 
per car-mile unit that may result through better loading. The space 
basis not only denies this but actually imposes some added cost due 
to the greater tonnage carried. Had a space plan applied, for ex- 
ample, to freight transportation, it is safe to say that the advancing 
operating costs would have long ago forced most of the roads into 
financial ruin through prohibiting the greater earnings they have re- 
ceived per train-mile unit through heavier loading. 

In conclusion, we believe that your committee in deciding this 
question, which is really one between the citizens who ship traffic 
through the medium of the Post Office Department and the citizens 
who carry the traffic through the medium of the railroads, will not 
be concerned as to the personal feelings of those who have conducted 
this debate on the one side or the other, but will render its judgment 
in accordance with the best interests and the abiding interests of the 
American people. 

Senator Weeks. How much more does it cost to run a train at the 
rate of 60 miles an hour than 30 miles an hour ? 

Mr. Peteks. I do not think anyone has attempted to work out that 
proposition so that it would be commonly talked about and familiar 
to all hands. I know that the Pennsylvania Railroad has its test 
plant at Altoona, and there are other testing plants at some of the 
universities where they get the cost of the locomotive-mile on dif- 
ferent speeds. I can not answer the question, however. 

Senator Weeks. What would be the difference in cost in fuel, do 
you know ? 

Mr. Peters. I am not familiar enough with that question to 
answer. 

Senator Weeks. That is definitely worked out in case of ships? 

Mr. Peters. Yes ; I think they have worked it out also at Altoona. 

Mr. Worthington. Mr. Delano presented some figures as to that in 
a former hearing before the Loud commission showing very large 
increases in fuel consumption as speed per hour increases. That 
principle is recognized in passenger transportation in the excess fares 
that are charged on fast passenger trains, for example, between New 
York and Chicago. 

Senator Weeks. But I supposed there was a definite basis to justify 
that increase ; that it had been worked out definitely so that someone 
would know the difference in cost ? 



KAILWAY MAIL PAY. 1343 

Mr. Worthington. The increase in cost relates not alone to the 
train itself, but to delay to other trains, for naturally the fastest 
train must be given preference and other trains are sidetracked 
for it. 

Mr. Peters. I see that we gave a statement on pages 642 and 643 
of the record, volume 5, which shows the increase in resistance per 
car, from records taken at Altoona testing plant, of the 40-ton car 
and 60-ton car and the different speeds, and it shows the increase for 
steel over a wooden car ; that is, the increased resistance. An increase 
in resistance necessarily means an increase in cost. 

Senator Weeks. What did Prof. Buck, of the engineering school 
of the University of Illinois, testify to relative to increased fuel con- 
sumption ? 

Dr. Lorenz. This was a letter to the chairman of this commission. 
He discussed in a general way the effect of increasing speed on cost 
of operation. He discussed it under various heads, one of which is 
the cost of fuel, and he concludes that discussion with this statement : 
"With modern fast passenger engines, it is quite possible to have 
the coal consumption doubled by an increase of speed from 60 miles 
per hour to 70 miles per hour." That is volume 6, page 896. 

Senator Weeks. What I am trying to get at is when a railroad 
furnishes a better and faster service, how much more is it costing the 
railroad to perform that service? Of course it would be difficult to 
give definite figures, but it is a material increase. 

Mr. Peters. It would be a mere guess on my part for I have not 
attempted to analyze in that direction. I have not been brought up 
against that particular development of the traffic question. 

Senator Weeks. What surprises me is that railroad men do not 
know all these questions and have not carefully determined what it 
costs to run a passenger train. 

Mr. Peters. I think they have worked that proposition out some- 
where, hut I am not able to answer offhand. 

Mr. Worthington. I would like to remark, if I might, that fast 
passenger train service requires a very much higher standard of 
track maintenance than slower trains. It requires heavier rails, 
better ballasted road bed, and the risk of accident is tremendously 
increased as the speed is increased, also all other classes of traffic are 
interrupted, more or less, and delayed through giving way to the 
faster trains. 

Senator Weeks. Dr. Lorenz, has the Interstate Commerce Com- 
mission given consideration to the question of cost of operating 
trains, and have they arrived at any conclusions ? 

Dr. Lorenz. Yes, sir. Many years ago they published in their 
annual report the cost of operating a passenger train a mile and the 
cost of operating a freight train a mile, but they abandoned that at 
the time when Prof. Adams, who has been mentioned here to-day, 
was conducting the department's statistics. Recently, however, the 
commission has again taken an interest in the subject. In the in- 
terim practically nothing was done by the commission in that direc- 
tion, except as it might have come up in some particular case in 
the exhibits. The commission has recently issued a tentative order 
providing for separation of expense between passenger and freight 
service, which order will come up for hearing at the end or this 



1344 RAILWAY MAIL PAY. 

month, so that you might say that the commission in the past has 
done practically nothing along that line but have been making 
strenuous efforts to get the railroads to cooperate. As a matter of 
fact, the railroads on many lines have done considerable work of that 
kind. We find that in the manufacturing industry, generally, there 
is much less hesitancy to speak of the value of that kind of work, 
namely, cost accounting. I think one reason why the railroads have 
not developed to the same extent the manufacturing companies have 
is the fact that the fixing of rates has not been on theories which 
required a knowledge of the cost; in other words, the traffic officer 
naturally wished to get as high rates as he possibly could in order 
to move the traffic, and he did not need to know the cost except to 
know a minimum cost, and we find that the cost statistics develoTJed 
by the railroads are very largely by operating officials who used 
them to gauge efficiency of operation rather than actual cost of per- 
forming the final service. With the growth of public regulation, 
the making of rat.es according to what the traffic would bear, is no 
longer an entirely satisfactory principle, because there seems to be a 
greater necessity for finding out exactly what it does cost to render 
a particular service to the public. 

Senator Weeks. I should suppose the commission and the railroads 
would attempt to work that out very definitely. That has been done 
in water transportation, and certainly the speed with which that 
transportation is performed should be taken into consideration in 
fixing a rate. I have just had my attention called to that matter in 
connection with a resolution which I introduced providing for mail 
service to South America to run scout cruisers of the Navy at a 
20-knot speed. The cost is twice as great as to run them at a 15-knot 
speed. The same general consideration must bear relatively in train 
transportation, I should think. 

Mr. Peters. There are so many elements that enter into a question 
of that kind — the question of grades, the question of stopping and 
starting, the reduction of speed through crowded communities, and 
so on — that it has been very difficult to work up any general rules on 
the question. I think one of the great objections that the railroads 
have had in the past to going into a detailed separation of all ex- 
penses at the point of origin was the large expense involved in get- 
ting at the information and the difficulties of keeping those records, 
and as to what was the value of them after we got them. It would 
not justify the expense, in other words. In many cases, as Dr. 
Lorenz states, the rates were made or based on what the traffic would 
bear. The railroads in the past, in developing this country and in 
developing traffic, especially on new lines, have had to make rates 
that would move and build up the traffic, as, for instance, the rates on 
grain from the far West into the interior, such as wheat from Ore- 
gon and Washington and lumber from that territory. Those rates 
were very low and were made at a time when there was a preponder- 
ance of the merchandise movement from distributing centers in the 
Middle West to the Pacific coast, the movement was westward bound, 
and they wanted something to load eastbound. Consequently they 
made low rates on wheat, but it was in order to move the traffic. 
Theie are many cases where rates are made that way in order to 
develop and build up, so that we have a system of rates all over the 
country made up, in some cases, to meet water competition, in others 



RAILWAY MAIL PAY. 1345 

to meet commercial center competition, and in others to meet com- 
petition between different roads that could in roundabout ways meet 
the conditions. Another reason: A railroad may be very active in 
securing business. A town or community may be inviting factories 
to come there. In such case the railroads would cooperate in order 
to help out, build up, and develop such town or community. 

Now, you have the commission studying all those things, working 
them out, and getting rates to reasonable points. They have to build 
up some rates as well as cut down others, and we are going through 
that process ; but you see the result to-day, the railroads are suffering 
and the country is suffering because our hands are tied so tight. 

The Chairman. Is it not true that it is much easier to get the cost 
on a manufacturing business than on a transportation business ? 

Dr. Lorenz. I should say generally that would be true where the 
product is relatively simple; but I think there are manufacturing 
enterprises where the product is complicated. 

The Chairman. But, taking business as a whole — generically — 
manufacturing and transportation business? 

Dr. Lorenz. I should say it would be more localized to a different 
product which is usually produced by a unit of a plant, so that I 
think it is true that it is easier to develop cost in manufacturing than 
in railroad transportation. However, I do not think that the differ- 
ence is so great as to prohibit the railroads from approximating that 
information. 

The Chairman. Do you believe it is possible at all to work out an 
absolutely correct estimate of cost in transportation without the 
adoption of a large amount of arbitrary percentages? 

Dr. Lorenz. You could not call the result absolutely accurate ; no, 
sir. For that matter, you could not do so in the manufacturing busi- 
ness either. 

The Chairman. You can in some manufacturing businesses, or 
practically so, can you not? 

Dr. Lorenz. It depends on the manufacturing business. With re- 
gard to the railroad industry, for example, the average cost of op- 
erating a freight train or a freight car a mile on a particular road 
can be ascertained with such degree of accuracy that you can make it 
the basis of rates. 

The Chairman. In your opinion, would the value of such infor- 
mation be commensurate with the cost of ascertainment? 

Dr. Lorenz. I think a method can be devised which would not be 
prohibitive as to cost. 

The Chairman. Just the initial cost? 

Dr. Lorenz. Yes. There are various degrees of cost accounting. 
The tendency is to run to extremes and get everything down to a 
fine point, but I think a system which would be useful could be de- 
vised and still not be prohibitive on account of cost. 

Mr. Scott. Mr. Chairman, I dislike to talk about such a complicated 
proposition as the cost of fuel on a fast passenger train, for I think if 
you were to ask 25 experts to come here and give you an opinion, you 
would probably get 25 different opinions in regard to it. I only 
offer this suggestion to show one of the difficulties. It is pretty 
nearly universal that railroad companies run locomotives first in 
and first out; for instance, take one of our passenger engines that we 
run on the 20-hour train between New York and Chicago. From 



A 



1346 RAILWAY MAIL PAY. 

Pittsburgh to Crestline, west bound, it would make no stops between 
those points and would run at a high rate of speed. When the en- 
gine leaves Pittsburgh it has a tank full of coal and when it gets to 
Crestline that tank of coal is not exhausted, but it comes back pos- 
sibly on a train that will make every stop between Crestline and 
Pittsburgh. We put some additional coal on at Crestline and you see 
the difficulty of attempting to keep a separate account of the coal 
consumption. It is not like a steam vessel, where the steam engine 
is performing the same kind of service every day. I do not know 
whether I have enlightened you on the subject or not. 

Mr. Worthington. While I think it would be possible to make an 
accurate estimate of the difference in fuel consumption at different 
speeds per hour on any individual road, that comparison would not 
be of any value when compared with another road operating under 
different circumstances. For example, we operate passenger trains 
over the Sierra Nevada mountains up 2.2 per cent grades at a speed 
of 25 miles an hour, where the fuel consumption per mile is very 
much larger than trains operated on level roads in the East at the 
rate of 50 miles an hour. It is necessary to use Mallet locomotives 
on those trains, the Mallets being practically double locomotives, 
where the fuel consumption is very large. Therefore, any rule that 
might be fixed for equating the cost according to speed would not 
apply to all roads alike. 

The Chairman. The value of the information as to cost ascer- 
tainment would depend entirely on the rule adopted in the way of 
rate making, would it not? 

Dr. Lorenz. Yes, sir. I think it is desirable to have a rule adopted 
independent of any case or investigation, which rule should be, you 
might say, prescribed by a commission or some other body. 

The Chairman. Would not the value be whether cost was to be 
given the greater weight in the determination of the rate charged 
by the commission or by congressional law or whether capital in- 
vested in the operation was to be given the greater weights 

Dr. Lorenz. The value would depend on how much you would 
take cost into consideration, but both commissions and courts have 
said with perfect definiteness that cost is one of the elements that 
you must consider. If that is one of the elements which you must 
consider, obviously you can not consider them until you know it and 
therefore you must ascertain it before you can consider it. 

The Chairman. Why have the commission and courts come to 
that conclusion? Because of construction of laws enacted by Con- 
gress ? 

Dr. Lorenz. Because, so far as I can see it, they could not discover 
any other basis on which to arrive at any conclusion as to fairness 
of a general level of freight or passenger rates. 

The Chairman. Have either the commission or courts determined 
as to what percentage of weight in any rule that might be adopted in 
rate making should be given to cost as compared with the capital in- 
vested ? 

Dr. Lorenz. I think it is practically the dominant consideration 
when you are considering the general level of rates ; for example, the 
courts in their decision as to wnether the 2-cent law is confiscatory or 
not have tried to discover what the cost of the passenger service is, 
whether it yields a percentage on the capital devoted to that service, 



KAILWAY MAIL PAY. 1347 

and that is the consideration in determining the fairness of the 2-cent 
passenger law. 

The Chairman. Disregarding the capital invested ? 

Dr. Lorenz. Oh, no. 

The Chairman. The cost takes into consideration an allowance on 
the capital invested ? 

Dr. Lorenz. Yes. 

Mr. Worthington. My impression of the decision of the Supreme 
Court was that cost was simply to be considered as one of the ele- 
ments, others to be the value of the service, the return on the invest- 
ment, and I think some other elements, but cost was simply one to 
be considered. 

Dr. Lorenz. I think that is true with respect to particular rates, 
but when you are talking generally, say, passenger rates, I do not 
know whether it would be so construed. 

Mr. Baskerville. When trains arei operated at a high rate of speed, 
the atmosphere, the wind, and all such matters control. A train op- 
erated at 60 miles an hour against a 20-mile wind is operated at a 
greater cost than one operated at 60 miles an hour against no wind. 

Mr. Peabody. Mr. Chairman, I have a statement somewhat in line 
with that of Mr. Peters which I would like to present. 

The Chairman. We will be glad to have you submit it now. 

STATEMENT OF MR. JAMES PEABODY. 

Mr. Peabody. Considerable has been said this morning in reference 
to Prof. Henry C. Adams's position as to the division of expense be- 
tween freight and passenger trains. It should be borne in mind that 
the objection of Prof. Adams, he being a professional statistician, is 
that it is not possible to get exact figures in such a division. Prof. 
Adams does not object, I think, to the proposition that it is possible 
to get approximate figures which in the opinion of very many people 
will serve, so far as their usefulness in connection with railway mat- 
ters is concerned, as good a purpose as if the figures were exact, and 
his objection to the division should always have that in mind. 

The major portion of the statement presented by the Second As- 
sistant Postmaster General at the hearing before the committee last 
week (March 24) depends for its probative force primarily upon the 
assumption that the method employed by the Post Office Department 
for determining, first, the cost to the railways of performing the 
passenger service ; and, second, the proportion of the passenger-train 
space properly assignable to the mail service, are correct. If these 
assumptions are faulty, then his argument falls, and that such is the 
case seems to be easily demonstrable. 

First. As to the basis of apportionment of costs employed by the 
Post Office Department. 

It is well understood by those who are at allj familiar with this sub- 
ject that the main difficulty in dividing railroad expenses between the 
freight and passenger service is in connection with what are known 
as the maintenance of way accounts, and this for two reasons, first, 
that both the freight and passenger service utilize the same facilities ; 
and, second, that the larger part of such maintenance expense is due 
to the action of the elements, or as it is termed "weather stress." 



1348 



KAILWAY MAIL PAY. 



which is wholly independent of either service. What is the relative 
proportion of the maintenance cost incident to weather stress on the 
one hand and use on the other is absolutely indeterminable with ac- 
curacy, but in connection with these two elements the Post Office 
Department has made the following apportionment : 



Proportion 

due to 

use. 




Proportion 

due to 
weather. 



Ballast 

Ties 

Rails and other track material. 

Roadway and track 

Terminals 

Bridges, trestles, and culverts . , 
Signals and interlocking plants 
Roadway, tools, and supplies . . 



Per cent. 
90„ 



90 



These items, which constitute upward of 70 per cent of the total 
charges to maintenance, are then apportioned to freight and passenger 
as follows : The " use " proportion on respective revenue train mileage 
and " weather stress " proportion on basis of direct charge accounts. 
Why a different basis should have been selected for apportioning 
these items, unless a predetermined result was to be reached, is past 
comprehension. The natural as well as logical method of apportion- 
ment of these expenses would have been to let the portion allotted to 
" weather stress " follow that employed for dividing the expenses 
assigned account of " use," which was the revenue train-mile. 

By adopting the revenue train-mile basis as the proper one to be 
employed in distributing expenses in connection with that portion 
of the maintenance expense due to "use," the department appears 
to be at variance with the Second Assistant Postmaster General, who 
seems to consider that basis as erroneous for any purpose and wholly 
unworthy of credence. Other people also differ with him. In his 
argument (p. 1256) he quoted from a paper written by Interstate 
Commerce Commissioner Meyer. This quotation he used had no 
direct reference to revenue train mileage as a basis of apportionment, 
but in the preceding paragraph of this same paper Commissioner 
Meyer did refer to this subject. He said: 

The railways themselves have made limited application of the principles of 
cost accounting to more than one-half of the railway mileage in the United 
States. They declare, however, that this has been done for internal corporate 
administrative purposes rather than just and reasonable rates. The difficulties 
of separating operating expenses among the various branches of the railway 
business are as apparent as the benefits of the final results are clear to those 
who are willing to undertake the task. It is perfectly obvious that controversy 
respecting the apportionment of maintenance of way items, for instance, can 
never end. Is this, however, sufficient reason for refraining from undertaking 
a work which is so promising in beneficial results? There exists surprising 
similarity in the methods employed by different railway companies in appor- 
tioning certain common or overhead expenses. This similarity appears to have 
been brought about without previous conference and agreement, and is appar- 
ently the result of similar conclusions arrived at by men working at the same 
problem independently of one another. 

There can be no better evidence that the revenue train mileage is 
at least a defensible method of distributing maintenance of way ex- 
penses than that so many experienced men in all parts of the country, 



EAILWAY MAIL PAY. 1349 

seeking only to ascertain the facts and with no ulterior purpose in 
view, are in agreement upon it, while the method adopted by the 
department finds practically no advocates. Further than this, many 
railroads have gone into court using the revenue train-mile basis 
of apportionment for many of the so-called items of " common ex- 
pense " in both freight and passenger cases, thus evidencing their 
confidence in its approximate accuracy, and up to date no court has 
found against it. 

I want to observe right here that the railroads have taken their 
cost into court on the basis of expenses and have used exactly the 
same division, whether passenger or freight case. If they had loaded 
either one they would have been rather loath to use it in the other. 
The Sante Fe, in many cases, has taken their division into court, 
using exactly the same basis in each case. 

The Chairman. What has been the attitude of the courts, princi- 
pally, on such division by the Santa Fe? 

Mr. Peabody. The lower courts and the circuit courts have ac- 
cepted that division and made their decisions upon it. The Supreme 
Court has not passed upon that as to the division between passenger 
and freight. The Supreme Court did object to the methods used by 
the so-called experts testifying as to the difference in the cost of State 
and interstate business, respectively, that being a matter of opinion, 
and they said that could be ascertained upon the use basis to some 
extent and which therefore should be employed, but they have 
not questioned the division made by the railroads between freight 
and passenger. 

Mr. Stewart. If you will allow me to suggest right here, the 
court decisions in those cases were based upon the fact that there 
was no better plan presented to them. The decisions clearly indicate 
that there was arrayed against one single man, who did present 
another plan, all the experts of the railroad companies, and the 
courts virtually said that the weight of evidence was in favor of the 
railroad plan. In regard to what Mr. Meyer has said, do you recall 
the very next sentence, which you did not quote ? 

Mr. Peabody. That is your quotation ? 

Mr. Stewart. No. There is one sentence in Mr. Meyer's statement 
that followed what you quote, and, as I recall it, it is to this effect : 
That notwithstanding this unanimity of practice, that was not any 
special reason why it should be adopted. That followed immediately 
the quotation which you gave with regard to the similarity among 
railroad accountants in the method used in dividing unassigned 
expenses. 

Mr. Peabody. Have you the paper ? 

Mr. Stewart. I have it at the office. Mr. Meyer says, as I recall it, 
that even though this be true, it is not specially conclusive that such 
method should be adopted. 

Mr. Peabody. So far as your statement regarding the court is 
concerned, with relation to the Santa Fe cases, I will say that there 
was no such conclusion of the court. Mr. Justice Sanborn, in the 
Minnesota case, adopted that basis as the basis of his decision. Judge 
Hook, in the Oklahoma case, adopted it as the basis of his decision, 
and Judge McPherson, in the Missouri case, adopted it as his de- 
cision. 



1350 KAIL WAY MAIL PAY. 

Mr. Stewart. On that point I refer to pages 1010, 1011, and 1012 
of the hearings, volume 7, in which the decisions of those courts are 
quoted. 

Mr. Worthington. In the Minnesota case the decision of the 
Supreme Court was practically to the effect that the division of ex- 
penses between passenger and freight and State and interstate 
should be on the basis of use of the property for the respective 
classes of service. I can not imagine any better use of the property 
than train mileage. 

Mr. Peabody. And the cases were sent back for development on 
that proposition. I will say that the western roads concerned in 
the Oklahoma case have been having a very elaborate test, cover- 
ing a period in Oklahoma of five months, for the purpose of ascer- 
taining the division of expenses on the basis of use. I put a man on 
every train we had in Oklahoma and in Missouri, and also in Ari- 
zona, because we have a State case there. I have every element of 
traffic separated in the report which I obtained. We are now work- 
ing up that data, and we propose to submit a statement of cost on 
the basis of use as suggested by the Supreme Court in the Oklahoma 
case, which will come up this succeeding month. 

Mr. Worthington. That basis of use simply follows the decision 
in the Minnesota case. 

Mr. Peabody. Yes. 

Mr. Lloyd. Do you aim to make Judge McPherson's decision an 
authority, or Judge Sanborn's decision ? 

Mr. Peabody. I am not quoting either as authority. I am simply 
stating the facts. 

The Chairman. You may proceed, Mr. Peabody. 

Mr. Peabody. Another and perhaps most striking illustration of 
the unwarranted methods employed by the Post Office Department 
is found in its apportionment of steam-locomotive repairs, renewals, 
and depreciation, one of the largest items of expenditure and which, 
in the year embracing the figures under consideration amounted to 
upward of $150,000,000. The usual, and in fact almost universal, 
basis of apportionment for these accounts is the respective loco- 
motive freight and passenger mileage — that is to say, the miles 
run in each service. So self-evident is it that this is the proper basis 
that the Interstate Commerce Commission, in its proposed "tenta- 
tive plan for the division of operating expenses between freight and 
passenger services," has suggested it in the following terms : 

Steam locomotives, repairs. — A record, should be kept of the repairs of each 
locomotive, apportioning to the freight service and. to the passenger service 
according to the miles run in each service by the individual locomotive. Run- 
ning repairs should, be apportioned on the basis of the mileage of each month 
and general or shop repairs on the basis of the mileage made by the individual 
locomotive since last general repairs. The mileage made by locomotives in 
mixed-train service shall be apportioned monthly between freight and passenger 
services on each operating division according to the total mileage made thereon 
by freight and passenger cars in such trains. Repairs to locomotives engaged 
in yard switching for both freight and passenger services shall be divided in 
accordance with the assignment of yard switching locomotive miles made in 
accordance with the rules governing the classification of train-miles, car-miles, 
and locomotive-miles. 

Steam locomotives, depreciation and retirements. — Assign directly as far as 
possible. Apportion the remainder in accordance with the freight and passen- 
ger proportions in the whole of account No. 308. (Steam-locomotive repairs.) 



RAILWAY MaIL PAY. 1351 

This basis, however, did not appear to suit the purposes of the 
Post Office Department. The formula it uses reads as follows: 

Steam locomotives, repairs ; steam locomotives, renewals ; steam locomotives, 
depreciation; electric locomotives, repairs; electric locomotives, renewals; 
electric locomotives, depreciation. The above six accounts were divided on the 
basis of the ratios of the direct-charge accounts, but excluding the direct 
charge accounts for station service — i. e., account 63, station employees, and 
account 66, station supplies and expenses. It was found that the locomotive 
mileage, although used by some companies as a basis for apportionment of these 
accounts, was too high for the passenger traffic and was in many cases unob- 
tainable. The train mileage was higher for passenger service than the loco- 
motive mileage, and the car mileage or cost of car repairs was too low a basis 
for division when the passenger traffic was considered. The direct-charge 
basis of separation exclusive of the accounts for station service seems a just 
and equitable one. 

This statement has at least the merit of frankness, but it is difficult 
to perceive any other advantages attaching to it except that it serves 
to contribute to a desired result. 

One other example of the unreliable character of the department's 
figures will suffice. It is found in connection with accounts 67 to 7b, 
yard accounts ; 80 to 85, engine accounts, and 88 to 93, train-service ac- 
counts. These accounts are very large, embracing about 70 per cent 
of the total transportation expenses. These accounts are by the 
department divided on locomotive mileage when the data are avail- 
able, but in the absence of such figures revenue train mileage — that 
obnoxious basis, which is held by the Second Assistant Postmaster 
General to be wholly indefensible — was used. In this connection it 
may be said that as applied to some of these accounts he is correct. 
To apportion yard expenses upon either the locomotive mileage or 
train mileage is absurd. It is only necessary to read the formula 
used by the department to make it plain to any student of the prob- 
lem that the Post Office Department plan, under which it is declared 
(Doc. 105, p. 3) "possible for the first time to determine the total 
expense chargeable to the mail service," is a conglomeration of ex- 
pedients alike unsound in theory, illogical in application, and erro- 
neous in result. 

In his determination of the space allotted to the mail service, the 
Second Assistant Postmaster General is equally unfortunate. He 
compiles a large amount of car- foot miles under the title of dead 
space which, although necessarily furnished by the railroads, were 
not, he claims, used by the mails ; and he not only deducts such com- 
piled figures from the car-foot miles allotted by the railroads to the 
mail service, but adds same to the car-foot miles allotted to the pas- 
senger service. This dead space was necessary to the proper handling 
of the mails, although the mails may not have actually occupied 
same; just as necessary as the dead space in the passenger coaches 
was to the operation of the passenger traffic. If only the actually 
occupied space was to be allowed for the mails, then as a correspond- 
ing factor the actually occupied space in the passenger coaches and 
express cars should have been employed in order to determine the 
relative car- foot miles used in each service, and the cost of operation 
divided on the ratio thus ascertained. There is no element of fair- 
ness in taking out the dead space in one case and leaving it in the 
other, to say nothing of adding the excluded space in the mail service 
to the included space in the passenger service. T venture to assert 



1352 RAILWAY MAIL PAY. 

that, on the basis of the relative space of the trains actually occu- 
pied in the respective services, the mail service would be charged 
with a much greater proportion than is claimed by the railroads. It 
must be apparent, therefore, that, inasmuch as the assumptions upon 
which the arguments of the Second Assistant Postmaster General are 
predicated are indefensible, his conclusions are equally unsound. 

The statement submitted by the Second Assistant Postmaster Gen- 
eral at the same hearing, as to comparative express and mail rates, 
is also wholly misleading. In the first place, the average length of 
the routes selected are much in excess of the average length of haul 
of the express, and in the second place 100 pounds of express is 
measured as a single shipment against 100 pounds of mail, whereas 
on the average it is made up of several shipments, each taking an 
undivided rate, while the mail rate is applied to 100 pounds in the 
aggregate. The average weight of all express shipments, as pub- 
lished by the Interstate Commerce Commission (First Annual Report 
of the Statistics of Express Companies in the United States, p. 18), 
is 32.8 pounds, while the average weight per shipment of the five 
large express companies on October 23, 1912, was 39.81 pounds. The 
average weight per shipment of merchandise, which is more nearly 
analagous to mail matter, was on the same date 29.54 pounds. It is 
manifest, therefore, the correct basis of comparison is to consolidate 
the charges accruing upon 100 pounds of the average merchandise 
shipments for a given distance and compare same with the pay for 
100 pounds of mail for the same distance. 

The average haul of the Adams Express Co., shown in I. C. C. 
decision in the express-rate cases of the United States and Adams 
Express case (pp. 501, 502), was 169.24 miles, and for the United 
States Express Co. was 234.96 miles. Two tables have been prepared 
embracing all the routes shown by the Second Assistant Postmaster 
General in his statement — one carrying all distances between 100 and 
200 miles, as corresponding with the average distance hauled by the 
Adams Express Co., and the others including all routes from 200 to 
300 miles, as equivalent to the average haul of the United States 
Express Co. Three shipments of express, consisting of 30, 30, and 40 
pounds, have been taken as representing the average shipments 
making up 100 pounds, and the rates computed thereon in order to 
show the average express revenue per 100 pounds. The express reve- 
nue thus formed was then divided in half to show the railroad pro- 
portion and set down opposite the rate of mail pay. 

It will be observed that this makes a very different showing from 
that submitted by the Second Assistant Postmaster General, and that 
only in a very few cases is the mail pay higher than the express 
revenue, and in nearly every one of such cases the distance covered 
in the rate is above the average haul, or else the pay on two short 
mail routes here have been united, thereby making a much higher 
rate for the whole distance than is applicable to any single mail route, 
and which is not comparable to the express revenue, that being com- 
puted for the entire distance at a single rate. 

Take two short mail routes and put them together for a distance; 
it will make a higher rate than the express rate. 

Mr. Worthington. But your 100 pounds does not include any 
light shipments at all for express. 



RAILWAY MAIL PAY. 1353 

Mr. Peabody. No ; no light shipments for the express. It is taken 
as representing the average merchandise shipment. 

Mr. Worthington. In other words, it takes as to express three 
shipments of about 30 pounds or a little over ? 

Mr. Peabody. Yes ; 30, 30, and 40. 

Mr. Worthington. But as to mails, it takes all the light shipments 
which are included in the mail and parcel post ? 

Mr. Peabody. Yes. 

Mr. Wobthington. The point I wanted to bring out is that includ- 
ing the light shipments, such as were handled in the parcel post, the 
return given by Mr. Peabody would be larger than he has shown 
there. 

Mr. Peabody. Of course, if that was made up of many packages 
the rates would be much higher, but I was just taking three ship- 
ments which were fairly representative of the average shipments 
and uniting them to make a 100-pound revenue. 

Mr. Lloyd. Let me interrupt you at this point. What kind of an 
arrangement is made with the express companies where in trans- 
mitting the parcel it passes through the hands of two different ex- 
press companies and over two different railroads? 

Mr. Peabody. So far as the railroad part of it is concerned, the 
•express companies handle it at the station themselves. 

Mr. Lloyd. I mean how do the railroad companies divide their 
share of the profits? Where is the division among the express 
companies ? 

Mr. Peabody. I do not know what the division amongst the ex- 
press companies is. The division among the railroad companies is 
a contractual rate on the earnings that are made by the express com- 
panies, or their haul, whatever that may be. 

Mr. Snead. Where it is handled by two express companies the 
delivering express company reports the waybill to the originating 
company and those two companies divide the total revenue on a pro 
rata basis. The express companies will settle with their own rail- 
road company according to their contract, under the rate prorate of 
what it gets or under a mileage pro rata; that is, the entire dis- 
tance hauled on both lines divided between the two companies. 

Mr. Lloyd. Does the railroad company over which the express 
package is carried in that event get 50 per cent ? 

Mr. Snead. Yes, sir. 

Mr. Peabody. It may be 55 per cent. 

Mr. Lloyd. We are just accepting that as the rate. 

Mr. Baskerville. It is sometimes carried by one company for an- 
other on a tonnage basis. For instance, the Wells Fargo Co. will 
deliver to the Great Northern Express Co. at St. Paul Portland mat- 
ter on a tonnage basis. I do not know how much it is, but it is ar- 
ranged on a tonnage basis. 

Mr. Connolly. There is something of a similar arrangement on 
the Lackawanna and the New York Central. The Lackawanna has 
an individual contract with the United States Express Co., and, due 
to its inability to deliver beyond Buffalo, it goes in tonnage lots over 
the Lake Shore Railroad to Chicago. 

Mr. Stewart. I wish to call attention to the fact that two repre- 
sentatives here have specifically stated that the railroads carry ex- 

40396—14 03 



1354 RAILWAY MAIL PAY. 

press matter on a tonnage basis, yet Mr. Peabody is presenting his 
statistics upon packages of 30 and 40 pounds. 

Mr. Baskerville. He stated it was between different companies. 

Mr. Worthington. It is my understanding the railroads do not 
carry this on a tonnage or pro rata basis. They simply receive one- 
half of the total express earnings accruing to their railroad. They 
do not get any proportion of any particular rate but receive a per- 
centage on the entire business handled over that road. 

Mr. Snead. I think Mr. Stewart misunderstood Mr. Baskerville. 
What he meant was that one express company would carry business 
on a tonnage basis for another express company, but that is not done 
except under exceptional circumstances where, by reason of the 
fact that one express company has a very circuitous route between 
two points, it will arrange with another express company having a 
direct route to handle that business for it and under an agreed basis it 
will pay them so much per hundred pounds to handle that matter. 

Mr. Stewart. What I want to call attention to is the great dis- 
crepancy between the facts as they exist and the examples that are 
being given by Mr. Peabody. Mail is not presented to the railroad 
companies in 30-pound packages under any circumstances, and there- 
fore the example of a 30-pound package is not at all a fair com- 
parison. Now, we learn that the railroads have relations Avith each 
other in which they are actually paid on a tonnage basis. 

The Chairman. No. That is between express companies exchang- 
ing business. 

Mr. Worthington. The express company apportions its revenues 
according to the individual road over which it does business and it 
pays each road according to its contract, say, 50 per cent of their en- 
tire earnings, whatever might be apportioned to that road. 

Mr. Peabody. Further than that the packages are not delivered 
to the railroad company individually in 30 and 40 pounds, but they 
are delivered in mass, and the correct measure as against the mail 
is the measure that we get per hundred pounds for carrying the 
mails and the measure we get per hundred pounds for carrying the 
express. The revenue which we get for carrying 100 pounds of ex- 
press is not based upon a rate upon 100 pounds, but based upon a 
rate on the various packages constituting 100 pounds, and that is the 
reason I am making the comparison. 

Mr. Stewart. And we have taken the average parcel, or the rate 
for the average parcel of 40 pounds. 

Mr. Peabody. Merchandise is scarcely 40 pounds, it is 29 and a 
fraction. The mail rate does not apply to 40 pounds, but it applies 
to 100 pounds and therefore it should be measured against the revenue 
which the railway receives for carrying the express. 

Mr. Stewart. The mail rate is just the same for 40 pounds as it 
is for 100 pounds, prorated. 

Mr. Bradley. Would the rate for a 40-pound package of express be 
the same as the rate for 40 pounds of express matter ? 

Mr. Peabody. Not by a great deal. The rate for 40 pounds of 
express would be a great deal more, for it is a higher rate. 

Mr. Worthington. In other words, the 100-pound rate to which 
Gen. Stewart refers would apply to every large shipment of 100 
pounds or more and would not apply to a shipment of less than 100 
pounds ? 



BAIL WAY MAIL PAY. 1355 

Mr. Stewart. I refer particularly to the 40-pound table which we 
submitted. 

Mr. Worthington. That would not apply to a shipment of less 
than 40 pounds ? 

Mr. Stewart. It would be the average. 

Mr. Worthington. No. The rate would be higher, I think. 

Mr. Stewart. The Interstate Commerce Commission found that 
the average weight of express parcels in 1909 was 32 pounds or there- 
abouts. The parcel post has taken out a large number of the smaller 
articles from the express and we estimate the average weight now to 
be about 40 pounds. 

Mr. Worthington. It does not follow that because the average 
weight is 40 pounds, that is the average rate, because the rate for 
40 pounds and 100 pounds or over is very much lower. What I mean 
to say is this: The 100-pound rate is very little lower per ton-mile 
than for 40 pounds, whereas the rate per ton-mile increases very fast 
with weights of less than 40 pounds. It is exceedingly high on the 
light, bulky packages shipped by express. 

Mr. Peabody. If we could get the actual weights on the packages 
constituting the 100 pounds it would be very very much higher than 
the rate shown here, because a large majority of those packages would 
leave the small ones at a very high rate and the rate is not at all pro- 
portioned. 

Mr. Stewart. A complete answer to Mr. Worthington and Mr. 
Peabody on that point is found in the official statistics which we gave 
on the service as a whole, regardless of weight of individual parcels 
or the amount you received from different parcels. We showed that 
practically the same difference exists between the total amount re- 
ceived by the railroad companies for the express service and the mail 
service as exists between the individual rates, so that the general 
statistics refute the theory 

Mr. Worthington. Upon what basis do you refer to a ton-mile 
rate on all the express traffic. 

Mr. Stewart. I refer to the comparison we submitted of revenue 
to the railroads from express and mail service as a whole, which was 
embodied in my paper and is found on pages 1278 and following of 
the record. 

Mr. Worthington. Is it not a fact that based on ton mileage rate 
it is of very doubtful value for the reason that the ton mileage for ex- 
press has never been computed for the country ? 

Mr. Stewart. We have a very fair estimate upon ton mileage. 

Mr. Worthington. Based upon about 15 per cent, as I understand, 
of the traffic of two express companies ? 

Mr. Stewart. But the results which are obtained by those figures 
are so near the results submitted by Mr. Bradley for the Pennsyl- 
vania Railroad Co., and those ascertained by the Bureau of Railroad 
Economics, that it seems to me they are practically beyond dispute. 
The figures they submitted were lower than ours, so that our figures 
are more favorable to the railroads. 

Mr. Peabody. Do not those figures represent the old express rates 
and not the new ones? 

Mr. Stewart. Yes. So did mine. 

Mr. Peabody. That statement which you submitted of the various 
examples of express rates were the new rates? 



1356 RAILWAY MAIL PAY. 

Mr. Stewart. Yes. 

Mr. Peabody. That is the one I am replying to. My figures are 
based on the new rate. 

Mr. Bradley. Did the computation take into consideration the 
difference between the average hauls? 

Mr. Stewart. Yes. We ascertained the average haul for the ex- 
press from statistics of the Interstate Commerce Commission. 

Mr. Worthington. I would like to call attention to the statement 
you referred to. You will find on analyzing that that you used 
car-foot miles used by the express for November, 1909, divided 
into one-twelfth of the express revenue for the whole fiscal year. 
You had available in your reports from the railroads the actual 
express earnings for November, 1909. The mail pay committee also 
received both the space and the revenue from express for November, 
1909, and the express space as computed by the railway mail pay 
committee was almost identical with the express space found in 
Document 105. Document 105 shows that the express space was 
10.62 per cent of the passenger train service. The independent com- 
putation of the railway mail pay committee showed it was 10.62 per 
cent, a difference of only five one-hundredths of 1 per cent. Divid- 
ing that space into the revenue the railway mail pay committee found 
that the revenue from express per car-foot mile was 3.86 mills, or 
nearly 20 per cent more than we received for handling the mails. 
Three and eighty-six one-hundredths mills are greater than the figures 
found in your document, which are 3.56 mills, due, no doubt, to the 
fact that you divide the space into one-twelfth of the express revenue 
for the fiscal year and not into the express revenue for November. 
The express revenue for November was more than one-twelfth of the 
express revenue for the fiscal year. 

Mr. Stewart. We did not accept those figures for November as 
submitted by the railroad companies for express, because they ap- 
peared to be inflated. They undoubtedly cover items which should 
not be included, because if you compare them with the average 
monthly revenue you will find them much in excess of the average. 

Mr. Worthington. Did you ascertain that they were inflated? 

Mr. Stewart. That is an inference. 

Mr. Worthington. I will say as to our road, we sent these figures 
to you under oath, as I remember, and we would resent any imputa- 
tion that our figures were inflated as to express revenues, because they 
were not. The figures were returned exactly as reported to the Inter- 
state Commerce Commission. 

Mr. Peabody. The same is true with respect to the Sante Fe. 

Mr. Stewart. When I said "inflated" I did not mean they sub- 
mitted figures which were false. What I mean is that the totals evi- 
dently contained items that would not be entertained by the Inter- 
state Commerce Commission. I draw that conclusion from the fact 
that on comparison with the Interstate Commerce Commission fig- 
ures we find them much in excess of the average. 

Mr. Worthington. Did you compare them with the November fig- 
ures for the Interstate Commerce Commission? 

Dr. Lorenz. The express companies do not report monthly their 
revenues. 

Mr. Worthington. The railroads report monthly their revenues 
Irom express? 



RAILWAY MAIL PAY. 1357 

Dr. Lorenz. We do not want the express companies' reports, but we 
want the railroad companies' reports. That is reported in one lump, 
as other passenger-train revenue and not segregated. 

Mr. Worthington. I would like to say as to the Southern Pacific 
that our express revenue included only 40 per cent of the express 
revenue. We entirely omitted any reference to the stock and bond 
bonuses which we received years ago when we made our express con- 
tract in lieu of 55 per cent. Possibly other lines have done the same 
thing. Now, if that were so. the express revenue would be even 
larger than shown. 

Mr. Lloyd. You got 40 per cent, so far as the record shows, but, 
as a matter of fact, you got 55. 

Mr. Worthington. We did not get 55. We received other con- 
siderations at the time our contract was made. 

Mr. Lloyd. But that other consideration was equal to 15 per cent, 
and that would make your compensation 55 per cent instead of 40 
per cent. If that be true, then your report was not a correct report 

Mr. Worthington. It was correct so far as the express revenue was 
concerned. 

Mr. Lloyd. But it did not include all express revenue, because it 
did not take into consideration all you got as bonus. What you re- 
ceived in compensation, whether it was bonus stock, cash, or credit, 
it is part of the company's revenue and ought to go in. 

Mr. Worthington. Under the commission's rules we could not in- 
clude in our revenue for that year any cash bonus or stock bonus 
which we had received a number of years ago as a consideration for 
making the contract with the express company. 

Mr. Lloyd. What I was getting at was the accuracy of your report 
Your report w T as not an accurate report, for it did not correctly state 
that which you received in revenue, because you had previously made 
some other arrangement and had received a bonus, which bonus is not 
taken into account at all in making this particular report. 

Mr. Worthington. We thought if we had to go into these outside 
considerations we would also have to go into many other things which 
were received for handling express. 

Mr. Lloyd. I am only getting at the question of the reliability of 
the report. The report, as I understand your statement, is not a 
reliable one, for it does not give information to Senator Bourne, or 
the commission, or what was the exact relation between you and the 
express company. It shows that you got 40 per cent, but there was a 
hidden arrangement between you that gave you compensation, you 
say, of 15 per cent, which 15 per cent is not shown as part of the 
revenue which ycu received from the express company for the work 
which you did for them. 

Mr. Worthington. I w 7 ould not term it a hidden arrangement, be- 
cause it was well known at the time it was made. 

Mr. Lloyd. But not known to the public, as I understand you, in 
the report you have made? 

Mr. Worthington. I think it has been reported publicly a number 
of times. 

Mr. Snead. You will find it fully explained in the commission's 
decision on the express case. The contract is specifically named and 
analyzed. 



1358 RAILWAY MAIL PAY. 

The Chairman. As I understand the report which your company 
furnished, it was in accordance with the requirements of the Inter- 
state Commerce Commission for information, which, however, did not 
cover the bonus, the concealed equity which Mr. Lloyd has drawn out 
in his discussion? 

Mr. Worthington. We did not feel we were justified in enlarging 
our regular express earnings for the year in any way. We thought 
that it was absolutely necessary for us to report the revenue absolutely 
received in the month of November for handling the express. 

Mr. Lloyd. I am simply getting at the correctness of your state- 
ment. You now say, and that is the basis of the inquiry I have been 
making, that the 40 per cent was not a correct statement, because 
there was another consideration, which consideration did not go into 
the report and did not show on the face of your return, and it did not 
show on the face of the return because the questions asked did not 
demand that you reveal the whole story. 

Mr. Worthington. I am rather of the opinion, though I am not 
certain, there was a supplemental statement furnished which did 
show the value of other equities for the express. 

Mr. Peabody. The report made by the Southern Pacific to the In- 
terstate Commerce Commission necessarily included only such items 
as went to make up their total receipts and could not have included 
any bonus of previous years. The idea of the Interstate Commerce 
Commission was not to find out what they were receiving from the 
express companies, but to find out the total of the receipts going to 
make up that total for the year, of which this 40 per cent received 
from the express company was one item and had to be reported in 
that way. 

Mr. Lloyd. Are there any other railroad companies that any of 
you know about that have gotten this secret compensation that is not 
shown in the report? Has your company, Mr. Peabody? 

Mr. Peabody. No, sir. We get a straight 55 per cent of the receipts 
of the express company. 

Mr. Lloyd. And have you bonus of any kind ? 

Mr. Peabody. And have no bonus of any kind, and I think those 
are very rare instances. I do not know of any important case except 
that of the Southern Pacific, but if there are any they will be shown 
in that decision of the express-rate case, for all contracts were de- 
tailed in that case. 

The Chairman. Taking the case in point as to the relativeness be- 
tween express and mail revenue, you are understating your case, 
rather than overstating it, from that viewpoint ? 

Mr. Lloyd. Yes. 

Mr. Worthington. That is the point I was trying to bring out. 

Senator Weeks. There are two questions here, whether you have 
made a statement that complies with the requirement of the Inter- 
state Commerce Commission, and, assuming that you have done that, 
whether your figures can be taken as a basis for making other com- 
parisons with the receipts received from the mail or from some other 
service, and evidently those figures can not be taken as a proper 
basis, because they are 40 per cent of the express rates, while they 
should be 55 per cent. 

Mr. Worthington. However, that has only a small influence on 
the express revenue of all the roads in the country. 



RAILWAY MAIL PAY. 1359 

Senator Weeks. It would have a considerable influence on roads 
like this. 

Mr. Snead. That contract was made 15 or 16 years ago, I believe. 

Mr. Woethington. It was made 20 years ago. 

Mr. Peabody. I do not think it would bring the 40 per cent up to 
55 per cent? 

Mr. Worthington. No. That is a matter of doubt. 

The Chairman. You may resume, Mr. Peabody. 

Mr. Peabody. It is further to be remarked that these express rates 
are not voluntary but are compelled by the ruling of the Interstate 
Commerce Commission and are at best only experimental, the express 
companies being given permission to come before that tribunal at any 
time and show cause for the promulgation of a higher basis of rates. 
It is also to be said that the contracts upon which the present division 
of revenue is based were all entered into when the express rate was 
upon a higher plane and do not in any wise represent what would be 
the basis adopted in any new contracts which may be entered into at 
the expiration of those now in force. 

Mr. Lloyd. What do you mean by " a higher plane " ? 

Mr. Peabody. The higher plane of rate ? 

Mr. Lloyd. Yes. What do you mean by " higher plane " ? 

Mr. Peabody. The contracts were entered into when the express 
rates were on a higher basis than they are now fixed by the Inter- 
state Commerce Commission. 

Mr. Lloyd. You mean a higher plane of charges ? 

Mr. Peabody. A higher plane of charges. If we were not willing 
to accept 55 per cent of these rates we are certainly not willing to 
accept 55 per cent of the present rates, because the service is of the 
same character. 

It can be established that even under the old rates the express bus- 
iness was unremunerative to the railroads; and to compel them to 
carry the mails for a compensation no higher than that at present 
received for transporting express would be to still further reduce 
the already inadequate pay received from the mail service. 

The statement submitted at the last hearing by the Second Assist- 
ant Postmaster General showing a comparison of express and mail 
rates has also been revised on the basis of the average merchandise 
shipments going to make up the revenue received per 100 pounds. 
This is interesting as showing 39 points between which 50 per cent 
of the express revenue exceeds the mail pay instead of 17 as set out in 
the statement of the department. Although the instances where one- 
half of the express revenue exceeds that of the mail are more than 
doubled, it must be remembered that the relatively small number 
of such cases is due to the numerous long and consolidated routes em- 
braced in the statement when the pay of several routes is added to- 
gether, thus obtaining a high rate of mail pay as contrasted with a 
single rate of express pay for the entire distance. 

These statements are merely submitted in reply to the statement 
prepared by the Post Office Department officials. I have also some 
instances in connection with parcel post which may be interesting. 
We had some shipments of fruit contained in boxes of 20 pounds each 
between Farmington, N. Mex., and Gallup, N. Mex., a distance of 
somewhat less than 150 miles in a direct line. 



1360 RAILWAY MAIL PAY. 

We had three shipments, which were carried between these points 
by the following routes: From Farmington to Durango, 50 miles, 
where a transfer was made. From Durango to Antonito, 172 miles, 
and Antonito to Alamosa, 28 miles, where another transfer was made. 
From Alamoso to Cucharas Junction, 78 miles, with another trans- 
fer. From Cucharas Junction to El Moro, 37 miles, where it reached 
our line, the Santa Fe, and another transfer was made. From there 
it was carried by the Santa Fe for 270 miles to Albuquerque, and 
thence 158 miles from Albuquerque to Gallup without transfer, mak- 
ing a total of 793 miles haulage. The three shipments thus handled 
consisted respectively of 240 boxes, 83 boxes, and 93 boxes, or a total 
of 426. Another shipment of 165 boxes between the same two points 
was handled by the same route as far as Antonito, from there it was 
hauled to Santa Fe, 125 miles, at which point it was transferred by 
the Eio Grande to the Santa Fe Railway, which line hauled it from 
Santa Fe to Lamy, 18 miles, where a transfer was made to the main 
line train, and from there it was hauled 68 miles to Albuquerque and 
158 miles from there to Gallup, making a total haul of 591 miles. 
That is merely an illustration of the work to which the railroads are 
now subjected in these roundabout routes where the matter has to be 
carried, because although it is somewhere within 150 miles across 
the country it requires a haulage of 793 miles. 

The Chairman. Your system is the Atchison, Topeka & Santa Fe ? 

Mr. Peabody. Yes. 

The Chairman. What is its mileage? 

Mr. Peabody. About 10,000 miles. 

The Chairman. How many express companies have you a contract 
with? 

Mr. Peabody. One. 

The Chaikman. What is your contract? 

Mr. Peabody. Fifty-five per cent. 

The Chairman. And you have notified the company that you 
would not renew the contract under the old rate ? 

Mr. Peabody. Not only that, but we have told them that we would 
not renew the contract at the same rate. 

Senator Weeks. Do you mean that? 

Mr. Peabody. We do. 

Mr. Worthington. His contract, is just expiring. 

Mr. Peabody. The contract expires in 1916. We would not renew 
it under the old rate, to say nothing of the new. 

Senator Weeks. I was looking over the express returns the other 
day as reported to the Interstate Commerce Commission, and, as I 
recall it, they showed earnings of about 3 per cent on their capital 
in the past year. What do you suppose the express companies will 
do if they are going to pay you more? 

Mr. Peabody. I know what one did and I presume the others will 
do the same thing. The United States Express Co. is going out of 
business. 

The Chairman. Are you familiar with the express business in the 
United States? 

Mr. Peabody. No, sir ; not very familiar. 

The Chaibman. Are there any gentlemen here who are familiar 
with the large express companies? 

Mr. Peabody. I do not know. 



RAILWAY MAIL PAY. 1361 

The Chairman. Were not the original contracts made between 
the railroads and the express companies purposely made favorable 
to the express companies because of the railroads themselves or 
some of their managers being largely interested in the express com- 
panies? 

Mr. Peabody. To what extent that is true I am not at all advised, 
but I understand in some cases that was the proceeding. 

The Chairman. If that were true, the natural bias would be in 
favor of the express companies and not in favor of the railroads, 
would it not? 

Mr. Peabody. That would be the natural bias in that case, to give 
higher earnings to the express companies. 

The Chairman. So that the railroads, on account of mutual owner- 
ship, would give more favorable rates to the express companies in 
which they had an interest than they would to an independent com- 
pany? 

Mr. Peabody. It is claimed that that is the case. 

Senator Weeks. The reverse is also true, that in some cases the 
managers or owners of express companies own considerable interest 
in the railroads. 

Mr. Peabody. But they do not control the railroad rates. It is 
also to be said, Mr. Chairman, that it is only in recent years that any 
idea has been possessed by railroad officials as to the costs of doing 
business. Railroad officials are very busy men; they did not have 
time to investigate into the workings of the road as to the ascer- 
tainment of the cost of the different services, and that will answer 
your question this morning as to whether the railroads have not 
ascertained all these things. Railroad officials have not had time to 
ascertain all these things; they have been busy developing their 
properties, and in obtaining the best and most efficient results pos- 
sible, but they have net had time to look into the cost and, as 
was remarked this morning\ the cost of doing that thing is very 
great, and they have not felt as though they could afford to use the 
money for it. I presume, perhaps, no road has gone into it to the 
extent that the Santa Fe road has done. We have spent on an aver- 
age of, say, $40,000 a year for the last 15 years investigating that 
very subject, and we have not gotten through investigating yet. We 
do not know now what it costs. We are going to get it if we can and 
our time and money holds out. I have two other items under parcel 
post I would like to call attention to. 

Mr. Stewart. Before you leave that one case. Mr. Blackwell, who 
is an assistant superintendent of Railway Mail Service at Omaha 
and located until recently at Denver, is here and he informs me the 
shipment that you speak of went the roundabout way because there 
was no Sunday service between the two points. 

Mr. Peabody. But there were three shipments that went that way. 

Mr. Lloyd. If there is no objection. I would suggest that we now 
take a recess. 

(Thereupon, at 1 o'clock p. m., 3 recess was taken until 2 o'clock 
p.m.) 

AFTER RECESS. 

The hearing was continued, at the expiration of the recess, at 2 
o'clock p. m. 



1362 BAIL WAY MAIL PAY. 

The Chairman. Mr. Peabody, will you kindly continue with your 
statement? 

Mr. Peabody. I have but very little more to say. I was simply 
going to cite one or two instances of the Parcel Post Service, or, 
rather, what shape it is taking. On March 12 there were TO sacks 

of beans shipped from to a place called , N. Mex., 

on which the postage rate was $1.04, whereas the freight rate be- 
tween the same points was $1.55. I only wanted to show that it is 
taking away from our freight service business that naturally belongs 
there and putting it into the parcel post, because of the extremely 
high rates for that service in that territory and the comparatively 
low rates for the parcel post. 

Mr. Lloyd. You do not mean to say that that occurs very fre- 
quently? That is an exceptional case. 

Mr. Peabody. We had another one of a lot of salt. There were 
26 sacks of salt from Park View, N. Mex., weighing 2,100 pounds, 
loaded on March 9, or about that date. 

Mr. Lloyd. These extraordinary cases you would be certain to 
find out? 

Mr. Peabody. Yes. I am afraid, however, that that service will 
grow where the cross-country distance is short and transportation 
distance is long. 

Mr. Lloyd. That occurs only occasionaly ? 

Mr. Peabody. That is true. It is not a common thing. 

Mr. Lloyd. It would be impossible for the Government to make 
a rule that might not make a hardship somewhere. 

Mr. Peabody. Absolutely, but we are just as willing to share our 
proportion of the hardship as anyone. 

Mr. Lloyd. This example that you give is one of the examples 
which proves the rule. 

Mr. Peabody. My object in citing was more to enter a quiet protest 
against this extension of the parcel-post weight to 100 pounds, be- 
cause if you get it up to 100 pounds, there will be a good deal of it. 

The Chairman. This apparent great difference in rates is due 
primarily to the distance in air, a direct line, and the rail distance, 
which is possibly three times as great ? 

Mr. Peabody. Yes; three, four, or five times. That can not be 
helped, however. 

The Chairman. Is that all, Mr. Peabody ? 

Mr. Peabody. That is all. 

Mr. Stewart. I would like to read into the record the sentence 
to which I referred as being contained in Mr. Meyer's statement, 
from which Mr. Peabody quoted. Mr. Peabody quoted up to this 
sentence, referring to the general plan followed by railroad account- 
ants. Mr. Meyer said about that: "However, I am not suggesting 
that methods and rules which are now found to be common to several 
railway accounting departments are those which the commission 
should necessarily accept or prescribe." 

Mr. Peabody. I will indorse that sentence of Mr. Meyer's exactly, 
because those that are now being used by the railroads are as yet 
imperfect, and I should dislike very much to have the method we 
use prescribed by the Interstate Commerce Commission as a rule. 

Mr. Snead. I should like to ask Mr. Stewart if he construes those 
remarks of Mr. Meyer as an official expression of the Interstate Com- 
merce Commission or from Mr. Meyer as his own personal views ? 



RAILWAY MAIL PAY. 1363 

Mr. Peabody. I can answer that for Mr. Stewart, because Mr. 
Meyer states in the beginning of his paper that they are his own 
personal views, and are not to be taken as the expression of the 
Interstate Commerce Commission. 

Mr. Stewart. I think that is correct. This was an address de- 
livered before an association meeting in Chicago. 

Mr. Lloyd. But this is more valuable than if it were his official 
view, because it is supposed to-be a statement of what he really 
thinks. 

Mr. Snead. But it does not bind the commission to those views ex- 
pressed by Mr. Meyer. There are six other gentlemen who would 
have something to say on that subject. 

Mr. Peabody. It is also to be said that Commissioner Meyer is 
very much in favor of prescribing a formula, and he believes that 
a practical formula that can be worked out would be practically 
accurate. 

Mr. Stewart. In connection with that statement of Mr. Meyer as 
an authority, it will be remembered that he was one of the railway 
commissioners of Wisconsin at the time the celebrated Buell case 
was heard there, and I believe his name appears at the end of the 
opinion in that case. The principles of that case largely controlled 
in the department's determination of a method of dividing expenses. 
This is what Mr. Meyer said regarding the principle which Mr. 
Peabody has announced this morning. 

Rails constitute the one item which is said to be eutirely affected by the 
traffic. The cost per revenue train-mile for the renewal of rails in the pas- 
senger group varied from 0.68 of a cent on the B. & M. to 1.2 cents on the New 
York Central. In the freight group this cost varied from 1.40 cents on the 
D. L. & W., which is also a heavy passenger road, to 2.68 cents on the W. & 
L. E. ; 2.80 cents on the Norfolk & Western; 3.51 cents on the D. & I.; 10.40 
cents on D. M. & N., to 2.55 per revenue train-mile on the C. M. & St. P. From 
these figures, which cover several years, it is very clear that the cost of 
maintenance of rails was relatively much greater on the freight than on the 
passenger road. What is true with .respect to the maintenance of rails is also 
true for the maintenance of ties and other maintenance expenses. The periods 
covered are long enough to indicate the general tendency. The extraordinary 
improvement during the periods does not seem to have been relatively greater on 
the freight than on the passenger roads. No conditions have been discovered 
which would warrant any other conclusion than that these differences in the 
costs actually measured the wear and tear on practically all of the roads in- 
cluded in the table. If this is actually the case, then it must follow as a 
matter of course that an average passenger train-mile is, on the whole, less 
injurious to the rail and track than an average freight train-mile. 

Mr. Meyer has since become a member of the Interstate Commerce 
Commission. 

The part of the testimony known as volume 11 was, as it is shown 
in the prefatory note, printed without the opportunity of the depart- 
ment to make the usual corrections. This was to expedite the work 
of the committee, as stated by the chairman. When we received the 
printed volume it was checked up, and not anticipating the submis- 
sion by Mr. Peabody of tables based upon rates and weights com- 
parable with the express tables, we changed the mail rates on various 
items in the table for the western section from the top rates to the 
average rates to make them uniform with all other rates in the tables, 
the other rates being average mail rates. The volume has not been 
reprinted. I have suggested to the chairman and to Mr. Peabody 



1364 RAILWAY MAIL PAY. 

that in order not to confuse Mr. Peabody's tables, I will let these 
tables stand just as they are in the record, so that his tables will have 
a relevancy to the original tables presented, and I will ask permis- 
sion to supplement the latter by tables showing the average rate in 
every case for the reprinted volume, and then Mr. Peabody can sub- 
mit other tables on those if he desires. 

The Chairman. There is an explanation similar to what you have 
stated on the supplementary case. • 

Mr. Stewart. Yes; Mr. Chairman. Is it the desire, before tak- 
ing up the question of Mr. Mack's space on the Missouri Pacific that 
we submit any suggestion upon the paper read by Mr. Peters? 

The Chairman. We will leave all these things for general discus- 
sion until we have before the commission all the papers that have 
been prepared and written. 

Mr. Mack. I have not quite completed my statement as yet. 

The Chairman. Is Mr. McCahan ready to submit his statement? 

Mr. McCahan. Yes, sir. 

The Chairman. This is for the Baltimore & Ohio Railroad? 

STATEMENT OF MR. J. C. McCAHAN, JR. 

Mr. McCahan. Yes, sir; for the Baltimore & Ohio Railroad Co. 

Mr. Chairman, what I have prepared here is a set of tables alpha- 
betically lettered from A to I. They represent the space on the line 
as a whole and one particular route, which represents various classes 
of service performed by the company for the Post Office Depart- 
ment. The others represent from an accounting standpoint, some 
of which have been prepared by our comptroller, Mr. J. T. Leary. 
Under the heading of Table A we show the total car-foot miles re- 
ported by the company classified by the various classes of cars, such 
as postal cars, apartment cars, and closed-pouch space. 

The Chairman. Reported to whom ? 

Mr. McCahan. The Post Office Department. 

The Chairman. When they were making up their compilations 
for Document 105 ? 

Mr. McCahan. Yes; for 1909. The total result of the compari- 
son is that the company reported 33,134,015 car-foot miles to the 
mail service. The department allowed 25,391,708, a reduction of 
7,742,307 car-foot miles. The passenger has been increased over 
that reported by the company by 7,772,775 miles, substantially the 
same. 

The Chairman. It is just a transfer? 

Mr. McCahan. Apparently such; a transfer from the mail into 
the passenger. I have taken one route, No. 113003, which runs 
through Washington, Table B. It was stated at that time from 
Baltimore, Md., to Grafton, W. Va., and I show in the full postal 
cars distribution space the department has given 216,955 more than 
we reported, but in the storage they have taken from us 907,494 
car- foot miles. In connection with the storage I find that during 
the time these statistics were taken we had a full storage car oper^ 
ated from Washington to Cincinnati on train No. 1. That car op- 
erated over three different routes, but over the particular route I 
have figured, allowing for a basis of 40 feet to the car, which was 
reasonably correct, the car being equipped with stanchions, it 



RAILWAY MAIL PAY. 1365 

amounted to 304,260 car-foot miles. I can not find, however, that 
any return movement was allowed for that car, so far as the car- 
foot miles are concerned, which, if they had been allowed, would 
have increased our car-foot miles in storage for that particular car 
just 100 per cent. The car operated over three routes between 
Washington and Cincinnati, as shown in Table C-l, and I find from 
Document 105 that the department allowed us storage space aver 
route 113003, which closely equals the amount that I figured. Be- 
tween Grafton and Parkersburg, which was part of the operating 
run of the car, and during which time the car was still occupied 
with mail, I can find no allowance whatever for storage space, but 
when that car got on the route between Parkersburg and Cincinnati 
I find storage space has been allowed. I have a diagram here in 
these statements which I will turn over to you. I do not know just 
why the storage space was disallowed between Grafton and Parkers- 
burg. 

The Chairman. Have you made any inquiry of the department 
as to the seeming discrepancy between their and your compulation? 

Mr. McCahan. No, sir; I have not. That would represent a con- 
siderable space, but that part that I show where the storage space 
was disallowed is not given in detail figures on these statements, 
because I have only taken the one route as an illustration. In the 
mail apartment-car service for that particular route I find the de- 
partment allowed us 943,937 car-foot miles in the distribution; 
that is all for apartment cars, shown on Table B. That decreases 
what we reported 66,575 car-foot miles. In storage for mail apart- 
ment cars we reported 812,280. I can not find that the department 
allowed anything for that, which made a decrease of that amount. 
Deadheading we reported 179,700, and I find that has been elimi- 
nated also. In connection with that I have taken certain trains on 
that route, with which I am personally familiar and about which I 
felt no doubt as to the conditions prevailing at the time these figures 
were taken — Nos. 5, 11, 12, and 14 — the first two representing west- 
bound trains and the last two eastbound trains. The westbound 
trains represent maximum amount handled as loaded at Washing- 
ton and eastbound the minimum amount as unloaded at Washing- 
ton. I find that on an average these trains handled over 4 tons 
westbound and from 1 to 2 tons eastbound. I am reasonably satis- 
fied that my figures as to the space allowed by the department in 
apartment-car service are reasonably correct, for the reason that I 
have figured out to see if there was any difference between that re- 
ported in Document 105 and the Railway Mail Service schedule in 
effect at that time, Table D. On one particular train that I speak 
of, train No. 5, it carried during the weighing period of 1909, 
939,500 pounds, which averaged per day a total of 8,947 pounds, 
but the maximum daily average for the heaviest week of the weigh- 
ing period there was loaded on at Washington 12,100 pounds. I 
figure that a full postal car would-run about 2J tons. Here is a 30- 
foot mail apartment car that carried over 6 tons out of Washington, 
on an average, and at times it went higher. I have a personal recol- 
lection at one time when there were 25,000 pounds of mail loaded in 
that car, and it went down so heavy on the bearings that it cut the 
air pipes, and the mail had to be transferred at Cumberland. I 
can not find from Document 105 that there was any space allowed 
for the overflow in the baggage end of the car. 



1366 KAILWAY MAIL PAY. 

Mr. Stewart. Are "you referring to the figures of 1913 weighing? 

Mr. McCahan. No, sir; 1909. I have the figures for 1913 sepa- 
rately. These are 1909 figures, taken in the spring of 1909, during 
the same year these statistics were gathered. 

I took this from the weight cards furnished by the Railway Mail 
Service. On train No. 11 we carried during the period a total of 
1,012,300 pounds, an average per day of 9,641 pounds, the maximum 
daily average being 12,442 pounds. That represents the two west- 
bound trains on which the department had a 30-foot car authorized. 
On the two east-bound trains with the same space, the amount of 
mail carried into Washington was not as heavy as carried out, as I 
have previously stated. Train No. 12 carried into Washington and 
unloaded at that point 430,200 pounds with an average of 4,097 
pounds per day. Even that train, with the mail in the light-weight 
direction, carried over 2 tons on an average. The maximum daily 
average went to 4,843 pounds. Train No. 14, unloaded 218,200 
pounds, an average per day of 2,078 pounds, the maximum daily 
average being 2,628 pounds. It will be observed that the lowest 
maximum weight loaded was over 6 tons, and unloaded at the same 
point was over 1J tons. The amount unloaded at Washington from 
trains Nos. 12 and 14 (the two eastbound trains) represent about the 
minimum weight carried at any one time. The purpose of this is to 
demonstrate that the company was entitled to the full inside length 
of the cars in each case cited. I have taken the 1913 weighing and 
have made calculations somewhat similar, and I find that train No. 5 
left Washington 61 per cent of the time with over 5 tons of mail. 
The maximum at any one time was 9 J. tons. That car had the same 
service in 1913, during the weighing, as it had in 1909, so that the 
figures are running very close. Train No. 11 left Washington 73 
per cent of its time with over 3 tons of mail, the maximum at any 
one time being about 7 tons. Train No. 12 arrived at Washington — 
this is the eastbound train — 48 per cent of the time with over 2 tons 
of mail, the maximum at any one time being 5^ tons. Train No. 14 
arrived in Washington 49 per cent of the time with over 24 tons, the 
maximum at any one time being 5^ tons — the same as No. 12. That 
is prepared, Mr. Chairman, in order to demonstrate the conditions 
prevailing during the two periods with the same service, and that 
the company ought to have been allowed credit in the 1909 figures 
for the full length of the cars run which were used entirely by the 
Post Office Department for mail service. 

The Chairman. Was it allowed by the Post Office Department in 
its computation? 

Mr. McCahan. I can not find that it was. 

The Chairman. No credit whatever? 

Mr. McCahan. No, sir ; I can not find it. 

The Chairman. General Stewart, I know it is pretty hard to carry 
these things in mind, but can you answer that question? 

Mr. Stewart. I could not say without examining the records. 

Mr. McCahan. In order to satisfy myself , as nearly as possible, that 
this calculation was correct (as previously stated) I took the cars 
as the department figured in the schedule at the time, and figured 
out the car-foot miles for each train in order to see that my total 
would come near Document 105, Table D. The result of that calcu- 
lation is that I have reached it all but 10,000 car-foot miles. They 



RAILWAY MAIL PAY. 1367 

allowed us 943,937, and I find 954,841, the difference probably being 
due to some mileage calculations. 

The Chairman. What do you figure you have lost in the failure 
of the department to grant all the allowance you claim ? 

Mr. McCahan. I figure that we have lost a total of 7,742,309 
mail car-foot miles. If we work that down to earnings per car-foot 
mile, I find that they have increased the earnings per car-foot mile 
nine-tenths of a mill. 

The Chairman. And the actual payments made you are in the 
tables made up in Document 105 ? 

Mr. McCahan. This is based on the actual payment for the month 
of November, 1909. I thought it would be well if I could present 
these figures, as they may be of some use to you even at this late day. 

Dr. Lorenz. With the weights for the two periods and the record 
of the space service for the two periods, you could give us a pretty 
good idea of the change in the average load per car, could 3^011 not? 

Mr. McCahan. On that particular route ; yes, sir. 

Dr. Lorekz. Has it changed appreciably? 

Mr. McCahan. It shows here (so far as the average I have worked 
out) that it has increased so much — that is, so far as taking the per 
cent of time. That would be no factor to compare with this — that is, 
1913, with the individual weight per day. 

Dr. Lorenz. Is it your impression, from a study of this, that 
the average weight in the car has increased as much as half a ton? 

Mr. McCahan. I would not like to make that as a definite state- 
ment, because I have not looked that up intelligently enough to find 
out. I haven't that in mind. 

The Chairman. Let me understand this: From concrete illustra- 
tions you have submitted to the committee, do you deduce the conclu- 
sion that Document 105, or particularly Table No. 7 of that docu- 
ment, is incorrect, or that it should not be given too great credence? 

Mr. McCahan. I do. 

The Chairman. Or is it your presentation simply that your road 
was underpaid nine-tenths of 1 mill per car-foot mile during that 
3^ear on the rates then existing? 

Mr. McCahan. I spoke so far as the Baltimore & Ohio Railroad 
is concerned that Table 7, Document 105, in my opinion, does not 
represent the full amount of car space that we were entitled to. 

Dr. Lorenz. But Table 7 does not purport to give anything else 
but the mail plus deadhead space and not the dead space. Now, if 
you add to that the dead space, would the total then be similar to 
your total? 

Mr. McCahan. I have in here everything that we reported and 
everything the department allowed. I have taken this by individual 
routes which I have here. Here is the way that worked out on indi- 
vidual routes on the same basis. 

Dr. Lorenz. My question is whether the total space which you 
determined is greater than the space generally in Table 3, for ex- 
ample, where the mail space plus dead space may be derived. If they 
have allowed you all the dead space, would they then have allowed 
you all you determined? 

Mr. McCahan. I did not figure on that basis. 

Dr. Lorenz. No railroad will find that there is any agreement be- 
tween its figures and Table 7 ; so, unless you add to that dead space, 
you can not make any comparison. 



1368 RAILWAY MAIL PAY. 

Mr. McCahan. I can very easily do that and work it out and see 
what the result would be. That represents the few cases, Mr. Chair- 
man, that I wanted to present. I did not want to encroach upon your 
time too much. 

The Chairman. We are glad to have all the information we can 
on the specific subject under consideration. 

Mr. McCahan. Mr. Chairman, I have here also a table lettered F, 
which represents the operating expenses and taxes reported by the 
railroad company in 1909 and those used by the Post Office Depart- 
ment. I have applied the percentage of car-foot miles reported, both 
bj the railroad company and those used by the department, to both 
the operating expenses and taxes and then to the fixed charges. My 
object in that was to find out just what over or under payment the 
different calculations would make, and I find that with the total 
operating expenses, by using our own car-foot miles, it shows we 
were underpaid the total of $21,886 per month. This is all based on 
the November, 1909, figures. With the fixed charges that the com- 
pany reported, I find our underpayment was $69,508 per month. 
The table following gives it by years and the per cent. With the Post 
Office Department car-foot miles applied to the same operating ex- 
penses, I find that we were overpaid $5,980.92. Ity taking the fixed 
charges and applying them to the same figures with the same per- 
centage, I find that we were underpaid $30,572.84. If I take the Post 
Office Department's operating expenses as they apportioned them, 
then I get, with the car-foot miles reported by the company, an over- 
payment of $4,391.66. 

The Chairman. These are all by the month? 

Mr. McCahan. All on a monthly basis. If I take the fixed charges 
and add to the same, then I get an underpayment of $24,477.14. 
Then the last two calculations are based on the Post Office Depart- 
ment's car-foot miles and operating expenses, which gives us an over- 
payment of $26,151.45 per month, which is what the department 
reported in Document 105 ; by applying the fixed diarges to the same 
item, I get an overpayment of $3,992.21. The idea in compiling this 
statement was merely to illustrate the effect in the application of the 
car-foot miles as both reported by us and those used in the depart- 
ment to the different methods of dividing operating expenses. The 
operating expenses we show here are divided on a train-mile basis. 
I have a couple of statements also, Tables G and H, prepared by Mr. 
J. T. Leary, comptroller, who is thoroughly familiar with the details. 
I asked him if they could be presented here, and any detailed ex- 
planation you would like, if I am not able to furnish it, I will be glad 
to get it. Table G is the formula for dividing the operating expenses 
and taxes, identical with the formula used by the Post Office Depart- 
ment. This represents the expenses as arrived at for the fiscal year 
ending June 30, 1913. These are brought up-to-date. The result of 
that is it shows that the mail service, based on our car-foot miles, is 
costing the company $1,780,155.48, while we received from the mail 
$1,205,158.95. In other words, on the net return from operation, 
instead of the mail earning anything it shows it went back $574,- 
996.53, or about 5.9 per cent on property investment. With the fixed 
charges added to that it increased the underpayment to $760,135.69, 
or representing a deficit on property investment of 7.83 per cent. 
We have another statement labeled H, which is worked out on the 



RAILWAY MAIL PAY. 1369 

Buell formula. This is the statement used in the Wisconsin rate case, 
as I understand it. The same method has been applied to this as in 
the other ones, with the result that the underpayment shows $390.- 
616.09, as compared with $574,996.53 on the Post Office Department's 
basis. With the fixed charges, that goes to $575,755.25, as compared 
with $760,135.69 on the Post Office Department basis. Those two 
statements represent the operating expenses for the last fiscal year, 
and we felt that it would represent very clearly the difference in the 
increased cost, as compared with the average, when the statistics were 
originally compiled and on which Document 105 is based. I think 
you have heard a great deal about the increased cost of labor and 
material and I think these statements are illustrative ; they were pre- 
pared with a view to seeing just exactly what the relative results 
would be. Then I have another table lettered I, worked out on the 
basis of passenger-car-mile earnings. In other words, if we applied 
the rate that we earned from passenger-car miles to the mail-car 
miles, we get a result similar to the other two statements — an under- 
payment of $559,431.02. In the Buell statement it runs $390,616.09 
and in the Post Office Department formulas it runs $574,996.53, so 
the effect of all these statements is to substantially harmonize. 

Dr. Lorenz. How did you get the earnings of passenger-car miles ? 

Mr. McCahan. By taking the total car miles and dividing them 
into the passenger earnings. 

Dr. Lorenz. So that it is an average, including baggage, mail, and 
express ? 

Mr. McCahan. Yes; everything. 

Mr. Tuttle. How much was that a car mile ? 

Mr. McCahan. Twenty-two and three-tenths cents. 

The Chairman. That is for a 60-foot car ? 

Mr. McCahan. That is on the passenger-car service; that is, it 
takes all the passenger equipment. I do not know just what cars 
were used ; in fact, every car we had was used. 

Mr. Tuttle. Does your table show what the cost was per car mile ? 

Mr. McCahan. No; the cost per car mile, I think, will work out 
pretty near on an equal basis. I have not figured that out. 

Mr. Tuttle. Does it about equal the revenue ? 

Mr. McCahan. I am not sure. Not exactly. I think it will run 
pretty close. 

The Chairman. Do you not take a 60-foot car as your standard; 
as your unit ? Your earning of 22 cents a car mile is on that basis ? 

Mr. McCahan. In the passenger service? 

The Chairman. Yes. 

Mr. McCahan. We took the total car miles regardless of the car 
length and figured out exactly what the total passenger earnings 
were per car mile. 

The Chairman. Then would it be equally fair to take the postal 
cars, regardless of their length — whether 70, 40, 50, or 60 feet — and 
make a computation on the same basis ? 

Mr. McCahan. I did allow straight car mileage for full postal 
cars because that represents the unit of service, but in the mail-apart- 
ment cars I took the car actually assigned to the run, figured out the 
length of the mail apartment, took the total mileage of the car, and 
arrived at it on that basis. In other words, if a car was 50 feet 
long and the mail space occupied 20 feet, I took two-fifths of that 

40396—14 94 



1370 



RAILWAY MAIL PAY. 



mileage. I took the proportioned mileage. That was the best way 
I could arrive at it. That statement is simply submitted as an illus- 
tration in connection with the other two statements. 

For convenient reference I submit the Tables A to I, inclusive, 
referred to in my general statement. 

[The Baltimore & Ohio Railroad Co. Mail department.] 

Railway Mail Pay. 

[Information prepared for presentation to the Joint Committee on Postage on Second- 
class Mail Matter and Compensation for the Transportation of Mails. Baltimore, Md., 
April 1, 1914.] 

Table A. — Comparative car-foot miles, Baltimore & Ohio Railroad and Post 
Office Department, November, 1909. 





Baltimore 

& Ohio 

Railroad. 


Per 
cent. 


Post Office 
Department. 


Per 
cent. 


Reported 
by Post 
Office De- 
partment 
(increase +, 
decrease—) 


Postal cars: 


Car-foot miles. 

13,970,480 

3,366,923 

662, 400 




Car-foot miles. 

14,242,425 

818,061 

489, 150 




+ 271,945 
-2,548,862 
- 173,250 




















Total 


17,999,803 




15,549,636 




-2,450,167 








Mail apartment cars: 


10,233,814 

1,501,300 

604, 122 




8,986,451 




-1,247,363 
-1,501,300 
- 604, 122 








Deadhead. . . 
















Total 


12,339,236 




8,986,451 




-3,352,785 










2,794,976 




855, 621 




-1,939,355 








Total mail 


33,134,015 


9.81 


25,391,708 


7.53 


-7,742,307 




Passenger: 

Revenue 


248,656,914 




251,582,255 
5, 660, 543 




+2,925,341 


Dead 






+5,660,543 
- 813, 109 


Deadhead 


813, 109 
















Total 


249, 470, 023 


73.85 


257,242,798 


76.28 


+7, 772, 775 






Express 


55, 187, 434 


16.34 


54, 585, 970 


16.19 


— 601,464 






Grand total 


337,791,472 


100. 00 


337,220,476 


100. 00 


- 570,996 







EARNINGS PER CAR-FOOT MILE. 



Mail 


$0. 00296 
. 00463 
. 00272 




$0. 00386 
. 00449 
. 00275 




+$0. 00090 


Passenger 






- . 00014 








+ . 000Q3 











Average weight per pouch or sack used by the Post Office Department, 20 
pounds. Results obtained by the Baltimore & Ohio Railroad Co. at Chicago, 
111., based on regular weighing by Post Office Department : 





March, 1911. 


Per cent of 

increase over 

department's 

average. 


November, 
1911. 


Per cent of 

increase over 

department's 

average. 


Average weight per pouch or sack: 


Pounds. 

28 
42 




Pounds. 
26 
39 
















Total average 


36 


SO. 00 


34 


70.00 







Mail revenue 

Mail revenue if paid on earnings per passenger car-foot mile. 
Increase (56.52 per cent) 



$98,015.98 

153, 410. 49 

55,394.51 



KAILWAY MAIL PAY. 



1371 



Table B.—The Baltimore & Ohio Railroad Co. — Route 113003— Baltimore, Md. 

to Grafton, W. Va. 





B.& O.R.R. 


Per cent. 


Post. Office 
Department. 


Per cent. 


Reported 
by Post 
Office De- 
partment 
(increase+, 
decrease—). 


Tostal cars: 

Distribution 


Car ft. miles. 
3, 670, 280 
1,251,714 




Car ft. miles. 

3, 887, 235 

344, 220 




+ 216,955 
— 907, 494 


Storage 






Deadhead 








Mail apartment cars: 


1,010,512 
812, 280 
179, 700 
294, 9C8 




943, 937 




- 66, 575 

- 812, 280 

- 179, 700 

- 208, 671 




















186, 297 












Total mail 


7, 319, 454 


10.52 


5,361,689 


7.63 


— 1,957,765 






Passenger: 


47,830,493 




49,552,270 
1, 730, 233 




+1,721,777 


Dead 






+ 1,730,233 
— 813, 109 




813, 109 
















Total passenger 

Express 


48,643,602 

13,604,250 


69.92 
19.56 

100. 00 


51,282,503 
13,582,424 


73.02 ' +2,63 c ,901 
19.35 - 21,826 


Grand total 


69, 567, 306 


70, 226, 616 


100.00 + 659,310 

1 





Table C. 



The Baltimore & Ohio Railroad Co. — Full postal cars- 
more, Md., to Grafton, W. Va. 



-Route 113003— Balti- 



1 

Trains. 


2 
Between— 


3 
Distance. 


4 

Length 
paid for. 


5 
Authorized 
space page 
190, Docu- 
ment 105. 


6 

Car-foot 

miles based 

on column 

5. 


1 


Washington-Cumberland 


151. 67 


Feet. 
50 
50 
50 
50 
50 
40 
60 
60 
50 
60 
50 
50 
50 
50 
50 
40 
50 
40 
50 
40 
40 
50 


Feet. 
50 
50 
50 
50 
50 
40 
60 
60 
50 
60 
50 
50 
50 
50 
50 
40 
50 
40 
50 
50 
50 
50 


4 

227, 505 


12 




227, 505 


55 


....do 


151. 67 


227, 505 


2 


do 


227, 505 


3 


do 


151. 67 


227,505 


4 


do 


182,004 


9 


do 


151. 67 


273,006 


10 


.do... 


273,006 


47 


...do... 


151. 67 


227, 505 


6 


. .do 


273,006 


1 


Cumberland-Grafton 


101. 88 



152, 820 


12 


...do 


152,820 


55 


...do 


101. 88 


152,820 


2 


do 


152,820 


3 




101. 88 


152,820 


4 


do 


122, 256 


555 




39.71 


59,565 


504 


do 


47, 652 


511 


do 


39. 71 


59,565 


516 


do 


59,565 


506 


do 


39.71 


59,565 


547 


do 


59,565 




Total 








3,597,885 















Total car-foot miles shown " Distribution space," page 191, Document 105 

Total car-foot miles based on R. P. O. car authorization, page 190, Document 105. 



Difference 

Reported byiailroad company. 
Difference compared with (a) . . 
Difference compared with (b) . . 



(a) 3,887,235 

(b) 3, 597, 885 

289,350 

3,670,280 

-216,955 

+ 72,395 



1372 



RAILWAY MAIL PAY. 



Table C-l. — The Baltimore & Ohio Railroad Co. — Route 113003 — Baltimore, Md., 

to Grafton, W. Ya. 

STORAGE CAR TRAIN 1. 

Document 105 allows 344,220 car-foot miles. 

Car equipped with stanchions and about 40 feet long, 304,260 car-foot miles. 

Department's allowance for this car reasonable. 

No allowance for return movement eastbound deadhead made necessary by- 
movement westbound for mail service and no use to company eastbound. 

If credit had been allowed for return movement, storage space for this one 
car would have been increased 344,220 car-foot miles. This does not take into 
consideration storage space in postal cars or similar space in mail-apartment 
cars. 

Car operated from Washington to Cincinnati over three routes, Washington 
to Grafton, Grafton to Parkersburg, and Parkersburg to Cincinnati. Credit 
allowed Washington to Grafton, none between Grafton and Parkersburg, and 
credit allowed between Parkersburg and Cincinnati : 



Washington 

Storage allowed 



Grafton Parkersburg 

Storage disallowed 

Operating run of car carrying storage mail 



Cincinnati 
allowed 



MAIL-APARTMENT CAR 

Document 105, 943,937 car-foot miles. 

No credit given for baggage end of certain cars used for storage of mails. 

Train 5, Washington, D. C, to Cumberland, Md., 30-foot apartment and 
29-foot baggage; latter space used entirely for mail. This will also apply to 
trains 11, 12, 14. These four trains have an aggregate of 116 linear feet of 
space in baggage end, representing 527,812 car-foot miles. Allowing for dead- 
head movement of storage car previously mentioned, makes a total of 872,032 
car-foot miles disallowed for these five trains on this one route. There may 
have been other cases, but these particular trains were selected because of the 
concrete evidence as to the use of the whole car for mail service. 

Total car-foot miles disallowed, Document 105, on this route as it applies to 
full postal and mail-apartment cars, 1,749,094, exclusive of 208,671 car-foot miles 
disallowed in closed pouch service, the total disallowance being 1, 957,765, or 
26.70 per cent of total mail space reported by company for this one route. 

Table D. — The Baltimore & Ohio Railroad Co. — Mail apartment cars — Route 
113003— Baltimore, Md., to Grafton, W. Ya. 



Trains. 


Between — 


Distance. 


Length 
required. 


Car-foot 
miles. 


145 




39.71 

39.71 

39.71 

39.71 

39. 71 

39.71 

9.00 

13.04 

9.00 

13.04 

13.04 

9.00 

13.04 

9.00 

9.00 

9.00 

151.67 

151. 67 

151. 67 

101. 88 

191. 38 

39. 71 

39.71 


Feet. 
20 
20 
30 
25 
30 
25 
20 
20 
20 
20 
20 
20 
20 
20 
15 
15 
30 
.30 
30 
25 
30 
30 
30 


20, 649 


no 

161 




20, 649 




35, 739 


144 




29, 781 


153 




35, 739 


171 


... .do 


29, 781 


19 




4, 680 


19 


Washington Junction-Harpers Ferry 


6,781 


17 




4, 680 


17 




6,781 


16 




6,781 


16 




4,680 


20 




6,781 


20 




4,680 


25 




3.510 


26 




3,510 


5 




136, 503 


11 


.do 


136, 503 


12 


Cumberland-Washington 


136,503 


14 




76, 410 


14 




172, 242 


502 




35, 739 


512 


.do 


35, 739 




Total 






954. 841 










943,937 














10,904 













RAILWAY MAIL PAY. 



1373 



Table E. — The Baltimore d- Ohio Railroad Co. — Use of mail apartment cars on 
trains 5, 11, 12, and 1^, loaded and unloaded at Washington, D. C, during 
weighing of 1909. 



Train. 




! 

Loaded Avpraee 

and ^ e I age 

unloaded. ! Perday. 


Maximum 

daily 
average. 


5 


Loaded 


Pounds. 
939,-500 

1,012,300 
430,200 
218,200 


Pounds. 
8,947 
9,641 
4,097 
2,078 


Pounds. 

12,100 

12, 442 

4,843 

2,628 


11 


do 


12 


Unloaded 


14 


do 







Average load in postal car will run about 2\ tons. It will be observed from the 
foregoing table that the lowest maximum average weight loaded on at Washington 
is over 6 tons, and unloaded at same point over \\ tons. The amount unloaded 
at Washington from trains 12 and 14 represent about the minimum weight car- 
ried at any one time on the route. The purpose of this exhibit is to demon- 
strate that the railroad company was entitled to the full inside length of cars 
in each case cited. 

During the last weighing, 1913, these trains had the same character of serv- 
ice — 30-foot mail apartment cars. Here is what they handled : 

Train 5 left Washington, D. C, 61.90 per cent of the time with over 5 tons of 
mail; maximum at any one time being 9$ tons. 

Train 11 left Washington. D. C, 73.33 per cent of the time with over 3 tons 
of mail ; maximum at any one time being 7 tons. 

Train 12 arrived at Washington, D. C, 48.60 per cent of the time with over 
2 tons of mail ; maximum at any one time being 51 tons. 

Train 14 arrived at Washington, D. C, 49.50 per cent of the time with over 2| 
tons of mail ; maximum at any one time being 5| tons. 

If the investigation had been conducted in November, 1913, and the same 
method followed by the department as in November, 1909, these four trains, 
carrying above-mentioned weights, would have received credit for only 30 feet, 
while it would have been impossible to have loaded the amount of mail mentioned 
in the mail compartment, and the same is relatively true of the conditions 
applying in 1909. 

Table F. — Comparative application of car-foot miles in mail serrice to passen- 
ger-operating expenses and fixed charges, the Baltimore & Ohio Railroad Co. 
and Post Office Department, November, 1909. 



Passenger 
operating 
expenses. 



Taxes. 



Total. 



Fixed 
charges. 



Grand totaL 



Railroad company 

Car- foot miles: 

Railroad, 9.81 per cent.. 

Post Office Department, 

7.53 per cent 

Post Office Department 

Car-foot miles:" 

Railroad, 9.81 per cent. . 

Post Ollice Department, 
7.-53 per cent 



11,151,649.02 $70,596.18 



954,573.41 I 37,337.54 



$1,222, 245. 20 

(a) 119,902.25 

(c) 92, 035. 06 
991,910.95 

(e) 93,624.32 

(g) 71,864.53 



$485,441.70 



i 256. 744. 72 



$1,707,686.96 

(b) 167,524.08 

(d) 128, 588. S2 
1,248,655.67 

(f) 122,493.12 

(h) 94023.77 



Mail earnings 

Underpaid on basis of (a). 
Underpaid on basis of (b). 
Overpaid on basis of (c). . 
Underpaid on basis of (d) . 
Overpaid on basis of (e). . 
Underpaid on basis of (f). 
Overpaid on basis of (g). . 
Overpaid on basis of (h). . 



Month. 



$98,015.98 
21,886.27 
69,508.10 

5. 9S0. 92 
30, 572. 84 

4.391.66 
24.477.14 
26. 151. 45 

3.992.21 



Year. 



$1,176,191.76 
262, 635. 24 
834.097.20 

71.771.04 
366,874.08 

52, 699. 92 
293,725.6s 
313,S17.40 

47.906.52 



Per cent 



22.33 
70.92 

6.11 
31.19 

4.48 
24.97 
26.62 

4.07 



1 Determined by railroad company, using 19.04 per cent, which ratio was used by Post Office Depart- 
ment in apportioning general expenses and taxes to passenger service. 

Passenger operating expenses as arrived at by company on revenue train mileage basis. 



1374 



KAILWAY MAIL PAY. 



Table G. — The Baltimore & Ohio Railroad Co. earnings and expenses of mail 
service, year ended June 30, 1913. 

[POST OFFICE FORMULA.] 



S ummary o f results . 


Total. 


Conducting 
freight traffic. 


Ratio. 


Conducting 

passenger 

traffic. 


Ratio. 


Assignable 

to mail 
traffic car- 
foot space, 

railroad 

figures 9.81 

per cent. 


Operating expenses: 

Maintenance of way 
and structures 


$14,019,619.57 

18,323,210.39 
2,026,273.88 

37,274,397.06 
2,136,137.08 
2, 648, 171. 61 


$10, 468, 806. 88 

15, 352, 396. 78 
1,255,326.31 

28, 530, 920. 31 
1, 706, 464. 61 
2, 030, 946. 43 


74.67 

83.79 
61.95 

76.54 
79.89 
76.69 


$3,550,812.69 

2,970,813.61 
770, 947. 57 

8,743,476.75 
429, 672. 47 
617, 225. 18 


25.33 

16.21 
38.05 

23.46 
20.11 
23.31 




Maintenance of equip- 




Traffic expenses 




Transportation ex- 




General expenses 




Outside operations 








Total operating ex- 


76, 427, 809. 59 

3,113,382.51 

627, 138. 55 

979,652.08 


59,344,861.32 

2, 517, 792. 44 

460, 502. 70 

474,662.25 


77.65 
80.87 
73.43 

48.45 


17,082,948.27 
595,590.07 
166, 635. 85 

504,989.83 


22.35 
19.13 
26.57 

51.55 












Miscellaneous rents (joint 
facilities) Dr 










81, 147, 982. 73 
1,065,493.00 


62, 797, 818. 71 
861,664.19 


77.39 
80.87 


18,350,164.02 
203, 828. 81 


22.61 
19.13 




Less miscellaneous rents 
(joint facilities) Cr 






Total operating cost. . 

Total operating reve- 
nue, including out- 
side operations 


80,082,489.73 
103,329,992.33 


61, 936, 154. 52 
83,560,745.84 


77.34 
80.87 


18,146,335.21 
19,769,246.49 


22.66 
19.13 


1, 780, 155. 48 
1,205,158.95 


A. Net return from opera- 


23,247,502.60 
9,865,391.21 


21,624,591.32 

7,978,141.87 


93.02 

80.87 


1,622,911.28 
1,887,249.34 


6.98 
19.13 


i 574, 996. 53 


Interest on funded debt 
and other interest, 
less income other 
than from operation. 


185, 139. 16 


B. Net balance 


13,382,111.39 


13, 646, 449. 45 


101.98 


264,338.06 


1.98 


i 760, 135. 69 






C. Property investment — 
Ratio of return upon 
property used— 

A divided by C 

B divided by C 


517, 123, 131. 00 

4.50 
2.59 


418,197,476.04 

5.17 
3.26 


80.87 


98, 925, 654. 96 

1.64 
.27 


19.13 


9,704,606.75 

5.92 

7.83 



Table H. 



i Excess cost mail service over revenue. 

■The Baltimore & Ohio Railroad Co. earnings and expenses of mail 
service, year ended June 30, 1913. 

[Buell formula.] 



Summary of results. 


Total. 


Conducting 
freight traffic. 


Ratio. 


Conducting 

passenger 

traffic. 


Ratio. 


Assignable 

to mail 
traffic car- 
foot space, 

railroad 
figures, 9.81 

per cent. 


Operating expenses: 

Maintenance of way 


$14,019,619.57 

18,323,210.39 
2,026,273.88 

37,274,397.06 
2,136,137.08 
2,648,171.61 


$10,810,433.68 

15,326,803.71 
1,255,326.31 

30,054,678.32 
1,746,188.10 
2,030,946.43 


77.11 

83.65 
61.95 

80.63 

81.75 
76.69 


$3,209,185.89 

2,996,406.68 
770,947.57 

7,219,718.74 
389,948.98 
617,225.18 


22.89 

16.35 
38.05 

19.37 
18.25 
23.31 




Maintenance of equip- 




Traffic expenses 

Transportation ex- 






General expenses 

Outside operations 








Total operating ex- 
penses 


76,427,809.59 


61,224,376.55 


80.11 


15,203,433.04 


19.89 





RAILWAY MAIL PAY. 



1375 



Table H. — The Baltimore & Ohio Railroad Go. earnings and expenses of mail 
service, year ended June 30, 1913 — Continued. 



Summary of results. 


Total. 


Conducting 
freight traffic. 


Ratio. 


Conducting 

passenger 

traffic. 


Ratio. 


Assignable 

to mail 
traffic car- 
foot space, 

railroad 

figures, 9.81 

per cent. 


Taxes 


$3,113,382.51 
627, 138. 55 

. 979,652.08 


$2,517,792.44 
460,502.70 

474, 662. 25 


80.87 
73.43 

48.45 


$595,590.07 
166,635.85 

504,9S9.83 


19.13 
26.57 

51.55 




Hire of equipment 




Miscellaneous rents (joint 
facilities), Dr 










81,147,982.73 
1,065,493.00 


64,677,333.94 
861,664.19 


79.70 
80.87 


16,470,648.79 
203,828.81 


20.30 
19.13 




Less miscellaneous rents 
(joint facilities), Cr 








Total operating cost. 

Total operating reve- 
nue, including out- 
side operations 


80,082,489.73 
103,329,992.33 


63,815,669.75 
83,560,745.84 


79.69 
80.87 


16,266,819.98 
19,769,246.49 


20.31 
19.13 


$1,595,775.04 
1,205,158.95 


A. Net revenue from op- 
eration 


23,247,502.60 
9,865,391.21 


19,745,076.09 
7,978,141.87 


84.93 
80.87 


3, 502, 426. 51 15. 07 


1390,616.09 
185, 139. 16 


Interest on funded debt 
and other interest 
less income other 
than from operation. 


1,887,249.34 


19. 13 


B . Xet balance 


13,382,111.39 


11,766,934.22 


87.93 


1,615,177.17 12.07 


i 575, 755. 25 




C. Property investment 

Ratio of return upon 
property used: 

A divided by C 

B divided by C . . . . 


517,123,131.00 

4.50 
2.59 


418,197,476.04 

4.72 
2.81 


80.87 


98,925,654.96 

3.54 
1.63 


19.13 


9,704,606.75 
4.03 




5.93 



Excess cost mail service over revenue. 



Table I. — The Baltimore & Ohio Railroad Co., earnings per mail car-mile based 
on earnings per passenger car-mile year ending June 30, 1913. 

Passenger earnings $19, 769, 246. 49 

Passenger car-mileage 88, 336, 782 

Earnings per car-mile $0. 22379 

Mail car-miles 7, 885, 026 



Mail revenue, based on earnings per passenger car-mile. 
Mail revenue received 



$1, 764, 589. 97 
$1, 205, 158. 95 



Underpayment mail compared with passenger. 
Per cent of mail revenue received 



$559. 431. 02 
40.42 



The Chairman. Mr. Mack, are you prepared with your statement? 

Mr. Mack. I haven't got the complete statement finished, but I 
think it can be finished to-morrow morning. The statement ought to 
be read and followed along consecutively in order to be understood, 
and it all ought to be read at one time. As there is to be a session 
to-morrow morning, I understand, it will be much more satisfactory 
if it can be arranged for me to present my paper then. 

The Chairman. Are there any other gentlemen present who would 
like to have anything to say ? 

Mr. Bradley. Mr. Chairman, before we adjourn I would like to 
ask a question on the express-rate matter. This morning, when I 
questioned General Stewart in regard to the computations of the de- 
partment in volume No. 11 regarding the gross revenue received 
from the railroad companies from the express traffic, instead of the 



1376 RAILWAY MAIL PAY. 

mail traffic, I asked whether the difference in the average haul was 
taken into account, and I understood General Stewart to say that it 
was. I have been examining pages 1277 and 1278 casually since that 
conversation, and I do not find it. Will General Stewart kindly point 
that out? 

Mr. Stewart. Yes. The ton-mile rate in the mail service of 10.04 
cents takes into acount, of course, the average haul, and the ton-mile 
rate in the express figures here also takes into account the average 
haul, which is stated on page 1279. 

Mr. Bradley. The observations I would submit in regard to that 
computation from a casual examination of it are, first, that the aver- 
age rate per ton-mile is ascertained upon slender data. It is the 
same situation that I had to deal with when I prepared a paper 
about a year ago in trying to find out for your committee the rela- 
tive earnings per ton-mile from the express and from the mail. 
The statistics available are very few. I judge that in this computa- 
tion reliance has been had upon the reports for two days' business. 
The Adams Express Co., I believe, for one day in August, 1909, and 
the United States Express Co. for one day in December, 1909; and 
therefore the business taken as establishing the average haul only 
included about 15 per cent of the total traffic. So that the ascer- 
tainment is not on a basis that would lead one to accept it as being 
at all conclusive. It may be right, but I am inclined to suspect 
that it is not. The second step in this computation seems to be based 
upon the ton-mileage of the mail. That is, having ascertained from 
the slender data that I have already spoken of the approximate rate 
per ton-mile for express, the department has applied that factor to 
the ton-mileage of mail service as of April 30, 1913. When I first 
read that statement of 510,000.000 ton-miles in volume 6 of Dr. 
Lorenz, I seriously doubted if it could be correct, and at that time I 
spoke to Mr. McBride and asked him whether he had verified the 
figures, but he felt content that the ascertainment as made by the 
department was correct. I do not know whether the department has 
been able to verify those figures, but in attempting to test the accu- 
racy of those figures I make this comparison: I understand that on 
July 1, 1908, the department reported to the Hughes commission that 
the total annual ton-mileage of the mail was 489,000,000. 

Eemembering that that was of July 1, 1908, and this ton mileage 
is given as of April 30, 1913, almost five years later, there has been 
a growth of 21,000,000 ton-miles, or only 4 per cent. That seems to be 
a very small growth compared with other mail statistics that are 
known. The weight of second-class mail matter for the year 1908 was 
694,000,000. For the year 1913 it was 997,000,000, a growth of 302 : 000,- 
000 pounds, or 43 per cent, and second-class mail matter is apt to be of 
long haul. In reflecting upon this I think there are two causes that 
might account for the smaller growth in the ton mileage since 1908 
than in previous years — one the application of the divisor and the 
other the transfer of a certain percentage of second-class mail to 
the blue-tag shipments — but I think any calculations made in regard 
to both of those causes would not account for the difference that is 
represented in so small a growth of only 4 per cent in the ton mileage, 
as compared with the growth of 43 per cent in the second-class mail 
matter. The Post Office Department calculation having obtained a 
total of $40,000,000 by the use of the figures I have just described, 



RAILWAY MAIL PAY. 1377 

then proceeds to ascertain the average loading per car, and this is 
based again on the figures of the Interstate Commerce Commission 
for express statistics that I have already referred to as being not 
sufficiently comprehensive. I do not believe that they are on a firm 
foundation. The conclusion arrived at, that the express-car loading 
of 2.57 tons and the loading of the mail car as 2:26 tons, does not 
appeal to the mind of a railroad man as arriving at a correct con- 
clusion. Further, it will be observed that in these other statistics, 
it is estimated by the department that there were 225,000,000 car- 
miles pro rated to a (30-foot car basis as of November, 1913, while 
Dr. Lorenz. in volume Xo. 6, has 228.000.000 car-miles as represent- 
ing the 60-foot car mileage of the mail service as of 1909. 

Dr. Lorenz. That raises the question as to what is included in the 
225,000,000 miles. As I understand, it includes no dead space. 

Mr. Worthington. Might I also add that Dr. Lorenz's figures 
refer to only 84 per cent of the road mileage and 94 per cent of the 
present earnings, which figure w 7 as divided into the total ton mileage 
for all the mail routes to obtain an average load per car. The ton 
mileage w T as not complete? 

Dr. Lorenz. I recognize the proportion was too high. 

Mr. Bradley. I do not wish to set forth any final conclusions on 
this subject at all, because these calculations I made were simply 
made within a short time while listening to this testimony, but I 
think that there is enough in what I have said to suggest the im- 
portance of a verification before any acceptance is given to the con- 
clusions of the Post Office Department. 

Mr. Stewart. Mr. Chairman, of course we realize the interest that 
Mr. Bradley has in this question, because he is already on record, 
somewhere, with reference to the ton-miles, having based his esti- 
mate, as he states, upon information which was given to the Hughes 
commission. I notice, however, that he has suggested the main 
factors which account for the difference betw-een the figures of 1908 
and the figures of 1913, namely, the application of the divisor to the 
pay which began July 1, 1907, and therefore prior to July 1, 1908, 
had become effective in only one section of the country. The with- 
drawal of second-class mail matter from the main mail routes and the 
sending of it by fast freight of course reduced the ton-miles very 
materially. Another factor which I do not think he mentioned is 
the reduction in car space which has been effected by administrative 
orders between those years and which amounts to 955,690,000 car- foot 
miles. This, of course, would have a bearing upon the subject. So 
far as the figures submitted for April 30, 1913, of 510,827,522, are 
concerned, I will say that those are the result of actual computations 
upon the data in the files of the department. There is no estimate 
upon this, and there is no necessity for verification. 

The Chairman. How was that data obtained? 

Mr. Stewart. Those data were obtained at the time of the weigh- 
ing in each section. 

The Chairman. Then, the data is for the period of the weighing? 

Mr. Stewart. Yes, sir. As to the 255,633,845 car miles pro rated 
to the 60-foot car basis, that estimate is also made upon the best in- 
formation to be gathered from, the records of the department, show- 
ing the conditions of the service at the time it was made. 



1378 RAILWAY MAIL PAY. 

Dr. Lgrenz. Does that include mail space used, or does it include 
something else actually run? 

Mr. Stewart. It includes the actual space authorized. 

Mr. Worthington. It does not include the dead space? 

Mr. Stewart. Mr. McBride, what does the 225,000,000 car miles 
specifically include? 

Mr. McBride. It includes the car mile figures from the authorized 
space in each train. 

Mr. Stewart. It also includes the return movement of all storage 
cars. 

Mr. McBride. I will correct that. Not as to all storage cars, be- 
cause the storage-car miles were computed from the car foot miles 
in Document 105. It includes approximately 40 per cent of the return 
storage-car movement. 

Mr. Worthington. In other words, any rate obtained from that 
divisor would exclude dead space and it would not be comparable 
with the load for the express car, which might include dead space 
in the express service. It seems to me it would not be comparable 
with the load for the express car, which might include the dead space 
consequent upon handling express. 

Mr. Stewart. If you mean by that that it does not take account 
of dead space the companies are running which the department does 
not need and does not use, I agree with you. 

Mr. Bradley. I would ask whether Gen. Stewart is able to at- 
tribute a value to those causes which he has mentioned — for instance, 
the divisor — could he venture an opinion as to what influence that 
would have upon the reduction in the ton mileage ? 

Mr. SteWart. The only guide that I would have is the reduction 
accomplished in the pay to the railroad companies. The annual re- 
duction, I think, amounts to nearly $5,000,000. At the time the sta- 
tistics were submitted to the Hughes commission the divisor had be- 
come effective only in the third contract section, and on a rough esti- 
mate three-fourths of the total reduction is unaccounted for in the 
result. 

Mr. Bradley. Say 7-| per cent. Could you offer an opinion in re- 
gard to the blue tag? 

Mr. Stewart. No; I would not care to do that offhand. 

Mr. Bradley. I would like to suggest in regard to the computation 
of car mileage as of November 30, 1913, I think that it is quite likely 
that it would be difficult for the department to make a satisfactory 
estimate, because of the inability to get a correct record of the storage- 
car movement, especially the additional storage-car movement, with- 
out actually going to the companies or to the Railway Mail Service 
and having the records kept. There has been a great growth in 
that class of service, largely due to the growth of the parcel post. 
If the computation was made from the railway post-office schedule 
made in the Railway Mail Service that is supposed to report the usual 
conditions, I do not think that an accurate estimate could be obtained. 

Mr. Stewart. We differ from Mr. Bradley on that. Furthermore, 
we would hardly take the chance of making a mistake on these figures 
without safeguarding ourselves in every way, inasmuch as we are 
dependent upon them for our judgment as to the effect of these rates 
proposed in the suggested bill. 



KAILWAY MAIL PAY. 1379 

Mr. Bradley. There is such an extraordinary difference in the 
figures on the ton mileage of 4 per cent, compared with the second- 
class mail matter, which shows a growth in the same period of about 
43 per cent, that I think it important to have any verification made 
that is feasible. 

The Chairman. How is that computation of 43 per cent increase 
in second-class mail matter made — on the revenue received, or is it 
made on the weighings? 

Mr. McBride. Made on the basis of revenue, which is coincident 
with the weight, because the rate is a cent a pound. 

Mr. Bradley. It is one of the most dependable ratios in working 
out any problems of this kind. 

Mr. McBride. I think we have a compilation at the department 
of ton mileage of blue-tag matter for a year, and if we have I would 
be glad to submit it. 

The Chairman. You say it is on the revenue, which depends on 
the weight ascertainment? 

Mr. McBride. Yes. 

The Chairman. The divisor is applicable to second-class mail 
matter as well as third and fourth ? 

Mr. McBride. Yes. 

The Chairman. Then, why should there be an increase of 43 per 
cent on second-class matter, while there is only 4 per cent during the 
period mentioned by Mr. Bradley? 

Mr. McBride. One of the reasons, as Mr. Stewart has stated, was 
on account of the withdrawal of a great part of the second-class 
matter, and the moving of it in freight trains, which amounts, if my 
recollection is correct, to about 90,000,000 ton-miles for that year. 
I will verify that, however. 

The Chairman. That is blue-tag diversion? 

Mr. McBride. Yes. 

The Chairman. Would that account for that seeming discrep- 
ancy? 

Mr. Bradley. I would suggest that Mr. McBride have opportunity 
to look up his authority. I do not think he would like to have 
ninety million rest in the record. 

Mr. McBride. I said that I would verify it. 

The Chairman. But, with the verification of that, would that 
clear up that point that you raised yourself? 

Mr. Bradley. It would help, but I doubt if all the blue-tag matter 
in the country in the second and third sections — this is merely a 
personal opinion — would exceed 50,000,000 ton-miles. 

Mr. McBride. We can figure that absolutely. We have record of 
every pound that was moved. There is no guesswork about that. 
I find that the ton-mileage of the blue-tag mails amounted, for 1913, 
to 42,623,102 ton-miles. 

Mr. Stewart. So far as the effect of the divisor is concerned, Mr. 
Bradley has probably overlooked the fact that the change of divisor 
decreased the total of ascertained average weights 16 per cent where 
applied. 

Mr. Lloyd. Mr. Chairman, I would like to have in the record 
ngain what is dead space and what is dead-head space. I believe 
that has been stated twice, as I remember it, but when this is to be 



1380 RAILWAY MAIL PAY. 

investigated hereafter, it is very necessary to get that into the record, 
because very few persons know the difference. 

The Chairman. According to the post-office classification. 

Mr. Stewart. Speaking generally, and I will say that the record is 
more specific, dead space as it appears in Document 105, and as the 
subject of discussion here, is that space in cars reported by the 
railroad companies and charged to the mail service which the de- 
partment determined was operated for the convenience of the rail- 
road company without a necessary connection with the mail service, 
or space operated in excess of the authorization made by the de- 
partment and operated for the convenience of the railroad company, 
or operated for some reason for which the department is not responsi- 
ble. In some cases it consisted of the operation of a full 60-foot car 
where the department asked for only 30 feet of space. Sometimes 
it represented the operation of a car beyond the terminus of an 
authorized line. In other cases it represented the operation of a car 
over a rail line where no mail service was authorized to be performed 
and sometimes it was the operation of an apartment car over a line on 
Sunday where no railway post office service was performed on Sunday 
although performed on week days. Those cases the department de- 
termined were not properly chargeable to the mail service and the 
space involved was designated as dead space and charged to the 
passenger service. Dead-head space is space which was operated by 
the companies in excess of the immediate needs of the service, but 
which the department believed the mail service was properly charge- 
able with as being incidental to the operation of the authorized 
service as, for instance, where a 60-foot car was authorized in one 
direction and a 40-foot car in the opposite direction. If that neces- 
sitated the operation of a 60-foot car in each direction, it w T as thought 
that the mail service should be charged with the entire space 
both ways, therefore the additional 20 feet in the return movement 
was designated as dead-head space and charged to the mail service; 
that is combined with the mail space but set out separately so that 
Congress might know what the dead-head space amounted to in its 
relation to the rest of the service. 

Mr. Worthington. Did you mention the return of empty storage 
cars and in what attitude they were placed, those not used by the 
railroads ? 

Mr. Stewart. The storage cars not used by the department were 
charged to dead space. 

Dr. Lorenz. If the department needed a 10-foot apartment and the 
company furnished an 11-foot apartment, that 1 foot was charged to 
dead space? 

Mr. Stewart. Yes. 

Mr. Baskerville. In case of a transcontinental train you authorize 
a 60-foot car over part of the route, 40-foot over another part, 30-foot 
over another part of that route, etc. You started out with a 60-foot 
car, and I would like to know how was the 40 feet handled on the 
second lap and the 30 feet on the third lap, and then the 50-foot car 
on the last lap ? Is that chargeable to dead space ? 

Mr. Stewart. If we had a case like that, and we might have, the 
space actually authorized would be charged to the mail service. 



KAILWAY MAIL PAY. 1381 

Mr. Baskerville. Then you would argue that the railroad com- 
panies should keep at these points the different sized cars, and that 
they should break up the trains at all these places ? 

Mr. Stewart. I did not argue anything of the kind. That is the 
application of your rule which I want to bring out before this com- 
mittee, a point which has not been dwelt upon sufficiently, and that 
is this: That the railroad companies have been holding the depart- 
ment to the strictest rule with reference to all space operated during 
November, 1909, as being the proper measure of service upon which 
to gauge railway-mail pay. That is too strict a rule against the 
department. We should regard the statistics of 1909 more in this 
sense, that it is a proper guide to the ascertainment of the space 
which the mails ought to occupy under a good administration as being 
a proper gauge for the payment which the United States should make 
to the railroad companies for the service. Now, if it should develop 
that here and there throughout the railroad mail service, through lax 
administration on the one hand or through a liberal policy on the 
other hand, that there was more space operated to accommodate the 
mail service than the department ought to pay for, I do not think 
that that is a valid reason for this commission to make a finding that 
the cost of the mail service should be based upon an inclusion of such 
large amount of dead space. 

The Chairman. I would like to return to your original definition 
of dead space. At the conclusion of your definition you stated, as I 
remember, that you did not allow that which was claimed by the rail- 
roads which you claimed was chargeable to the passenger service. 
Why did you charge it to the passenger service ? 

Mr. Stewart. We charged that to the passenger service because 
the responsibility as to how the trains shall be made up and operated 
rests entirely with the railroad companies. The railroad company 
has that responsibility and if it operates dead space for which the de- 
partment is not responsible, it should take the charge of that space 
in any apportionment of cost. That space represents expense just 
the same as other space, and if the department should not be charged 
with it the railroads who are responsible for the running of it 
should be. 

The Chairman. For the value of any comparative figures between 
passenger and mail service, it seems to me that you should not charge 
the passenger service with dead space that was in some way used in 
the mail service if you decline to charge to the mail dead space that 
was used in some way in the passenger service. 

Mr. Steavart. I do not think that follows at all. Take just such a 
case as I have mentioned, where a railroad company will run a 30- 
foot car over a mail route which, Ave Avill say is 50 miles long, and 
they haA-e a system that covers 150 miles. Beyond the authorized line 
they find it convenient to run that car down over several routes over 
which they have no mail service until they strike another route upon 
which there is mail service. Suppose they charged to us, as they 
did in one instance, the operation of that car over the Avhole line? 
Why should the department pay for that ? 

The Chairman. You are perfectly sound on that. 

Mr. Steavart. Those are cases such as I haA-e mentioned. 



1382 RAILWAY MAIL PAY. 

The Chairman. But suppose you call for a 60-foot car and they 
furnish you a 60-foot car, and then you call at the end of the route for 
a 40-foot car and they haven't got a 40-foot car and they can only 
give you a 60-foot car and that goes 200 miles over the route. They 
do not use that 20 feet extra space in any way, shape, or form, and, 
if not, why should the passenger service be charged with that 20 
feet of space when it gets no benefit from it or earns nothing from it ? 

Mr. Stewart. The passenger service could not be charged with it 
excepting to form a basis for ascertaining the division of expenses. 
If anybody pays for the expense, certainly the passenger service or 
the railroad company should pay for it. 

The Chairman. But in making your comparison between passen- 
ger and mail, if you debit for the mail why not debit for the passen- 
ger as well and throw it out of both computations ? 

Mr. Stewart. We were not making an ascertainment for passen- 
ger service and it was not incumbent upon us to do that. We take 
the passenger service as a whole and it makes no difference for our 
purpose how much passenger dead space there is in the passengei 
service, because we compare the whole of that with the mail. We 
did not make any attempt to ascertain the passenger cost. 

Dr. Lorenz. You ascertained the passenger revenues as 4.16 mills, 
did you not. 

Mr. Stewart. We did not make any ascertainment of that, but 
later the hearings brought out some ascertainment of that kind. 

Mr. Lloyd. Suppose having started from St. Louis to Galveston, 
Tex., with through mail in a 60-foot car, you find that the service be- 
yond Texarkana does not need more than a 40-foot car and you re- 
quire of the railroad company a 40-foot car at Texarkana and from 
there to Galveston, what kind of a credit would you give the railroad 
company ? 

Mr. Stewart. For the 20 feet ? 

Mr. Lloyd. Yes. 

Mr. Stewart. Under our suggested plan it is altogether likely that 
the additional 20 feet would be taken up. There would probably 
be sufficient mails to occupy the 20 feet in excess of the 40 feet needed 
for distribution purposes, so the authorization would probably be 
for a 60-foot car through. This question enables me to point out 
the difference between the use of space under the present system 
and under the proposed system. The reason this question is con- 
tinually recurring here, of differing authorizations of 60-foot car, 
50-foot car, and 40-foot car over different parts of a through line, 
is that we are paying for space now in addition to weight, and under 
the law authorizing us to pay additional money for space for dis- 
tribution purposes we pay specifically for units of space of 60 feet, 
50 feet, and 40 feet. That brings about this seeming inconsistency 
that we will pay for 60 feet for a certain distance and for 50 feet for 
another distance. That is because we do not need the 60 feet for dis- 
tribution purposes and 50 feet is sufficient, for which we pay. These 
differences, you understand, are the result of the present system of 
paying additional money for distribution space. 

Mr. Lloyd. As I understand you, under the proposed bill that 
could not be. 

Mr. Stewart. Probably would not be. 



EAILWAY MAIL PAY. 1383 

Mr. Lloyd. I want to get at the question whether it would or 
would net. The railroad companies claim with reference to your 
bill, that the matter is left open and it is susceptible of that con- 
struction. I want to get your idea, if you demanded a through 
mail car from St. Louis to Galveston, a 60-foot car, whether you are 
going to pay for that 60-foot car to Galveston and back again or 
would you pay the railroad company for a 60-foot car to Texarkana 
and then pay for the same car with 40 feet of space in the same car 
from Texarkana to Galveston and from Galveston back to Texar- 
kana ? 

Mr. Stewart. If we did not need more than 40 feet for all pur- 
poses 

Mr. Lloyd. Then you would not start with but 40 ? 

Mr. Stewart. We would pay for only 40. 

Air. Lloyd. But you would only start with 40 if you only needed 
40. The proposition I put to you is that you start with 60 feet be- 
cause you need 60 feet as far as Texarkana and you did not need 
60 feet beyond that point. 

Mr. Stewart. If we did not need 60 feet beyond Texarkana, for all 
purposes, we would expect to pay for only such space as we needed, 
say 50 feet or 40 feet. 

Mr. Lloyd. You would not want the mail transferred from one 
car to another, but you would expect to use the same car. Then why 
should not the railroad company get paid for it if space is the basis 
of pay? 

Mr. Stewart. That brings up the question as to what considera- 
tion should be given to the necessities of operation. 

Mr. Lloyd. Now, let's go back to the comparison of cost, because, 
after all, we must consider that question of comparison. Is that 20 
feet properly chargeable to passenger service from Texarkana to 
Galveston ? Why should you charge it to the passenger space ? The 
passenger space is in no way interested in it at all, the railroad com- 
pany is not interested in 20 feet of space and it is only there because 
you order it and it seems to me as long as you ordered it your 
bill ought to require, whether it does or not, that the Government 
should pay for the 60-foot car that you required from St. Louis to 
Galveston. 

Mr. McCahax. We have a case right now of a full car, 50 feet, 
running from Washington to Grafton. The operating run of the 
train is through to Cincinnati, but when it gets to Grafton, then the 
service changes to apartment-car service. It is almost an operating 
impossibility to give the department what they require at Grafton. 
We must necessarily operate that car clear through to Cincinnati. 

Mr. Lloyd. What I am trying to impress upon 3^011 is, if you are 
required to carry that car through to Cincinnati, you ought to get 
pay for it ? 

Mr. McCahan. Well, we do not. 

Mr. Baskerville. We have a 60-foot car from St. Paul to Fargo, 
they use 40 feet from Fargo to Glasgow and 30 feet from Glasgow 
to Spokane. 

Mr. Lloyd. I do not think you railroad people have any right to 
complain at the present time because you are insisting upon the 
present system of pay. Now. we are talking about changing this 
system and if it is changed to a space basis, my idea is that the Gov- 



1384 RAILWAY MAIL PAY. 

ernment ought to be placed in the position that if space is the basis 
of pay, that it shall pay for the space that it demands. Now you 
get your pay on the basis of weight and space only comes in con- 
nection with the railway post office car. 

Mr. Baskerville. What I was trying to find out was how he 
made his computation for document 105 to measure this question 
of the 60 foot, 50 foot, 40 foot, 30 foot and then back over to 50 feet 
on one train. Naturally he reduces his distribution space, for which 
he is paid for but 30 feet at Glagow, but the storage mails are there, 
the mails are there that we have had in the 60-foot car. 

Mr. Mack. I think in the analysis of dead space, which comes up 
to-morrow in connection with the Missouri Pacific, which has been 
presented by the department as a typical case that all of this will be 
explained and dealt with in detail and in a consecutive way. 

Mr. Lloyd. Very well, then ; I am willing to wait until to-morrow. 

Mr. Rowan. In the case you illustrate of the car that went from 
St. Louis to Galveston, I would like to ask Mr. Stewart how long it 
would take, under ordinary circumstances, to tie out, supposing the 
railroads transferred the mail at Texarkana, and put it into a 40-foot 
car if it were available ? In other words, how long would it take to 
tie up the mail before it reached Texarkana, and how long would 
it take to set up the pouches and label the sacks for the 40- foot car 
starting out from Texarkana? 

Mr. Stewart. That is a Railway Mail Service technical question 
I am not prepared to answer, but it suggests this further considera- 
tion that it is just as much to the interest of the railroad companies 
to run that car through as it is to our interest, because it is an 
expense to have to change the train and put in a new car. 

Mr. Rowan. I want to bring out the point that it is to the interest 
of the Post Office Department as much as it is to the railroads. 

Mr. Stewart. What we insist on is as much to your interest as 
ours. 

Mr. Rowan. In case you change the authorization of a car in the 
middle of a run, it would not be a practical thing to set the car out 
and put a different sized car in, even if we had cars available. 

Mr. Stewart. Therefore I think that question Mr. Lloyd put 
a while ago, as to what you do in a case of that kind, is answered by 
the fact that companies now furnish cars under authorizations of 
different lengths, and that you are insisting now upon the present 
basis of pay. If you are doing that you are apparently satisfied 
with the condition that now exists. I do not see that we should 
make any different rule as to space if we go on the space basis. 

Mr. Lloyd. If we change the present law we want to do the right 
thing toward everybody. I do not want to see any law enacted that 
works any hardship on the railroad companies; they are a part of 
the country and a very necessary part of the country, and you want 
to deal as fairly and honestly with the railroad companies as you 
would with any individual, and any law that we enact in changing 
the existing law ought to be a fair, honest, and equitable law, with 
no disposition on the part of the railroad companies to take advan- 
tage of the Government or the Government to take advantage of 
the railroads. What we are trying to do now is to reach a satisfactory 
determination as to what is right in the ascertainment of pay. I am 



RAILWAY MAIL PAY. 1385 

speaking for myself, and I am sure I am speaking for the commis- 
sion when I say that we have no bias on either side. We want to 
do the fair thing, and I know you want to do the fair thing. I do 
not hesitate to say that before the railroad people you want to do 
the fair thing. But I want to get at what you understand would be 
the practical application of the law that you propose to enact, be- 
cause if what you propose becomes a law, then they would not get 
any pay excepting for space. The railroads are in no position now 
to complain, because they get pay for the weight and they are in- 
sisting that the basis shall remain that way; but if we change the 
basis to space, in doing the thing that is fair to them, it seems to me 
if we had through mail in the instance that I gave that we ought to 
pay for that full 60-foot car from St. Louis to Galveston and back, 
because the Government demands that space. 

Mr. Lorenz. It might be pointed out, under Mr. Stewart's sug- 
gested bill, that if he changed the authorization at Texarkana he 
would have to pay the terminal charge for ending one route there 
and beginning a new route. 

Mr. Lloyd. I appreciate that ; but in the long run, in the instance 
I gave in the St. Louis and Galveston case, the terminal charge would 
be a small consideration. 

Mr. Stewart. Mr. Lloyd, I think this is the important thing to 
consider in connection with the question that is in your mind. The 
practical operation of the service under the proposed bill will go 
further to eliminate that one criticism against the service as it stands 
to-day than any other plan that can be devised. 

Mr. Lloyd. I am trying to get out of you how you are going to 
operate it. 

Mr. Stewart. When we carry a 60-foot car down to Texarkana 
we have a 60-foot space authorized for distribution purposes; if we 
have a 60-foot car we have sufficient mail on that train to occupy 
more than 60 feet, some of which we are carrying somewhere else, 
probably in the baggage car, and after we reach Texarkana that mail, 
under the new plan, will be combined with the mail in the 60-foot 
car, and undoubtedly justify payment for 60 feet through. In other 
words, the authorization of the space would tend to require the 60- 
foot car all the way through, because then we would be paying for 
space and nothing else. Now we pay for weight wherever we carry 
it and for space only when we need it for distribution purposes. We 
would combine all elements of space under the suggested plan. 

Mr. Lloyd. That is getting at another thing I was leading to in 
connection with the same proposition. In carrying the mail from 
St. Louis to Texarkana you might need a full 60-foot car and you 
might need a 30-foot apartment car. When you get to Texarkana 
you might need a 30-foot apartment car and it would come back to 
St. Louis. But that would not affect the 60-foot car at all. The 
railroad companies would get pay for a 60-foot car, as I see it, from 
Galveston and back, but that car used between St. Louis and Tex- 
arkana need not go farther than Texarkana, for when you get to 
Texarkana you put the mail that is in that apartment car in the 60- 
foot car. Now, what is the authorization? A 60-foot car to Gal- 
veston, a 30-foot car to Texarkana ; but that 30-foot car, when it gets 
to Texarkana, turns around and comes back. Nobody is injured by 
49396—14 95 



1386 RAILWAY MAIL PAY. 

that proposition; but if, when you get to Texarkana, you say we do 
not need a 60-foot car, we want a 40-foot car, then it seems to me that 
you would work a hardship on the railroads if you only paid them 
for the 40-foot space between Texarkana and Galveston. That is 
plain. 

Mr. Stewart. Yes ; but you must bear in mind that our discussion 
on the different lengths of cars has reference to the existing condi- 
tions under the authorization of space that is needed for distribution 
purposes. If we adopt the proposed plan, authorizations will not 
depend primarily on distribution space, but we will combine all space 
necessary in the 60-foot car. We would not divide the mail up and 
put part in one car and part in another. 

Mr. Lloyd. But you have seen several times a number of cases 
where these things appear to show these discrepancies; but it seems 
to me that you are right if your new system is adopted ; there is no 
necessity for these discrepancies at all, for they are overcome, and, 
it seems to me, wholly overcome. 

Mr. Stewart. That is our expectation. 

Mr. Lloyd. If you have a through car to Galveston you are going 
to pay for a maximum car 60 feet; you pay for that to Galveston 
and back. If you have an additional car to Texarkana you would 
pay for the space you use to Texarkana and back, and there ought 
not be any trouble in adjusting that rate at all. 

Mr. Peters. Mr. Lloyd, would not that car that was used part 
storage car from St. Louis to Texarkana have to be set out of the 
train ? 

Mr. Lloyd. Yes. 

Mr. Peters. Your train is delayed getting rid of dead space and 
also delayed taking it on again when you come back. If not delayed, 
then the railroad, for the convenience of the department, has got to 
haul that empty space to the end of the train run. 

Mr. Lloyd. The probabilities are, as a practical proposition in the 
instance I mentioned, there would be a readjustment of the train 
at Texarkana, you would readjust your train, you would readjust 
your passenger cars, and at the same time you would readjust them 
you would readjust the number of cars used in the train. 

Mr. Stewart. Furthermore, they would have a need for part of 
that car themselves. 

Mr. Lloyd. I am taking it for granted they would not need the 
car beyond Texarkana. 

Mr. Baskerville. My question was to find out how he treated this 
matter in compiling Document 105. In other words, did Mr. Stewart 
allow credit for the 60- foot car that we run through to Spokane? 

Mr. Lloyd. I was trying to get at another proposition. 

Mr. Baskerville. We transfer mail into that car at Grand Forks 
and other points on the line. There was mail in there, but we got 
no credit for the storage space. 

Mr. Lloyd. What I am trying to get at is, if we change this law 
how are we going to pay on a space basis? It seems to me under the 
proposed law the Government would be required to pay for a 
60-foot car all the way. 

The Chairman. That is, if the law was stated. 

Mr. Lloyd. According to the law he proposes. 



KAILWAY MAIL PAY. 1387 

Mr. Wade. Dr. Lorenz's suggestion that there would be a terminal 
rate on this car if any change was made in the authorization leads 
me to wonder what the arrangement would be in a case of that sort, 
whether there would be a terminal charge or not on a car that was 
run through and no switching done or no mail transfer where a 
change in authorization occurred under the proposed law ? 

Mr. Worthington. There would not be under the proposed law 
from the way it reads. The terminal charge occurs only at the ter- 
minal of the car run. 

Mr. Lorenz. The bill as it is drawn by Gen. Stewart provides that 
he may state the mail routes as he sees fit. If he states a' route, of 
course he can not assume anything else. Personally I think the law 
ought to be amended on that point and should read that mail routes 
shall correspond, as near as practicable, with the actual run of the 
cars. That would cover this very difficulty. 

Mr. Stewart. That is covered in the language of the statute 
sufficiently where we say we fix these terminal charges by car runs. 

Mr. Lorenz. You would not in that case pay a terminal charge, 
but change the authorization. 

Mr. Lloyd. That is a very nice point. I have studied that out. I 
may be wrong about that. I want Gen. Stewart's view on that point. 
My idea is in the case I have mentioned, in going through to Tex- 
arkana, that that car — not the train, but the 60- foot car — would get 
a terminal charge at the initial point, St. Louis ; it would get pay for 
the terminal charge at Galveston, Tex. The 30-foot apartment car 
that I mentioned, that started at St. Louis, would get its pay at St. 
Louis for the initial service, and it would get its terminal charge at 
Texarkana, Tex. 

Dr. Lorenz. I should say the bill was clearly defective if it per- 
mits a change in authorization without a terminal charge. 

Mr. Lloyd. I am somewhat inclined to think that your view about 
the bill on that particular point is a valid criticism, and that is the 
reason I was trying to bring it out. I am not sure whether it is or 
not. 

Mr. Stewart. I think not ; if you will let me suggest this, that if 
you attempted to state routes with reference to the runs of the indi- 
vidual cars they would be very numerous. Under the operation of 
this proposed statute we would state a route between two main 
points which would most nearly coincide with the operation of 
trains and the operation of the Railway Mail Service, but there might 
be a car operated between, for instance, the initial terminal and an 
intermediate point which would receive its line pay and also its pay 
for the terminal charge at the initial point and the point at which 
the car ceases on its run on the same route. There would not be any 
complication about that. 

The Chairman. Then it is possible that such a difference of con- 
ditions might have existed in the different years as, for instance, the 
fact that the railroads were underpaid or overpaid in the year 1909 ; 
that the reverse of that situation would be true in 1910, 1911, or 1912 
or 1913? 

Mr. Stewart. I do not have in mind such a change in conditions. 
The Chairman. If they were underpaid or overpaid then, pre- 
sumably they are now ? 

Mr. Stewart. I think they received liberal pay in 1909. 



1388 RAILWAY MAIL PAY. 

The Chairman. That is not the point. Would the same reason 
apply now that was applied in 1909, or would new factors have to 
be taken into consideration to come to any conclusion ? 

Mr. Stewart. I think you could very fairly come to a conclusion 
to-day from the status of 1909. 

Dr. Lorenz. Suppose that in the interim the total weight of the 
mails, as carried, has increased considerably, thereby increasing the 
compensation to the railroads, or that the space has not increased in 
the same proportion. Would it not be true that the railroads might 
have been underpaid in 1910 and still not be underpaid to-day? 

Mr. Stewart. On a space basis, that would be true. 

Mr. Worthington. Do you not think the increase in railway op- 
erating expenses has something to do with it? Since 1909 there 
has been a large increase in ratio of operating expenses to operating 
revenue. 

Mr. Stewart. That is an element that is worthy of consideration, 
but I do not see how it would be safe to attempt an ascertainment, 
supplementing it by these considerations at this time, without going 
over the whole process again. 

Dr. Lorenz. It might be said that increase of expenses is one of 
the things the Interstate Commerce Commission is investigating at 
the present time. 

Mr. Worthington. But the record shows there has been an in- 
crease in the ratio of operating expenses to revenue from 65 per 
cent in 1909 to nearly 72 per cent in 1913, and the first month of 1914 
shows a very heavy fall in net earnings over January, 1913. 

Mr. Stewart. I would like to say again that which I have sug- 
gested several times, that the further I have studied the matter the 
more am I convinced that the plan followed by the department in 
making an ascertainment of cost is very liberal to the railroad com- 
pany. 

The Chairman. That is, you mean the deductions based on Docu- 
ment 105? 

Mr. Stewart. Yes. 

The Chairman. Then you think that Table 7 is too liberal to the 
railroads ? 

Mr. Stewart. Not Table 7. That is specific data. I mean the ap- 
plication of the percentages to the expenses, both with reference to 
operating expenses and the overhead charges; the charges payable 
out of operating expenses; for instance, dividends and interest on 
bonded debt, and the plan of making the mails participate on the 
ratio of 6.68 per cent — the ratio of operating expenses and taxes to 
all operating expenses and taxes — in the cost of the extensive rail- 
road plant including, for example, all of the expensive and ornate 
union stations and the great stations throughout the country, in 
which the mail service has a very remote interest. The plan adopted 
by the department makes the mail service participate on the same 
basis in all of those expensive appurtenances to the railroad business. 
I think it is very much too liberal, and if I were going to propose 
another ascertainment, I would be compelled, from what I believe to- 
day, to adopt a less liberal plan in that respect. For example, if you 
take the cost of railroad equipment — the cars — and make a compari- 
son between the cost of passenger cars, including all other cars ex- 



BAIL WAY MAIL PAY. 1389 

cepting mail cars, you will find that the ratio of cost is very much less 
than 6.68 per cent; in fact, not more than a little over 4 per cent. 
We have not participated in benefit in this ratio of 6.68 per cent in 
that actual investment of something like probably $308,500,000. 
That is charging to the mail service a greater ratio of the investment 
than the department is properly accountable for. Furthermore, we 
have applied that same ratio to every kind of investment, even to 
payment of interest on funded debt, which represents the extensive 
railroad plant throughout the country and to the dividends that 
the railroads have paid from their revenues. 

The Chairman. Do you not participate in that? Would they be 
able to handle a thousand passenger trains a day if they did not have 
terminals for them? Could they handle 500 or 200 or 300? Does 
not the Government get the benefit of the more improved and efficient 
service, and are not those terminals necessary, and are they not a 
direct benefit to the Government and should not the Government 
participate in their proportionate part? 

Mr. Stewart. They should participate, but not in that proportion.. 

The Chairman. I am speaking only for myself, but to my mind it 
seems to me in the terminal charge there should be no distinction; 
that the mail participates as much as any other branch of the busi- 
ness and thereby obtains a more efficient, better, and quicker service, 
if speed is one of your factors in the transportation of mails. It is 
one of the factors, is it not ? 

Mr. Stewart. Speed is one of the main factors. The mail service 
is not interested in expensive waiting rooms and all the expensive 
accessories which large union stations furnish to the public. 

The Chairman. Does it not get the additional increased train serv- 
ice? Is not the increased service because of additional speed put 
on for handling the additional number of passengers ? 

Mr. Stewart. But we could handle that without these outlays. 

The Chairman. No; not without the passenger service you could 
not. 

Mr. Stewart. I think the passenger service could take care of itself 
without burdening the mails with these extra costs. 

The Chairman. Very true, but you make that a line of cleavage 
upon which I am not convinced. It seems to me that the mail would 
benefit in terminals just as much, and it is entitled to the same per- 
centage in proportion as any other charge in the mail or passenger 
transportation. 

Mr. Stewart. Furthermore, on that point, while we are discussing 
it, I would like to call the committee's attention to the fact that I 
think it would be difficult to find any rate which has been fixed by a 
commission or by the railroads themselves upon the strict lines that 
we have suggested here. I have read all the works that I have found 
available in a short time upon rate making, and I find nowhere in the 
development of rates that the railroad companies have themselves 
fixed rates upon this very strict method which has been proposed here. 
In fact, it was suggested here this morning that many of the railroad 
rates are fixed upon expediency — what the traffic will bear — and we 
all know that there are many other considerations that enter into the 
subject, not only competition between the roads themselves but com- 
petition between the products, for instance, the products of the west- 
ern coast of the United States competing with the products of 



1390 BAILWAY MAIL PAY. 

Florida, and the railroads give rates which enable the producer in 
California to get his oranges to New York just as readily as the 
producer in Florida can get his oranges there. Therefore all these 
things enter into the rate-making question. I think the committee 
should bear all these things in mind in considering this subject and 
not hold the department down to the strict rule of apportionment 
which has been discussed. We had to present something to the com- 
mittee and we presented it in the most scientific manner we could 
devise. What I am suggesting is that that is strongly suggestive but 
not necessarily controlling. It was suggested here by Mr. Lloyd 
that we are launching upon a new era of rate making and that the 
United States should set a good example by fixing a scientific rate 
in this case. While I appreciate a consideration of that kind, I do 
not want it to unduly influence this committee in making a rate for 
mail service which would be based wholly upon a scientific theory, 
rather than to take into consideration some of these other elements 
that we have suggested and which we have shown all railroad com- 
panies take into consideration when fixing rates for the general public. 

The Chairman. How much importance do you attach to the testi- 
mony and evidence that you submitted in reference to the express 
companies? I would like to get your. idea as to what weight we 
should give in our consideration to the information submitted con- 
cerning the express operations? Do you think that the express 
charges should control the mail charges or, if not, to what extent 
should they effect them and how much ? 

Mr. Stewart. I can not escape the conclusion that the matter which 
we have presented upon that point is of special importance in con- 
nection with the question of rates. It is something definite and 
specific and the comparison is made, I think it is fair to say, with 
reasonable certainty for the first time. There was something said 
here this morning by Mr. Peters to the effect that this is a new ques- 
tion injected by the department during the closing days of the hear- 
ing, and I think it was suggested inferentially that the railroad rep- 
resentatives felt at a disadvantage in replying to what the depart- 
ment had submitted, but I notice throughout the hearings that the 
question of express rates as compared with mail rates has been dis- 
cussed. Such mention is in the gentleman's paper submitted this 
morning. Citations are also made to volumes in which railroad rates 
have been discussed with relation to express and mail rates. Dr. 
Lorenz discussed what Senator Ashurst said on the floor of the Senate 
last year; and altogether it has been before the committee to some 
extent. The chairman will recall that he asked the department to 
submit views upon that very question, but I have not been able to 
present views which I thought were worthy of consideration until we 
took it up on this basis of comparison. Coming to the question of 
what they are worth, it seems to me they show, without doubt, that 
the rates which we have proposed in this suggested bill, are not gen- 
erally too low. The question as to whether they are too high must 
turn upon a consideration of the extent of similarity between the two 
classes of service, and an appraisal of the value of the differences 
between them. What services do the railroad companies perform 
for the department which they do not perform for the express com- 
panies, and what is the fair value of such differences? 



RAILWAY MAIL PAY. 1391 

The Chairman. Do you not also have to have another premise 
that the present express rates are scientific, sound, and just? 

Mr. Stewart. If we were going on a strictly scientific basis that 
would be correct, but I think we are entitled to the benefit of the con- 
dition that exists. 

The Chairman. That is not the point. What I want to get at 
is this: To what extent, in your opinion, should consideration be 
given to the express operations in our conclusions relative to railway 
mail pay? 

Mr. Stewart. It is a condition that exists in railroading and I 
do not see why we should not give full faith and credit to it. 

The Chairman. Of how much importance ; would it be a determin- 
same pay to the railway for the railway mail that the express com- 
pany gives to the railroads ? 

Mr. Stewart. If the services were the same I would say that you 
would be justified in doing that. 

The Chairman. That conclusion assumes a premise that the 
present rates are absolutely just and fair. 

Mr. Stewart. Yes. 

The Chairman. You are convinced that they are ? 

Mr. Stewart. I take it they are. 

The Chairman. I believe that Mr. Kindel has something to say 
to us. 

STATEMENT OF HON. GEORGE JOHN KINDEL. 

Mr. Kindel. Mr. Chairman, for the past 20 years, being a resident 
of Colorado and a manufacturer, I have had occasion to study the 
question of transportation. I have been before the Interstate Com- 
merce Commission since 1902 constantly, and finally have had myself 
elected to Congress. In the last and final effort to control and equalize 
express rates, you gentlemen remember, if familiar with the Inter- 
state Commerce Commission hearings, I was the first man to attack 
the express companies after the Hepburn law was enacted, and have 
succeeded by two suits to reduce the rates from New York to Denver 
from $8.50 to $5.70 per hundredweight. In my next move I started 
in on the plan of parcel post rate graduates and zones that would 
be the means of insuring reasonable and relative rates. It has never 
been a question with me to get low rates, but only relative rates, 
never as to how high or how low, but we in the West object to being 
made the goat to pay from 100 to 300 per cent higher rates than in 
any other part of these United States, and that applies equally to 
freight, express, and parcel post as they are established to-day. I 
heard the discussion and have listened with much interest to the basis 
of rates. The express table that was brought out and perfected by 
Mr. Lane and his aids is one of the very best ; it is scientific, but his 
basis of rate making is as faulty as anything we ever had to do with, 
because when we reach the one hundred and fifth meridian and go 
westward the express rates are based on a ratio of 23 as against 10 
that prevail east of the Missouri River. In my labors to improve 
the parcel post I found one way, first, of taking the zones as you had 
established them, eight zones, by multiplying the pounds by the zones, 
adding three, and getting the rates. Manifestly the railroads are 
satisfied and the express companies are satisfied with the rulings of 



1392 * RAILWAY MAIL PAY. 

the Interstate Commerce Commission as to express rates, and knowing 
that the railroads get about 50 per cent of the earnings of the express 
companies I made numerous comparisons of rates. I have made 
numerous tables with 90 points, with 30 points, and with 10 points, 
of which I brought one little 10-point table with me to show you how 
it works out. 

In this case, knowing that the railroads are satisfied with the rates 
that are given them by the express companies, one-half, I would take 
that as a base rate. Here is a rate from Omaha to New Orleans; 
the rate per hundred pounds on express is $4.10. The parcel-post 
rate would figure out $6.02, if you had the 100 pounds weight limit. 
You can ship 50 pounds, or you can multiply the five 20-pound 
rates. Take the $4.10 rate, of which the railroad gets $2.05, and 
I say pay the railroads not $2.05, but 50 per cent higher; or an- 
other $1.02J on top of the $2.05. Then, at the Postmaster Gen- 
eral's foolish low rate of $1.04 per hundredweight for 150 miles, 
for which he now assumes he is paying the railroad 80 cents, he keeps 
the whole of it this time and the total rate would be $4.12 as against 
the express rate of $4.10. Now, you have paid the railroads 50 per 
cent more than they are getting from the express companies to-day 
and you are making Mr. Burleson's rate 80 cents greater than before, 
because he does not divide with anybody on his $4.10 rate or the 100 
pounds. In the fourth zone it would be 4 times 100 plus 3, or $4.03. 
Mr. Burleson's rate on that would be $6.02. The railroads com- 
plain of being overburdened with parcel post. I deny it. I do not 
believe there are chumps enough in the country who will pay $6.02 
to the post office when the express companies will carry it for $4.10. 
If it happens to be second class, they get 25 per cent off by express, 
so that in thousands of cases I could enumerate you will find the par- 
cel-post rates to-day are 200 per cent and more higher than the ex- 
press rates. That applies to territory east of the Missouri River. 
When you go west of the Missouri River in territory where the 
ratio is 23 to 10, it is a different story, because there they are pretty 
nearly equal. There, where the post office would charge $6.02, the 
express rate is $6.30. An express rate worked out on the basis I ex- 
plained to you, to give them 50 per cent more; and applying Mr. 
Burleson's 100-pound rate would be $5.77 as against the present ex- 
press $6.30 and against the parcel post of $6.02. My rate again in 
this case, multiplying the pounds by the zones, would be 5 times 100 
plus 3, which would be $5.03, whereas the other is $6.30 and $5.77, 
respectively. 

I have come here for the very purpose of seeing if we could not 
get something done, because I can not get Mr. Burleson or anyone 
else to listen to me. I tried going before the Interstate Commerce 
Committee and the Post Office Committee, and this is as far as I have 
gotten. In the determination reached in your parcel post investigation 
you have stated that there is an overhead charge on every parcel of 
3 cents per parcel, so I added that to each, and it further does this : 
It prevents the reshipping without the penalty of at least 3 cents, 
whereas at Mr. Burleson's rate you can ship to every one of the ter- 
ritories beyond the third and save 95 cents on every hundred pounds. 
That is to say, he multiplies on his first pound, so you can ship one 
hundred 1-pound packages very much cheaper than you can ship a 



KAIL WAY MAIL PAY. 1393 

100-pound package, while it ought to be the reverse. They appar- 
ently do not exercise the least bit of common sense, outside of our 
friend, Mr. Stewart, here, and he knows I am right if he dares say so. 
Mr. Stewart is one of the Republicans they have not dismissed be- 
cause he has too much knowledge and brains ; they need him. If there 
are any questions you want to ask further I will give you more data. 

The Chairman. No. We are glad to have that. 

Mr. Kindel. If you want to find out the lowest express rate, take 
25 per cent off on all eatables, which rule is not permitted on the par- 
cel post rate. The express rates are so low in the East that you can 
ship to-day from New York to Des Moines, Iowa, 100 pounds (5 
20-pound packages) , and when it gets to Des Moines throw it into the 
post office, and it will take five 150-mile rural routes, and you will 
save over $5 on combination express and parcel post as against the all 
parcel-post rate. 

Mr. Lloyd. In your judgment, does the express company get too 
much or too little for its service? 

Mr. Kindel. I think in parts of the country they get too little. 
In the eastern part I think the rate is abnormally low, and I think 
in our section it is so high that they knock themselves all out of 
business. Even the parcel-post rate is low on the 150-mile hauls. 
We do not want rates too low any more than we want them too high. 
To-day, from Denver to Newcastle, Colo., the freight rate is $1.40 
per hundred, first-class rate. By parcels post we take the freight 
trains off and give you all baggage cars, and put it into the parcels 
post because we do it for $1.04. We talk about building tunnels to 
make freight rates cheaper. We do not need to. The same condi- 
tion as to rates prevails all over the West, and I am glad to say I 
have the attention of the Senators. I am glad to bring it to your 
attention, for the truth can not be sujjpressed much longer. 

Mr. Lloyd. I asked you the question whether in your judgment 
the express companies are receiving too much or too little, and 
you answered in some cases too much and in some cases too little. 
Would it be safe to base the mail rate on the express rate, or, in 
other words, to pay the railroad companies for carrying the mail 
about what they are paid for carrying the express ? 

Mr. Kindel. First I would ask you what base you take, whether 
1 pound, 10 pounds, or 100 pounds ? 

Mr. Lloyd. I am not taking any base, but the general proposition. 
If we pay the railroad companies as much for carrying the mails 
per hundred pounds as we pay the railroads for carrying the ex- 
press per hundred pounds, would that be fair ? 

Mr. Kindel. Well, I would give them more, especially if they 
handle the parcel post, 

Mr. Lloyd. If you make the mail rate less than the express rate. 

Mr. Kindel. I would not do that. 

Mr. Lloyd. Everything would go by mail in that event, 

Mr. Kindel. You can equalize these rates just that Avay, as I tell 
you. 

Mr. Lloyd. I am getting at the other question. From your knowl- 
edge of the express rates, if the railroad companies get as much for 
carrying the mails per hundred pounds as they do for carrying the 
express per hundred pounds, on an average, is that just? 



1394 RAILWAY MAIL PAY. 

Mr. Kindel. I do not see why it would not be fair, why they could 
not carry it as cheap for the Government as for express companies, 
under similar circumstances and conditions. 

Mr. Lloyd. Why they do not at the present time. 

Mr. Kindel. I do not think they are getting paid at all for what 
they are doing on parcel post according to their statement. 

Mr. Lloyd. You are speaking of the parcel post ? 

Mr. Kindel. Yes. 

Mr. Lloyd. I am speaking with reference to all mail. 

Mr. Kindel. I do not know anything about that. 

Mr. Lloyd. You have not studied the question of railway mail pay 
at all? y vy 

Mr. Kindel. No; I have not. 

Mr. Lloyd. Except from the relation of parcel post? 

Mr. Kindel. Except in the relation of heavier merchandise traf- 
fic. I oppose 1-cent postage rate until we get through with the 
other matter. 

Mr. Bradley. Observing your comments in regard to Commis- 
sioner Lane's project of express rates, that they were very scientific 
in construction, although the base was not acceptable, and remember- 
ing that that scale allows 21 cents for the first pound to the express 
company, while the parcel-post rate is based upon a 3-cent overhead 
charge such as you have used in your schedule, I would like to know 
what your opinion is as between these two primary rates ? 

Mr. Kindel. The express companies insuring and making de- 
livery was the cause of the Interstate Commerce Commission's lib- 
erality to them, but I believe that business ought to go through the 
Post Office Department. 

Mr. Bradley. Would it lead you to think that the 3-cent overhead 
charge was adequate? 

Mr. Kindel. No ; hardly. I would make that greater, to my mind, 
as I see it. But I take it because of reports by Senator Bourne and 
others. 

The Chairman. We recommended a 5 per cent overhead charge. 

Mr. Kindel. There are a lot of these rates that I think are abnor- 
mally low, especially since he eliminated the 50-mile distance. Sen- 
ator Bristow showed that very ably on the floor of the Senate the 
other day. To-day, gentlemen, the mail-order house and the express 
companies are making a carrier out of the Post Office. The Sears 
Roebuck people, of Chicago, engaged quarters in Denver for which 
they are paying $900 a month and which they are not occupying. 
I pointed out to them what they were going to run into on freight 
rates, and they are leaving the store vacant. They can better afford 
to do business from their Chicago store and redistribute by parcel 
post from Denver. 

Mr. Lloyd. What is the necessity for paying $900 a month? 

Mr. Kindel. They made a contract, and the other party would 
not release them. They are still continuing to pay $900 a month. 
The Suit & Cloak Co." of New York are doing that very thing, 
putting their stamps on their goods before they leave New^ York by 
express, and when they get to the different points they are distributed 
by mail. 

Mr. Tuttle. Do they have distributing offices at these points? 



RAILWAY MAIL PAY. 1395 

Mr. Kindel. Yes ; and if a man will study that thing, on every 100 
pounds he will save 95 cents. 

Mr. Tuttle. Is that the general custom of the mail-order house 
to-day ? 

Mr. Kindel. Yes ; I have been pointing it out to them. They will 
make a tool of the Post Office. I do not think I have anything fur- 
ther to say, Mr. Chairman. 

Mr. Stewart. I have one other matter I want to present. The 
question has been broached as to what is the monetary value of these 
differences between the mail and express services. I have hoped the 
railroad representatives might submit something on that, but they 
did not do so this morning. The chairman asked me if I would do 
my best in getting information, and I have this to submit. I have 
here a statement from Exhibit No. 28 of the Interstate Commerce 
Commission, express tables of revenue and expense showing summary 
of total amounts paid to the railroad companies by express companies 
for the fiscal year ended June 30, 1911, and per cent of the several 
items to the total amount paid. The total express privileges, 1911 — 
shown by the Interstate Commerce Commission's statistics of ex- 
penses, preliminary abstract — are placed at $73,956,450. That total 
amount is not yet accounted for, but the tabulation up to date shows 
this as the basis of the total involved. In this tabulation of $73,- 
371,161.41, $69,429,471.65 was paid for what are known as express 
privileges. As I take it, that means the amount which the railroad 
companies receive from the express companies as their share of the 
express charge. So that something over $69,000,000 of the $73,- 
000,000 is represented by this division of the express charge. The 
balance of it is scheduled as total other charges, $941,219.76. I take 
it that that amount represents the value to the railroad companies of 
the particular services which they render the express companies. It 
is itemized as follows, with their monetary value: Rent of buildings 
and grounds, $551,852.61 ; joint messenger service, $122,272.68 ; freight 
charges, $44,743.31 ; car mileage and rental, $844.99 ; switching serv- 
ice, $58,270.22 ; miscellaneous charges, $163,235.95 ; making a total of 
$941,219.76, which is 1.34 per cent of the total amount received by 
the railroad companies. 

The Chairman. The entire revenue of the railroad companies ? 

Mr. Stewart. Yes; the revenue the railroad companies received 
from the express companies. It will be observed that these items 
correspond in nature to some extent, at least, to the stated differ- 
ences between these two classes of service. It covers the amount the 
railroad companies receive from the express companies for rental 
charges, rent of buildings, and grounds; it covers the amount they 
get for joint messenger service and for the freight charges, and I 
take it that these services are outside of the contract services. It 
takes in car mileage and rental, switching charges, and miscellaneous 
charges. If we should go to the basis proposed in volume 8,^ it 
eliminates the difference which now exists between the services with 
respect to side and terminal service. I do not recall the other differ- 
ences which have been named, but you will notice that the monetary 
value of the differences I have named amounts to about $941,000 
a year. 



1396 EA1LWAY MAIL PAY. 

The Chairman. Was there not a different suggestion wiii* refer- 
ence to the liability ? 

Mr. Stewart. Yes, sir. 

The Chairman. Liability for death or injury to a postal clerk? 

Mr. Stewart. Yes, sir. On that point I have something to submit. 
As I understand it, it has been claimed that the railroad companies 
are not liable for any damages for injuries which may occur to the 
express messengers. I notice that the case entitled " The Missouri, 
Kansas & Texas Eailway Co., National Surety Co., and American 
Surety Co., of New York, plaintiffs in error, v. Ivolue B. West, 
in error to the Supreme Court of the State of Oklahoma," and 
brought to the United States Supreme Court, has just been decided. 
This was an action for damages by the widow of an express mes- 
senger against the railroad company. The messenger died as a 
result of injuries sustained by reason of a collision between a freight 
train and a passenger train in which he was engaged in his employ- 
ment. The deceased was a joint employee of the railway company 
and the express company, his salary being paid by the express 
company, which drew a bill each month for half the amount on the 
railway company. 

The messenger had executed the usual contract assuming risk of 
injury. In addition to that he contracted that he would ratify any 
contract which the express company would make with the railroad 
company limiting liability. This the State court held to be void, 
as against the public policy of Oklahoma and in contravention of 
the laws of the State of Kansas. 

The railroad insisted that the messenger was an employee of a 
railroad company and therefore subject to the Federal employees' 
liability act. This was the question considered by the Supreme 
Court, which, however, sustained the holding of the State court 
that the deceased was an employee of the express company. 

The material point of this case is that so far as the States of Okla- 
homa and Kansas are concerned contracts of this nature are either 
against public policy or in contravention of the statute. 

While I have not looked- up the decisions in other courts I am 
inclined to think that we would find the decisions the same in all 
the courts, that contracts of that kind are against public policy. 

Mr. Mack. In that event I should think it probable that the ex- 
press companies would necessarily stand by the contract. 

Mr. Stewart. They were not made party defendants in this case. 

Mr. Mack. But I should think the effect would be, if the employee 
won the suit, that the express company would be liable to the rail- 
road company for the amount of damages under the contract, so that 
the railroad company would not have any liability that was not 
protected by the express company. 

Mr. Worthington. I think the contracts contain clauses throwing 
liability on the express company for accidents to its employees. 

Mr. Stewart. This is a direct adjudication that the railway is 
always responsible to the messenger. 

Mr. Lloyd. While that might be true as between the railway com- 
pany and the general public, the railway company and the express 
company have entered into a contract, and that contract is that the 
express company will bear all such loss. Now, if there is a judgment 



EAILWAY MAIL PAY. 1397 

against the railroad company the express company would be liable to 
the railroad company. If the judgment is against the express com- 
pany, it is that which it is claimed is the liability of the express 
company. 

Mr. Mack. But in no case is the railway company liable, because 
the express company has indemnified it. 

Mr. Lloyd. That is, it is not liable as against the express company 
but against the general public. 

Mr. Stewart. The judgment in this case was against the railroad 
company. I do not mean to say that the railroad company can not 
contract with the express company in such manner that the express 
company will be liable to the railroad company if the railroad com- 
pany has to pay a judgment of this kind. The thing that impressed 
me further in this case was that the usual procedure of that kind was 
not followed — for instance, the railroad company did not bring the 
express company into the case, which, under a contract of that kind 
they had a right to do. 

Mr. Lloyd. But the individual injury was settled by the railroad 
company? 

Mr. Stewart. But the railroad company could come right back 
and bring the express company in as a party, so if the messenger got 
judgment it would go against the express company also. 

Mr. Scott. They do not have to do that, because the express com- 
pany agrees to save them harmless against any accident to their em- 
ployees. 

Mr. Lloyd. You would not say that an employee having sued a 
railroad company and having secured a judgment from the railroad 
company could now sue the express company ? 

Mr. Mack. No ; but in case he had lost he would simply sue the ex- 
press company. 

Mr. Lloyd. I would doubt that very much, because I would say 
the case was res adjudicata, was disposed of; the employee was in- 
jured, he brought suit and lost. 

The Chairman. General Stewart, in your suggested bill and sug- 
gested rates, did you give any consideration whatever to express 
charges in making up the suggested rate? 

Mr. Stewart. No ; we did not. 

The Chairman. No consideration? 

Mr. Stewart. We did not have that data before us when we sub- 
mitted those rates. 

The Chairman. And your rates were based primarily on cost as- 
certainment under Document 105, particularly Table 7. 

Mr. Stewart. No; that can hardly be said, becauseyou recall that 
Dr. Lorenz submitted to the committee a proposed bill based on the 
average passenger-car-mile revenue. We can only say that the rates 
are related in a manner to cost, but not primarily so. We go upon the 
assumption of Dr. Lorenz that the revenue per passenger-car mile is 
a safe basis and thus avoid the expensive and elaborate process of 
ascertaining cost each time. 

The Chairman. So that the passenger revenue was more of a de- 
terminant factor than any other one factor in arriving at your sug- 
gested rate ? 

Mr. Stewart. Yes, sir. 



1398 BAILWAY MAIL PAY. 

Dr. Lorenz. It is interesting in this connection to notice the fair 
agreement, rather than the wide differences as we have seen them in 
many cases here. We have heard to-day from the railroad repre- 
sentatives that the railway mail pay committee estimated the express- 
car-mile revenue to be twenty-three and a fraction cents and Gen- 
eral Stewart has told us that his ascertainment is twenty-one and a 
fraction cents, so we have the difference between them of less than 
2 cents per car-mile. Of course, that amounts to a good deal, but 
after all it is a margin that is somewhat less than the other differences 
we have had. 

Mr. Worthington. Our space figures are almost identical. The 
difference arises from the revenue from express into which space was 
divided. We took reports for November, 1909, received from the 
railroads, giving the express revenue for that month, while, as I 
understand it, General Stewart took one-twelfth of the express 
revenue for the fiscal year ending June 30, 1910. 

Dr. Lorenz. But lie also took one-twelfth of the mail revenue for 
that year. 

Mr. Worthington. Not necessarily. Where the express revenue is 
available I think it should be used. 

Mr. Scott. The difficulty about that is in taking the average for 
that 12 months. The actual traffic carried during the month of 
November affected the car-feet space. 

Mr. Stewart. Not in express service, 

Mr. Scott. I mean it affected it relatively as compared with other 
months ; that is, November would not be a fair month so far as traffic 
is concerned any more than any other month. 

Mr. Stewart. You did not change the car space after November, 
or before November, materially, did you? 

Mr. Scott. The express-car space depends very largely upon the 
revenue. Take the Pennsylvania Lines, for instance, while I am not 
quoting the figures accurately, they will vary from $85,000 in one 
month to $130,000 in another month on one system. 

Mr. Lloyd. But you would use the same space in carrying it ? 

Mr. Scott. Not necessarily so at all. 

Mr. Stewart. How is your space arranged for? 

Mr. Scott. We just load the cars up. We have no authorized 
space. We furnish whatever cars are necessary to carry whatever 
the express company delivers to us. 

Mr. Worthington. In the fruit shipping season, for example, we 
ship practically whole carloads by express, which take additional 
cars, and we ship at times silk and horses, all of which affects the 
amount of space which would be chargeable to express in any par- 
ticular month. 

Mr. Stewart. And that itself varies from month to month? 

Mr. Worthington. It varies some, but how materially I could not 
say. 

Mr. Stewart. What do you call that space, dead space or dead- 
head space? 

Mr. Scott. We never heard of the terms until the advent of 
document 105. 

Mr. Worthington. I would like to make a few remarks on the use 
of comparative rates per ton-mile for express and for mail. I think 



KAIL WAY MAIL PAY. 1399 

in discussing the express and mail rates on the ton-mileage basis we 
are losing sight of a factor which is the principal one justifying a 
lower ton-mile rate for express than for mail ; that is, as applied to 
the entire traffic of either, this is the fact that in the mail service a 
large part of the mails have to be conducted in the railway post-office 
cars. The post-office facilities restricting the tonnage which the rail- 
ways can carry in those cars and those cars also weighing, perhaps, 15 
tons more of dead weight than the average express car. For that 
reason I think any comparison on a tonnage-mile basis of express 
and mail rates, taking the traffic as a whole, is not quite fair. 

Mr. Lloyd. That would not be true of a storage car? 

Mr. Worthington. No ; not true of a storage car. 

Mr. Lloyd. Would it be true of an apartment car ? 

Mr. Worthington. Yes. The car has the post-office facilities. 

Mr, Lloyd. And the express in the same way? 

Mr. Worthington. Not in the same space. It might in the same 
car, but the express part of that car would be available for much 
greater tonnage than the mail portion. 

Mr. Lloyd. What are you getting at? Is the weight of the car 
the same? If part of it is used for mail and part for express, the 
car would have the same weight? 

Mr. Worthington* But the weight of the fixtures is certainly 
chargeable against the mail and not the express. 

Mr. Lloyd. The weight of the fixtures is not very much, because 
the weight of the express fixtures are, perhaps, as much as the weight 
of the mail fixtures, for I presume you would have a safe in connec- 
tion with every express car. 

Mr. Worthington. Yes. 

Mr. Lloyd. That would be pretty near as heavy as the mail. 

Mr. Baskerville. Not a stationary safe. We only have stationary- 
safes in a few cars, and the messenger carries a little hand safe. 

Mr. Mack. Adverting to the question of rates to the proposed 
bill I would like to refer to the Denver & Rio Grande Railroad. 
For instance, Document 105 shows, on the space used by the depart- 
ment, a gain of $5,206 a month. On that basis the company would 
have been cut $62,400 a year. Under the proposed basis in volume 
No. 8 the loss to that company would be twice that, or $124,800 a 
year. 

Mr. Snead. I should like to refer for a moment to General Stewart's 
remarks about $941,000 paid the railroads by the express companies, 
to say that this $941,000 does not include the amounts paid by the 
express companies to joint agents at stations where the agent is also 
the express agent. Neither did it include joint service of trainmen 
and baggagemen, because it did not include the payment to the 
employees where it was made by the express companies directly. In 
making this return the companies simply report in accordance with 
the commission's question, amounts paid to railroad companies, and 
the $122,000 did not include all payments for joint messenger service. 
That $122,000 did not include all the payments to joint employees. 

Mr. Stewart. What relevancy would that have? 

Mr. Snead. It would increase the relevancy. There must be a, 
man on there. 



1400 BAIL WAY MAIL PAY. 

Mr. Stewart. Does it save something which the railroad com- 
pany would have to pay, or is it something extra the express com- 
pany pays over and above what the railroad company pays? 

Mr. Snead. It saves, unquestionably, what the railroad company 
has to pay. 

Mr. Stewart. How can you make that definite? 

Mr. Snead. By my own experience? 

Mr. Stewart. Give us an example ? 

Mr. Snead. I do not know that I can give you an absolutely accu- 
rate example, for it has been a good many years since I was in the 
express business; but I do know, of my own knowledge, on many 
runs where we would pay a messenger, for example, $75 a month 
where the express and baggage business was not so heavy but that 
one man could handle both, the railroad company would withdraw 
the baggage man, and one man would perform the entire service and 
receive $80 a month, each company dividing the amount. 

Mr. Lloyd. Would they deduct that amount from the gross earn- 
ings of the express company in settling with the railroad company? 

Mr. Snead. No ; there were different methods employed. 

Mr. Lloyd. How does this come into the question between the rail- 
road and the express company? 

Mr. Snead. It does not. That is what I was attempting to point 
out, that if the express company would pay this joint employee $40 
direct, it would not come into the railroad account. It would not be 
covered by these figures Mr. Stewart has given. 

Mr. McCahan. When the salary of a station agent is considered, 
is not the express business first taken into consideration ? 

Mi*. Snead. I think that is true where the station agent is a joint 
employee. 

Mr. Stewart. Do you think it would probably be as much as this 
item — joint messenger service, $122,000? 

Mr. Peabody. Do you mean by that the commissions paid to the 
station agent would amount to that sum ? 

Mr. Stewart. No. The amount I stated was what the railroad 
companies saved by these commissions paid to joint employees. 

Mr. Snead. Including station agents I should say it was a great 
deal more. 

Mr. Stewart. How much more? 

Mr. Snead. That is a matter of guesswork. No one, so far as I 
know, has any figures. 

Mr. Lloyd. My understanding is that in most of those cases the 
railroad company employs the man and pays him and the express 
company employs a man and pays him and what the express com- 
pany pays would go into the express company's account, and what 
the railroad company pays goes into the railroad company's account, 
and it would not affect this question at all. 

The Chairman. Two years ago the express companies had 50,000 
employees who attended to the express business only and 35,000 em- 
ployees who had joint service — express, railroad, telegraph, or tele- 
phone. 

Mr. Lloyd. There are 35,000 employees, as I understand it, that 
have two paymasters ; the railroad company pays the employee as 
its employee and then the employee gets another salary from the ex- 



RAILWAY MAIL PAY. 1401 

press company. Now, there are some of these that are paid jointly, 
and that is accounted for in this item here. 

Mr. Snead. For instance, at nearly all these stations the railroad 
company controls them; they have the hiring of the employee and 
they will say the service at such a station is worth, for instance, $80 
a month — that is, the joint service for handling express, baggage, 
mail, and everything. The express company ordinarily allows 10 
per cent commission on all business handled in and out of offices 
where they pay on a commission basis. Suppose the express commis- 
sion at that particular point should average, for a period of perhaps 
six months or perhaps a year, $10 a month. The railroad company 
having fixed the salary at $80 per month would say to the man, " We 
will pay you $70 a month and the express company will pay you $10 
a month; that is, your commission from the express company will 
average you $10 a month." 

Mr. Lloyd. Is not this the point you make : Suppose that the sal- 
ary of an individual is $100 a month. The railroad company pays 
him $75 a month, the express company pays him $25 a month. Does 
not the railroad company figure it out something like this, that if the 
express company did not pay him that $25 for the service that he ren- 
dered the express company in order to retain that man would be re- 
quired to pay him $100? 

Mr. Snead. Or something additional to the $75. 

Mr. Lloyd. Now, coming back to the other feature : if this is the 
situation the railroad company has paid him for all the services he 
has rendered the railroad company and the express company has 
paid him for all the services he has rendered, and it seems to me that 
it has nothing to do with this question at all. 

Mr. Mack. Except, Mr. Lloyd, if the express company did not pay 
that man the railroad company would have to. 

Mr. Lloyd. It might be ; because possibly that man could not be 
secured for a $75 salary. 

Mr. Mack. It is always calculated by the railroads, where that 
character of service is concerned, such as Mr. Snead has pointed out, 
where the express company pays part of the salary, that it is an ad- 
vantage to the company to that extent. 

Mr. Lloyd. It saves the railroad company just the amount that the 
express company pays? 

Mr. Mack. That is the point exactly. 

Mr. Lloyd. But that amount that is paid for by the express com- 
pany is paid for services rendered to the express company? 

Mr. Mack. Within the time which the railroad company pays for. 

Mr. Stewart. Something was said this morning about the in- 
terest that railroad companies might have in the express companies 
and which interest might influence the question of rates and contracts 
between them. In that connection I want to submit this, in addition 
to what was said. This is Exhibit 36 from the Interstate Commerce 
Commission calculation which shows that $54,890,950 in stocks and 
bonds of railroads are owned by express companies. That is the 
other side of it. 

The Chairman. At this point we will take an adjournment until 
to-morrow morning. 

(Thereupon, at 5 o'clock p. in., an adjournment was taken until 10 
o'clock a. m. Thursday, April 2, 1914.) 
49396—14 96 



1402 RAILWAY MAIL PAY. 

THURSDAY, APRIL 2, 1914. 

Committee on Second-Class Mail Matter, Etc., 

Washington, D. G. 
The committee met, pursuant to adjournment, at 10 o'clock a. m. 
Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W. 
Weeks, and Representatives James T. Lloyd and William E. Tut- 

tle >i r - . 

All of the witnesses, with a few exceptions, attending the meeting 
of the previous day were present and all indicating a desire to be 
heard, and those subsequently participating in the discussion were 
duly sworn by the chairman. 

The Chairman. Mr. Mack, have you your statement ready for the 
Missouri Pacific? 

Mr. Mack. Yes, sir. 

Mr. Stewart. Mr. Chairman, before we go into this matter thert 
is some additional information I want to submit in connection with 
our discussion last evening as to the difference between the two 
classes of service and the monetary value of such differences. 

The Chairman. Which two classes of service? 

Mr. Stewart. The mail and express. Reference was made to the 
contracts between the express companies and the railroad companies, 
exempting the railroad companies from liability in case of accident 
or death to the express employees. I would like to know whether 
the railroad representatives have any information to submit on that 
point — as to its value to the railroad companies ? 

The Chairman. You mean in dollars ? 

Mr. Stewart. Yes. 

Mr. Peters. No; we have not. We attempted to get up a state- 
ment for the railroads showing the amount they have paid out for 
personal injuries to postal clerks and we could not get the informa- 
tion in any intelligent shape to be sufficiently reliable. I think it 
was not as high as most of us had thought, but it was impossible to 
get the information from all of the roads, and it was so incomplete 
that we never worked it up. I did not bring those papers with mt. 
That was some two or three years ago that I attempted to collect the 
information, but I was not successful. I do not know from my own 
experience whether we have had to pay anything for personal in- 
juries to an express messenger. Sometimes a railroad may have a 
judgment rendered against it in a court, but under the contracts 
with the express companies the express companies pay the bills after- 
wards, so that the railroad company is relieved. 

The Chairman. Have you the information as to what the rail- 
roads have to pay because of injuries to postal employees? 

Mr. Peters. No; I could not get it complete enough; from the few 
roads I was able to get the information. I should say it was some- 
thing like $200,000 a year. 

The Chairman. Have you the information, General Stewart? 

Mr. Stewart. I have information as to the amount we paid in 
1913 on account of the death of clerks who were killed in accidents 
or who died during the year as a result of accidents and the amount 
paid for acting clerks in place of clerks who were injured and who 



BAILWAY MAIL PAY. 1403 

were given leave of absence for periods not exceeding two years, as 
allowed by the statute. The law allows us to pay $2,000 in case of 
death, and it also allows us to put on acting clerks in place of clerks 
who were injured and to give leave of absence within a period of 
two years. If that will be pertinent information, I will submit the 
figures. Six hundred and eighty-eight clerks were granted leave for 
one year or less, and the acting clerks employed in consequence received 
$84,826.21. Forty-one clerks were granted leave during the second 
year, and the acting clerks employed in consequence received $5,- 
268.76. That makes a total amount of $90,094.97 paid in 1913 for 
injury. Four clerks were killed outright and five died as a result of 
injuries, a total of nine clerks, whose representatives received $18,000. 
The total expenditure under the appropriation for 1913 was 
$108,094.97. 

Mr. Peters. Those payments would not prevent the clerks from re- 
covering damages from the railroads? 

Mr. Worthington. I recall a single instance on the Oregon Short 
Line within the last year where the road paid about $10,000 for the 
death of a clerk. 

The Chairman. Now, Mr. Mack, we will hear from you. 

STATEMENT BY MR. H. E. MACK. 

The statement submitted by the Post Office Department at the 
hearing March 24, 1914, before your committee, concerning reports 
made by the Missouri Pacific system and also the Denver & Kio 
Grande, Texas & Pacific, International & Great Northern, and St. 
Louis Southwestern Cos., as typical of the reports by the railroads in 
general, contains reference to no errors of fact in such reports, but is 
an explanation of the departments action in detail in changing the 
reports submitted by the companies as to the facts, and classifying 
some mail space as " dead space " and charging it to passenger space. 

I will ask you to keep in mind throughout that you are not consid- 
ering errors in reports made by the railroads, for, as to these com- 
panies, the facts are beyond controversy and can not be disputed, that 
the mail space reported in full railway post-office cars and apartment 
cars was in actual private and exclusive use of the Post Office De- 
partment, so reported by conductors during the period fixed by the 
department and checked in tabulation as to the length of mail cars 
and apartments by the companies' car records from the numbers of 
the cars reported in actual service ; the space reported as baggage-car 
overflow, referred to in the statements, and the storage-car space on 
the other routes was based on reports made by conductors or bag- 
gagemen, being the daily average, representing the varying higher 
or lower space used day by day. In some few instances the space 
reported was compulsorily hauled by the companies deadhead, essen- 
tially due to its use by the Post Office Department ; but it is a fact 
that a portion of this space was charged by the department to pas- 
senger service instead of mail, notwithstanding none of it was in use 
for passenger service. 

This so-called " dead space " is that proportion of mail space which 
was in actual use, or directly hauled in connection with such use, and 
the Post Office Department disowned after its use. 



1404 EAILWAY MAIL PAY. 

It was not space which was not in use by the Post Office Depart- 
ment, or incidentally hauled for the Post Office Department, but 
what, on the space basis of pay proposed in Document No. 105, the 
department would not be willing to pay for under that plan; but 
upon the question of underpay to the railroad, it must be considered 
as operated for the mail service to be comparable with the space used 
directly and incidentally in the passenger and express service simi- 
larly reported, or the usefulness of the figures for purposes of 
comparison are destroyed altogether. The same rule must apply 
throughout or there would be no proper ratio for comparison. 

There is just one fair basis of comparison, and that is the exact 
service with the mail, express as well as the passenger service, as it 
actually existed during the month of November, without any change 
in the space assigned to each at any time by anybody. 

" Dead space " is based also upon units of a single car- foot mile, 
now discarded by the department. 

Of course, average space is not sound for a space basis, for the 
maximum must be provided to take care of the business at all times. 
While this detailed data have been in the department nearly four 
years, and Document 105 should have contained it for all compa- 
nies, I have endeavored in only the four days I have had it for out- 
lines, as a typical statement, to classify and rearrange it in four 
statements in tabular form, comparing the route so as to show 
through-car runs, that it may be clear to you, as would not have been 
the case as segregated by routes in paragraph form as submitted by 
the department. 

Before proceeding it may be well to dispose of a few errors in the 
department's statement : 

Eoute 147041. The department corrects its error on this route of 
609,804 car- foot miles; but the calculation is in error, as the amount 
is 627,786 car- foot miles. This would make the total error of the 
department, in car- foot miles, 907,112 instead of 889,129. 

Koute 145034. The original error on this route, as to trains 410 and 
425, was corrected by letter of August 31, 1910. 

Eoute 145062. The original error on this route was corrected in 
letter of September 1, 1910. 

Koute 147051. Not our company. 

Route 145042. Company did not report five car-feet of space on 
this route, as department's memorandum indicated. 

Eoute 145039. Texarkana-Shreveport. The department states there 
was no Sunday service on this route, but the schedules of the Railway 
Mail Service show, for both trains 11 and 12, such service. Proceed- 
ing to the four statements submitted, as follows : 

Statement No. 1. Sunday cases affecting 11 short-line trains. 

Statement No. 2. Incidental haul of cars affecting five short-line 
trains. 

Statement No. 3. Apartment-car service. 

Statement No. 4. Full railway post-office service. 



BAIL WAY MAIL PAY 



1405 



Statement No. 1. 

Details in cases where mail apartment cars were necessarily operated on Sun- 
days, but without a mail clerk, the mail in such cases being in care of the 
train baggageman. 



Route 
No. 



Points between- 



Dis- 
tance. 



Train 
Nos. 



Mail 
apart- 
ment. 



Car-foot miles. 



145042 
145047 
149056 
147067 
147004 
147044 
147060 
147002 



147026 
150164 



149017 
149031 
149035 
149059 
149039 



MISSOURI PACIFIC— IRON MOUNTAIN. 



Sedalia-Warsaw 

Jefferson City-Bagnell 

F. & S. Junction (n. o.)-Monroe 

P. B. & W. Junction (n. o.)-Benton. 

Halley-Warren 

McGehee-Halley 

Arkansas City-Trippe 

Helena-Clarendon , 



ST. LOUIS SOUTHWESTERN. 



Little Rock-Altheimer. 
Corsicana-Hillsboro 



TEXAS & PACIFIC. 



Cypress-Shreveport 

Simmesport-Bunkie . . . 
J unction-Mar ksville. . . 
Simmesport-Melville. . . 
Texarkana-Shreveport. 

Total 



42.30 
45. 31 
38.99 
44.65 
44.63 
9.12 
7.19 
47.34 



42.90 
41.78 



86.42 
25.79 
9.04 
25.56 
75.11 



637-636 
641-642 
535-536 
941-942 
825-826 
825-826 
828-g27 
829-830 



31- 32 
503-504 



75- 76 
81- 82 
81- 82 
81- 82 
41- 42 



Feet. 



6,768 
5,799 
4,990 
8,215 



6,4261 
1,313V 8,7 
1,035] 



74 



5,680 



40, 226 



8,923 
8,356 



17,279 




95,124 



This list comprises the instances where the mail-apartment-car space was 
operated on Sundays (one case on Saturday) without postal clerks; but the 
train with all of its equipment, including the mail-apartment car, is run Oh 
Sundays, and the mail space is therefore compulsorily hauled, because of the 
private apartment for mail which is in the car for the convenience and use of 
the department at all other times. 

Mails were carried on the trains as closed pouches nevertheless. 

In some cases the mail is actually placed in the mail apartment just the 
same on Sundays as it would be on week days, but the baggageman puts it in 
and takes it out on Sundays instead of the postal clerks. This was explained to 
Mr. Stewart in a letter on September 12, 1910, copy attached, in one case illus- 
trating this. 

The instances of this kind only represent 11 trains each way, Sunday only, 
a total car-foot miles for November, 95,124 feet. 



September 12, 1910. 
Hon. Joseph Stewart, 

Second Assistant Postmaster General. 
Dear Sir: In answer to your letters of August 4 (C. H. M.) with regard to 
Sunday service trains 538-535 and 536-537, mail routes 149054 and 149056, 
would say that while true the postal clerk who runs on these trains week days 
does not run on Sundays, the same car in the make-up of the train is necessarily 
run on Sundays, and the closed mails which are carried are carried in the mail 
compartment although in charge of the company's employee instead of the 
postal clerk. 

The requirement to furnish an apartment car six times a week perforce re- 
quires furnishing and hauling it seven times a week. 
Very respectfully, 

(Signed) H. E. Mack. 

Missouri Pacific Railway Co., 
St. Louis, Iron Mountain & Southern Ry. Co., 

Fcrriday, La., September 7, 1910. 
Mr. H. E. Mack, 

General Agent Mail Department, St. Louis, Mo. 
Dear Sir : Referring to your special letter August 30, regarding mail handled 
on trains 538, 535, 536, and 537 on Sundays between Monroe and Farmerville, 



1406 



RAILWAY MAIL PAY. 



the same mail-apartment car is used on Sundays as on other days, and the mail 
is not handled in baggage car on Sundays, but is handled in the mail apartment 
Mail is handled as follows : 

No. 538. — 1 pouch from Farmerville for train 806 at Felsenthal, 1 pouch 
from Farmerville for 535 at Felsenthal. 

No. 535 — 1 pouch from train 538 for Monroe. 

No. 536 — 1 pouch from Monroe for train 537 at Felsenthal, 3 sacks papers 
from Monroe for train 537 at Felsenthal. 

No. 537 — 1 pouch from train 536 for Farmerville, 3 sacks papers from train 
536 for Farmerville, 1 pouch from train 805 for Farmerville, 5 sacks papers 
train 805 for Farmerville. 
Yours, truly, 

(Signed) C. M. Andrews, Superintendent. 



Statement No. 2. 

Details in instances reported by the companies lohere deadhead movement of 
postal cars was compulsory and necessary operating incident of their use by 
the Government in connection with the companies' operation of train service. 



Route 
No. 



Termini. 



Train 
No. 


Length 

of 
apart- 
ment. 


631-632 
631-632 


Feet. 
\ 22 


137-138 


23 


103 
104 


} 30 


31-32 


25 


57-58 


25 



Car- 
foot 
miles. 



145040 
145100 



155040 



155091 
155031 



150073 



149002 



MISSOURI PACIFIC-IRON MOUNTAIN. 

C. & W. Jc-Joplin 

Webb City-Granby 

Trains 631 and 632 over the two routes named, haul tbe mail apart- 
ment car operating between Topeka and Fort Scott. The Railway 
Mail Service requested and the company consented to the bag racks 
being hung, and the company was required to heat the car south of 
Fort Scott, so as to be in readiness for the clerk when he entered the 
car on the return trip at that point. This car was in use therefore in- 
cidentally to that extent. 
Auburn-Falls City 

In this instance the train and car run between Omaha and Falls 
City, but the postal clerk occupies it only between Omaha and 
Auburn, route 157038. It is necessarily hauled by the company as a 
part of the train to Falls City, and is a necessary incident to its use by 
the Government in connection with our train service. 

Kansas City-Osawatomie 

Osawatomie- Yates Center 

The car on these trains is occupied by the mail clerks south of Yates 
Center, but is run through between Yates Center and Kansas City as 
a necessary incident of train operation to avoid transfers at Yates 
Center. 

TEXAS & PACIFIC. 



Whitesboro-Fort Worth 

This mail apartment car is a part of the train operating between 
Texarkana and Fort Worth, but is used by the postal clerks between 
Texarkana and Whitesboro, route 150011, and is necessarily run 
through in connection with the operation of the train. 
Shreveport-Marshall 

This car is part of the equipment of train running from Texarkana 
to Marshall via Shreveport, and was occupied by the mail clerk be- 
tween Texarkana and Shreveport, route 149039, and was run through 
as incident of the train operation. The car is now in service be- 
tween Shreveport and Marshall. 



21,175 
24,070 



34,767 



108,720 
121,140 



106,995 



65, 100 



Senator Weeks. What do you mean by "incident of the train 
operation " ? 

Mr. Mack. It was part of the train and necessarily a car having 
an apartment had to run through. In the case of a full R. P. O. 
car, if the department discontinued its use, the car could be cut out. 
That is not true of the mail-apartment car. It must be operated 
through as a part of the train and if the department does not use it, 
for reasons of its own, it does not relieve the necessity of carrying that 
space. 

Senator Weeks. That train always carries mail? 



RAILWAY MAIL PAY. 1407 

Mr. Mack. Yes, sir. It ran through and the closed-pouch mail 
was carried in the mail apartment in care of the baggagemen between 
Shreveport and Marshall. At the present time the mail clerk is in 
charge of that space. 

Mr. McBride. At the time the statement was made in 1909 was 
the mail actually carried in the apartment car on Sundays between 
Shreveport and Marshall? 

Mr. Mack. Yes, sir. That is paper mail from Texas and Pacific 
mail for the east forwarded via Marshall on the V. S. & P. The 
letter mail was forwarded via St. Louis and Fort Wayne, Ind., to 
connect with the 20-hour train on the Pennsylvania Railroad. 

STATEMENT NO. 3. 

The apartment cars were all in the exclusive use of the Post Office 
Service, as reported, and hereafter explained and quite generally 
had been in use for years, but under document 105 the space would 
have been cut down as indicated by " dead space," and this is an 
indication of what would happen generally to the short lines on a 
space basis. Where it was estimated that a 15-foot car would be 
sufficient, instead of a 20-foot car in use, and an error was made, and 
it would develop from experience that an error was made, the com- 
pany would have to go to the expense of changing the car on account 
of the error by the Postal Service. 

The department, in a number of instances in the statements, has 
not recognized the full space through over the operating run of the 
car, although such cars are run through and can not be changed at 
different points en route from a 25 to a 20 foot car, and then to a 10- 
foot car. An important transportation principle must here be recog- 
nized that through operation is a necessity in connection with train 
service itself, and especially with fast-train service, and a change to 
different size cars could not be made without impairment of the 
service, resulting from train delays that would follow from trans- 
ferring not only the mail but baggage and express, and sometimes 
passengers also, in the case of apartment-car service. 

In some instances the department demand for 30-foot mail service 
compels the railroads in furnishing it to actually haul a 60-foot car, 
as when 30 feet of space is required by the department, it would so 
far encroach upon the space in the car as to not leave sufficient re- 
maining space in the car for any company use. Where possible, 
however, to use this space in the opposite end of the car for baggage 
or express it is done, but only those cases are reported to the depart- 
ment where the space referred to could not be used at all. 

In many cases the department changed apartment-car space in use 
to " dead space," although reports actually show overflow mail in 
baggage car in such train. 

The overflow mail in baggage car in all but two cases was thrown 
by the department into " dead space " and classified as passenger 
space, although only the daily average was reported, and in many 
cases the company might very fairly have added a charge on return 
of the car to correspond to the outward use, because when that is not 
done the entire " dead space " returning was all charged to the pas- 
senger and express service, although the car was operated for general 
mail use. 



1408 



RAILWAY MAIL PAY. 



As the statement submitted shows, every foot of space reported by 
the companies was properly charged by the companies to mail service 
and was in actual use by the department, as fully explained in state- 
ment submitted. 



Statement No. 3. 



Mail 
route. 


Termini. 


Train 
Nos. 


Length 
of mail 
apart- 
ment 
operated 
and in 
exclusive 
private 
use of 
PostOffice 
Depart- 
ment. 


Classed 

as "dead 

space" 

and 
charged 
to passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


Daily 
average 
overflow 

mail 
actually 
carried 
in bag- 
gage cars. 


Classed 

as "dead 

space" 

and 
charged 
to passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


145001 


MISSOURI PACIFIC-IRON MOUNTAIN. 

St. Louis-Tower Grove 




Feet. 


Feet. 


Feet. 


Feet. 


145070 


Tower Grove-K.B. Conn 


23 
22 

422-423 
431-436 
214-215 
207-208 
212- 
209 


26 


6 






147041 




2 


2 


145034 


Bismarck-Columbus 


26 

20 

130-25 


6 

5 

125 




145027 


Cairo-Poplar Bluff 






145001 


Kansas City-Pleasant Hill 






145040 


Pleasant Hill-Joplin 






145001 








5 


5 


145040 










145001 












145093 




5 

6 

631 

632 

845 

846 

847 

848 

825 

826 

1 

2 

9 

10 

309 

310 

223 

204 

205 

202 

931 

1 

2 

1 

2 

536 

535 

103 

104 

131 

132 

407 

408 

407 

408 

703 

704 

706 

705 

749 

762 

1 

2 

3 

4 

631 

632 

1 

2 

3 

4 


19 
19 


4 
4 


9 
8 
5 
5 


9 


145001 


Myrick Junction-Kansas City 


8 


145093 




1.25 










.83 


147009 


16 


1 
































147044 










147004 




18 
IS 


3 
3 






147017 










Poplar Bluff-Knobel 






147041 


21 
21 
21 


1 
1 
1 


4 
4 


4 


147012 


Knobel- Wynne 


4 


147012 














147023 


20 


5 
















16 


1 


3 


3 




30 

18 




2 


2 


147057 




3 






P. B. & W. Junction-Benton 






147067 


23 


8 














149056 










153005 


Fort Smith-Cofleyville 


16 
130-30 


1 
130 


§ 


h 










155084 


26 


6 






155040 








155080 


Rich Hill Fort Scott 














23 
23 


3 
3 






155036 














155036 














23 


9 














20 


6 






155046 










16 


4 






155091 








Topeka Fort Scott. . . . 












2 30-30 


130 












155060 


22 


2 














155067 














130-30 


130 























ID. H. 



2D.f H. 



railway mail pay. 



1409 



Statement No. 3 — Continued. 



Mail 
route. 


Termini. 


Train 
Nos. 


Length ! 
of mail 
apart- : 
ment 1 
operated 
and in 
exclusive 
private 
use of 
PostOffice 
Depart- 
ment. 


Classed 

as "dead 

space" 

and 
charged 
to passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


Daily 
average 
overflow 

mail 
actually 
carried 
in bag- 
gage cars. 


Classed 
as "dead 
space" 

and 
charged 
to passen- 
ger space 
bv Post 
Office 
Depart- 
ment. 


155074 


MISSOURI PACIFIC-IRON MOUNTAIN— COn. 


333 

334 

643 

644 

12 

137 

138 

645 

648 

633 

634 

638 

639 

645 

648 

1 

2 

3 

4 


Feet. 
18 


Feet. 
2 


Feet. 


Feet. 




Warwick-Prosser 






155094 


14 


2 








Gypsum-Marquette 






155095 


130-30 
23 








157038 


Omaha-Auburn 


11 


5 


5 










16 


1 








Union-Lincoln 






157040 


16 


1 


2 


2 




Talmage-Crete 






16 


1 












157059 


16 


1 








Towner-Pueblo 






165036 














130-30 


130 

































ID. H. 

The apartment car space was correctly reported by the company as in the private, exclusive, actual use 
of the Post Office Department, or compulsorily operated by the company in connection with such use, 
and as to the overflow space reported in baggage cars, it was based upon reports by conductors upon meas- 
urements taken day by day and represents the daily average space so occupied actually by mail for the 
period, although this average includes higher maximum space in use at times. 

MISSOURI PACIFIC-IRON MOUNTAIN. 

Route 157040, 12 to 14 feet of space was used in baggage car on Sundays, making a daily average of 2 feet 
baggage car mail. 



Mail 
r'«ura. 


Termini. 


Train 

Nos. 


Length 
of mail 
apart- 
ment 
operated 
and in 
exclusive 
private 
use of 
PostOffice 
Depart- 
ment. 


Classed 

as "dead 

space" 

and 
charged 
to passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


Daily 
average 
overflow 

mail 
actually 
carried 
in bag- 
gage cars. 


Classed 

as "dead 

space" 

and 
charged 
to passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


165001 


DENVER & RIO GRANDE. 


109 
114 
115 
115 
116 
115 
116 
115 
116 
425 
426 
425 
426 
317 
318 
317 
318 
315 
316 


Feet. 
30 


Feet. 
15 


Feet. 


Feet. 
















6 
20 


6 


165004 




25 




20 










167002 


20 




















20 


10 














165004 


20 


8 


3 
4 


3 






4 


167011 


20 


8 












165012 


20 


5 














165004 


20 


5 








Salida-Montrose 






165012 


20 
26 




3 


3 






6 





1410 



BAILWAY MAIL PAY. 
Statement No. 3 — Continued. 



Mail 
route. 


Termini. 


Train 
Nos. 


Length 
of mail 
apart- 
ment 
operated 
and in 
exclusive 
private 
use of 
PostOffice 
Depart- 
ment. 


Classed 

as "dead 

space" 

and 
charged 
to passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


Daily 
average 
overflow 

mail 
actually 
carried 
in bag- 
gage cars. 


Classed 

as "dead 

space" 

and 
charged 
to passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


165037 


DENVER A RIO GRANDE— Continued. 


367 

368 

315 

316 

227 

228 

377 

378 

5 

5 

3 

5 

409 

410 


Feet. 
20 
26 
30 


Feet. 
5 
11 
10 


Feet. 


Feet. 




Montrose-Grand Junction 






165012 








Glenwood Springs-Aspen 






165018 


30 


20 














165025 


21 


11 








Denver-Newcastle 






165019 


30 
30 
30 
30 
21 
21 




20 
5 
1 

4 


10 


165042 


Newcastle-Grand Junction 




5 




Grand Jnnetion-Ogdfin 




1 


169002 




4 


169002 


Salt Lake-Springville 


6 
6 




169015 


Springville-Silver City 















DENVER A RIO GRANDE. 

Route 165001, Pueblo to Trinidad, train 109; on Sundays there was an average of 6,253 pounds, rendering 
30 feet service necessary on that train. -The company could not furnish 30-foot cars Sundays and 15-foot 
cars week days. 

Route 167002, Antonito to Durango, Durango to Silverton, trains 115 and 116; company reported 20-foot 
mail apartment cars in use; should have reported 25, increasing car-foot miles 51,460 and 13,554 car-foot 
miles, respectively. 

The mail car on these trains was started on route 165004 at Alamosa, and ran via Durango Jto Silverton, 
cars 64 and 66 being operated through. The department recognizes 25 feet between Alamosa and Antonito, 
and recognizes only 20 feet between Antonito and Durango, and only 10 feet between Durango and Sil- 
verton. 

Route 165037, trains 367 and 368, narrow-gauge cars run through from Salida to Ouray; department 
recognizes 20-foot from Salida to Montrose and only 15-foot from Montrose to Ouray over this route. 

Route 165004, company reported 20-foot storage space, Alamosa to Antonito, trains 115 and 116. This 
represents the mail for trains 425 and 426 between Antonito and Santa Fe. Mail loaded in the car at 
Alamosa and would have been in baggage car had not the mail car been operated through. Postal clerk 
got on at Antonito; also a necessary operating movement of car to avoid transfers of mail, baggage and 
express at Antonito. 









Length 
of mail 
apart- 
ment 
operated 


Classed 

as "dead 

space" 

and 


Mail 
route. 


Termini. 


Train 
Nos. 


and in 
exclusive 
private 


charged 
to passen- 
ger space 
by Post 








use of 








Post 


Office 








Office 


Depart- 








Depart- 
ment. 


ment. 




INTERNATIONAL A GREAT NORTHERN. 




Feet. 


Feet. 


150007 


Hearne-San Antonio 


7 

8 

9 

404 

405 

205 


30 

30 


15 




Palestine-San Antonio 


10 




Houston-Columbia 




150008 


17 


2 




Mineola-Troup 




150032 


21 


6 






206 













INTERNATIONAL & GREAT NORTHERN. 

Route 150007, company should have reported 30-foot deadhead apartment on train 10, the return move- 
ment of car in use on train 7, Hearne to San Antonio. This would have increased mail car-foot miles, this 
route, 152,170. 

Note. — Essential to have 30-foot cars in use on this route, because of changing about of equipment 
account of the operation of the service in connection with through trains from the north. 



KAILWAY MAIL PAY. 



1411 



Statement No. 3 — Continued. 









Length 










of mail 


Classed 








apart- 


as "dead 








ment 


space" 








operated 


and 


Mail 
route. 


Termini. 


Train 

Nos. 


and in 
exclusive 
private 


charged 
to passen- 
ger space 
by Post 
Office 








use of 








Post 








Office 


Depart- 








Depart- 


ment. 








ment. 






TEXAS A PACIFIC. 




Feet. 


Feet. 


149002 


New Orleans-Addis. .-. 


55 
56 
55 
56 
61 


25 


5 




Addis-Torras 




149018 


25 


5 




Addis-Ferriday 






25 


10 




Shreveport-Cypress 


62 
75 






149017 


25 


10 




Rimmesport-Bunkie 


76 
81 






149034 






149038 


Junction-Marksville 


82 


11 


10 


149059 


Simmesport-Melville 




150009 




{ 1 


} 30 


10 









TEXAS & PACIFIC. 



Route 150009, Big Springs to El Paso, the department recognizes the 30-foot car, which was run from 
Fort Worth to El Paso, Tex., between Fort Worth and Big Springs, but recognizes only 20 feet between 
Big Springs and El Paso. 



Mail 
route. 


. Termini. 


Train 
Nos. 


Length 
of mail 
apart- 
ment 
operated 
and in 
exclusive 
private 
use of 
Post 
Office De- 
partment. 


Classed 

as "dead 

space" 

and 
charged 
tc passen- 
ger space 
by Post 
Office 
Depart- 
ment. 


Daily 
average 
overflow 

mail 
actually 
carried 
in bag- 
gage cars. 


Classed 
as "dead 
space" 
and. 
charged 
to passen- 
ger space 
bv Post 
Office 
Depart- 
ment. 


147026 


ST. LOUIS SOUTHWESTERN LINES. 


31 

32 

35 

36 

25 

26 

1 

2 

25 

26 

31 

32 

3 

4 

23 

24 

3 

4 

201 

202 

205 

206 

203 

204 

101 

102 

103 

104 

1 


Feet. 
26 


Feet. 
11 


Feet. 


Feet. 




Stuttgart-Gillett 








26 


11 












147030 


26 


11 








Maiden- Jonesb or o 






147042 


26 


11 








Stuttgart-Altheimer 


4 


4 




26 


11 






Pine Blufi-Altheimer 








26 


11 








Fair Oaks-Maiden 








130-30 


130 








Lewisville-Shreveport 






149019 


26 


11 








Texarkana-Waco 






150025 


30 


10 








Noel Junction-Dallas 






150042 


26 


1 








Commerce-Sherman 








26 


6 












150060 


26 


11 








Mount Pleasant-Fort Worth 






150067 


26 


1 
















26 


6 












150127 


22 


7 









Tyler-Lufkin 


2 
403 
404 






150144 


22 












i 







iD.H. 

ST. LOUIS SOUTHWESTERN LINES. 

Route 150025, Texarkana to Waco, trains 5 and 4, the department recognizes 30-foot car carried to Tex- 
arkana, but not over this route from Texarkana to Waco, recognizing only 20-foot, although the car is 
essentially operated through for efficiency of service. 



1412 



.RAILWAY MAIL PAY. 



Statement No. 4. 

MISSOURI PACIFIC, IRON MOUNTAIN, TEXAS & PACIFIC, INTERNATIONAL & GREAT 
NORTHERN— THROUGH TEXAS SERVICE. 



Miles. 



Size of 
mail 

cars in 
use- 



Space 
used as 
reported 
by com- 
pany. 



Daily 
average 
overflow 
mail in 
baggage 

cars. 



Although 
in actual 
use, re- 
ported by 
depart- 
ment as 
dead 
space. 



Properly 
reported 
by com- 
pany, 
car-loot 
miles. 



Train 3, St. Louis to Fort Worth, Tex. (train 
and mail car run through). 

Mis- 



St. Louis-Tower Grove, route 145001 

souri Pacific 

Tower Grove-K. B. Conn., route 148070, 

Missouri Pacific 

K. B. Conn-Little Rock, Ark., route 147041, 

Iron Mountain 

Little Rock-Texarkana, Ark., route 147041, 

Iron Mountain 

Texarkana-Longview Junction, Tex., route 

150009, Texas & Pacific 

Longview Junction-Fort Worth, Tex., route 

150009, Texas & Pacific 



Train 4, returning Fort Worth to St. Louis 
(train and mail car run through). 

Fort Worth-Longview Junction, route 150009, 
Texas & Pacific 

Longview Junction-Texarkana, Ark., route 
150009, Texas & Pacific 

Texarkana-Little Rock, Ark., route 147041, 
Iron Mountain 

Little Rock-K. B. Conn., route 147041, Iron 
Mountain 

K. B. Conn-Tower Grove, route 145070, 
Missouri Pacific 

Tower Grove-St. Louis, route 145001, Mis- 
souri Pacific 



Train 5, St. Louis to Fort Worth, Tex. (train 
and mail car run through). 

St. Louis-Tower Grove, route 145001, Mis- 
souri Pacific 

Tower Grove-K. B. Conn., route 145070, 
Missouri Pacific , 

K. B. Conn.-Little Rock, route 147041, Iron 
Mountain 

Little Rock-Texarkana, route 147041, Iron 
Mountain 



Texarkana-Longview Junction, route 150009, 
Texas & Pacific 

Longview Junction-Fort Worth, route 150009, 
Texas & Pacific 



Train 6, returning Fort Worth to St. Louis 
(train and mail car run through). 

Fort Worth-Longview Junction, route 150009, 
Texas & Pacific 

Longview Junction-Texarkana, route 150009, 
Texas & Pacific 

Texarkana-Little Rock, route 147041, Iron 
Mountain 

Little Rock-K. B. Conn., route 147041, Iron 
Mountain 

K. B Conn.-Tower Grove, route 145070 Mis- 
souri Paciific 

Tower Grove-St. Louis, route 145001, Mis- 
souri Pacific 



348.77 

144.61 
93.35 
156.34 



156.34 

93.35 

144.61 

348.77 



348.77 

144.61 
93.35 
156.34 



156.34 

93.35 

144.61 

348.77 



Feet. 



60 



Feet. 
40-20 



40-20 
40-20 
40-20 



40-20 
40-20 



60 



60 



50-10 
50-10 



50-10 
50-10 



60 



Feet. 



Feet. 



RAILWAY MAIL PAY. 



1413 



MISSOURI PACIFIC, IRON MOUNTAIN, TEXAS & PACIFIC, INTERNATIONAL & GREAT 
NORTHERN— THROUGH TEXAS SERVICE— Continued. 



Miles. 



Size of 
mail 

cars in 
use. 



Space 
used as 
reported 
by com- 
pany. 



j Although 
Daily in actual 
average use, re- 
overflow ported by 



mail in 

baggage 

cars. 



depart- 
ment as 
dead 
space. 



Properly 
reported 
by com- 
pany, 
car-foot 
miles. 



Fast mail train 7, St. Louis to Mexico border 
(train and mail car run through). 

St. Louis-Tower Grove, route 145001, Missouri 
Pacific 

Tower Grove-K. B. Conn., route 145070, Mis- 
souri Pacific 

K. B. Conn.-Little Rock, route 147041, Iron 
Mountain 

Little Rock-Texarkana, route 147041, Iron 
Mountain 

Texarkana-Longview Junction, route 150009, 
Texas & Pacific 

Longview Junction-Palestine, route 150007, 
International & Great Northern 

Palestine-San Antonio, route 150007, Inter- 
national & Great Northern 

San Antonio-Mexican boundary, route 150126, 
International & Great Northern 



Trains 4-8, returning Mexican boundary to St. 
Louis (train and mail cars run through). 

Mexican boundary-San Antonio, route 150126, 
International & Great Northern 

San Antonio-Palestine, route 150007, Inter- 
national & Great Northern 

Palestine-Longview Junction, route 150007, 
International & Great Northern 

Longview Junction-Texarkana, route 150009, 
Texas & Pacific 

Texarkana-Little Rock, route 147041, Iron 
Mountain 

Little Rock-K. B. Conn., route 147041, Iron 
Mountain 

K. B. Conn.-Tower Grove, route 145070, Mis- 
souri Pacific 

Tower Grove-St. Louis, route 145001, Missouri 
Pacific 



Train S, second car, St. Louis to Little Rock. 

St. Louis-Tower Grove, route 145001, Missouri 
Pacific 

Tower Grove-K. B. Conn., route 145070, Mis- 
souri Pacific 

K. B. Conn.-Little Rock, route 147041, Iron 
Mountain 



Trains 28-10, return trip of car. 

Little Rock-K. B. Conn., route 147041, Iron 
Mountain 

K. B. Conn.-Tower Grove, route 145070, Mis- 
souri Pacific 

Tower Grove-St. Louis, route 145001, Missouri 
Pacific 



Train 5, second car, St. Louis to Little Rock. 

St. Louis-Tower Grove, route 145001, Missouri 
Pacific , 

Tower Grove-K. B. Conn., route 145070, Mis- 
souri Pacific 

K. B. Conn.-Little Rock, route 147041, Iron 
Mountain 



348. 77 

144. 61 
93.35 
81.30 

259.89 
153. 88 



153. 88 

259.89 

81.30 

93.35 

144. 61 

348. 77 



Feet. 



50 



Feet. 
60 



50-10 
50-10 
50-10 
30-30 



30-30 
50-10 
50-10 
50-10 
40-20 

40-20 



Feet. 



Feet. 



40-20 



40-20 



20 



20 



83,704 



47,608 
29,268 
93. 560 
101,560 



355, 700 



30 


138,492 


10 


77,967 


10 


24,390 


10 


28,005 


20 


86,766 



209,262 



564, 882 



209 r 262 



52,315 



1414 



RAILWAY MAIL PAY. 



MISSOURI PACIFIC, IRON MOUNTAIN, TEXAS AND PACIFIC, INTERNATIONAL & 
GREAT NORTHERN— THROUGH TEXAS SERVICE— Continued. 





Miles. 


Size of 
mail 

cars in 
use. 


Space 
used as 
reported 
by com- 
pany. 


Daily 
average 
overflow 
mail in 
baggage 

oars. 


Although 
in actual 
use, re- 
ported by 
depart- 
ment as 
dead 
space. 


Properly 
reported 
by com- 
pany, 
car-foot 
miles. 


Train 6, return trip of car. 

Little Rock-K. B. Conn., route 147041, Iron 
Mountain 




Feet. 
60 


Feet. 
40-20 


Feet. 


Feet. 
20 




K. B. Conn.-Tower Grove, route 145070, Mis- 


209,262 


Tower Grove-St. Louis, route 145001, Missouri 
Pacific 










Total 


2,025,667 















Notes. 

Trains 3 and 4: The foregoing statement shows that there were two cars outward from St. Louis on train 
3, one running through to Fort Worth, Tex., and returning on train 4, and that part way over the line 
the car was recongized by the Post Office Department as having 55 feet of space in use, St. Louis to Little 
Rock* 50 feet of space, Little Lock to Longview Junction; 45 feet of space, Longview Junction to Fort 
Worth; while on the return trip the same car is recognized as having 40 feet in use to Texarkana, whereas 
from Texarkana to St. Louis, it is recognized as a 60-foot car. As the train and mail car run through, the 
company properly reported 60-foot car service through in both directions between St. Louis and Fort 
Worth. 

The second car is recognized as 60-foot outward to Little Rock and returning on trains 28-10, was recog- 
nized by the department only as a 40-foot car from Little Rock to Hoxie, and not recognized at all from 
Hoxie to St. Louis, although the outward car was necessarily returned. Properly reported in both direc- 
tions by the company as a 60-foot car. 

Trains 5 and 6: There were also two outward cars on train 5 from St. Louis; one to Fort Worth returning 
on train 6, and the second running to Little Rock and returning also on train 6. As to the through car, 
it was recognized by the department as a 60-foot car all the way through on train 5, but as a 50-foot car only 
from Fort Worth to Texarkana on the return trip, although as a 60-foot car from the latter point to St. Louis. 
As the train and car ran through, company properly reported it as a 60-foot car in both directions. 

As to the second car, which was of 60-foot length, the department recognized it as 55 feet in average use 
on the outward trip, but on the return trip on train 6 it recognizes it only as a 40-foot car. 

As the average use of the storage space was recognized as a 15-foot outward, and as there was a daily 
average overflow mail in the baggage car of 2 feet, the company properly reported 60-foot car in service in 
both directions. 

Trains 7-5 and 4-8: This train represents the expedited fast-mail service from St. Louis to the Mexican 
border, the train being run as a fast-mail train St. Louis to Palestine, Tex., where the mail car is attached 
to regular train 5, leaving St. Louis six hours previously, the company running the fast-mail train six 
hours faster than its regular passenger train, for the postal service. 

There were two cars on this train, one running through from St. Louis to Mexican border, which the 
department recognizes as of 60-foot from St. Louis to Texarkana; 50-foot, Texarkana to San Antonio, 30-foot, 
San Antonio to Mexican boundary; returning, the car is recognized as 30-foot from the Mexican boundary 
to San Antonio; 50-foot, San Antonio to Texarkana; 40-foot, Texarkana to St. Louis. The company prop- 
erly reported 60-foot car in outward service and the return service. 

Manifestly, as a 60-foot car was necessary from St. Louis to Texarkana, the company was compelled, on 
account of the fast schedule, to run the car through to the Mexican border. It was not possible even to 
transfer from a full car to an apartment car at San Antonio, as in that case it would have been impossible to 
make the Mexican National connection, which was essential. 

Even from San Antonio to Mexican boundary, the department recognizes 45 feet of space as necessary on 
the outward trip. Not only was the 60-foot car run through, but there was overflow Mexican parcel post 
mail in the baggage car loaded in that car at St. Louis and run through. As the train and car service was 
necessarily operated through, the company properly reported 60-foot car both directions. 

As to the second car, the department recognizes 60-foot outward, and by correcting its error, 60-foot 
return deadhead. 

As to the overflow baggage-car mail on these trains, it is based upon the daily reports of the conductors 
of the train, and in many cases exceeded the amounts reported, as the statement submitted shows the 
average only and not the maximum space in service. 

Total amount of space properly reported by the company, 2,025,667 car-foot miles, and although actually 
and necessarily in use in the mail service, as explained was treated by the department as dead space and 
charged to passenger service, when not a foot of it was in any passenger service whatever, and nearly half 
of the space was operated in connection with the fast-mail train. 



RAILWAY MAIL PAY. 

MISSOURI PACIFIC— ST. LOUIS-KANSAS CITY SERVICE. 



1415 





Miles. 


Size of 
mail 

cars in 
use. 


Space 
used as 
reported 
by 
com- 
pany. 


Daily 
average 
overflow 
mail in 
baggage 

cars. 


Although 
in actual 

use 
reported 

by 
depart- 
ment as 
dead 
space. 


Properly 
reported 

by 

company 

car-foot 

miles. 


Fast mail train 7, St. Louis-Kansas City 


282. 48 


Feet. 

*60 
60 
60 
60 

2 70 

60 
60 
60 
60 
2 70 

60 


Feet. 
60 
60 
60 
40-20 
70 

60 

60 

3 60 

3 60 

<70 

2 50-10 


Feet. 


Feet. 
























20 
10 
2 










Train 12-Train 4, returning this equipment 
Kansas City to St. Louis 


2 


271,180 
























20 

70 

2 

10 










Train 8, returning equipment west on train 9. . 


2 


779,644 
5 84, 744 








Total 


1,135,568 















1 Postal. *D.H. storage. 

2 Storage. 5 Department does not show correctly to 9 west, as reported. 

3 D. H. postal. 

Notes. 

Train 7, St. Louis to Kansas City, is a fast-mail train, and the department eliminates 20 feet of space in 
one of the 60-foot postal cars operated; 10 feet of space in storage car operated, and a daily average of 2 feet 
of overflow in the express car. The amount sometimes in this overflow was over 10 feet, but the average 
was 2 feet. All of this space was properly reported by the company. 

The department does not recognize the 20 feet of space on the return trip in train 4, nor does it recognize 
70 feet in the return movement of the storage car, and also does not recognize 2 feet of mail carried in the 
regular baggage car on train 4. 

All of this space was properly reported by the company as chargeable to mail service. 

Train 8: The department's statement does not correctly quote the company report outward for train 9, 
of 60-foot car with 50 feet for R. P. O. and 10-foot storage, and fails to recognize in the 60-foot car in return, 
the 10 feet of space referred to, which was properly reported by the company as return for the outward 
movement and recognized by the department. 

Total amount properly reported by the company in mail service, 1,135,568 car-foot miles, which the 
department classified as dead space and charged to passenger service, although practically all was in con- 
nection with the fast-mail operation. 

Total car-foot miles properly and accurately reported by company as actually operated for and 
in actual and exclusive use of Post Office Department and erroneously treated by department 
as "dead space" and improperly classified by department as passenger space: 

St. Louis-Texas service 2, 025, 667 

St. Louis-Kansas City service 1, 135, 568 

Total 3,161,235 

Mr. Mack. I think that explains the situation with regard to the 
Missouri Pacific service thoroughly and completely. 

The Chairman. Do you eliminate in your statement the fourth 
paragraph on page 5 ? 

Mr. Mack. I read the fourth paragraph with regard to the through 
service following the apartment-car service. 

The Chairman. You changed the order of the reading ? 

Mr. Mack. Yes. With reference to the remark of the department 
that the company did not overlook any opportunity to report space, 
I would like to make a statement for the Missouri Pacific that we 
might have shown on our line between St. Louis and Kansas City 
1,522,800 additional car-foot miles for the month of November. 

The Chairman. Why did you not do so? 

Mr. Mack. We operated a fast-mail train for a temporary period 
of about 4 weeks, and 15 days of that time was in the month of No- 



1416 EAILWAY MAIL PAY. 

vember, 1909. As the service was not permanent, and these figures 
should not be used except to indicate service on a permanent basis, 
we refrained from reporting that space and instead took the space as 
it existed on the first 15 days as typical. At the beginning of the 
statement I should also have made the correction in stating that there 
were no errors in our report. I did find in looking it over that there 
were two, but those two errors were against the company and not the 
Post Office Department. They represent 217,184 miles which should 
be added to the mail-car mileage reported by the company. 

The Chairman. I see you have attached here a map of the United 
States showing the Missouri Pacific and Iron Mountain. It will be 
impossible to put that into the record. 

Mr. Mack. I merely submit that in case anyone desires to follow 
the routes in reading the statements. With regard to the closed- 
pouch service, which is not alluded to by the department in its 
memorandum in regard to the Missouri Pacific, the company re- 
ported, based on measurements taken by train baggagemen, space 
representing 2,377,024 car-foot miles, and the department cut that 
space 63 per cent and recognized only 857,211 car-foot miles. Per- 
haps Mr. Prentiss could state whether that ratio held throughout 
the country. 

Mr. Prentiss. The ratio for the whole country was about 50 per 
cent. Approximately as much closed-pouch space was transferred to 
passenger space as was charged to mail in Table No. 3. 

Mr. Mack. The department recognizes 26,299,260 car-foot miles, 
and if the ratio on our lines held throughout the country the de- 
partment would have cut out 44,779,883 car-foot miles; and, as I 
recall, that was not classed as dead space, but was directly charged 
by the department into the passenger service altogether, and it was 
not based upon any measurement by the Railway Mail Service, but 
was based on an estimate as to the number of pouches in which certain 
weight of mail might be included, and the space in which it was 
assumed it might have been placed. Is that correct ? 

Mr. McBride. Based on the number of pouches and sacks reported 
by the company, to which we applied our rule of weights. 

Mr. Mack. Without any measurement as to the space used in the 
car? 

The Chairman. Then, as I understand, what you have stated with 
regard to the department, as far as the Missouri Pacific is concerned, 
they cut out a larger percentage than they did for the rest of the 
country. 

Mr. Mack. The average throughout the country. 

The Chairman. According to Mr. Prentiss's statement they cut 
out 50 per cent. 

Mr. Prentiss. I say that is approximate. 

The Chairman. Wliy did you cut out so much more in the case of 
the Missouri Pacific? 

Mr. Prentiss. The reason for that is that the Pennsylvania and 
the New York Central reported on practically the same basis that 
was used by the department, or a little less than the department 
would have allowed them. Those two systems comprise a large per 
cent of the whole service of the country and affect the average by 
reducing it to about 50 per cent. 



RAILWAY MAIL PAY. 1417 

The Chairman. Still that does not answer my question as to why 
you cut out a much larger percentage in the case of the Missouri 
Pacific than on the roads in the rest of the country. 

Mr. McBride. I presume it is because that company reported 
greater space per sack or pouch than tome of the other roads. 

Mr. Mack. With regard to Mr. Prentiss's statement that the Xew 
York Central followed more closely the department's rule, a memo- 
randum I have here, included in yesterday's record, shows that the 
department cut out 57 per cent of the closed-pouch space on the Xew 
York Central. 

Mr. Stewart. You are referring to the New York Central? I 
named the Xew York Central & Hudson River Railroad. The fact 
that there may have been returns made by the company which we 
disallowed had nothing to do with the rule which the company 
followed and which approximated the department's rule. That is 
the example I stated here. The Pennsylvania Railroad adopted a 
different rule from that used by the railroads' committee. These two 
companies adopted their own plan, the results of which approxi- 
mated very closely to the result obtained by the department's plan. 

The Chairman. Would it be possible in that connection to state 
distinctly the two rules — the department's rule and the railway mail 
pay committee's rule — so that the ordinary citizen may understand 
that ? I mean so that a man does not have to be a specialist in mail 
transportation to get an understanding of the difference in the two? 

Mr. Stewart. Those three plans are all stated in the record. 

The Chairman. Well, in this connection it might be wise to re- 
peat them, if it can be done clearly. 

Mr. Stewart. It can not be done without taking the record and 
reading it. It is not a very small matter. 

The Chairman. Is it lengthy ? 

Mr. Stewart. Yes. 

The Chairman. What is the page in the record — in the volume? 

Mr. Bradley. With regard to the rule of the railway mail pay 
committee, it will be found on pages 71, 72, and 73 of volume No. 1. 

Mr. Stewart. You first want to refer to the department's rule 
and then the rule which the railway mail pay committee have put 
into the record. 

The Chairman. Do they follow in sequence? 

Mr. Stewart. I think not. 

The Chairman. How many pages would it take to give a clear 
distinction as to the two rules — the department's rule and the rule 
of the railway mail pay committee — to which you have referred ? 

Mr. Stewart. Probably one and one-half pages of text for all 
three rules. 

The Chairman. If you will furnish the information as to Avhere 
in the hearings these three rules are set forth, it will be sufficient. 

Mr. Stewart. The rules followed by the department in determin- 
ing the charge for closed-pouch space are given in full on page 101 
of the preliminary report and on page 1015 of volume 7. The rule 
followed by the railroad companies generally is referred to on page 
102 of the preliminary report and page 1017 of volume 7. The rule 
followed by the Pennsylvania and Xew York Central Cos. is recited 
in full on pages 1264 and 1265 of volume 11. 

40300—14 07 



1418 RAILWAY MAIL PAY. 

Mr. Mack. This is the same subject that was discussed during the 
day you were absent — about the relative proportions of unoccupied 
space in baggage cars, door space and aisle space being charged to 
the mail exactly as was charged to the express and passenger service. 

Mr. Stewart. I should like also to have the record shov/ that the 
department does not concede that we cut out closed-pouch space. 
The references made would indicate that we arbitrarily cut out space 
that the companies were entitled to. I think the record ought to 
show that what we did was to make an allowance for closed-pouch 
space upon the department's rule, as distinguished from the rule 
laid down by the railroads' committee. 

Senator Weeks. How much did the Missouri Pacific receive for 
transportation of the mails ? 

Mr. Mack. About one million and a half. 

Senator Weeks. Suppose all the space had been allowed by the 
department throughout. How much additional compensation would 
you have received ? 

Mr. Mack. I have not calculated that. We can apply the per- 
centage, which was in the neighborhood of 20 per cent. It would 
have increased our compensation that much. 

The Chairman. Twenty per cent of $1,500,000? 

Mr. Mack. Yes. 

The Chairman. That is, you would have received that much more 
of a credit under your space ascertainment than was allowed you in 
the department's space ascertainment? 

Mr. Mack. Yes. 

The Chairman. You would not have received $300,000 more under 
the present method of railway mail pay than you did receive? 

Mr. Mack. No, sir ; but the import of the figures is that they rep- 
resent underpay to that extent. 

The Chairman. On a space basis ; that is, if the suggested plan of 
the department were in operation? 

Mr. Mack. No. We would not receive that if the suggested plan 
of the department was in operation. Our pay would be very much 
reduced, as I pointed out in my testimony the other day. The import 
of these figures is on the basis reported by the department, the com- 
parative basis of express, mail, and passenger, the railroads are un- 
derpaid over $15,000,000 a year. I pointed out particularly the fig- 
ures in previous testimony, the exact amount based upon the exact 
number of car-foot miles. 

The Chairman. I do not see where that has application. It may 
possibly be because of the subject being extremely technical. You 
do not claim that you were $300,000 underpaid in the money you 
actually received from the department for that year? 

Mr. Mack. Not on the present basis of pay. 

The Chairman. That is what I mean. 

Mr. Mack. If we had been paid adequately for the service as meas- 
ured on that basis, we should have received 20 per cent more money. 

The Chairman. Measured on what basis ? 

Mr. Mack. On the basis of the space actually in use. 

The Chairman. Upon what rate of compensation — the space actu- 
ally used ? 

Mr. Mack. Upon the present rate of compensation. In other 
words, the result from the present rate of pay did not produce an 



BAILWAY MAIL PAY. 1419 

adequate amount of pay in proportion to the space occupied by the 
mail service. 

Mr. Lloyd. In other words, if you had gotten pay for all the space 
used according to the space that was used, you would have gotten 
$300,000 more? 

Mr. Mack. Yes, sir ; on the Missouri Pacific. 

The Chairman. But under the present rate of pay the only space 
classification is that of the R. P. O. car, is it not? You have your 
pay for the weight of the mail ? 

Mr. Mack. Yes, sir. The proposition here is a comparison to de- 
termine whether the pay was adequate or not. We claim the pay was 
not adequate because the space occupied by the mails was greater in 
proportion than the pay received for services on the other basis for 
passenger trains. 

The Chairman. But you do not predicate your claim that the rail- 
roads are underpaid $15,000,000 on this demonstration that you made, 
so far as the Missouri Pacific is concerned? As I understand, the 
contention of the railroads' representatives is that they are underpaid 
$15,000,000 because they received nothing for the side service, because 
of the quadrennial weighings, and because of one other factor — the 
failure to pay for apartment-car service. That is true ? Those are 
the main factors on which the claim of the railroads is based that they 
are underpaid? 

Mr. Mack. Those are the suggested means of meeting the question 
of underpay. 

The Chairman. Then, what is the method by which you arrive 
at a determination that you are $15,000,000 underpaid? 

Mr. Mack. On the comparison of space occupied. 

The Chairman. Yet you object to the adoption of space as the 
measure of the service rendered. 

Mr. Mack. Not as a measure of comparison of the value of the 
services at that time. 

The Chairman. Value of the service to what — passenger? 

Mr. Mack. Compared with the passenger service. 

The Chairman. Then, your contention is that the mail payment 
should be based upon and commensurate with the passenger returns — ■ 
a revenue basis entirely ? 

Mr. Mack. Yes, sir; on the ground that the passenger rates are 
either approved by the Interstate Commerce Commission as to inter- 
state rates and are approved or fixed as intrastate rates by the State 
railroad commissions or State laws. 

Mr. Lloyd. That is the strongest statement, I believe, that has 
been made on either side in favor of a space basis. 

Mr. Stewart. I would like further to suggest that Mr. Mack's 
conclusions as to what his company was entitled to in space in No- 
vember. 1909, and what his company would be entitled to if he had 
received pay for that space on the basis of the present law are all 
predicated upon the theory that the railroad company is going to 
absolutely control the space that the department needs for transport- 
ing the mails. 

The Chairman. I do not catch that? How do you deduce that 
from the statement ? 

Mr. Stewart. Because the Missouri Pacific charged to us full 
space on every occasion, on every train, for every run, regardless of 



1420 KAIL WAY MAIL PAY. 

the needs of the department. Now, we are operating at the present 
under a statute of Congress which provides that we shall pay for 
three sizes of cars specifically in addition to the weight-basis pay — 40 
feet, 50 feet, and 60 feet. If we adopt Mr. Mack's theory of this cost 
ascertainment, we necessarily disregard all distinctions that are now 
made in the law in the matter of authorizing full railroad post-office 
ears, because he has charged us for 60 feet in every case whether we 
need it or not, and if we followed that plan in the administration 
of the service to-day we would pay for only 60-foot cars under the 
present law. 

Mr. Lloyd. In that connection, as I understood your statement 
made just before we adjourned yesterday, you said that on these 
trips where you used a 60-foot car part of the way, that under your 
proposed system you would pay for the full 60-foot car both ways. 
If that is true, you admit that his contention is right. 

Mr. Stewart. I think there is a distinction that you have not 
observed. 

Mr. Lloyd. I am anxious to get it, because this is crucial, it strikes 
me. It seems to me you are each yielding to the other. 

Mr. Stewart. I think not. The practical operation of this pro^ 
posed plan would be that where we now pay specifically additional 
money for full cars, and, therefore, we authorize 40 feet over part 
of the run and 60 feet over another part of it, the tendency would 
be to combine all mails in the 60-foot cars and we would have, in- 
stead of these separate authorizations and accountings, practically 
a 60-foot line throughout. This, in my judgment, would be the prac- 
tical operation of the proposed law. It abolishes the distinction be- 
tween the space basis and the weight basis, and necessarily forces the 
department and the companies to accommodate the service to the 
conditions of one basis. 

The Chairman. To make the record clear, you say the new law. 
You mean the suggested plan, if adopted ? 

Mr. Stewart. Yes. 

Mr. Mack. I would be glad to get down to the actual proposition 
as applied to this car from St. Louis to the Mexican boundary. We 
run a 60-foot car through to the Mexican boundary, or we did at that 
time, and return. That car was recognized by the department as a 
€0-foot car part of the way, 50-foot car part of the way, 35 foot or 
40 foot part of the way, and on the return trip 30 foot, 50, and 40 
foot. Now, this was a through operating run which was absolutely 
necessary. There seems to be no question but what that space should 
have been recognized as a 60-foot car throughout, and in all cases 
there was overflow mail in the baggage car, sometimes two cars and 
at the present time there are three cars. On a long run of a car, such 
as that, on the space basis, would the department pay for 60-foot car 
without any question in a case of that kind ? 

Mr. Stewart. In the first place, let me go back to the first part of 
jour proposition ; that is, the fast-mail train. You offered that train 
to the department knowing the conditions under which you were go- 
ing to operate it. You accepted the present pay on the theory that 
you were getting compensation adequate to put that train on and you 
have maintained it ever since under those conditions. We do not 
think it fair now to say that the department should change the basis 
of our arrangement in this ascertainment of cost of service. As to 



RAILWAY MAIL PAY. 1421 

the rest of your question, I can only say, as I replied to Mr. Lloyd, 
that we can not go into the details of a specific line at this time and 
say what would actually happen, but our belief is that under the 
operation of this proposed statute the mails will be consolidated 
upon a basis of space. The result would be the most economical ar- 
rangement for the department on the one side and the most eco- 
nomical arrangement for the companies on the other side. It could 
not be anything else where both are interested in the same thing, 
We are interested in paying for the least amount of space and the 
railroads would be interested in furnishing us the space most eco- 
nomically arranged. The tendency would therefore be to combine 
all mails in the space we would authorize and the probabilities are. 
on a long line like that, that authorizations would be very much more 
uniform than they are now, because now we have two bases of pay. 
There is only part of the space we can pay for specifically under the 
present law. 

Mr. Mack. I so understand, but that does not answer the question 
which, I think, could be answered very directly in this case and cases 
like the Great Northern, which was presented yesterday. If Mr. 
Baskerville is here, perhaps he could illustrate it at this time; that is,' 
would the car on its through operating run be paid for on the max- 
imum basis required in either direction over even part of the route; 
if not, any rule otherwise would be unfair to the company, because 
the company must furnish and haul such a car such a distance. 

Mr. Stewart. Yes. That is our plan — to pay for the maximum. 

The Chairman. That would be your plan ? 

Mr. Mack. I understand, but Gen. Stewart does not come to the 
point I am trying to reach. He says he would pay for the maximum, 
but will he pay for the maximum over the usual operating run of the 
car in this case to the Mexican border, and in the case of the Fort 
Worth cars through to Fort Worth, in the case of the Little Rock 
cars to Little Eock and return. 

Mr. Stewart. That would depend on what the needs of the services 
are. I understood your question to be whether we would pay, in both 
directions, for the maximum required in one direction. That is our 
plan. Whether we would pay for a 60-foot car between certain 
points I could not say to-day and nobody else could say to-daj^, but 
it depends on the needs of the service. 

Mr. Mack. The point we are trying to get at is when the car must 
run through is it to be changed as it is now, a 60-foot car part of 
the way, 30-foot car part of the way, and on the return run different 
lengths of car paid for? 

Mr. McBride. Is the entire 60-foot car used to its capacity all the 
way through to the boundary line? 

Mr. Mack. I can not tell. The car is run through because it is 
lieeded as a 60-foot car when we start out at St. Louis. You can not 
change it several times as you go over the line before you get down 
to the end of the run. It is like a passenger car, with the maximum 
mail starting out, but in many cases, when you get to the end of the 
line, there is only one passenger left in a car, possibly one bag of mail 
in a car. but* any basis of pay must necessarily be on the maximum 
required, which fixes the requirement as to the car which must be 
furnished at the initial point, and then run through. 



1422 KAILWAY MAIL PAY. 

The Chairman. That is required by the Post Office Department? 

Mr. Mack. Yes. 

The Chairman. And necessarily operated during the run by the 
railroad ? 

Mr. Mack. Yes. 

Mr. Worthington. I would like to mention another viewpoint in 
that connection. At the present time the K. P. O. car represents one- 
tenth of the total pay, and changes of authorization made by the de- 
partment necessarily affect only one-tenth of the pay, where the roads 
still get nine-tenths of the pay based on the weight, whereas under 
the proposed law changes .of that kind would have 10 times the 
extent — that is, it would affect all of the pay of the railways directly, 
and the incentive of the department to change authorizations, to my 
mind, would be much greater where they could thereby save 10 times 
the amount that they do at the present time. 

Mr. Stewart. I corrected that statement at the last hearing and 
said that that was erroneous, because while full cars represent one- 
tenth of the total pay they represent 46.24 per cent of the service 
on space basis. 

Mr. Worthington. At the same time the compensation for han- 
dling the mail at the present time is nine-tenths, based on weight. 

Mr. Mack. In other words, we are having a controversy with the 
department, as Mr. Stewart has pointed out, with reference to the 
full R. P. O. car space used in connection with that service, which 
represents only a portion of the service and only one-tenth of our com- 
pensation. But when our entire compensation, representing 10 times 
that amount, is at stake, the controversy will then not only apply to 
these routes which are full R. P. O. routes, and only 10 per cent of the 
pay, but it will apply to every dollar of mail pay that we would receive, 
except on exclusive closed-pouch routes. As I pointed out the other 
day, we would have to have 60-foot cars, 50-foot cars, and all these 
different classes of cars, and we would not do as we do to-day where 
we are paid on a different basis. We could not do, as we do to-day, 
furnish the cars that we have, because our pay would be so entirely 
different. If the Post Office Department said they needed a 40-foot 
car, we could not furnish a 60- foot car, but we would have to go out 
and buy a 40-foot car, because we could not afford to run the chance 
of putting in a 60-foot car and have them pay for only 40 feet of it ; it 
would mean too great a loss. So we would not only be in that pre- 
dicament as to full R. P. O. cars, but it would apply also to the apart- 
ment car as to how much space we used. We would have to have 13 
different kinds of cars and keep them in stock like boxes on a shelf. 

Senator Weeks. You do that now, on the train from St. Louis to 
the Mexican border ? 

Mr. Mack. No, sir. Only 60- foot cars are used. 

Senator Weeks. Do you carry passengers on that train ? 

Mr. Mack. We carry from St. Louis to Texas a sleeping car to aid 
in maintaining the service. 

Senator Weeks. Do you carry express ? 

Mr. Mack. We carry some express, but very little. 

Senator Weeks. What part of the space in the trayi is used for 
passengers, express, and mail? 

Mr. Mack. From St. Louis to Palestine, Tex., is what we con- 
sider the fast mail train. We put one sleeping car on out of St. 



RAILWAY MAIL PAY. 1423 

Louis, with the idea of trying to augment the earnings of that train, 
because the mail did not support it for some years. On the new 
space basis of pay proposed in Document 105, no railroad could op- 
erate a fast mail-train service of two postal cars with a 20 per cent 
land-grant reduction, for we would only be paid 15 cents a car-mile, 
and we would not earn 50 cents a mile on the train. 

Senator Weeks. Is the train profitable now? 

Mr. Mack. It probably supports itself now. I think we earn about 
$1.15 to $1.20 per train-mile. 

Senator Weeks. Can you tell the relative earnings of the passenger 
space, the express space, and the mail space on that train ? 

Mr. Mack. We have no such separate statistics by trains. 

Senator Weeks. Do you not run some number of cars ? 

Mr. Mack. Yes, sir. 

Senator Weeks. Would it not be easy enough to do that ? 

Mr. Mack. I do not know that it would. I do not know what the 
express earnings were. 

Mr. Worthington. The difficulty is with the express earnings. 
That is reported to the railroads as a whole for the entire system. 

Senator Weeks. It seems to me that would be a complete illustra- 
tion, if you could do that, of the passenger space, express space, and 
mail space on a train of that kind where you run cars, using the same 
equipment or in the same maimer, that there you could show you were 
earning as much from your mail space as from your passenger space. 

Mr. Mack. Our passenger space on that train is a mere incident. 

Mr. Worthington. Is it not a fact that that train was run pri- 
marily for the mail service and you simply added the express and pas- 
senger service to fill out, otherwise that traffic would be handled on 
your regular train ? 

Mr. Mack. That is entirely true. 

Senator Weeks. It strikes me where 60 feet of space is needed on 
some part of a through route, that the department should pay for the 
(30 feet of space for the entire route. If there was a case in which the 
amount of space required was not over 40 feet and the railroad had 
but a 60-foot car to furnish for that service 

Mr. Mack. Then the department could only pay for 40 feet. 

Senator Weeks. Yes. 

Mr. Mack. Our point there is we would have to have a lot of cars 
of different kinds that the railroads would pot now employ and will 
not now build. The railroads are not building 40-foot cars ; they are 
building 60 and 70 foot cars only. 

Senator Weeks. In that case you would have to run a 60- foot car 
and be paid for the maximum amount used on any part of the run. 

Mr. Mack. We would not undertake to do that, because on the 
maximum days an excess of that 40- foot space would likely be used, 
and Ave are not permitted in the mail cars to observe and if we sus- 
pected it was being used on those days without any compensation, 
the only way we could protect our compensation would be by having 
a complete outfit of these various units of cars. Take to-day, with 
the varying cars we have, we are unable to put specified cars on some 
runs. If the department calls for a 15-foot car on a particular run, 
we might not be able to put any 15-foot car on that run, but we 
might have to put in a 20 or an 18 foot car ; but where our entire pay 
depended upon space we would be compelled to have all these classes 



1424 RAILWAY MAIL PAY. 

of cars to protect our pay. We could not take the chance of having 
the Railway Mail Service say they only needed 15 feet in a car. 

Mr. Stewaet. Why could you not put a partition in a 60-foot 
car, just as you do now, and use the rest of the car for your own 
purpose ? 

Mr. Mack. I think you will recognize from the plan of the 60-foot 
car that you can! not do that. It is impossible. 

Mr. Stewart. What we would ask for would be 40 feet on your 
assumption. We have a plan for a 40-foot car. Wiry could you not 
use the rest of the car for your own purpose ? 

Mr. Rowan. Because you get your mail in there and out of the car 
through the use of the doors and you would not have the use of the 
doors at all, the 40 feet of distribution space being between the two 
sets of doors. 

Mr. Baskerville. Twenty feet of space on lines that would justify 
60 feet would not be worth anything to the railroad company. That 
is why we do not put partitions in there. We start out with a 60- 
foot car with the mail and the baggage is in another car and the 20 
feet would not do us any good after you took out the 20 feet of mail 
and changed the authorization to 40 feet. That is why we would not 
put a partition in it. We would have to have a partition that we 
could move around. 

Mr. Mack. The design of the car makes it impossible to change a 
40-foot car to a 50-foot car and a 50-foot car to a 60-foot car. I hap- 
pened to be a member of a committee representing the railroads, in 
cooperation with the Post Office Department, on the standards for 
steel cars and we very earnestly urged, on behalf of the railroads, that 
the committee adopt a plan that would permit of extension such as 
that. The committee did not adopt any such plan. 

Mr. Stewart. The question of construction of cars is always open 
to change. The Postmaster General is given authority by law to 
provide for emergencies just like that. 

Dr. Lorenz. Would not most of your objection be answered if the 
units Mr. Lloyd suggested, 15 feet and 60 feet, were adopted? Then 
you would not have to break up a car into units which you could not 
use. 

Mr. Mack. Personally I would not favor any units less than 60 
feet for a car, for we are not building anything less. As to apart- 
ment cars I would like to say that even 30 feet of space in some cases 
requires furnishing to the department a full car. and I think that we 
have really reached the capacity of apartment-car service to-day 
when we have a 25-foot standard, and then a straight full ^car. I 
think that that is the experience on the railroads, that really a 30-foot 
car is too large for an apartment car. 

The Chairman. You think the uniformity of car lengths is desir- 
able for safety and economical operation of trains. Is that an estab- 
lished railroad policy? 

Mr. Mack. Uniformity of cars? 

The Chairman. Car lengths; that is, 60-foot cars, 70-foot cars, or 
would a 30-foot car or a 40-foot car put in between the two 60-foot 
cars minimize the safety and increase the cost of operation ? 

Mr. Mack. I could not pass any opinion on that. That is an oper- 
ating question. 



RAILWAY MAIL PAY. 1425 

The Chairman. Do you have regular standards on the Missouri 
Pacific for car lengths? 

Mr. Mack. Of course the railroads to-day have all sorts of cars, 
particularly the older roads. The proposition we have to consider 
here is the fact that the railroads to-day are not building such cars, 
but they are building 60 and 70 foot cars as standard cars — passenger, 
express, and all classes. 

The Chairman. The reason being what — increased speed and de- 
creased cost of operation? What is the reason for it? 

Mr. Mack. I expect the purpose is standardizing uniformity. 

The Chairman. Mr. Worthington, can you answer that. 

Mr. Worthington. On our lines, as to apartment cars, we are not 
building any mail apartments of less than 30 feet in length. 

Mr. Chairman. You do not have 30-foot cars, but you take a 60- 
foot car and use 30 feet for the authorized apartment and 30 feet 
for baggage and express. You do not build any 30-foot cars to run 
on the Southern Pacific? 

Mr. WORTHINGTON. No. 

The Chairman. The smallest car you build is a 60-foot car? 

Mr. Worthington. At the present our standard is 60 feet for full 
R. P. O. cars. 

The Chairman. For any car that goes into a passenger train? 

Mr. Worthington. Yes, sir : not less than 60 feet. 

The Chairman. Your reason being what? Increased speed and 
decreased cost of operation ? 

Mr. Worthington. Well, Ave feel that a car of smaller length is 
not economical. Take, for example, a passenger coach: The dead 
weight per single seat is always greater as the car is made smaller 
and we would feel that anything less than 60 feet is not an economical 
length. 

The Chairman. Mr. Mack, referring to Dr. Lorenz's question about 
Mr. Lloyd's suggested plan adopting three units of 60, 30, and 15 
foot cars, if that was designated in the law, would you then say that 
you would have, under an authorization of 15 feet by the department, 
45 feet to utilize for other business and could adapt your other busi- 
ness to a certainty instead of an uncertainty where it was left to the 
discretion of the department. 

Mr. Mack. Your thought is that in a 15-foot car the Post Office 
Department, where they had a 15-foot car. would confine their mail 
to the 15 feet of space? 

The Chairman. But they can not get over 15 feet, and when they 
have 16 feet of business they have to make some other arrangement 
with an increased authorization? 

Mr. Mack. But that they would not do. 

The Chairman. What would they do ? 

Mr. Mack. They would keep on carrying the overflow in the 
baggage space. 

The Chairman. That is cut out. That is lumped, under the Lloyd 
suggestion, and Dr. Lorenz's elaboration of it. 

Mr. Mack. We do not feel that the space basis fits the service. 

Mr. Lloyd. So far as I am concerned, on the space basis, if you 
are going to have an absolute space basis, I am inclined to think we 
can go farther than has been suggested in any concrete form and 
provide that wherever closed-pouch mail is carried that the mini- 



1426 KAILWAY MAIL PAY. 

mum space that shall be used in carrying closed-pouch mail shall be, 
say, 10 feet in a car. In other words, if you carry closed-pouch 
mail and only carry half a dozen closed pouches, so far as the au- 
thorization between the railroad company and the Government is 
concerned, it must be a certain number of feet. It seems to me that 
that would overcome the problem about the closed pouch. Then if you 
had a full 60-foot car, and there is overflow mail and it goes into the 
car, you get pay for the space; if it was just a small space, you would 
get paid for at least 10 feet, and if it is a larger space, you would 
get pay for the space actually used. So far as I am personally con- 
cerned I am opposed to any kind of system that does not give the 
railroad companies full pay for everything they do for the Gov- 
ernment, and I do not want them to have a cent more than they 
ought to have for the service rendered. 

Mr. Mack. The postal system is very fluctuating. I do not be- 
lieve, under practical administration, it would be possible to confine 
the mail as it flows in such varying and irregular quantities within 
a given space unles that space were based strictly and absolutely 
upon the maximum. 

Mr. Lloyd. The bill which Gen. Stewart suggests, so far as full 
railway post-office cars are concerned, is so plain that it seems to 
me there is no possibility of trouble about its construction. It says : 
" In computing the car-miles of the full railway post-office cars and 
apartment railway post-office cars the maximum authorized in 
either direction of a round-trip car run shall be regarded as the space 
to be computed in both directions," etc. 

Mr. Worthington. That refers really to the return trip ? 

Mr. Lloyd. It refers to both directions. 

Mr. Worthington. That would not prevent in any way the change 
in authorization from a 50-foot to a 60-foot car 100 miles out if the 
department wished to do it ? 

Mr. Lloyd. Yes. This applies to the car you start with, a 60-foot car. 
As I understand this, if you start with a 60-foot car and it makes a 
round trip, the Government would be bound to pay for a 60-foot car 
for the round trip ? 

Mr. Mack. I see your point. Your distinction is the round-trip 
movement, but that paragraph very studiously avoids reference to 
the length of the run. That is what I am pointing out. here, that 
when the department only pays one-tenth of the total mail pay for 
full railway post-office cars they decline to recognize the minimum 
space used in both directions over a through operating run of the 
car. 

Mr. Lloyd. I understand that now, but they have no such require- 
ment as that. I may misunderstand this proposed section, but to 
me it is perfectly plain that they are bound to pay for the car, not 
the train, but the car used, and they have to pay for the car at the 
maximum space used, so that if they call at any time, either outgo- 
ing or incoming, for 60-foot space, they have to pay for it all the 
way around. 

Mr. Mack. That is for the route, but Mr. Stewart will not say it. 

Dr. Lorenz. That is for the route, and he may break up the run 
into more than one route. 

Mr. Lloyd. That is the contention that has been met at times 
past, but it seems to me, according to this, if the car starts at St. 



RAILWAY MAIL PAY. 1427 

Louis and goes to the Mexican border, and then comes back from the 
Mexican border to St. Louis, they have to pay for the full space 
used at any place on that run ; it does not make any difference where 
it runs, but it is the round trip. 

Mr. Mack. Suppose the department says that that particular car, 
although it is a 60-foot car, is not needed all the way through '\ 

Mr. Lloyd. They are precluded from that. Let us get the gentle- 
man's idea. I think he has precluded himself from saying that if 
the cars makes a round trip he has to pay for it. How about that, 
Gen. Stewart? 

Mr. Stewart. That can be controlled by the manner of stating the 
route, very largely. 

Mr. Lloyd. Then if you just stated the route half way, you made 
that 60 part of the way, 40 part of the way, you would pay for 60 
feet on the part you needed 60 feet and 40 feet where you needed 
40 feet. If that is true, then I am opposed to that proposition, for 
that is not fair. If you are going to use a 60-foot car from St. Louis 
to the Mexican border and not pay for it, I do not think that is a 
fair proposition. 

Mr. Stewart. You have to confine your payment for cars to routes 
over which they are operated. 

Mr. Lloyd. But between St. Louis and the Mexican border there 
are three or four routes, and you can make just as many routes as 
there are divisions. You can make a dozen routes between St. Louis 
and the Mexican border over which this car would travel. 

Mr. Stewart. We would make our routes conform, as near as prac- 
ticable, to the running of the cars. That is the idea under this plan. 

Mr. Lloyd. I am getting at the discretion of the department. I 
understood you just now opposite to what I understood you to say 
on yesterday. You would make the authorization on the route, and 
if you had half a dozen routes between St. Louis and the Mexican 
border you might have half a dozen different kinds of authorization 
for that between St. Louis and the Mexican border. 

Mr. Stewart. Yes; because you might not have a through car run 
always on that same route. 

Mr. Lloyd. I am talking about a through car. 

Mr. Stewart. That would be a different thing. I think I would 
agree with you there. 

Mr. Lloyd. Now, let us see if we understand each other, because 
this, it seems to me, is vital, and that is the difference between you 
people, as I understand. If a car actually starts at St. Louis and 
goes to the Mexican border and returns to St. Louis, as demanded by 
you, as I understand this law, the car has made a round trip where 
to? Not on a route, but on several routes. It has made a run from 
St. Louis to the Mexican border and return, and that is the round 
trip of that car. If that is the round trip of that car and at any 
place on the journey, according to your proposed law, you authorize 
the use of a 60-foot space, you must pay for that 60-foot space the 
whole distance, outgoing and incoming. Is that right? 

Mr. Stewart. Hardly right. That would leave the control of the 
space for which the department should pay entirely to the railroad. 
If you are going to combine a through car run over several routes 
and compel the department to pay for the maximum needed on any 



1428 RAILWAY MAIL PAY. 

route it gives the company the opportunity to rim one size car out to 
fill these several authorizations. That will not be fair to the depart- 
ment. 

The Chairman. But you have the protection in your own hands, 
have you not ? The initiation has to take place with the department 
because the authorization is from the department. 

Mr. Stewart". We would call for a 60-foot car. 

The Chairman. Then, as Mr. Lloyd says why should you not pay 
for a 60-foot car for the whole run, provided it is used by the Post 
Office Department for that run, although in different lengths, 40 
feet part of the way, 50 feet, and 60 feet; but you need it for the 
whole run, and why should you not pay by the run instead of by the 
route ? 

Mr. Stewart. We would pay by the run, according to the routes. 

Mr. Lloyd. And you pay according to the route and not the run ? 

Mr. Stewart. It would carry the same pay on the several routes. 
A 60-foot car would carry the same pay. 

Mr. Mack. That is not the point. 

The Chairman. Would you pay for the full 60 feet for the whole 
run? 

Mr. Stewart. If we needed it, of course. 

The Chairman. If you needed it for any part of that run, and 
you called for it. It seems to me you have the absolute protection, 
from a governmental standpoint, in the fact that the initiation lies 
entirely with you. You call for so much space, you make the ap- 
portionment, and you call for 60 feet, and they run 60 feet. If it is 
not used by the railroads during any portion of that run for any 
other business except the mail service, why should not the Govern- 
ment pay for that if the initiation comes from the Government's 
representative ? 

Mr. Stewart. There is no question at all between us on that. We 
would pay for it. 

Senator Weeks. Why would you not be on all fours with the 
sleeping-car service? Suppose every time that train leaves St. Louis 
with a full car of mail, 60 feet, and two sleeping cars filled with 
passengers; they have to run those two sleeping cars through, al- 
though they are dropping the passengers all the way down, and 
perhaps they do not have half a car when they reach the Mexican 
border, but sometimes they have a full car. I should think one 
service was on all fours with the other ; it is necessary to run the car 
at some part of the trip, or the two cars, because there are two car- 
loads of passengers, and there may be. I should think it was on 
all fours with the mail service of that character. If it is necessary 
to run the cars through at all it seems to me you should pay for the 
whole service. 

Mr. Lloyd. Let me ask another question. It seems to me that it 
all hinges on what the definition of a round-trip car run is. As I 
understand General Stewart now, he construes that to mean the 
round trip of a run which they have established. 

Mr. Stewart. No, Mr. Lloyd; I am sorry that I have not made 
myself plain. This is what I intended to say: That car runs must 
be considered with reference to the stated route over which it is 
operated, and necessarily so. We have to state the service by routes. 

Senator Weeks. Why do you have to do that? 



RAILWAY MAIL PAY. 1429 

Mr. Stewart. I will come to that in a moment. Then, neces- 
sarily, the payment for all car operations over that route must be 
separate and distinct from the payment on other routes. 

Senator Weeks. Why is not a route the distance from St. Louis 
to the Mexican border instead of from the Mexican border to San 
Antonio ? 

Mr. McBride. There are three different railroad companies in- 
volved there. 

Senator W^eeks. Why is it necessary to divide a route by the com- 
panies operating? 

Mr. McBride. I presume it is necessary, because the companies 
desire to have the revenue accruing to each company paid to each 
company. 

Mr. Stewart. We contract now with separate companies. We 
never consider the practicability of contracting with joint companies, 
but that might be done. 

Senator Weeks. For a car goes through over different trucks on 
a route. 

Mr. Stewart. It iright be done. 

Senator Weeks. Would not that simplify the matter very ma- 
terially ? 

Mr. Stewart. If there was any advantage in it. 

Mr. McBride. It would put on the railroads the burden of divid- 
ing the revenue between themselves. 

' Mr. Lloyd. Could ycu not do this ? I do not know the facts about 
it, but suppose you have a through mail car from St. Louis to the 
Mexican border and you have to Texarkana, Tex., a through 60-foot 
car and a 30-foot compartment. Why could you not call the 60-foot 
car run a route, as far as that particular service is concerned, and the 
other, to Texarkana, a route so far as the compartment car was con- 
concerned ? 

Mr. Stewart. That would make such a multiplicity of routes it 
would be very difficult to administer, and you can accomplish exactly 
the same purpose by stating the routes as we do now, which conform 
as nearly as practicable to the car runs. 

Mr. Lloyd. I am trying to get at the trouble that is between you 
people and the railroad companies ; they say you are going to do just 
about what they say 3 r ou are going to do, and I am trying to make it 
appear that you ought not do that way. 

Mr. Mack. Take, for instance, a 30-foot car that Mr. Lloyd sug- 
gests, which is the second car on the train. We would have to fur- 
nish 30 feet of space on the train, where the Government already 
requires a full car. For instance, in this through service that Mr. 
Lloyd refers to we would have no passenger use for a 30-foot apart- 
ment car in service of that character. We could not use space in 
it at all. We have to build up our train with baggage, sleeping, and 
passenger cars for the general business, and your demands for a 
30-foot car on a train of that character would compel us absolutely 
to haul the 60-foot car with 30 feet of space that we have no use for 
whatever. 

The Chairman. Suppose that that authorization extended over 
30 days and the pay extended over 30 days whether it was used or 
not. Would you not have opportunity of adjusting your business to 
utilize the 30 feet of space? 



1430 RAILWAY MAIL PAY. 

Mr. Mack. On trains of that character we could not use it. 

The Chairman. Could you not adjust your business so that your 
80 feet could be used for baggage or express service ? 

Mr. Mack. No. On trains of that character an apartment for bag- 
gage space is of no value because we must make provision in large 
cars. In this case we use 70-foot baggage cars for service of that 
kind to take care of our baggage and express. A request for a 30- 
foot apartment car is absolutely to us a request for a full car, and on 
such trains we would hesitate very much to furnish it, if possible. 
Take, for example, what the effect of it would be. The effect would 
be on this proposed rate, on a land-grant road, to pay 7J cents a mile 
for hauling a car on a heavy train with perhaps 10 or 12 cars. It is 
a very serious matter with us to consider a second car under such 
circumstances. 

The Chairman. Take the conditions as they exist to-day. You are 
called on by the department for a 30-foot apartment car. What do 
you do? Put on a 60-foot car? 

Mr. Mack. We do not happen to have such cases on our line. We 
would be unable to furnish 30-foot cars for that kind of service. 

The Chairman. What kind ? 

Mr. Mack. For a supplemental car on a heavy through train of 
ihis character. 

The Chairman. If they call for 40 feet, what would you do? 

Mr. Mack. We would have to furnish a 60-foot car. 

The Chairman. What do you do to-day with the excess 20 feet 
of space ? 

Mr. Mack. It is in the postal car. We furnish a 60- foot car if 
they call for a 40-foot car. 

The Chairman. What do you do with the 20 feet of extra space? 

Mr. Mack. Nothing at all. 

The Chairman. In no instance? 

Mr. Mack. No, sir. 

The Chairman. It is not utilized by the railroad for any service 
whatever ? 

Mr. Mack. No, sir. 

The Chairman. It is not ? 

Mr. Mack. No, sir; it is not. 

The Chairman. What would be the objection to stating the pay 
of the railroad runs and the service by routes? You say it is neces- 
sary to designate your service by routes. Is it possible to designate 
the service by routes in order to arrange for the pay by car runs? 

Mr. Stewart. That is exactly what we would do under this pro- 
posed law. 

The Chairman. You would? 

Mr. Stewart. Yes. 

The Chairman. Then you would pay for the car run for the maxi- 
mum authorization the full round trip of the car run, would you ? 

Mr. Stewart. Yes; over the route. 

The Chairman. Over the runs ? 

Mr. Lloyd. He says over the route. 

Mr. McBride. The run might cover several routes. 

Mr. Stewart. The supposed car run may cover the trackage of sev- 
eral companies. We contract with one company for the service. We 
do not contract with two or three companies. 



RAILWAY MAIL PAY. 1431 

Mr. Lloyd. Of course not. Just exactly as they do with the Pull- 
man coach. Here is a coach put on at St. Louis that goes to the 
Mexican border. You make a contract with the initial road which 
takes it through to the end, and it does not make any difference how 
many companies there are handling it. It is nothing to the passen- 
ger or passengers what arrangements may be made with the several 
roads, just as long as they get the service. 

Mr. Mack. Here is the Great Northern with a clearer case than 
that. There is one route, one railroad, from St. Paul to Devils Lake, 
where they use a 60-foot car; from Devils Lake to Glasgow they 
allow 40 feet; and from Glasgow to Spokane 30 feet, and from 
Spokane to Seattle 50 feet. 

Mr. McBride. That is not all one route. 

Mr. Baskerville. It was when you made up Document 105 — one 
route from Fargo to Spokane. 

Mr. Lloyd. Is it a through car that goes from St. Paul to Spokane ? 

Mr. Baskerville. Yes, sir; from St. Paul to Seattle — the route 
ran from Fargo to Spokane when Document 105 was made. 

Mr. McBride. It does not run from St. Paul to Spokane? 

Mr. Baskerville. You have given GO feet from Fargo to Devils 
Lake, 40 feet from Devils Lake to Glasgow, and, on the same route, 
30 feet from Glasgow to Spokane. We have to run a 60- foot postal 
car. 

Mr. McBride. It is occupied by storage mail ? 

Mr. Baskerville. Not at all. You did not give us any credit or 
allowance for it. 

Mr. McBride. Do you mean in Document 105 ? 

Mr. Baskerville. You did not allow it in your calculation in Doc- 
ument 105. You did not allow for 60 feet, and you charged that 
back into the passenger space. 

Mr. Mack. The point of the matter is this: The proposition is 
whether in that case a 60- foot car should be authorized from St. Paul 
to Seattle ? 

Mr. Baskerville. Fargo to Spokane, we will put it. 

Mr. Lloyd. My notion was, as I read this law, that it was the 
car run, and if the car ran from St. Paul to Seattle and return you 
would get pay for 60 feet of space ; but that is not, however, the in- 
tent of Gen. Stewart. 

Dr. Lorenz. Should not the car run be taken into connection with 
the train run? 

Mr. Lloyd. I am using his language. The language here is the 
car run, and I understand the car run is the run of the car; if the 
car runs from St. Paul to Seattle and return, that is the round-trip 
car run of that car. 

Dr. Lorenz. But there may be cases in which the car run is longer 
than the train run? 

Mr. Mack. Yes. A train may start at one point and break up 
into different sections at junction points, but you can not break a 
60-foot car into a 50-foot car or a 40-foot car; and, in this case, on 
the Great Northern, you can not change it from a 60-foot to a 40-foot 
car, and then from a 50 to a 30-foot car. 

Dr. Lorenz. My idea is, when the company breaks up the train it 
is no hardship to assume there is a new starting point, and they may 
then authorize what they please. 



1432 RAILWAY MAIL PAY. 

Mr. Mack. There is hardship whether the train is broken there 
or not, but it has no bearing on the matter whatever. 

The Chairman. The hardship being what? 

Mr. Mack. There would be a hardship because we would have to 
run the car through or change to a different car. If you change to 
a different car you would have to delay the train perhaps an hour 
transferring the mail, so that these movements of cars are not 
based on convenience of the railroad at all, but they are based on 
the necessities of operation; they are transportation propositions, 
pure and simple. 

Mr. Lloyd. Does not this extend the car-run proposition? The 
car run, as Gen. Stewart would construe it, is the run of the car to 
the end of a route and return. Now, if that same car goes farther, 
theoretically it is not the same car, it is the car in another route, and 
the pay would be based on the run of that car in the next route ; then, 
if it passed over the third before it has reached the final terminus 
of that car, it would be, so far as the law is concerned, a different car 
again, and you would receive pay in accordance with the demands of 
that route in round-trip service. It seems to me that that works a 
hardship on the railroad, and that the car, if it makes the run, it does 
not make any difference how many routes there are, ought to be paid 
for the run it makes. 

Mr. Stewart. The tendency would be to make the routes conform, 
as nearly as practicable, to the car runs. That would be the tendency 
under the new plan. 

Mr. Lloyd. Let me state it a little differently : Suppose in starting 
out from St. Louis the needs of the department require two full rail- 
way post-office cars. You need one of those through to the Mexican 
border, you need the other one to Texarkana ; at Texarkana you take 
off one car and the other goes through to the Mexican border and 
makes its return. My notion would be, possibly I am wrong about 
it, that this full car that runs from St. Louis to the Mexican border 
and return should be paid for according to the maximum use of that 
car at any point on that run. The other car, the one to Texarkana, 
would pay for full space only to Texarkana and back, because that is 
as far as it went. 

Mr. Stewart. The practical operation of it would be as you say. 
This Great Northern case is a good example of what we believe would 
occur. That is a case where the authorization of the car space be- 
tween those extreme points, 1,800 miles, is changed from time to time 
because the needs for distribution space throughout that long distance 
across the country change and it could not be otherwise under the 
existing statutes. But we always have mails to carry across the 
continent, and the difference between 60-foot and 40-foot authoriza- 
tions would entirely disappear on that route, because the distinctions 
between distribution space and storage space will not exist under the 
proposed plan. 

Mr. Lloyd. What is the objection to have the law specify the pay 
that way, if that will be the practical operation? In your judgment, 
Avhat is the objection to having the law so designate and specifically 
so to make certain that the pay would be dependent upon existing 
law and not upon personal opinions? 

Mr. Stewart. The objection is this: That the result that Mr. Mack 
#nd Mr. Baskerville are seeking to accomplish, and the result which 



RAILWAY MAIL PAY. 1433 

I state would be the practical one under this suggested plan, must 
be accomplished through the administration of the service as it 
exists at the time, and you can not frame any law which would meet 
that specifically without completely tying the hands of the depart- 
ment and compelling it to pay in any event the maximum rate. 

Mr. Lloyd. It seems to me there could not be any question when 
you demand a full R. P. O. car they are to receive so much. If you 
demand an R. P. O. car they shall receive that pay. If later on you 
authorize two R. P. O. cars they would then get pay for two. " If 
still later on you needed three, they would get paid for three. It 
looks to me like the expanding of the service is fully provided for in 
the bill which you propose, and you provide for additional service 
and provide pay for additional service. It seems to me you have 
that safeguard. 

Mr. Stewart. That is my own view about it. 

Mr. Mack. We know how difficult it is, in the law, to state spe- 
cifically what must be done. Then in reference to our pay, the one- 
tenth of our pay provides that we shall be paid on a round-trip basis. 
As I understand, there is no question but what for many years we 
were paid on a round-trip basis. The department some years ago 
started in the half car line proposition and split the lines, and the 
Supreme Court sustained the position of the department in that 
matter. The department has discretion in the matter to-day of the 
full R. P. O. car space, representing only one-tenth of our pay. Even 
with only one-tenth of our pay the department does not accept the 
principle that the maximum needed over the operating run in both 
directions should be paid for. How much more difficult would the 
situation be when ten-tenths, or the whole of the pay, was involved 
in questions of discretion of that character. 

Mr. Lloyd. Very marked differences, according to my construction 
of * this law, because it specifically proposes that the maximum shall 
be the basis. That is not the law to-day. 

Mr. Mack. But it does not provide for the length of run or through 
movement of the car. 

Mr. Lloyd. It provides for full car runs. It may be that some 
suggestion right there as to just what is meant — and that is what I 
have been trying to get at for the last hour, just that very thing — so 
that we may fully understand the difference between Gen. Stewart 
and the railroad people at that point. 

Mr. Mack. If we would accept that principle and apply it to the 
space in 1909, it demonstrates that we are underpaid over $15,000,000, 
and that under any provision of this kind our pay should be increased 
$15,000,000. 

The Chairman. In that connection your statement and assertion 
just made to my mind is capable of the construction that you would 
receive, under the new plan suggested by the department, if adopted 
and enacted into law, $15,000,000 more than you receive in pay to-day. 

Mr. Mack. If the rates were fixed equal to the earnings on the 
passenger service. But if we take the space herein proposed, which 
seems to be entirely fair, we come immediately to the question that 
we think settles the question of underpay very, very clearly and the 
amount of it. 

Dr. Lorenz. The amount of $15,000,000? 

Mr. Mack. Yes, sir. 
49396—14 98 



1434 KAIL WAY MAIL PAY. 

Dr. Lorenz. I do not think so. 

Mr. Mack. The actual car-foot miles, a little over $15,000,000. 

Mr. Lloyd. Now we have this thing narrowed down to two ques- 
tions, one, the discretion of the department with reference to the 
runs and the other the question of the rate. I am speaking of the 
rate of the storage and apartment. 

The Chairman. As I understand it, the difference between the 
department and the railroads is that the department wants the au- 
thority to route the pay, the railroads want to bind the department 
to pay them on car runs under the law. Is that a correct statement? 

Mr. Lloyd. That depends on the construction of the words "car 
run " used in the proposed law. 

The Chairman. Dr. Lorenz, in that connection, in the tentative 
draft that you have submitted, what was your idea in making the 
bill provide for runs instead of routes? 

Mr. Lorenz. It was to meet this very difficulty that has been 
brought up here. 

The Chairman. Do you think that vour plan did meet the diffi- 
culty? 

Dr. Lorenz. I rather thought it did. I think even that might re- 
quire some elaboration, because I have not thought of the case where 
the car runs were for longer distance than the train runs. Some one 
called my attention to the case of a car which started in eastern 
territory and went through to Chicago or Omaha. 

Mr. Scott. There are several storage cars from New York to 
Omaha, or Council Bluffs. 

Dr. Lorenz. I should think since there was a general break-up of 
trains at Chicago, that the natural authorization would stop at Chi- 
cago and begin again at that point ? 

Mr. Scott. That is the question. Where does it stop ? 

Mr. Worthington. I do not think Chicago is a typical illustration 
of the breaking-up point, for the reason that nearly all trains pass- 
ing through Chicago from the east to the west are delayed a con- 
siderable time, which is not the case at ordinary railway junction 
points. That would not apply to the car mentioned by Mr. Scott 
from New York to St. Louis, which operates, as I understand, en- 
tirely over the Pennsylvania lines. 

Mr. Scott. That is a car that operates over seven different routes 
and four different corporate companies, all on one system, and the 
car runs through from New York to St. Louis. When that car 
leaves New York on the first route between New York and Phila- 
delphia it will have an average load of, say, three and one-half tons, 
and when it gets to St. Louis over the Yandalia road the average load 
would be about two tons. Dr. Lorenz's basis of pay contemplates an 
augmentation of his rate on the basis of the tonnage, which would 
result in that case, if that was made a mail run from New York to 
St. Louis, in throwing part of the pay of the Pennsylvania Kailroad 
on to the Yandalia Eailroad, an entirely different company. That is 
why I thought that Dr. Lorenz's mail lines might be defective. 

Dr. Lorenz. I agreed to that proposition, but inasmuch as I am 
willing to omit the difference in weight as a basis for condition in 
pay, I think that objection would fall. 

Mr. Scott. I do not know whether that is less objectionable than 
the mail routes. 



RAILWAY MAIL PAY. 1435 

Mr. Wokthington. I think Dr. Lorenz has mentioned the vital 
point. He says he is willing to omit the allowance because of dif- 
ference in weight, and that is the very factor that enables, at the 
present time, the heavy traffic routes to run mail trains with some 
profit, which would be denied them on a space basis, making those 
trains extremely unprofitable. If the general question of pay, based 
on space, is up for discussion I would like to read into the record a 
protest on behalf of the Southern Pacific on the space basis. 

The Chairman. Before doing that and before Mr. Mack completes 
his testimony, I would like to get Mr. Gaines, who is the division 
superintendent of Kailway Mail Service for the eleventh division and 
who lives at Fort Worth, Tex., an opportunity of asking Mr. Mack 
some questions which he wished to ask while Mr. Mack was reading 
his paper. 

Mr. Gaines. Mr. Chairman and gentlemen, I think it may be of in- 
terest to know that this particular train under consideration — the 
St. Louis-Mexican train — where it is proposed to make a car run, 
starts out of St. Louis with mail in five different cars. One of those 
cars, the mail car, is cut out at Little Rock, Ark., the mail tied out of 
the racks, and that going forward is transferred at Little Rock 
either to one of the baggage and express cars in the train or into the 
other mail car, the one which runs through to the Mexican border. 
At Texarkana, the point that has been mentioned here as a place 
where the car could not be handled, one of the cars containing mail 
and express is cut out. The third car containing mail and express is 
cut out at Palestine, Tex. The mail car, with mail in the express 
car, runs through to Laredo, the Mexican border. For distributing 
purposes a 20-foot apartment car would suffice between San Antonio 
and Laredo. The department credited 45 feet of space to the mail 
between San Antonio and Laredo, leaving 25 feet for storage. That 
storage mail consists entirely of through Slexican mail, for which the 
company is paid by weight, which, as a matter of fact, when it was 
being handled in large quantities before the Mexican trouble, was 
being loaded in the baggage or express car at St. Louis and went 
through to Laredo in the express car and not in the mail car. If I 
am mistaken in any particular I would be glad to have Mr. Mack 
correct me as to my understanding of the car movement. Is that 
correct, Mr. Mack? 

Mr. Mack. No. That car is run through for the specific purpose 
of avoiding transfers. 

Mr. Gaines. I am making simply a statement of fact as to the way 
the car is handled. 

Mr. Mack. No question exists about that. 

Mr. Gaines. The mail which is credited with 25 feet of space is 
carried in the express car and not in the mail car. 

The Chairman. Why, if you only needed 25 feet for distribution 
purposes, did you allow 45 ? 

Mr. Gaines." We have not allowed that. I am not entirely familiar 
with this, but the information th£ department called for was the 
space occupied for distribution and by storage mail in November, 
1909. In our reply we not only informed them of the amount of 
space occupied in the mail cars, but the space occupied for storage 
purposes also, and we gave them the information, as I recall it, that 
the mail service required 45 feet of space between San Antonio and 



1436 RAILWAY MAIL PAY. 

Laredo, 25 feet of that space to be charged or credited to storage 
space and not to space for mail distribution. I thought it might be 
that showing that this particular train was broken up in that way, 
might serve to point out the fact that it would not be impossible to 
handle mail cars in the same way if the department were paying by 
space instead of by weight ; at least, I thought it might be of interest 
in that connection on this particular train, which was referred to as 
a train which, on account of its through service, necessarily could not 
be stopped en route to make any change in equipment by being 
broken up and a car dropped out at Little Rock, a car dropped at 
Texarkana, and a car dropped at Palestine. 

The Chairman. The dropping of a car from the train is the same 
as changing mail from one car to another on the train ? 

Mr. Gaines. No; that would require more time. As a matter of 
fact, however, at Little Rock, that operation is very largely per- 
formed. The mail is taken out of what we call the Arkansas car, the 
car that is operated for the purpose of distribution of Arkansas mail 
between St. Louis and Little Rock ; that car is cut out and all the mail 
in that car is transferred to other cars. 

The Chairman. Is that done under your direction or under the 
railroad's election? 

Mr. Gaines. They are only paid for that car to Little Rock, be- 
cause that is as far as the car is needed for distributing purposes, and 
they elect to cut the car out at that point and transfer the mail either 
to the storage or mail car. 

Mr. Mack. If I may explain, that is the mail that still remains in 
the car at Little Rock, and that car is the local car that runs from 
St. Louis to Little Rock, and practically the principal part of its 
load, and almost its entire load, is delivered from the train before the 
train gets to Little Rock. We do not object in case of that kind to 
the car being cut out ; it is very proper that it should be cut out, be- 
cause it is not needed beyond there. There are probably a couple 
of truck loads of mail to be transferred at that point, and it is trans- 
ferred while the necessary change of engines is in process at that 
point. 

Mr. Gaines. Would not that same reason apply to a car cut out 
at any other point? 

Mr. Mack. In that event you would have trains of several cars 
more than we have now. We have trains built up now on a basis of 
traffic as near as possible to adjust it from initial points to get a 
through loading. For instance, on this train at this time there are 
three baggage cars on that train. In order to secure exactly the 
transportation proposition of eliminating all transferring, instead of 
putting all the mail in one car, and for the purpose of avoiding 
transfer, we split up the transfer mail and it goes into the three cars 
with the baggage and express. At Texarkana we cut out a car 
that contains the mail and baggage and the other cars go through 
to Palestine and Laredo with the overflow mail and baggage. It is 
a pure, simple illustration of what we have been trying to show here, 
that through car movements are essentially a part of the transporta- 
tion and operation, and that is the point that the department did not 
recognize m Document 105 in its report of space. 

The Chairman. Is it recognized in the present suggested plan? 



BAIL WAY MAIL PAY. 1437 

Mr. Mack. I do not think so ; no, sir. That is the point at issue. 
That is where the difference exists between the department and our- 
selves and it applies to apartment-car service as well as full postal- 
car service. 

Mr. Gaines. It occurs to me, in any case where we had a rente 
terminal or any arrangement for changing from one sized car to 
another, or from a three-car train to a two-car train, or from a two- 
car to a one-car train, as the case may be, that where the mail had 
necessarily diminished by being put off at local stations, just as Mr. 
Mack refers to in the case of the Little Rock car, that there would 
be no more difficulty in making the change at that point than there is 
now at Little Rock. It might well be that we could not perform 
service, in fact, I am sure we could not perform service if we were 
paying for the entire space occupied by the mail. We could not go 
beyond Texarkana with one car, it would be two cars or three cars, 
but we might cut out a car at Texarkana or Long View Junction or 
any other point where the particular mail that was being handled in 
that car that we propose to eliminate from that train had been re- 
duced to such an extent that we no longer needed it. I think the 
same would apply to a reduction from a 60 to a 50 foot car or 40-foot 
car, as the case may be. I do not see anything impossible about it. 
In the case Mr. Mack referred to, of the fast-mail train, it would 
be one of the hardest problems we would have to contend with, but 
I can not believe it would be entirely impossible, the department 
paying for all the space that it needed to handle the mail. If we 
had to have two cars at San Antonio or Palestine, I think whenever 
the needs of the service could be met by less space than we started 
out with than we had at that particular point, it would be possible 
to eliminate the car. 

The Chairman. Does not the department absolutely control the 
car run? 

Mr. Gaines. As I understand it, that is what the railroad company 
now wants to control. 

The Chairman. I say, does not the department absolutely control 
the car run? 

Mr. Gaines. We pay for cars over certain lines; that is true. 

The Chairman. The car is sent where the department authorizes 
it to be sent? 

Mr. Gaines. It is authorized between certain points. 

The Chairman. Then, the department controls the car run ? 

Mr. Gaines. Not absolutely. 

The Chairman. Why not? 

Mr. Gaines. I will say in some cases of through-car service, where 
from some standpoints it would be better to have another car set into 
the train, we would agree to the other car operation for the purpose 
of eliminating any possible delay. 

The Chairman. You assent to it? 

Mr. Gaines. Yes. 

The Chairman. Consequently you control it? 

Mr. Gaines. Yes. 

The Chairman. You direct it, and the Government directs every 
car run? 

Mr. Gaines. In that sense, yes. 



1438 RAILWAY MAIL PAY. 

The Chairman. Do you concur on that, General Stewart ? Is that 
the case, that the Government absolutely controls every car run? 

Mr. Stewart. I do not think I could answer yes to the question 
that you have in mind. The way I understand your question is this, 
does the Government, to the exclusion of the railroad company's 
management, control the operation of these cars? I should say, no. 
We control them only so far as we authorize the space, and we do 
control that far. Between the railroad company and the department 
comes in this zone of mutual agreement and cooperation in the oper- 
ation of the service. 

The Chairman. The railroad has no discretionary power in the 
activity whatever. In other words, their hands are tied so far as 
having any say in the authorization of the department? 

Mr. Stewart. Theoretically that is so. We cooperate with each 
other. If the railroads do not have the cars, Ave say we will wait. 

The Chairman. But the power of initiation in every activity lies 
with the department itself? 

Mr. McBride. Not always in the operation of the car. 

The Chairman. It does in the pay? 

Mr. McBride. Yes. But, for instance, we authorize a line of cars 
between certain points, and we only need an apartment car the rest 
of the way. For operating reasons the company may want to operate 
that car through. 

The Chairman. And you assent? 

Mr. McBride. Yes; we assent. 

The Chairman. They can not do it without your consent ? 

Mr. Stewart. They could. 

Mr. Mack. Let me illustrate that point by using the Union Pa- 
cific experience between Kansas City and Denver. The Union Pa- 
cific had an authorization of a 40-foot mail car from Kansas City 
to Denver, and the department decided that they did not need this 
40-foot car beyond Ellis, Kans.. even with only one- tenth of the pay 
involved, with the smallest unit of 40 feet, they decided they only 
needed 30 feet beyond Ellis, and they gave the railroad company 
the opportunity of delaying the train at that point and transferring 
the mail into a 30-foot car because they did not need a 40-foot car. 

Mr. Worthington. They are now being paid for the 30-foot car? 

The Chairman. Did the railroad company do that? 

Mr. Mack. My understanding is they temporarily did, and par- 
alyzed the train service so that they had to stop and run the car 
through. So that would be the experience of the railroads, which 
shows an absolute necessity of the recognition of the car that started 
out at the initial point and recognition of it through its operating 
point. This train ran between Kansas City and Denver. 

Mr. Stewart. Mr. Mack is referring altogether to conditions which 
arise under a law which fixes two bases of pay and which gives the 
department power to exercise judgment with reference to one case 
where we pay for additional space. 

Mr. Mack. That proposition would be vastly worse when there 
were ten times the pay involved and it covered the transportation 
service also, because if the department then started out with a 40-foot 
ear, or, perhaps, conceding here that the load as well as the dis- 
tributing facilities were involved, that they started out with a 60-foot 
ear, then when they got to Ellis they would say they needed a 50-foot 



BAIL WAY MAIL PAY. 1439 

car and at some other point a still smaller car. There is a situation 
which would be much worse under a space plan than it is to-day, 
where the questions at issue involve comparatively a small amount of 
money. 

Mr. Bandel. I happen to be familiar with that case because I be- 
lieve I prepared the draft for the order. The facts are that the run 
is from Kansas City to Denver, 500 miles, and the mail largely went 
through to Denver and we paid additional only for distributing facili- 
ties. From Ellis, Kans., to Denver the clerk slept and, of course, 
we did not need any distributing space. 

Mr. Mack. But on a space basis the men would not sleep. 

Mr. Rowan. Mr. Chairman, I have a better illustration than that 
between Utica and Massena Springs. We have train service there 
where the department authorized a 40-foot car between Utica and 
Watertown and the department said they only needed an apartment 
car between Watertown and Massena Springs, so, in order to comply 
with the exact requirements of the Post Office Department, we op- 
erated the full car as far as Watertown and then we put on an apart- 
ment car from Watertown to Massena Springs. That is not what 
the department wanted and the superintendent of the Railway Mail 
Service in New York came to me and asked me whether I would not 
operate the full railway post office car through to Massena Springs 
because it took an hour to tie out the mail in order to make the trans- 
fer of cars at Watertown and it took some little time to set up the 
sacks and label them to do the distribution from Watertown to 
Massena Springs and it was delaying the mail and they could not 
perform the distribution and the clerks were complaining. I ob- 
jected to doing that, I said we are going to give you exactly what 
you ask for and cooperate with you in every way, but if you want a 
full car through you ought to authorize it, and we negotiated back 
and forth and finally the department, in order to prevent a transfer 
being made at Watertown, authorized the car from Utica through to 
Massena Springs. In that particular case it was possible to make 
the transfer ; there was sufficient time at Watertown to do so, but in 
most cases where they changed an authorization from 60 feet to 40 
feet and later changed it in the same train to 50 feet there is no 
time to make the transfer, even if we had the cars and maintained 
the through schedules that the department wished and which we 
have to make in connection with our passenger service. 

The Chairman. Is this isolated, or are these cases of general in- 
stances ? 

Mr. Rowan. This is an actual case. 

The Chairman. But it is an exception rather than the rule ? 

Mr. Rowan. It is the first case I have had on the New York Cen- 
tral Lines. I am sure if we attempted to change cars every time 
the department changed their authorization that the department 
would not change the authorization. But we can not do it, because 
we haven't got the different size cars. Furthermore, our schedules 
would not permit the delays incident to making changes in size of 
cars en route. 

The Chairman. Has the New York Central a standard-sized car? 

Mr. Rowan. Yes, sir; a 60-foot car. 

The Chairman. All your cars in passenger trains are 60 feet or 
over? 



1440 RAILWAY MAIL PAY. 

Mr. Eowan. Yes, sir ; and every apartment car. We are building 
to-day 50 all-steel 30-foot apartment cars. These are all 60-foot cars. 

The Chairman. All the cars on what are known as passenger 
trains are 60 feet or over? 

Mr. Rowan. So far as I know ; yes, sir. 

The Chairman. The purpose being what in building them 60 feet, 
increased speed and decreased cost of operation? 

Mr. Rowan. I do not know the exact reasons for building them 60 
feet long. 

Mr. Worthington. You can realize a passenger car has to have two 
trucks, regardless of its length, and naturally a 60-foot car is more 
economical to operate in proportion to its loading capacity than a 
shorter car. 

The Chairman. And I understand for that purpose a 60-foot car 
has been adopted as a standard car by all the railroads ? 

Mr. Worthington. Sixty feet or more. 

Mr. Mack. As to the cars being built at this time. 

The Chairman. I mean that is the present and future policy, so 
far as is known ? 

Mr. Mack. Yes. 

Mr. McBride. Referring to the case Mr. Rowan brings up, I think 
it sufficient to say that the department, as soon as the facts were 
learned, paid for 40 feet in each direction. 

Mr. Rowan. Mr. McBride himself asked me if I would not operate 
the full car through to Massena Springs, but in lieu of an apartment 
car from W^atertown, so as to avoid transfer. 

Mr. Stewart. I want to call your attention to the fact that these 
complaints are directed entirely to the administration of the service 
at present. 

The Chairman. You mean under the present conditions and law? 

Mr. Stewart. Yes. Further, it appears from Mr. Rowan's state- 
ment that, notwithstanding the fact that the present law authorizes 
the Postmaster General to pay for 60 feet, 50 feet, and 40 feet rail- 
way post-office cars, and he knows that it is the practice of the depart- 
ment to-day, and has been for a long time past, to scrutinize care- 
fully the matter of space for which we give additional pay, they are 
nevertheless building 60-foot cars and none other. I take it also that 
Mr. Rowan does not expect to go on the space basis because he is 
here opposing it, and I assume that he is satisfied to build 60-foot 
cars and provide them wherever we need 40-foot authorizations or 
50-foot authorizations. Furthermore, notwithstanding the fact that 
he knows that we have plans for 10, 15, 20, and 25 foot apart- 
ment cars, he says they are building nothing but 30-foot apartment 
cars. They are, therefore, willing to continue giving us BO feet of 
space, notwithstanding the fact he knows we may not need more 
than 10, 15, or 20 feet. 

Mr. Rowan. We were living in hopes and do hope that some day 
the thing will be corrected. We are not satisfied, and we are in 
hopes that some day it will be corrected and the department will 
recognize a standard car, and when they want distribution facilities 
they will authorize a standard car. Now, the 40, 50, and 60 foot cars, 
as I understand it, were originally put into the law at the time when 
there were different sizes of cars, and the law was made to fit the 
conditions that existed at that time, and since that time the depart- 



RAILWAY MAIL PAY. 1441 

ment has gone to the different-sized authorizations. Originally it 
was made to fit the different-sized cars that existed. 

Mr. Mack. In building steel cars, Mr. Chairman, it is not an easy- 
matter, but it is almost possible in building steel equipment to change 
the length of cars to conform to the views of the department with 
reference to the amount of space needed on a particular train. Rail- 
roads building cars to-day certainly do not overlook the fact that 
we have parcel post, and the parcel-post growth is not going to be 
in the direction of small cars, but it is going to be in the direction 
of larger units, and it would not be a sound proposition to build 
steel cars with 10-foot apartments with the expectation that it might 
be necessary later to turn them later into 15 feet and later into 20 
and later into 30. So that those are reasons, and very complete 
reasons, for the action of the New York Central and the action of 
our own lines. We are building 21 to-day with 30-foot apartments — 
steel cars — and it is based upon these primary reasons. 

The Chairman. You are building 21 60-foot cars with 30-foot 
apartments ? 

Mr. Mack. Yes. 

The Chairman. Mr. Gaines, have you finished your discussion 
with Mr. Mack in reference to these concrete instances Mr. Mack has 
submitted ? 

Mr. Gaines. Mr. Chairman, there was another point I wanted to 
inquire of Mr. Mack upon. The report that the department received 
of the particular case of space between San Antonio and Laredo came 
from my office, and Mr. Mack, in his statement a while ago, claimed 
that it was a necessary movement of the through car between San 
Antonio and Laredo, and therefore that 60 feet of space was charged, 
but I do not see the reason for that statement. The heavy mail which 
we credited with 25 feet of linear space is carried in the baggage car 
and not in the mail car, and therefore I see no reason for the opera- 
tion of the through mail car beyond San Antonio, at which point the 
department ceases to pay for it as a full railway post-office car. If 
Mr. Mack will enlighten me on that subject I will be glad to have 
him do so. 

Mr. Mack. The car, as I pointed out, was operated through be- 
cause of the necessity of avoiding transfer and because of the neces- 
sity of avoiding any delay in connection with it on account of the 
Mexican National Railroad connections, which had an arbitrary de- 
parting time, and we absolutely had to run the car through. 

Mr. Gaines. Did you not have an hour's dead time at San An- 
tonio ? 

Mr. Mack. No; we never did have an hour's dead time at San 
Antonio. 

Besides, the train, of course, can not always be depended upon to 
be on time at the end of a thousand-mile run, so that it was prima- 
rily an operating necessity. We did not operate it just for the pur- 
pose of hauling the car. 

Mr. Gaines. I can not agree with that proposition, because the 
heavy mail was in the baggage car and was not in the mail car. 

The Chairman. And went through the run of the baggage car? 

Mr. Gaines. That was the heavy mail — the Mexican mail — that 
was in the through baggage car and not in the through mail car. 






1442 RAILWAY MAIL PAY. 

Mr. Mack. The registered mail, I think, without getting into any 
controversy about how many bags or pounds there were, for Mexico 
is usually heavy and has to be carried in the postal car. We could 
not get it in a 20-foot car — the registered mail alone. 

Mr. Gaines. There is another point I would like to ask Mr. Mack 
about, and that is his statement that mail arriving at Shreveport, 
where a certain apartment-car run emptied, was carried in the same 
mail apartment car between Shreveport and Marshall. If that was 
done, it was improperly done; the railroad company had no right 
to carry mail in the mail apartment car where there was no clerk 
on duty, unless the matter had been taken up with the officials of the 
Railway Mail Service and an agreement had been reached whereby, 
for the convenience of the railroad company, the mail would be al- 
lowed to remain in the mail apartment car and the mail apartment 
car would not be locked with a mail lock, but would be locked with 
a switch lock and entirely under the control of the railroad company, 
just the same as though it was in a baggage car. 

Mr. Mack. That entire presumption, with regard to the space, 
is that it was in our custody, and if it was in our custody we have 
the right to carry the mail in any part of the train that is in our 
custody. It does not make any difference to the department whether 
it is in the mail, baggage, or apartment car, and if we carried it 
there for our convenience, certainly the question of propriety which 
you raise is not involved at all, for the department's rule can not ap- 
ply over cases of that kind. 

Mr. Gaines. We have allowed some cases of that kind after corre- 
spondence with the railroad companies, and upon their agreeing to 
see that the mail-car doors were secured with a switch lock, and it 
being understood it would be entirely under the control of the rail- 
road company. Recently we have had a case where the mail-car 5 doors 
were not secured and where a tramp, or someone, had gotten in there 
and robbed the mail pouch, and we have refused to allow that ar- 
rangement to continue. 

The Chairman. Would not that be a criticism on your own judg- 
ment in permitting it in the beginning ? 

Mr. Gaines. In that particular instance it looks like our judgment 
was wrong ; that the railroad company did not properly protect it. 

Mr. Peters. If there was anything in there for a tramp to rob and 
you keep it under your supervision, it must be in your service. 

Mr. Gaines. It was not operated under our service. 

The Chairman. The committee will now take a recess until 2 
o'clock. 

(Thereupon, at 12.40 o'clock p. m., a recess was taken until 2 o'clock 
p.m.) 

AFTER RECESS. 

The Chairman. Mr. Worthington, have you got your statement ? 

STATEMENT OF MR. W. A. WORTHINGTON. 

Mr. Worthington. The discussion this morning dealt with the ad- 
ministrative features of the space basis. On behalf of the Southern 
Pacific Co. I would like to place in the record a respectful protest 



RAILWAY MAIL PAY. 1443 

against the confiscatory nature of the proposed department space 
measure as applied to the lines which I represent, and in doing so 
will base my conclusions on the department's apportionment of space 
and expenses found in Document 105. The Southern Pacific Co. to 
reach the valleys of California must cross high mountain ranges with 
maximum grades of 116 feet to the mile or more, our heaviest traffic 
mail route, involving the lifting of trains almost from sea level to 
an altitude of 7,000 feet in a distance of 80 miles. Because of dis- 
tance from eastern markets we must pay excessive prices for rails 
and other material used in operation, while on account of local in- 
dustrial conditions our wages paid are the highest in the United 
States. On our heaviest mail routes we operate a fast expedited mail 
train, which is moved at much higher speed than the other passenger 
trains. On the route between Ogden and San Francisco Document 
105, page 194, showed that our mail revenue averaged 6.4 mills per 
car- foot mile, or 38.4 cents per 60-foot car mile. Gen. Stewart says, 
on page 1261, that the pay under his proposed bill would be 20.91 
cents per car-mile, including the terminal allowances, which would 
be less frequent on our Ogden route because of the long haul. Our 
annual reduction on this one route would thus be about $400,000. 

Our high operating costs are confirmed by the department itself 
in table 7 of Document 105, which shows a cost for all Southern 
Pacific lines for operating expenses and taxes of 3.70 cents per car- 
foot mile, or 22.60 cents for a 60-foot car-mile. The same table shows 
that we are now receiving 5.25 cents per car-foot mile, or 31.5 cents 
per 60-foot car-mile, on our total mail traffic, or about sufficient to 
cover the allowance for other charges against income; 32.57 per 
cent of the operating expenses and taxes, as computed by department 
in volume 7, pages 95-96. Note, however, that the proposed pay is 
only 20.91 cents per car-mile, or below the department's own estimate 
for operating expenses and taxes only, without any allowance for 
capital charges, coupled with an obligation under the proposed law 
to transport the mails at not exceeding these rates. Is not this clearly 
confiscation of property ; and is it fair to ask us to accept such a bill, 
which is below the department's own estimate of operating cost, to 
say nothing of a return on our investment, and at the same time 
expect us to operate the expedited train service? Not only is the 
plan confiscatory, as far as we are concerned, but it introduces into 
our passenger service a rate far below the carload earnings received 
on many classes of freight traffic, and the possibilities in this connec- 
tion are not pleasant to contemplate. Furthermore, it confines us to 
a minimum and noncompensatory car-mile revenue and denies us 
the opportunity which every road should have of taking advantage 
of economies that may result from heavier car loading. In the past 
15 years on our lines material prices have gone up 30 per cent and 
wages 20 per cent, and a space rate that might have been fair at the 
beginning of such a period would be ruinous at its close. The South- 
ern Pacific Co. can not protest too strongly against the radical and 
unjust operation of the plan recommended by the department, which 
would reduce its compensation below the figure which the department 
itself estimates is necessary as an adequate return for operating ex- 
penses and taxes only, leaving no interest whatever or return on the 
investment. 



1444 RAILWAY MAIL PAY. 

The Chairman. As I understand that, do you think the present 
method is more equitable as between roads operating under different 
conditions ? 

Mr. Worthington. I think it is much more fair. 

The Chairman. That is, so far as topographical and climatic con- 
ditions and varying wage schedules are concerned, the present plan 
would be much fairer than the suggested plan of the department, if 
adopted, would be ? 

Mr. Worthington. I think so. 

Dr. Lorenz. I do not quite understand how varying climatic con- 
ditions, grades, etc., can be better taken care of by a weight system 
than by a space system, for the existing law pays the same rate per 
ton per mile for a given load per route with reference to one system 
as on any other in the United States. The law is simply one schedule 
for the whole country for a given density of traffic. Therefore I do 
not see why, in that respect, the department's bill is any more illogi- 
cal and inconsistent than the present law. I admit that any one rate 
for the whole country can not fit any one railroad company. 

Mr. Worthington. Do you think it would be fair to fix a rate 
which would be actually confiscatory on one road, simply because it 
fits the average conditions of the United States? 

Dr. Lorenz. The question as to whether you wish to vary the rate 
for each individual railroad is a question which can be discussed. 
For the sake of simplicity I assumed that we had arrived at the con- 
clusion that it was impracticable to have a changing rate for every 
railroad. I think the railroads themselves have discussed that 
proposition, that it was impossible to have a rate adjusted to every 
railroad, but the existing law, T say, is equally objectionable as the 
Post Office bill in that respect. 

Mr. Worthington. So far as the existing law is concerned, we 
do receive more per car-mile than the average railroad, and in that 
respect we do make up the difference in operating cost. 

Mr. Lloyd. Why do you receive more? 

Mr. Worthington. Because our load per car is more. 

Mr. Lloyd. Because you are more fortunate in having more mail? 

Mr. Worthington. The traffic is more concentrated on our lines. 

Dr. Lorenz. Could you estimate what is the difference on your 
line compared with the average for the country ? 

Mr. Worthington. That could be done, but I have not done it. 

Dr. Lorenz. Are your R. P. O. cars heavier than the R. P. O. cars 
on the Pennsjdvania Railroad? 

Mr. Worthington. I could not say as to that. 

Dr. Lorenz. Is it not true that the heavier mail on your line is 
due to the fact that you operate more storage cars on your long hauls? 

Mr. Worthington. I think we have. 

Mr. McBride. Is it not due also to the fact that practically all 
your mail is carried on one train, which permits very heavy loading? 

Mr. Worthington. On a ver}^ expensive train, which is operated 
at faster speed than other trains. 

Dr. Lorenz. Could you not, under the proposed bill, refuse to pro- 
vide special mail trains if you saw they would not pay ? 

Mr. Worthington. L do not think it was contemplated under the 
proposed bill that the obligation should be so onerous on the rail- 



RAILWAY MAIL PAY. 1445 

roads that they should think it necessary to refuse to move fast-mail 
trains. I suppose we could refuse to move them. 

The Chairman. As I remember, in the suggested bill it is com- 
pulsory, and wherever a railroad is forced it has a recourse to the 
courts. 

Mr. Stewart. To carry the mail, but not to inaugurate fast mail 
trains. 

Mr. Worthincton. I understand we have the option of taking off 
the fast mail trains and placing the mail on the other trains which 
are now operated. 

Mr. Mack. I would like to suggest a point there which will de- 
velop this practice, that the authority of the department to require 
this space on given trains would have the effect, if they required sev- 
eral cars on one of your faster passenger trains, of operating a special 
train for the mail service. While we could not be compelled under 
the provisions of the bill itself to operate a specific train, the effect 
would be to require us to do so. 

The Chairman. I do not agree with you on that. 

Mr. Mack. As a practical matter, it would, Mr. Chairman. 

The Chairman. I would like for you to elucidate that a little. He 
would simply be compelled to operate the mail car on one of the ex- 
isting passenger trains, but it would be optional with him whether 
he should continue a fast mail train that solely carried the mails. 

Mr. Mack. I agree with you as to that, as to the schedule for the 
fast mail train. 

Mr. McBride. We have the same provision now, but we do not 
require the companies to carry mail cars on trains on which they 
object to carrying them, such as the 20-hour train on the Pennsyl- 
vania. 

Mr. Bradley. Might I ask how this clause in the proposed bill 
would be interpreted : " The Postmaster General shall in all cases de- 
cide upon what trains and in what manner the mails shall be con- 
veyed. Every railroad company carrying the mails shall carry on 
any train it operates and with due speed all mailable matter, equip- 
ment, and supplies directed to be carried thereon. If any such rail- 
road company shall fail or refuse to transport the mails, equipment, 
and supplies when required by the Postmaster General on any train 
or trains it operates, such company shall be fined such amount as may 
in the discretion of the Postmaster General he deemed proper " ? 

Mr. Stewart. Mr. Bradley has read what is practically now the 
law, and I assume the latter part would arise out of existing law and 
regulations, but the rest of it is almost in words as the present law 
now reads. I think it combines one or two sections, and I assume the 
administration of it will be practically the same as now. I do not see 
any reason why there should be any change. 

Mr. Bradley. Is there any law to-day that permits the Postmaster 
General to impose fines according to his discretion only in such cases, 
merely according to his discretion ? 

Mr. Stewart. Yes. All the fines are provided for in the discretion 
of the Postmaster General ; that is, he has discretion to impose such 
fines as he thinks proper under the circumstances. 

Mr. Bradley. Is it not limited to three times the price of the trip ? 

Mr. Stewart. That is a deduction, I think. As I recall it, there 
is a deduction from pay limited to the price of the trip, where it is 



1446 EAILWAY MAIL PAY. 

not the fault 01 cue carrier, but three times the price of the trip 
where it is the fault of the carrier. Fines are imposed in the discre- 
tion of the Postmaster General, and the limit of them is not speci- 
fied in the law. 

Mr. Bradley. Do you think that the action of the Postmaster Gen- 
eral under this clause would be limited as to the extent of fines im- 
posed by the compensation which the railroad company receives for 
carrying the mails, or might it go beyond that ? The language does 
not seem to restrict the power. 

Mr. Stewart. No ; nor does the language of the present statute re- 
strict the power. I do not think it would be proper for me to state 
what the department might do in the future under a statute like this. 
I can only say that my only guide would be experience and judgment 
as to the fairness of the case. I know we have not imposed excessive 
fines in a case of that kind. 

Mr. Safford. My recollection is the specific requirement of the law 
at the present time is that a railroad which refuses to carry mail on 
its fastest trains may be fined 50 per cent of its compensation. 

Mr. Stewart. I think you are mistaken on that. 

Mr. Safford. I am sorr}^ I haven't the regulations here. 

Mr. Mack. I can say that is correct. Fifty per cent on the fastest 
trains for failure or refusal. 

Mr. Stewart. Is not that a regulation ? 

Mr. Mack. No, sir; that is the statute. 

Mr. Worthington. I think the limitation which would be placed 
on the railroads of a fixed rate per car mile is most unfair. Even the 
obnoxious 2-cent passenger laws would permit the roads, on an 
average load of 10 passengers to the car, to earn as much as the pro- 
posed bill, and there is no limitation on loading the cars to their 
capacity, if possible. We have no such limitation as to any other 
class of traffic. Under the proposed rates if carload shipments were 
made Ave would probably receive less on our lines for carloads in 
passenger service, I would say about one-half of what we receive 
for a carload of coal in freight service. Under the parcel-post act 
there is no limitation, as I understand it, on weights which the Post- 
master General may eventually take over into the Postal Service. 
It might be easily imagined that sooner or later carloads of traffic 
might be placed on us to move in passenger trains and move at this 
fixed rate. I am not speaking so much about the rate as applied 
to R. P. O. cars, but with reference to storage cars and parcel post. 

Dr. Lorenz. You would not suppose that the law could be framed 
on what might possibly happen when it is entirely probable there 
will not be greater weights than 2-J tons or 3 tons in an R. P. O. car, or, 
say, a maximum of 10 tons in a storage car? Suppose they did de- 
velop that service? The gross weight of your 10-ton storage car 
would probably not be any greater than your R. P. O. car with 3 
tons ; so that I do not see where you would be harmed by the multi- 
plication of the carload service which you mention. 

Mr. Worthington. In this way. The traffic taken over by the 
parcel post would be withdrawn to a large extent from the express 
service, for which we are now being paid on a tonnage basis. 

Dr. LoRenz. If the people can effect an economy in that way I do 
not see why they should not do it. 



RAILWAY MAIL PAY. 1447 

Mr. Worthington. At the expense of the railroads. 

Dr. Lorenz. Provided the cost of the transportation is paid for. 
certainly. 

Mr. Lloyd. It is your computation that you refer to in your state- 
ment for the whole Southern Pacific System ? 

Mr. Worthington. For the entire Southern Pacific Sj-stem. 

Mr. Lloyd. And your complaint is against the fact that it would 
affect your system to the extent of $400,000 a year ? 

Mr. Worthington. Not exactly $400,000 a year. I mean $400,000 
a year on one route, between Ogden and San Francisco. I should 
say, regarding the system as a whole, it would be in the neighborhood 
of $1,000,000 a year. 

Mr. Lloyd. How much do you now receive? 

Mr. Worthington. We receive $2,500,000. The department says 
we are receiving on all our mail routes, according to Document 105, 
5.25 mills per car- foot mile, or 31.5 cents per 60-foot-car mile. 

Dr. Lorenz. Is that from table No- 7? 

Mr. Worthington. From table No. 7. 

Dr. Lorenz. That is based on space, excluding dead space \ 

Mr. Worthington. Yes, sir. 

Dr. Lorenz. Whereas the department, in its proposed bill, would 
necessarily have to authorize some dead space, the rate which you 
take out of table No. 7 could not be applied exactly. 

Mr. Worthington. It would probably be something additional on 
that account, but how much I can not say. However, inasmuch as 
the department has used Document 105 as an authority. I thought 
we could use the same document. 

Mr. Lloyd. The objection that you read is to a uniform system of 
pay? 

Mr. Worthington. Under the space basis. We do not object to 
the present uniform system. 

Mr. Lloyd. You do not object to the present system on the weight 
basis because it happens that your road gets the best of the proposi- 
tion, but you would object to the proposed bill because you might 
get the worst of it. 

Mr. Worthington. We would get much the worst of it. 

Mr. Lloyd. That is not proof to us that you are not getting too 
much now. The probability is you are getting $400,000 too much, 
while under the proposed system you would get what you are en- 
titled to. 

Mr. Worthington. I do not follow you there as to our now receiving 
t6o much, when the department shows that otir expenses, according 
to Document 105, was 3.70 mills per car-foot mile, or 22.60 cents per 
60-foot-car mile for operating expenses and taxes only. Later on, 
the department estimated an addition should be made for other 
charges against income of 32.5 per cent, which would bring our re- 
quirement up to 30 cents for 60-foot-car miles, which is practically 
what we are getting, whereas the proposed pay is only 21 cents. 
What I am protesting against is the -injurious effect on our line of the 
proposed bill, and how much below the actual cost it is according 
to the department's own figures for the Southern Pacific. 

Mr. Lloyd. Is it your candid judgment that if the proposed bill 
were adopted, that it would mean a loss to the Southern Pacific Rail- 
road System of $400,000 a year? 



1448 RAILWAY MAIL PAY. 

Mr. Worthington. I have not said it would mean a loss to the 
Southern Pacific System of $400,000 a year. The statement I make 
is that it would fall $400,000 below our present compensation. 

The Chairman. On that route ? 

Mr. Worthington. Yes; that is, that the proposed pay would 
lower our present compensation by that much. 

Mr. Lloyd. I understand on the whole svstem a while ago you 
said it would lower it about $1,000,000 ? 

Mr. Worthington. Yes ; on the basis of Document 105. 

Mr. Lloyd. I am not talking about Document 105. T am trying 
to get at the amount and what would be the actual fact, as a practical 
proposition, if this bill were adopted as a law. Have you made any 
estimate of your road to determine the fact whether it would increase 
your pay and, if it increased your pay, how much ; or, if it decreased 
your pay, how much it would decrease it ? 

Mr. Worthington. I think I have just said it would decrease our 
pay according to the department's estimate 

Mr. Lloyd. You say according to the department's estimate. I 
am talking about your own judgment. You are basing your judg- 
ment on what they say. We want to find out what the fact is. 

Mr. Worthington. I am taking the present pay from the reports 
of the department. They say our present pay is 5.25 mills per car- 
foot mile, which would be 31.5 cents per 60-foot-car mile. 

Mr. Lloyd. In other words, the statement you are making is an 
answer to the department, rather than a statement of fact. You base 
your statement on the argument made by the department and, com- 
bating that argument, you say what you have said. What we want 
to get at is the fact. Does it or does it not have the effect of reducing 
the pay that you would receive to the extent of $1,000,000? 

Mr. Worthington. It will be impossible for me to answer that 
question because I do not know how much space which the depart- 
ment eliminated in Document No. 105 they would pay for under the 
proposed bill, but if they paid for all space that is classed as dead 
space, it would make our present revenue per car-foot mile 4.27 mills 
in place of 5.25 or 25.62 cents per 60-foot-car mile. Against that 
the proposed bill would pay us something less than 21 cents a car- 
foot mile. In other words, if we include all the dead space and 
receive pay for all of that under the proposed bill, we would still 
receive a material reduction from the present compensation. 

The Chairman. A little over 20 per cent? 

Mr. Lloyd. The result of that would be to reach the conclusion 
that the department's bill makes the rate 20 per cent too low to meet 
the present rate of pay. In other words, expressing it differently, 
that it would be a reduction of 20 per cent in the present rate of 
pay to your railroad system ? 

Mr. Worthington. Yes; that is it. 

Mr. Lloyd. What have you to say to that, Mr. Stewart ? 

Mr. Stewart. Mr. Worthington is basing his argument entirely 
upon the revenue per car-foot mile, shown by the figures in Docu- 
ment 105. I think the safe thing to do, if Mr. Worthington wants 
to know what this bill that is now before the commission would do 
for his road, would be to apply its terms directly to the conditions 
found on his road at this time. How that would result I do not 



KAIL WAY MAIL PAY. 1449 

know. We have made estimates on various lines, Dut we haven't 
Mr. Worthington's with us. I was just asking Mr. McBride if he 
had it. We could make a statement. I would not want to take the 
whole system, but we could take any particular line Mr. Worthington 
will designate and give you the result. 

Mr. Worthington. Of course, I have not a detailed statement but, 
as I said, if we include all of the dead space which is shown in Docu- 
ment 105, we would still receive a materially lower compensation 
than we do at the present time if we include all that dead space, and 
I understand the department contemplates paying for only a portion 
of that space. 

The Chairman. I would like to ask Mr. Stewart what criticism or 
comment he might have to make with reference to the statement that 
including all of the dead space, and allowing it, there would still be 
this reduction of 20 per cent, and why that is not sound in its appli- 
cation ? 

Mr. Stewart. You might find some reason for reduction on his 
route in analyzing the particular kind of service that is required. 
For instance, if a large proportion of his mails are storage mails, 
for which he is getting 40, 50, or 60 cents a car-mile, it would ac- 
count for a large part of the reduction, and I believe that is where 
much of it will be located. We all understand that it is true, that 
where we have a heavy storage-car movement, under the present law, 
the rates will run up to 40 and 60 cents a car-mile. 

The Chairman. Run up the car miles but run down the ton-miles. 
There is an increase on the car-mile basis but a decrease on the ton- 
mile basis. 

Mr. Stewart. Yes. 

Mr. Mack. I showed, with reference to the Denver & Rio Grande, 
that the loss, by applying the department's bill, would be $124,000, 
out of the present total compensation of about $310,000, nearly 40 
per cent, and on the Iron Mountain $146,000 a year compared with 
something less than half a million dollars, or between 30 and 40 per 
cent. So that the loss would be very heavy by the application of the 
bill to the space, so far as we can ascertain what would be allowed. 

Mr. Lloyd. Do you include dead space in that ? 

Mr. Mack. I include space figured on the department's bill, which 
is the maximum in both directions, based upon outward maximum 
needed over that particular route, the exact application of it, as I 
understood, including the tonnage and including the terminal charges 
through. 

Mr. Stewart. I think it is only necessary to say that the companies 
are now receiving, in some cases, as high as 60 cents a car mile for 
storage movement, to indicate that it is altogether too high for that 
class of service and wherever we find that in the service it should be 
reduced. I do not think anyone can defend the contention that pay 
for that particular service should not be reduced. I think it is a ques- 
tion of what it is worth, 18 cents throughout the country, exclusive 
of loading and the terminal charge, 

Mr. Worthington. That is a service which really enables railroads 
to run the expedited mail train, it gives them some additional com- 
pensation for the extra cost. 

The Chairman. That is the storage-car service? 

49396—14 99 






1450 KAIL WAY MAIL PAY. 

Mr. Worthington. Additional pay per car-mile which they get in 
that way. I think, without question, if they receive the same'amount 
per car-mile as routes which carry less weight and do not furnish 
that service, it would be very unattractive to them. 

Mr. Stewart. I will admit that is a consideration at the present 
time in putting on fast-mail trains. 

Mr. Worthington. I think you, yourself, said so in your early 
testimony. 

Mr. Stewart. Yes, sir ; that is a consideration with the companies 
now, but that does not change my view in this respect, that if we did 
not have that consideration to offer you, we would still get the fast- 
mail trains, and I think it is proper for me to state that I have had 
assurances from railroad people that I could get fast trains under a 
statute of this kind. 

The Chairman. At the suggested rate ? 

Mr. Stewart. Yes, sir. 

Mr. Worthington. I would like to ask Mr. Stewart if the 60-cent 
rate which he referred to for storage cars took into consideration 
return movement of those cars ? 

Mr. Stewart. Yes, sir. 

Mr. Worthington. You mean to say $1.20 in one direction? 

Mr. Stewart. No ; I misunderstood your question. 

Mr. Lloyd. It is 30 cents each way ? 

Mr. Worthington. Yes ; it makes quite a difference. Most storage 
cars have to return empty. 

Mr. Lloyd. Under this bill you would get pay, the maximum being 
18 going out and 18 coming back. There is no question about the 
back pay. 

Mr. Worthington. I could express that in another way. Accord- 
ing to the figure presented by the department of 20.91 cents as the 
proposed pay for a 60-foot car, that is equivalent to 3.5 mills per car- 
foot mile. Our pay under Document 105 is 5.25 mills, excluding 
dead space, and 4.27 mills including the dead space, and the depart- 
ment's own figures for expenses and taxes, according to their appor- 
tionment of expenses, was 3.7 mills, or more than the proposed pay 
on our line for operating expenses and taxes alone, without any 
return on the investment. 

Mr. Peabody. I would like to ask if I understand Gen. Stewart 
aright, to say that he had assurances from railroads that they were 
willing to put on fast mail trains at the rate of 18 cents a car-mile? 
That is what I understood him to say, and I would like to know if 
that is correct ? 

Mr. Stewart. No; you modified my statement somewhat. I said 
under the provisions of a statute like this we had suggested. 

The Chairman. At the rate suggested here, that is 20 cents a car- 
mile E. P. O., 19 for apartment and 18 for storage. 

Mr. Stewart. That is one of the rates named in the statute. 

Mr. Mack. As I understood, these rates have been proposed subse- 
quently to the fast mail proposition that you have in mind. Is not 
that true ? 

Mr. Stewart. No. 

Mr. Mack. Practically within the last two or three weeks? 

Mr. Stewart. Yes, sir. Recurring to the question which Mr. 
Bradley brought up about the limitation in the present law, which I 



RAILWAY MAIL PAY. 1451 

find is the act of July 5, 1884, limiting the power of the Postmaster 
General to fine roads 50 per cent of the amount allowable by law for 
that particular train service in case the company fails or refuses to 
transport the mails on the fastest trains ; I wish to say, while that is 
the law, and has been the law since 1884, I have never known of a 
case where such a fine has ever been imposed or where such a case 
has ever been presented to the Second Assistant Postmaster General 
to impose such a fine ; so I think that answers the question suggested 
by Mr. Bradley and the other gentleman as to what will be done 
under the proposed law. 

Mr. Bradley. The point I desire particularly to bring out as 
referring to the position of the Southern Pacific Co. in this sup- 
posititious case was that the present law does limit the fine. The 
proposed law leaves it entirely in the discretion of the Postmaster 
General. 

Mr. Lloyd. That can be very easily remedied if we decide to do 
anything of that kind by limiting it. There ought to be a limit. 

The Chairman. Mr. Worthington, do the same objections or weak- 
nesses, as they appear to your mind, exist against the suggested 
Lorenz plan as against the suggested departmental plan? 

Mr. Worthington. Nowhere near to the same extent. As be- 
tween the two plans, I think the plan suggested by Dr. Lorenz is far 
superior to a space basis. My only criticism of his plan was that the 
allowances for increased weights per car did not seem to me to be 
large enough. 

The Chairman. Why? 

Mr. Worthington. I believe his allowances were about three- 
tenths of a cent, or something of that sort, for each additional ton- 
weight per car. 

Dr. Lorenz. Per mile. I think that was the practical working 
out of it. 

Mr. Worthington. I think the amount should be at least 1 or *2 
cents. 

The Chairman. The reason being what? 

Mr. Worthington. I do not exactly understand Dr. Lorenz's basis 
for fixing that allowance. 

Dr. Lorenz. The basis was the estimated gross weight of the car. 

Mr. Worthington. What did you take the tare weight at? 

Dr. Lorenz. The tare was taken at 60 tons. 

Mr. Worthington. Sixty tons is perhaps the heaviest mail car in 
the country. The average mail car in service at the present time is 
very much less than that. Our mail cars weigh only about 50 tons, 
and the apartment cars weigh less per car foot than the railway post- 
office cars. 

Dr. Lorenz. I think the precise differences I made were only tenta- 
tive, and I would, of course, be glad to modify them if it were shown 
that the average weight of the postal car was going to be 50 rather 
than 60 tons. But since I made those suggestions I have been rather 
impressed with the statement and discussion to the effect that, after 
all. variations of the load in a car, whether 50 or 60 tons, were not 
sufficient to be taken account of Avhen you consider the great sim- 
plicity of a system which rejects the weight element altogether. 
Theoretically, X think it would be right to divide the increased gain 
of loading between the railroad company and the department. 



1452 RAILWAY MAIL PAY. 

Mr. Worthington. As a matter of justice? 

Dr. Lorenz. Well, as a matter of justice, but the injustice is slight 
compared to the great convenience. 

Mr. Worthington. The heavier weights per car, although the 
difference may be only two or three tons, will be found on the heavier 
traffic mail routes which furnish the expedited service and move that 
service much faster and with generally heavier equipment. That 
should be compensated for. If the alloAvance, on account of differ- 
ence in weight were liberal, the railroads would be paid for the excess 
cost, and it would be much fairer than paj^ment on a space basis. 

Dr. Lorenz. I should think the object you have in mind could be 
accomplished, perhaps, directly better than by this indirect method 
of paying for combined weight and space, the direct method being 
to pay for expedited service. The Postmaster General may be given 
authority, in this bill, to provide for special fast mail trains by 
special agreement, and pay therefor somewhat higher rates if that 
is deemed advisable. It seems to me the discussion has shown, out- 
side of the contentions of Mr. Worthington for his particular road, 
that for the country as a whole the weight in the car was, perhaps, 
not so important as to regard its consideration. I realized that, of 
course, in studying the questions last summer, but there was this ad- 
ditional consideration in recommending that the weight be taken 
into account, that heretofore one of the strong objections to the space 
basis had been the fact, that there would be no limit upon the depart- 
ment as to the amount of space authorized, you would have no statis- 
tical check as to what was being done, and if, therefore, we could 
have a way by which we could keep track year by year or month 
by month, as these statistics were compiled, as to the relation between 
the space authorized and the weight carried, there would be a sort 
of check upon the authorization of space. That consideration, how- 
ever, seems not to have impressed the other persons in this discus- 
sion. The railroads think the department will be too economical 
in the use of space : and for these reasons I think the great simplicity 
which would come from having simply a space basis, going even 
further than the department and eliminating the weight from the 
terminals as well as from the line, would possibly be justified. 

Mr. Worthington. That might be so as applied to R. P. O. cars 
only, but not as to storage cars under the present conditions, includ- 
ing the recent enlargement of the activity in the department in tak- 
ing over the parcel post, which may, eventually, result in a very large 
bulk tonnage. It is decidedly unfair to expect railroads to handle 
any class of tonnage in bulk without paying them something for the 
additional load in the car. That principle is not followed in any 
other class of railroad transportation. 

Dr. Lorenz. Suppose we make it a rate that is fair for the average 
storage car with a good load. In the freight business an article is 
classified, the commodities are in some carload class ; or take a special 
commodity rate, the classification committee taking account, of 
course, of the loading and the load that that commodity supplies to 
the car, but they do not change that classification for every partic- 
ular shipment if the weight in a car changes, but they have the same 
general classification, paying, of course, a different rate per ton. So 
here, if you had a fair rate for a TJ-ton storage car, would the rate 



RAILWAY MAIL PAY. 1453 

be very unfair if you had on your system an average of 8 or 9 tons? 
It is not a question of whether a rate for a 1-ton car is fair for a 7 or 
8 ton car, but it is a question of whether the average rate for a stor- 
age car is fair for all storage cars and whether the average rate for 
all E. P. O. cars is not fair for all R. P. O. cars. You may reasonably 
argue the storage-car rate ought not to pay 18 cents but 25 or 30 
cents on account of the contents ; but even at 30 cents 10 tons would 
be only 3 cents per ton-mile, and it does not seem to me the mere fact 
that you have more storage cars than the other companies necessarily 
invalidates or, rather, is a reason for ignoring the weight of the car. 

Mr. Safford. I would like to ask Dr. Lorenz if it does not make 
a great deal of difference whether you figure on a maximum rate 
or a minimum rate in this connection? There is nothing on earth, 
when you fix a maximum rate, that you can do under actual operation 
except pull down that maximum rate. 

Dr. Lorenz. I do not understand what you mean by maximum or 
minimum rates. 

Mr. Safford. I mean just this: That the proposition as presented 
here seems to be entirely contrary to the experience and processes of 
rate making. For instance, you fix a maximum rate, whatever it 
may be, 20 or 25 or 30 cents for a 60-feet car at less proportionate 
rates for other classes of cars and that is the utmost you can re- 
ceive. It does not make any difference how efficient your car service 
ma}^ be ; how much you could transport, how much revenue the ship- 
per may get out of a load, you carry you can not possibly get any 
more. But in your lighter and less important services your rate goes 
constantly down, and you wind up with an average very much below 
what would be carried in the minds of these gentlemen as to what 
the average would be, because you are not going to improve, you are 
not going to maintain that average at 20 or 30 cents, or whatever it 
may be. and you can not possibly do it on the rates proposed. 

Mr. Bradley. Is it not a fact that if you make a car-mile rate 
high enough the company can afford to ignore the modification caused 
by increase of loading? 

Dr. Lorenz. That is the idea. 

Mr. Bradley. Then, in order to make sure that it would be high 
enough, would you not have to fix a maximum rate? I imagine that 
is what Mr. Safford had in mind. 

Dr. Lorenz. You would have to fix a rate based on the average 
conditions, and then you would carry some carloads at too low a 
rate and some at too high a rate, but in the end you would come out 
even. The idea would be to fix the average conditions on that road, 
and if the Post Office Department was willing to have a bill compli- 
cated enough to have a rate separate for each road, I do not see that 
anyone can object to it, but I understand you have a present law 
which defines what the proposed law does, namely, have one schedule 
of rates for the whole country. 

Mr. Bradley. Which, of course, is modified by the increasing 
volume of weight, concentration of weight leading to the establish- 
ment of fast mail trains, and to a class of service of the highest 
quality which the department obtains at a constantly decreasing rate 
per ton-mile. 



1454 KAIL WAY MAIL PAY. 

Dr. Lorenz. The present law would also work in a much similar 
fashion, for if we assume on a light road the load is 1 ton, and 
they would get 25 cents a car mile, on the dense road, where your 
average is 3 tons for the R. P. O. car, they would pay one-third of 
that, or 8 cents a car mile, so you would have the same declension 
with an increasing weight, perhaps, more rate declension under the 
space basis than you do with the weight basis. 

Mr. Bradley. I would like to ask Dr. Lorenz whether in his study 
of this matter his opinion was affected by the suggestion that storage 
cars earn as much as 60 cents a car mile at the present time ? 

Dr. Lorenz. No, sir. I was not affected by that. I had in mind, 
more than anything else, the gross weight of the two classes of cars. 

Mr. Bradley. I was wondering whether you had examined the 
subject sufficiently to determine to what extent any such rate as 60 
cents a car mile applied to the whole service, if at all? 

Dr. Lorenz. There is no separate payment for storage cars, so you 
can not say that there is a separate rate of 60 cents. That is ob- 
tained simply by taking the average payment per ton-mile and 
multiplying it by the assumed load. 

Mr. Bradley. According to the testimony of to-day, it would seem 
that the statement of the Second Assistant Postmaster General alleg- 
ing an earning of 60 cents a car mile for storage cars was a mistake 
and that counting in the empty return movement it was really an 
earning of 30 cents, and even that rate associates itself with the one 
mail route in the country where the greatest concentration of weight 
occurs on a single train. Inasmuch as the storage-car space in the 
whole country, quoting the Department's figures, is only 10 per cent 
of the whole mail space, and this particular storage-car earning of 
30 cents is a maximum car-mile earning on a very small fraction of 
that 10 per cent, does it not look as though it might seriously mislead 
us, if we pay any attention whatever to the idea that there is so high 
a storage-car earning as 60 cents? 

Dr. Lorenz. However, the storage-car service may become more 
important in the future. 

Mr. Bradley. The average loadings as ascertained by the Depart- 
ment in 1907 were, as I recall them, 7-J tons for a storage car for the 
loaded movement. That would be 3| tons for the double movement, 
including the empty movement. At the normal rate of 6 cents a 
ton-mile on heavy routes would you consider that to be an extrava- 
gant car-mile rate? 

Dr. Lorenz. I might suggest at this point that it might be a good 
thing in the proposed bill to make a higher rate for the storage cars 
and not pay for the empty return novement. As a practical propo- 
sition it looks strange to a good many people that the Department 
should pay for empty space at all. We know that it is the logical 
thing when you are comparing the different services to consider the 
empty space, but to pay directly for empty space strikes a good many 
people as being something that needs explanation. It is not the 
custom, of course,- in freight business to pay for empty space. You 
pay high enough in the loaded space to cover the empty space, and 
it might be a wise thing to make a rate for the storage car 36 cents 
and pay nothing for the return movement on the assumption that it 
is 100 per cent empty movement, or if you do not think it is 100 



RAILWAY MAIL PAY. 1455 

per cent make it 30 cents. That would make it look more attractive 
to the railroad companies on the one hand and shock much less those 
people who do not believe in paying for empty space. 

The Chairman. Would it shock less if you paid 30 cents on the 
storage car? 

Dr. Lorenz. You could explain to them what is the load of that 
car. I simply suggest it with regard to a question of practical 
politics. 

Mr. Bradley. Does not the same consideration apply to the pro- 
posed terminal charge? In the case of short-line mail-apartment 
cars is it no possible, if you pay the railroad company 13 cents a car- 
mile for part of the car that that would be made up in the proportions 
of. say. 10 cents for the terminal allowance and only 3 cents for the 
line allowance. Would not that be subject to the criticism that you 
were paying heavily for the thing that was merely incidental rather 
than the main service that ought to be recognized in the rate of pay- 
ment — that is, the service rendered in moving the load of mail and 
supplying the apartment car. The major portion of the rate paid is 
made up of the terminal allowance, and, in the minds of the ignorant, 
would be criticized? 

Dr. Lorenz. The only way to avoid that criticism would be to 
state the rates in a different way, have a zone system, and have 
a rate of 30 cents for the nearer zone, 25 for the next, and so on, 
but that has other objections, which lead me to suggest this more 
simple method of statement. 

Mr. Stewart. You considered that once ? 

Dr. Lorenz. Yes; but I found that had this objection: That for 
certain distances the total rate would be less than for nearer dis- 
tances. 

Mr. Bradley. You say it led you to select this " more simple method 
of statement," Might I suggest you call it " a less complicated 
method," because it seems to me inevitable that all methods are more 
or less complicated when you attempt to form rates on space and 
terminal charges. 

The Chairman. Have they got to be considered under any plan? 

Mr. Bradley. I should say yes, they should all be considered in 
the formulation of a rate, but my personal opinion is that it would 
be very unwise to state them in the rate. 

Dr. Lorenz. How would you take account of the fact that the 
shorter haul ought to receive larger payment per mile ? 

Mr. Bradley. I would prefer, of course, the schedule in the pres- 
ent law for fixing the retail payment. 

Dr. Lorenz. The present law does not make a higher rate for the 
shorter haul ? 

The Chairman. The retail and wholesale principle is only appli- 
cable to the weight itself and not to the haul. 

Mr. Bradley. I have not been able to follow Mr. Lorenz in that, 
because it seems to me the long hauls and the short hauls are recon- 
ciled and accounted for in the average weight carried per day under 
the operations of the present law. 

Dr. Lorenz. For a given weight per day the present law pays 
absolutely the same whether the haul is 10 miles or 1,000 miles. 

Mr. Bradley. A haul of what ? 



1456 KAIL WAY MAIL PAY. 

Dr. Lorenz. The run of a car. 

Mr. Bradley. What car? 

Dr. Lorenz. The R. P. O. car. The pay is the same per mile to 
the New England roads as it is to the Pennsylvania Railroad. 

Mr. Bradley. You mean according to load ? 

Dr. Lorenz. If the load is the same, the road is paid, according 
to the law, exactly the same per car mile. 

Mr. Bradley. Per car mile ? 

Dr. Lorenz. Either one. If the load is the same it does not make 
any difference whether you take it at a ton-mile or car mile. It is 
exactly the same per car mile or per ton-mile, whether the haul is 
long or short. 

Mr. Bradley. I do not see what you refer to when you say the 
haul is long or short. 

Dr. Lorenz. I refer to the run of the car. 

Mr. Bradley. It seems to me when you compare the average haul, 
which the Department states is 620 miles, with the average pay for 
that distance, you have automatically accounted for your long hauls 
and your short hauls. 

Dr. Lorenz. I do not think that the average haul of the mail itself 
is the significant thing here, because that is a question for the De- 
partment and not for the railroads. The average haul of 620 miles 
may be over two or three railroad routes ; it may be transferred from 
one car to another, so that the significant thing is the run of the car, 
the operating unit is the run of the car to the railroad company. 

Mr. Bradley. Let me suggest this: That the lowest rate of pay 
under the present law is $42.75, equal to $1.17 a ton-mile, for 200 
pounds. That is the highest rate per ton-mile if 200 pounds are 
carried. The lowest rate of pay is above 48,000 pounds average 
daily weight carried and amounts to about 5£ cents a ton-mile. There 
is a difference between the retail rate and the wholesale rate of 
20 to 1. 

The Chairman. But on weight, distance cutting no figure. 

Mr. Bradley. On weight. Now I am going to apply it. Ordi- 
narily that retail measure of pay is most predominant on the short 
routes, while on the long routes the wholesale rate approaching the 
minimum of 5J cents a ton-mile is in operation, so that it seems to 
me automatically the law of 1873 follows the haul of the mail by 
the declension in the rate according to the greater weight that is 
carried and the greater weight being carried on the heavy lines. 
Whether that fully accounts for the exact haul of the unit of mail 
might still be a matter for some debate, but it seems to me that the 
intrinsic idea of the whole law does account for the difference in the 
relative haul. 

The Chairman. You mean conditions take recognition in the ap- 
plication of the wholesale and retail principle? The law takes rec- 
ognition in the rate of compensation ? 

Mr. Bradley. Yes. 

The Chairman. What do you say to that, Dr. Lorenz ? 

Dr. Lorenz. I think that operates to some extent, undoubtedly. 

The Chairman. Is it general in its operation? That applies to 
the Pennsylvania, but would it apply equally to the Southern 
Pacific? 



KAIL WAY MAIL PAY. 1457 

Dr. Lorenz. I doubt very much whether it applies with any ap- 
proach to accuracy; for we have routes, let us say, of 200 miies or 
150 miles, some of which are very thin routes, and some of which 
are very heavy routes. 

Mr. Bradley. It has also been suggested that on the long haul the 
load thins out as you approach the terminal points, and that fact 
reduces the average weight carried over the whole line. Thus, again, 
we see that the operation of the law takes note of the varying length 
of hauls. 

While I am at the table, Mr. Chairman, I would like to make a 
remark that I did not have suitable opportunity to make this morning 
when Mr. Rowan presented the case regarding the object lesson his 
company was able to give to the Post Office Department as to the 
operating necessity for running an E. P. O. car through from Utica 
to Massena Springs instead of transferring at Watertown, where 
the authorization ceased. It seems to me that the suggestion from 
the department that such cases would be eliminated under the opera- 
tion of the proposed law failed to take into consideration tins fact, 
that the railroad is seldom able to match the conditions which repre- 
sent the wishes of the department, and thus test the sufficiency of 
the authorization which the department in its discretion proclaims. 
It suggests further as bearing upon this whole question that any 
proper settlement of the relations of the railroads, on the one hand, 
and the Post Office Department on the other, each should be pro- 
tected against the other. If the department is at liberty through the 
discretion sought in the new law to authorize so much space, so much 
more or so much less space, according to its judgment, it may be able 
to impose its wishes on the railroad because of the inability of the 
railroad to accommodate itself to those successive changes because 
of the expense entailed upon the company either in making up the 
train or in rebuilding the car. 

Mr. Lloyd. But you would remedy that if we went to the space 
basis. 

Mr. Bradley. I do not see any way of remedying that. It would 
seem to me that the natural remedy would be for the railroad com- 
pany to make its own rates. Then it could, on its side, take note 
of all these conditions and modify the rate accordingly. Even then 
it would be controlled by the competition which is sought as between 
different lines. But if any new law on the subject fixes a specific 
rate, and then the department operates under that rate with full 
discretion as to authorizations and changes, the company would be 
helpless. 

The Chairman. Then your idea, as I understand it. is that the 
ideal plan would be for the railroads to initiate the rates, for the de- 
partment to accept those rates, and then adjudicate the fairness of 
the rates in the courts if the department claimed the rates were exor- 
bitant. 

Mr. Bradley. That would be the logical sequence of that line of 
thought. On the other hand, it seems to me if the space basis were 
put into law that Congress would almost of necessity be obliged to 
give a large amount of discretion to the Postmaster General, and 
when you once give him that discretion the railroad is helpless to 
adjust/ itself. Complications, irritations, and injustices come in. 



1458 KAIL WAY MAIL PA1. 

The discretion, if not abused under this administration, may be 
abused under some future administration. 

The Chairman. Then, you would still have the right of appeal to 
the courts for adjudication of an injury that had been done you? 

Mr. Bradley. That process does not seem to appeal to anybody. 
I. noticed when the department discussed the various plans, those of 
Senator Weeks and Mr. Buckland and others, where the suggestion 
was made to have recourse to the Interstate Commerce Commission, 
they said that such plans would throw all disputes into the arena 
of discussion, with demoralization of administration and continual 
controversy. 

The Chairman. I would like to ask you whether you are ac- 
quainted Yv T ith the policy of the Pennsylvania system in the ordering 
of cars going on passenger trains; that is, as to the length? Is it 
the general policy, without exception, that all cars are 60 feet in 
length or more for passenger travel, whether express, baggage, mail, 
or regular passenger? 

Mr. Bradley. Of course, I have not the familiarity with the ques- 
tion that would enable me to make the final answer on that subject, 
but to the best of my knowledge and belief all equipment that is be- 
ing constructed for passenger trains is 60 feet or more in length. 

The Chairman, Do you know the reason for that? 

Mr. Bradley. I suppose it must be a process of standardization 
to secure economy in construction and in operation. I recall an 
instance where a suggestion was made by a representative of the 
department for a slight change in the pattern of a window sash of a 
postal car. It looked like a request that ought to be complied with, 
but the motive-power department explained that if a mechanic went 
out to repair a broken window sash he would have to take all of the 
different kinds with him. It was thought very important to have 
one standard. Therefore if it is important to have a uniform stand- 
ard in regard to a small component part of a car, it would be so 
much more important to have the standard run throughout. 

The Chairman. Mr. Peabody, I would like to ask yon, so far as 
the Atchison system is concerned, what the policy of that company 
is in the ordering of cars ? 

Mr. Peabody. The effort of the Santa Fe road and all other roads, 
for that matter, is toward economy in service, and our experience 
has taught us that the larger we can make the unit of service — that 
is, the proportion of dead weight to total weight carried— the better 
will be the result, and that applies equally to passenger or freight 
cars. Consequently we seek to make that service as advantageous 
as possible. There are many things, of course, that have to be con- 
sidered. Our cars are limited, so far as the length of the car is con- 
cerned, in passenger service particularly, to the curves of the road. 
We can not increase that length indefinitely on account of the added 
resistance on the curves. Also, we find that the tunnels and the plat- 
forms of the road are so adjusted that if the cars are made an ex- 
treme length it would require an alteration of the tunnels and plat- 
forms on a great many of our lines. We have found,J:herefore, in 
practical operation, that on the main line we can use a TO-f oot car to 
advantage, the curves having been eliminated. On our branch lines, 
however, where the curves have not been so reduced, we find that a 



RAILWAY MAIL PAY. 1459 

60-foot car is about the limit, and our standards are a 60-foot car 
usually. But on our main line we have 70-foot cars used as standards 
and as our maximum. 

The Chairman. But you use no car in your passenger service 
shorter than 60 feet on your main line ? 

Mr. Peabody. No. We had some 50-foot cars which we used on 
some of our branch lines where the curves were excessive, but gen- 
erally speaking, those curves have been so reduced that we have 
nothing now less than 60-foot cars. 

The Chairman. Do you feel you should receive greater relative 
compensation for two 30-foot apartment cars than you would receive 
for one full 60-foot car? 

Mr. Peabody. Certainly. 

The Chairman. On what ground? 

Mr. Peabody. We would have to haul double the amount of 
weight ; that is, the dead weight of two cars, proportioned to 30 feet 
of space on each car, would be very much more than one 60-foot car. 

Dr. Lorenz. That is assuming that the other half goes empty? 

Mr. Peabody. In a great many cases it does. 

Dr. Lorenz. But you are assuming that it does so in all cases? 

Mr. Bradley. Does not the other half have to go empty, according 
to the discretion of the department ? 

Mr. Peabody. We do not assume the basis will be twice as much, 
but we do- assume that we should have a higher rate per car-mile 
proportionately for the 30-foot car than for the 60-foot car. By that 
I mean if the pay were based on a 60-foot car, it should pay a pro- 
portionately higher rate for 30 feet. 

Dr. Lorenz. Xow, in order to tell how much more you would have 
to know the percentage of the cases that they are half empty. 

Mr. Peabody. It would be absolutely impossible to set a mathemati- 
cal rule for that. 

The Chairman. As I understand the department and you gentle- 
men representing the railroads, you are diametrically opposed in your 
views on that phase of the subject. The department suggests a lower 
rate per car-foot on the apartment car than on the full R. P. O. car 
and the full-sized car. You suggest that you should receive a higher 
rate. 

Mr. Peabody. I say a higher proportional rate. I understand the 
department recommends a lower proportional rate for an apart- 
ment car. I understand they recommend that if the full car rate 
was 30 cents, the 30-foot car should be less than 15 cents. 

The Chairman. As I understand the department on the full 
R. P. O., they recommend that the maximum should be 20 cents a car- 
mile, and the apartment car at 30 feet would be at the rate of 19 
cents for a 60-foot car. So that there you are both diametrically 
opposed in your views of the application of the wholesale and retail 
principle on the rate. 

Mr. Peabody. That, as I understand, is not because of the propor- 
tional space, but because of the kind of car used, the proposition being 
that the apartment cars of wooden construction are not as valuable 
for the service as the others and consequently pay less, not because 
it is an apartment car, but because they are of wooden construction, 
and the rate should be less for that reason. 



1460 E AIL WAY MAIL PAY. 

Mr. Bradley. Yes; because it is an apartment car. The depart- 
ment proposes a rate of 20 cents for a full car and 18 cents for 60 
feet of space. 

Mr. Stewart. If it is constructed of wood ? 

Mr. Bradley. There is a distinction. 

Mr. Peabody. I can see no just cause for reducing a proportional 
rate for the apartment car. 

The Chairman. General Stewart, would you repeat your reasons, 
in order that we may get a running discussion on that phase of the 
question. 

Mr. Stewart. I have stated many times the reason why, in my 
opinion, the apartment car should not be paid the same rate as 
the full car, the main reason being that the full car necessitates 
the placing in the train of an independent car for the use of the 
department, which adds a new element to the train. That is gener- 
ally recognized by the railroad companies. The requirement for an 
apartment in a car calls for part only of a car which the company 
runs for its own purpose to a large extent, and would probably have 
to run if we did not take the apartment in it. So that there is that 
very material difference in the service, and which existed at the time 
the law of 1873 made the distinction and allowed specific pay for 
the specific additional cars that had to be put in the train, if they 
were 40 feet or over in length. That is the first and fundamental 
difference as I see it. One other difference is that I understand the 
construction of the full cars, as we have them to-day, is a very differ- 
ent proposition from the construction of apartment cars; that is to 
say, they are very much more expensive in their original construction, 
and they are certainly more expensive in the manner in which they 
are fitted up and taken care of. Under the existing law we are not 
permitted to pay anything for the cars unless they are thoroughly 
cleaned and unless the}^ meet certain other requirements and are 
kept sanitary. There are no such provisions in the present law with 
regard to apartment cars; however, we have followed the general 
spirit of the law and are requiring the companies to comply with it 
respecting the sanitary condition of apartment cars. 

The Chairman. For sanitation you would have proportionately 
the same requirement, whether it , was for a 30- foot car or a 60- 
foot car. 

Mr. Stewart. Yes, sir. 

The Chairman. So that there would be no difference in the rates, 
relatively ? 

Mr. Stewart. No. I am giving you the conditions as they exist 
in the service now. There has been an evolution in car building 
toward the steel car, and Congress has provided certain limitations 
on the use of cars, requiring all companies to convert practically all 
of their cars into steel cars. There is no such provision in regard to 
apartment cars, although some companies are constructing steel cars 
in which there are apartments. In the proposed bill we made a dis- 
tinction between the wooden apartment car and the steel apartment 
car which we think is fair and which would encourage the construc- 
tion of steel cars. 

The Chairman. How do you arrive at your 5 per cent reduction 
because of the difference in apartment and full cars, and then your 



RAILWAY MAIL PAY. 1461 

additional 5 per cent reduction between the steel and the wooden 
car? 

Mr. Stewart. That, as we have explained heretofore, is an estimate 
based upon judgment. 

The Chairman. It is an arbitrary, as a matter of fact ? 

Mr. Stewart. Yes. There is no possible way of getting at it 
definitely under the present conditions in any other way. 

Mr. Peabody. Might I ask a question now? Do I understand you 
to say that the railroads generally admit that proposition, that these 
cars will be run anyway if they were not used for mail ? 

Mr. Stewart. Xo. I could not say what the railroads would say 
on that question. I meant to say, so far as my understanding was 
concerned, that generally the cars in which we have apartments 
would be run anyway. 

Mr. Peabody. I understood you to say that the railroads admit- 
ted that? 

Mr. Stewart. I do not think I said that. 

Mr. Peters. If Gen. Stewart was right in regard to his idea that 
pay for apartment cars should be less than the pay for full cars 
because the car is one that is provided for other service on the train, 
and you take every part of it to handle the mails in, that might have 
been the theory when you were contemplating the new rate basis, to 
pay for the apartments and were also paying for the handling of the 
mails on the weight basis. When you change and go to paying for 
the mails on the space basis, is there any reason why the space in the 
apartment car should be at a lower rate than the space in the full 
R. P. O. car ? I can not see it at all. 

Dr. Lorexz. I would like to ask Mr. Stewart one question upon 
this particular point — whether he has considered the fact that apart- 
ment car lines are usually on lines of thinner traffic than the R. P. O. 
cars, and on that account might be paid a higher rate, or at least the 
same rate proportionate as the old R. P. O. cars ? I think in his bill 
he suggested in connection with the closed-pouch service, to pay a 
higher rate for the closed-pouch mail on lines that had only apart- 
ment cars, and that those were lines that had only thin traffic. 

Mr. Stewart. The reason wiry, in nry mind, that it would not apply 
is this: When you make the transition from weight to space the dis- 
tinction which you have in your mind disappears. 

Dr. Lorexz. I did not mean traffic in the sense of mail, but in the 
sense of train-mile — per mile of traffic. I mean the railroads' whole 
business would be relatively thin. 

Mr. Stewart. I see your point. I did take into consideration 
those facts in proposing that there be a different rate for closed-pouch 
service on apartment car lines. We had in view the present con- 
ditions and rates of pay ; that is to say, unless we made that distinc- 
tion we would be paying a higher rate for the closed-pouch service 
on full lines under the proposed law than under the existing law, 
which we thought would be inconsistent. I did not see any justifica- 
tion for doing it. 

The Chairmax. I would like to ask Dr. Lorenz how that phase 
of the subject comes to his mind; whether the department, in its sug- 
gestion as to relative compensation for apartment cars and full cars, 
provided the construction is the same, is sound ? 



1462 BAIL WAY MAIL PAY. 

Dr. Lorenz. I have not been able to agree with the department — 
with its view — on that point, because it seems to me, so far as the 
matter of running the car is concerned, it applies as much one way 
as the other. Sometimes a car would be run solely for mail service, 
and sometimes it would be run for the other service. If you could 
always match them up, it is clear each should pay the actual propor- 
tion rate ; but it is wholly impossible to tell to what extent the empty 
movement in apartment cars is due to one service or the other. For 
that reason I do not see any distinction to be made in the rates. If 
any distinction is to be made, it should be a higher rate for the apart- 
ment car, on the ground that, so far as I know, the apartment car is 
likely to be on the line which has thinner traffic; by which I mean 
fewer trains per day over a mile of track. 

Mr. Bradley. Does that mean the line of thinner traffic needs the 
money more? 

Dr. Lorenz. Yes. 

Mr. Bradley. Not that it earns more, but that it needs it more. 

Dr. Lorenz. I think the cost of maintaining the roadway is less 
per train-mile on a road that has 10 trains per day than on roads 
with two trains per day. 

Mr. Bradley. That is getting down to cost basis. 

Dr. Lorenz. I think for that reason the pay for apartment cars 
would be higher. 

Mr. Bradley. Would you apply the wholesale and retail principle 
as between full cars and apartment cars ? 

Dr. Lorenz. As I say, the unused space, which may come from 
cutting up the car, seems to me may be logically attributed to the 
baggage as well as to the express or mail. 

Mr. Bradley. Except the railroad company would control the 
allotment for baggage and express, but in regard to the mail space 
would not under the proposed compulsory law. 

Dr. Lorenz. It would not make any difference whether it con- 
trolled it or not. The fact would be there would be occasions when 
the department's view would be correct; that is, you would not have 
to run the extra car on account of the mails. 

Mr. Bradley. Would there not be a great difference in results 
because of the ability to control the car movement and to economize 
in loading and operation, whereas compulsory service must be per- 
formed under heavy penalties, whether or not it is remunerative 
or economical? 

Dr. Lorenz. That is clearly a waste in cutting up cars, but, as T 
say, I do not know that you could charge it entirely to the mail 
service. 

Mr. Lloyd. Would it not be a reasonable proposition to say that 
when a railroad company needed less space that the demand of the 
department would be for less space also? In other words, if the Gov- 
ernment needs, less space in a given instance, would it not be natural 
that the railroad company would need less space in that given in- 
stance and it would not have the opportunity to use the space which 
might be vacated by the Government in the given instance? 

Dr. Lorenz. I think that is very probable ; yes, sir. 

The Chairman. I think that is a very strong point. To my mind, 
as I look at it at present, one of the elements of weakness in the de- 



KAIL WAY MAIL PAY. 1463 

partment's position as to the reduction of rate in the apartment over 
the full car is the assumption that there is always an overflow of 
business that the railroads can take up which does not exist. 

Mr. Lloyd. It seems to me that the assumption would naturally be 
the other way. 

The Chairman. It would in its operation — in effect. But the de- 
partment assumes there is always business available that the rail- 
roads can put right into the unused space and it earns something. 

Mr. Stewart. To prove that is correct w T e refer to the present con- 
ditions in the apartment-car service, where the railroads are, on their 
own account, voluntarily furnishing us a great deal more space than 
we need. What is that space? It is space that is surplus in their 
trains which they have liberty to use at any time. It is overflow 
space which is available to them if we do not need it. 

The Chairman. It is not available to them, for they can not use 
it, or they would not furnish it to you when you ask for it. 

Mr. Stewart. If they needed it they would not surrender it to us. 

The Chairman. The case you have just cited, instead of proving 
your vieWj disproves it, namely, that they would have additional un- 
earned space that they would get no return on at all. 

Mr. Lloyd. At the present time it does not make much difference, 
but if you are going to change to a space basis it is a serious element, 
and it seems to me when you do not need the space, or the Govern- 
ment does not need the space, it would naturally follow that the rail- 
road company would not need it either. When you have increased 
business and need the space it would naturally follow the railroad 
company would have increased business and need the space. The 
very fact that at times they give you more space than you need proves 
positively the fact they have more space than they need. 

Mr. Bradley. I think, also you do not get an exact idea of what 
we are discussing, if we simply use the general term " space." Here 
would be the thought : If a railroad company, looking to the future, 
and especially in connection with parcel post, voluntarily provides 
30 feet of space where the department at present needs only 25 feet, 
that 5 feet additional may necessarily carry with it the rest of the 
car. It is not to be contended that because the company can spare 
that 5 feet that they can also spare the other 30 feet that goes to make 
up the rest of the car. Very often an additional car would have 
to be run. 

Mr. Rowan. In this connection I want to bring out the point, 
which I think it is well to have, as a result of the full-crews bills 
which have gone into effect in many States. We have cut out the 
handling of baggage on a great many trains, especially in suburban 
territory, so that where the department asks for an apartment-car 
facility, it means the railroad can not use the baggage end of that 
car without putting a baggageman on that train. Your committee, 
when they were in New York this summer, saw an instance where we 
were hauling an apartment car of 12 or 14 feet from New York to 
Croton and from Croton to New York with the baggage end abso- 
lutely empty ; we had no use for it, and we did not use it for baggage, 
because according to the laws of the State of New York we would 
have had to employ a baggageman to ride on that train, and that is 
one of the trains we have marked on our timetable which does not 



1464 RAILWAY MAIL PAY. 

carry baggage. Dr. Lorenz and Mr. McBride saw that particular 
case, and we have many like it. 

Mr. McBride. That was a fact on that one particular train. 

Mr. Eowan. And on a good many others. 

Mr. Safford. I would like to say also that in the South, where 
we have to separate the races, we generally build what we call a 
baggage and a seat car ; one end of the car is used for baggage and 
the other end is devoted to carrying of colored people. Those cars 
are entirely sufficient for most of our local trains upon which apart- 
ment-car service is performed, and it is very generally the case, 
where we are asked to put in apartment-car service, it means an- 
other car on the train. It is not unusual at all that the railroads 
have to put in another car to supply the apartment-car space. Then 
there is another matter which, we will say, probably would be con- 
sidered as optional with the railroads, but still it is a condition we 
have to practice in pursuit of economy. This question of furnishing 
more space in apartment cars than the department actually requires 
is due very largely to the fact that the railroad company, without 
great extravagance, can not keep all of the types of cars that the 
department may ask for. I have on my system requirements running 
all the way from 6 feet up to 30 feet. We do not have any 6-foot cars, 
we haven't any 10-foot cars, but in order to exercise the best eco- 
nomy we can, we build a larger proportion of cars with larger mail 
apartments in them, so that they will be interchangeable through- 
out the system. The department never finds fault except when we 
furnish them too little space. They never have made any objection 
when we gave them more than they called for. 

The Chairman. Why should they? 

Mr. Safford. I do not know why they should, but no specific men- 
tion was ever made of that fact until we began to go into the ele- 
ments that finally developed Document No. 105. 

The Chairman. Then, Gen. Stewart, as I understand you, it gets 
down to the one factor of the greater cost of a 60-foot steel- 
constructed R. P. O. car than of an apartment steel car, and a reduc- 
tion of 5 per cent suggested by the department in the rates. The 
cost is relatively the same and the cost of heating relatively the 
same ? 

Mr. Stewart. It ought to be. 

The Chairman. Then it is simply the difference in the cost of the 
car? 

Mr. Stewart. That is the undisputed difference. I could not say 
that that was the only difference, because I do not think the ques- 
tion has been settled here that it is the only one. 

The Chairman. I mean the department's objection in making up 
its mind for a 5 per cent reduction between the two ? 

Mr. Stewart. No, sir. I still insist that the railroad companies in 
many cases have to put this car in their train, and in everv case that 
we call for a whole car they have to put a separate and distinct car 
in the train. That is certainly a difference that ought to be con- 
sidered. Mr. Lorenz suggests that on the space basis he does not 
see how that could enter into the consideration. I can not quite fol- 
low him there at present. It does seem to me that it makes a differ- 
ence in the cost and leaves it to the company whether they have to 



RAILWAY MAIL PAY. 1465 

put an independent car in or whether they give the department 30 
feet in one which it runs anyway, for its own convenience. 

Dr. Lorenz. I agree with you that if it is true they are running 
the car anyway, that their giving you that part of the car does not 
cause a proportionate increase in expense for furnishing the new car, 
but the question is to what extent is that typical and to what extent 
the other case presented by the railroad is typical where they have to 
put in another car where you ask for an apartment car? The only 
question is which is relatively the more frequent. 

Mr. Bradley. Is there not one thing that always happens, that if 
the department orders an additional K. P. O. car they would be ex- 
pected to pay the full rate for the whole car? If they order an addi- 
tional mail apartment car, if it happened to be 15 feet, it would onlv 
pay 4J cents ; yet the company might have to put on a full car, which 
according to the department's own schedule is given a rate of 20 cents. 

Dr. Lorenz. That is one case that might happen, and the other is 
Gen. Stewart's, where you would run the car anyway; without the 
statistics as to the frequency of relative cost, I do not see why it should 
be more or less on that ground. 

Mr. Scott. Assume that 30-foot apartment cars cost the same as 
60-foot full R. P. O. cars and the Post Office wants 30-foot mail 
apartment cars running in both directions between two points. The 
value of that car is fixed at 20 cents and the Post Office Department 
will say for that 30 feet we will pay you 9 cents, because some days 
you have an opportunity to load your end of the car partly full. 
Why should the railroad company be penalized that 10 per cent 
whether they load their end of the car or not? They are penalized 
to start with, by being paid for only half of the car. 

The Chairman. And the risk they run to fill the other half. 

Mr. Scott. Yes ; it seems to me it is a one-sided proposition. 

Mr. Mack. We have many cases of that kind. For instance, I 
pointed out on our line from Kansas City to Pueblo, as I showed in our 
statement, we are obliged to furnish a full car. We would get 9 cents 
if it is a wood car and 9-J cents if it is a steel car, but no question ex- 
ists about the fact, but some provision ought to be made even under 
the existing plan. We have suggested apartment-car pay as a pres- 
ent remedy for it, but this class of cars is quite general in the West 
and they are not a negligble quantity and undoubtedly ought to have 
some consideration, not merely with respect to the difference in rate 
between the apartment car and the full R. P. O. car, but as a different 
class of cars. 

Dr. Lorenz. Have you any case in which, if the department should 
take off the mail service entirely from part of the car line, you would 
still have to run the same number of cars for the baggage and ex- 
press ? 

Mr. Mack. If the department took off the space ? 

Dr. Lorenz. Yes. If the department said they did not need the 
apartment on this train at all, would you not still have to run that car 
in many cases for baggage and express ? 

Mr. Mack. "No. That is the point we make, that 30 feet of space 
in the other end is not of any value. 

Dr. Lorenz. Then there is no case in which an apartment 

Mr. Mack. Do not misunderstand me. It is not in all cases where 
we have a 30-foot apartment car that we have to haul other cars, 
49396—14 100 



1466 RAILWAY MAIL PAY. 

but there are cases where it does occur, and that is a condition that 
ought to be considered. 

Mr. Baskerville. There are other cases. Take, for instance, the 
two or three car trains on the branch lines ; we could use the combined 
passenger and express car and eliminate the postal car. 

Mr. Wade. Is it a fact that in the development of the passenger 
service that the first thing provided for is passenger and baggage 
service, and that the mail is incidental? Naturally, in that case the 
railroad company would provide the space in the part of the car to 
take care of the passenger business, perhaps the smoker. As the mail 
developed, additional space is required, and in a great many cases an 
additional car would be required on that train. We presented a state- 
ment that showed that 19 out of 42 apartment cars in use on the 
Erie Railroad were not used for any other purpose except for mail 
at the present time. 

Mr. Rowan. Nineteen out of forty-two ? 

Mr. Wade. Nineteen out of forty-two, if I remember correctly. 

Mr. Connolly. On the Central Railroad of New Jersey they run 
three 30-foot cars every day 120 miles, four 30-foot cars 60 miles, and 
one 30-foot car 90 miles. Of those seven 60- foot cars, with 30 mail 
apartment cars, the storage space is of no use to the railroad company. 

The Chairman. It is not utilized at all on any one of those seven 
trains ? 

Mr. Connolly. No, sir. To get away from that we are building 
TO-foot cars, 30 feet of mail and 40 feet to be devoted to the express 
and baggage, so that we can cut one car out of the train. There is 
one of the most glaring instances in this part of the country. 

Mr. McBride. Then, 10 feet additional will take care of your bag- 
gage and express? 

Mr. Connolly. On an average ; but not all the time. 

Mr. Lloyd. I want to ask Mr. Worthington a question which will 
get away from this particular point. On your heavy Ogden trains 
you stated, as I understand you, that you had several storage cars. 
Is it not true that in the storage cars you have a very great tonnage? 

Mr. Worthington. A large tonnage. 

Mr. Lloyd. Do you know how much? 

Mr. Worthington. I do not think I said several storage cars. A 
few storage cars ; but I do not remember the number. 

Mr. Lloyd. But you have storage cars on every train. 

Mr. Worthington. On every mail train. 

Mr. Lloyd. Have you any idea of the weight carried in that storage 
car? 

Mr. Worthington. I have not, A special weighing was had in 
1907, which I think gives the weights of those cars. Dr. Lorenz 
showed me some figures to-day on that. He showed me a figure on 
page 857 of 9.26 tons for a 60- root storage car. 

Mr. Lloyd. That is the average weight carried in a storage car? 

Dr. Lorenz. That is the average loaded movement. 

Mr. Lloyd. Do you know whether it is true that on your train 
the average weight of your storage car is not very much heavier than 
that? 

Dr. Lorenz. That is the average in his section; the average for 
the country was less than that. 



E AIL WAY MAIL PAY. 1467 

Mr. Lloyd. What was the average of the country ? 

Dr. Lorenz. A little less than seven and one-half. 

Mr. Lloyd. Do you know what the average is on your road ? 

Mr. Worthington. For the entire country 7.26, according to this 
statement, and for the district comprising California, Nevada, Ore- 
gon, Arizona, Idaho, Utah, and Washington, 9.26 tons. 

Mr. Lloyd. Your Ogden road would be away beyond 9.26 ? 

Mr. Worthington. It may be. I do not know the average for 
the Ogden route. It probably is, but I do not know. 

Mr. Lloyd. The probabilities are that on that Ogden road, where 
you are getting large compensation for the individual train or in- 
dividual car, that you are carrying away beyond the average weight, 
and if some kind of a provision were put into the law that fixed, 
by weight, what a storage-car load is, like you actually do on hogs, 
would not that, to a very great extent, increase your pay and over- 
come your objection. 

Mr. Worthington. I think it would. 

Mr. Lloyd. If we come to the space basis, would not that equalize 
the pay to the railroads, if some such system were adopted? 

Mr. Worthington. If a system were adopted which increased the 
pay according to the load in the car, it would overcome most of the 
objections. 

Mr. Lloyd. What I was getting at was the fixing of the weight 
that makes a storage-car load. In explanation, a few days ago we 
were talking about cattle and hogs, and I raised the question as to 
whether you shipped them by weight. I asked the question whether 
or not you shipped them by carloads, but the answer of the rail- 
road companies was that we do ship by the carload, but we fix the 
weight. Here is a car that carries so many tons and we count up 
so man} 7 tons, but we do not actually weigh it. Now, if you fix the 
limit of weight which makes a full storage-car load, and you actually 
carry twice that weight in storage cars, you might make some kind 
of a system by which you could pay for carrying twice the weight in 
the storage car. In other words, you have two cars in one. 

Mr. Peabody. May I correct your understanding there? On all 
shipments of live stock we have a minimum weight for different sizes 
of cars, but we charge for the actual weight in that car when it is 
above the minimum. That is always the rule. For instance, we 
have a minimum of 20,000 pounds in a 30-foot car, 22,000 in a 36-foot 
car, and so on. We have a minimum weight for each sized car and 
then we charge for the actual weight in case the cars are loaded above 
their minimum. 

Mr. Lloyd. Here is a carload of hogs that weighs 20,000 pounds; 
that is the minimum weight and it turns out, however, you have very 
heavy hogs. For the purpose of illustration, suppose you have very 
heavy hogs and crowd them in close and get in 40,000 pounds of hogs 
in that car. Then, as I understand you, the effect of your rate would 
be to charge twice as much as the minimum weight. Now, if the 
same principle were applied to the mail on the space basis, if you 
carried two loads in one you would get pay for two loads and that 
would overcome the problem that we meet here on these heavy 
storage cars in the West. As I understand it, there is this difference 
between the eastern cars and the western cars, and it is a very marked 



1468 RAILWAY MAIL PAY. 

difference, that when you get west of Chicago and St. Louis, you 
carry the magazines. East of Chicago and St. Louis the trains do 
not carry the magazines except few in number. 

Mr. McBride. West of Council Bluffs and Kansas City. The 
freight shipments end at Kansas City and Council Bluffs. 

Mr. Lloyd. Beyond that limit, wherever it may be, you carry these 
heavy magazines, but if you fill up a car with magazines it is going 
to be much heavier than it will be if it is filled with ordinary mail. 
That is the heaviest mail you could carry, and I can conceive how 
you could fill up a car and put nearly twice the weight in it if you 
had that heavy mail than you would with the ordinary mail that 
makes up the storage car. 

Mr. Peters. The service is being performed by the railroad and 
under the weight basis the railroad gets paid ? 

Mr. Lloyd. He was making the statement that by indirection he 
would not be treated fairly under this proposed pay system. I was 
trying to reach a solution of the matter to ascertain if there was not 
some way to fix that space by law so that he would get that, and it 
struck me that that might be feasible. 

Mr, Worthington. In freight service that is the rule as to all 
carload traffic. 

Mr. Lloyd. The chairman very properly asks how you would make 
the ascertainment of weight. Can you answer that? 

Mr. Worthington. I do not see how you could get an ascertain- 
ment of weight without weighing the mails. The department could 
answer that better than I could. You would have to weigh the mails 
in those cars. 

The Chairman. You would have to weigh every car and every 
movement. 

Mr. Worthington. Unless they follow the present plan and take 
the weight for a certain number of days. 

Mr. Lloyd. Take the hogs that you speak of. Do you actually 
weigh the hogs that go into the car ? 

Mr. Peabody. Whenever they are taken to market they are always 
weighed. 

Mr. Lloyd. Do you weigh the horses that go into your cars ? 

Mr. Peabody. Earely, except by scale weight. 

Mr. Lloyd. What do you mean by scale weight? 

Mr. Peabody. The track scale weights. We take the market 
weights where they go to market, with cattle and hogs, but where 
they do not go to market we take the track scale weights. We always 
weigh every car. 

Mr. Lloyd. Is it not possible to determine the weight question this 
way: The railroad company comes to the conclusion that there are 
more than 1\ tons being carried from day to day. That question 
can be easily settled between the railroad company and the Govern- 
ment by taking the mail actually weighed for a few days to deter- 
mine it. It need not be any particular time, but whenever a railroad 
company says they are not getting enough you could weigh it to see. 
If it should happen to be a heavy period, and the Government would 
say it would not be a fair test, it would determine just for the time 
being whether they were getting enough or not, and at some other 
time the Government could demand a weighing, and they could ascer- 
tain what was the average weight. 



RAILWAY MAIL PAY. 1469 

Mr. Wade. Why not fix the schedule at 1\ tons ? 

Mr. Lloyd. Because, as I understand it, that was said to be the 
average weight of the storage-car mail. 

Mr. Bradley. In 1907 in the special weighing? 

Mr. Worthington. I suppose that has changed since the maga- 
zines have been taken out of that east of Council Bluffs. 

Mr. McBride. I think the statistics of 1907 show the average load 
of storage cars in the eighth division, which would take in your line, 
was somewhat heavier than 7-J tons. 

Mr. Worthington. The weight varies in different sections from 2| 
tons to 9.26 tons, and the average shown is 7.26 tons. That is accord- 
ing to the special weighing of 1907. 

Mr. McBride. That is my impression. 

The Chairman. Would you gentlemen of the railroads be satisfied 
if you had compensation from the Government for railway mail pay, 
including the railway post office, equivalent on a car-mile basis to 
your passenger revenue? 

Mr. Peabody. The passenger car-mile revenue? 

The Chairman. Yes. 

Mr. Peters. I think we would. 

Mr. Peabody. While it is true that the passenger-train-car revenue 
does not pay for its proportion of the expense of conducting the 
service, I think it would be only fair that the mail should not pay 
any larger revenue than accrues to the other service. But that is 
considerably more than 25 cents per car mile on our road. 

The Chairman. Would you go as far as to say you think the mail 
should pay exactly the same in revenue to the railroads that the 
passenger service pays. 

Mr. Peters. I think they should pay fully that much. 

The Chairman. Your reasons are what? 

Mr. Peters. It occupies so much space in the train. 

Mr. Worthington. Would you mean for each individual road or 
for the railroads as a whole; for example, our passenger-train mile 
revenue is, I think, about 34 cents a car mile, which is higher than 
the average for the United States, and it would make a material 
difference to us whether you mean the average for the whole 
country. 

The Chairman. What I meant was the average for the country of, 
say. 25 cents a car mile? 

Mr. Worthington. We get more than that now, according to these 
figures. 

Mr. Lloyd. How about you, Mr. Bradley? Are you getting more 
than that now? 

Mr. Bradley. Oh, no. 

Mr. Lloyd. What do you get now? 

Mr. Bradley. We get considerably less than the average passen- 
ger car earning. 

The Chairman. As I understand, in the rate suggested in the 
proposed bill, the determinant factor in your mind in arriving at the 
suggested rate was the revenue from the average passenger service ? 

Mr. Stewart. Yes, sir: that was the basis. 

The Chairman. And your reason for making a reduction there of 
20 per cent in the average passenger rate as applied to the mail reve- 



1470 RAILWAY MAIL PAY. 

nue was what ? How did you arrive at that 20 per cent ? Was that 
an arbitrary? 

Mr. Stewart. In the first place, we accepted the 10 per cent reduc- 
tion proposed by Dr. Lorenz, somewhat measuring the difference 
between the passenger service and the mail service. 

Dr. Lorenz. I might suggest at that point I do not venture to 
measure the exact difference in the value of the mail service per car- 
mile and the other passenger service per car mile, but I said it could 
not exceed 10 per cent at the outside, I thought. 

Mr. Worthington. Did you not say, Dr. Lorenz, that your thought 
was that the rate should be somewhere in the neighborhood of 25 
cents, but you doubted whether it would be well to go all that dis- 
tance at once in increasing the rate, and that 22J cents was going 
halfway. 

Mr. Lorenz. Yes. I think the evidence was too slender to base 
an award of $15,000,000. 

Mr. Stewart. I am glad Dr. Lorenz has finally brought that out 
and put it into the record. Of course you gentlemen all know that 
I do not think the evidence is sufficient upon which to reach such 
conclusion. I furthermore think we have clearly shown that that 
conclusion is based upon premises which have been disproven. 

The Chairman. That is the $15,000,000? 

Mr. Stewart. Yes. 

Mr. Lloyd. In that connection, may I ask Dr. Lorenz what would 
be his award, if anything, on the $15,000,000 proposition? 

Dr. Lorenz. How much do I think the evidence warrants? 

Mr. Lloyd. Yes. 

Dr. Lorenz. Well, my actual suggestion was 22-J cents. 

Mr. Lloyd. You made a statement as to $15,000,000. You said 
you would not make an award of $15,000,000. Now, I said, if you 
were going to make an award, are you prepared to make an answer 
which would make any part of the $15,000,000 ? 

Dr. Lorenz. Yes. I suggested possibly 10 per cent of the existing 
pay— $5,000,000. 

Mr. Peters. I thought you suggested $8,000,000. 

Dr. Lorenz. No. I suggested that $8,000,000 was what the claims 
of the railroads amounted to if their amendments were allowed. 
But it seems to me, on the commercial basis, that the department has 
itself furnished the evidence, so far as we can judge, from the returns 
for the single month, that there was some underpay; that is to say, 
if we take their statement in Document 105, Table 7, their figures 
for a division between freight and passenger and make a single 
correction, that they should be charged with at least half the dead 
space — and I think it could be argued they should be charged more — 
that with that correction it would amount to four or five million 
dollars, according to their own showing. 

The Chairman. That is, that the railroads were underpaid instead 
of overpaid ? 

Dr. Lorenz. I think that is indicated. But, as I said, I do not think 
the evidence sufficient to say positively how much more than that 
they were underpaid. 

Mr. Bradley. That was on the department's division of expenses, 
their ratio of 29.21, and increasing their space ratio to approximately 
what? 



RAILWAY MAIL PAY. 1471 

Dr. Lorenz. It would be between their figure and 8 per cent. 

Mr. Worthington. I would like to make one deduction. Docu- 
ment 105, Table 7, shows the figures of space and operating expenses 
and taxes chargeable to the mail service. Dividing the space figures 
into the operating expenses and taxes chargeable to the mail, produces 
an average of 3.08 mills per car-foot mile for operating expenses 
and taxes, according to the department's calculations. In volume 
No. 7 the department gave other figures, which would increase the 
operating expenses and taxes by 32.51 per cent to cover other charges 
against income, increasing the 3.08 for the operating expenses and 
taxes by 32.51 ; this would make a total of 24.81 cents per 60-foot car- 
mile, which the railroads should receive to cover operating expenses 
and other charges against income, according to the department's own 
calculation, whereas the proposed rate is 20.91. 

Dr. Lorenz. I made the same calculation, but I think it should be 
stated that indirectly your result there assumes that they would have 
to pay that on the live space, for in Table No. 7 their figures are based 
on the mail space without dead space. 

Mr. Worthington. The mail space figures do not enter into this 
at all. 

Dr. Lorenz. Yes; because they then say that by using 68.8 per 
cent 

Mr. Worthington. It is the pasenger train space as a total divided 
into passenger operating expenses as a total. 

Dr. Lorenz. But that space you have divided as a total is the live 
space ? 

Mr. Worthington. It is the total space on the passenger train. 

Dr. Lorenz. Excluding the dead space. In Table No. 7 there is no 
dead space. 

Mr. Worthington. Yes, there is. 

Dr. Lorenz. Pardon me, not Table 7. You have simply mail plus 
deadhead space. 

Mr. Worthington. I am not speaking of mail space. I am speak- 
ing of total passenger space as shown in Table No. 7. 

Dr. Lorenz. There is none shown in Table No. 7. 

Mr. Worthington. I am not speaking of the division of mail 
space in revenue, but the operating expenses. 

The Chairman. You were interrupted in answering a question I 
propounded as to the reasons why you arrived at a 20 per cent de- 
duction from the passenger rate for mail revenue. When the inter- 
ruption took place you referred to Dr. Lorenz's suggestion of 10 
per cent. 

Mr. Stewart. In addition to the 10 per cent suggested by Dr. 
Lorenz we made another deduction of 10 per cent on consideration 
of, first, the overpayment to the railroads as demonstrated by our 
presentation to the committee, which we think is as yet unsuccess- 
fully controverted. Further, in consideration of the additional ele- 
ments which we have suggested, which Dr. Lorenz took no notice 
of, and which justifies a considerable reduction from a strictly 
commercial rate. Those considerations have been referred to fre- 
quently in the hearings and are set out specifically in our reply. 

Mr. Lloyd. What is that ; uniformity of service, homogenity, etc. ? 

Mr. Stewart. Yes. 



1472 RAILWAY MAIL PAY. 

The Chairman. Public-utility features ? 

Mr. Stewart. Yes. 

The Chairman. If you eliminate the public-utility features and 
treat it purely as a commercial proposition, then what reduction, 
further than that suggested by Dr. Lorenz, do you think the Gov- 
ernment would be justified in making as between mail and pas- 
senger ? 

Mr. Stewart. I think the same reduction we have suggested, be- 
cause I have given very little consideration to the specific element 
of public utility in that 10 per cent. We have named a number of 
elements and public utility is only one of them. 

Mr. Lloyd. You mean those several elements combined are 10 per 
sent? 

Mr. Stewart. Yes. We have stated specifically that whether or 
not the element of public utility is to be considered must ' be de- 
clared by Congress as a public policy, and we have not attempted to 
put a value on it. 

The Chairman. Then your 10 per cent further' reduction is an 
arbitrary of your's, based upon taking into consideration such factors, 
but without comparing the value or weight, relatively, or each one 
of those factors ? Is that it ? 

Mr. Stewart. Necessarily so, because there is no other basis upon 
which to proceed, excepting the one basis of overpayment to the 
railroads. 

The Chairman. Let us turn to that for a minute for discussion and 
analysis. If that were true, and if you were right in your contention 
that they were overpaid, and these suggested rates would go into 
operation for a period of years, how long would it remain in opera- 
tion? Congress might see fit to change the rates. How do you 
justify that viewpoint of the adjustment of that overpayment, for 
how many years before these rates would equalize that, in which 
event, after that indebtedness on the part of the railroads to the 
Government had been repaid because of the overpaying, would this 
pay be sufficient ? 

Mr. Stewart. You mistake me entirely if you think the purpose is 
to recoup something that has been paid out. It is only to reduce the 
pay to what it ought to be. The reductions were preliminary to the 
further building of the rates. Those reductions determined the line 
rate, and upon that line rate we build an additional element into the 
rate by adding the terminal charge and the loading charge, which 
brings the average for the entire service up to about 20.9 cents a 
car-mile. 

The Chairman. As against 25 cents plus for the passenger revenue ? 

Mr. Stewart. That reduces the 10 per cent reduction which I 
made to about 7 per cent. In regard to Dr. Lorenz's answer to 
your question as to how much of this alleged $15,000,000 under- 
payment he would venture as a suggestion should be allowed, it 
is still to be observed that he bases that upon the showing which 
he says has been made in regard to the Missouri Pacific system, 
and he says that perhaps one-half of the dead space ought to be 
allowed. We show that over 9,000,000 car-foot miles was in con- 
troversy in the Missouri Pacific case. The answer of Mr. Mack is 
before you, and he has not successfully shown that any material 



EAILWAY MAIL PAY. 1473 

part of that should have been put back in the mails. What he has 
said in his answer is a reiteration of the points of difference between 
the administrative rule of the department on the one side and the 
contention of the railroads on the other as to what should have been 
charged to the mails and as to what should not have been so charged. 
He has given you nothing but a restatement, in concrete figures, of 
the same controversy between us. We thought we would have the 
opportunity before the closing of the day to give you some further 
light upon the Missouri Pacific system and show you the kind of 
examples which make up, to a very large extent, at least, the 9,000,000 
car-foot miles. 

The Chairman. Have you got it ready ? 

Mr. Stewart. We have that now. 

The Chairman. I understand you want some little time to look 
over that statement ? 

Mr. Stewart. In the morning will do just as well, so far as we are 
concerned. 

The Chairman. As I understand, you have still further modified 
your views in reference to the question of rates, because of the dis- 
covery or working out of the express cases that you submitted to 
the committee in your table, so that you are now of the opinion that 
the maximum rate suggested in your proposed plan should be made 
still lower ? 

Mr. Stewart. I am not prepared to make a suggestion. 

Mr. Lloyd. I think your suggestion was that it was certainly 
liberal. 

Mr. Stewart. Yes. I said that they were certainly high enough. 
I am not in position to suggest to your committee that any reduction 
should be made. I could not bind the Postmaster General in that 
respect. 

The Chairman. There is no desire to bind the Postmaster General, 
but we are trying to get for the information of the committee the 
development of your mind in your study. Having the determinant 
voice, provided your suggested plan were enacted into law, the rates 
being maximum, your present impression would be to reduce in all 
instances, would it not ? 

Mr. Stewart. To reduce the pay to the company below the rates 
fixed by law ? 

The Chairman. Below the maximum rates. 

Mr. Stewart. Oh, no. 

The Chairman. Would you not have the authority under the law 
to give lower than 20 cents a car mile — 19 cents and 18 cents ? 

Mr. Stewart. Yes ; but that is not the question you asked me. You 
asked me whether it would be my intention to reduce them in practice. 

The Chairman. That is what I mean? 

Mr. Stewart. No, sir; I have no such purpose as that in view. 
Practically that could be done under this provision which permits 
the Postmaster General to ascertain from the Interstate Commerce 
Commission certain information upon which he might act. That is 
independent entirely of the rates that are fixed in the proposed bill. 

The Chiarman. You think those rates are extremely liberal? That 
is your present impression? Now, if on further investigation you 
became convinced that they were excessive, would you not have au- 



1474 RAILWAY MAIL PAY. 

thority, under the suggested plan, if enacted into law, to pay less 
than the maximum provided there? 

Mr. Stewart. Yes, sir. 

The Chairman. Would it not be your inclination and your duty, 
under the position you occupy, to do that ? 

Mr. Stewart. The sufficient answer to that is this, that the sama 
provision exists in the present law and has been there since 1873. 

The Chairman. We used to use tallow dips, but we now use elec- 
tric light. 

Mr. Stewart. The same controversy has continued for many years. 
There have been a number of Postmasters General who have believed 
that these rates fixed by the law of 1873 and the amending acts were 
too high, and they have so expressed it in their annual reports and 
otherwise, and no Postmaster General has arbitrarily made a reduc- 
tion in rates. 

Mr. Peters. When you changed the divisor you did? 

Mr. Stewart. No. That was correcting a process. The effect of 
it was to reduce the rates about 10 per cent. 

The Chairman. What I meant was, as a practical proposition, the 
change in the divisor was a change in rates of about 10 per cent ? 

Mr. Stewart. It had that effect. 

The Chairman. That was the purpose of it ? 

Mr. Stewart. I think not. I think the purpose, primarily, was to 
adopt the correct process for finding the average daily weight. 

The Chairman. I think Gen. Cortelyou, who made the order, ex- 
pressed the other view, that there ought to be a reduction. That has 
always been my view, but I may be wrong. 

Mr. Stewart. I do not know of any such expression. This is what 
it did do: It reduced the rates and we have maintained that as a 
reduction in rates it was justified under the power given the Post- 
master General under that statute, aside from its being a correct 
process. 

Mr. Kowan. Did you not also make a reduction of 5 per cent at the 
same time? 

Mr. Stewart. Congress did, on weights above 5,000 pounds. 

Mr. Rowan. So altogether the reduction is how much? 

Mr. Stewart. On the whole body of the mail I do not know. All 
rates were not reduced by the statute at that time. 

Mr. Rowan. On routes handling over 48,000 pounds, what did the 
two reductions amount to ? 

Mr. Stewart. It may probably be stated in the annual reports, but 
I do not recall the approximate amount. 

The Chairman. Is it absolutely necessary for administrative pur- 
poses that the law should give a maximum and not specified rates ? 

Mr. Stewart. I think so. 

The Chairman. It is necessary ? 

Mr. Stewart. Yes. That has been my opinion and I do not see 
any reason for changing it. 

The Chairman. The point is not as to the policy but as to the 
necessity. The law, if it was fixed, namely, if the law provided 
20 cents, 19 cents, and 18 cents and fixed a flat rate, it could not be 
administered, or would interfere with the administration. 

Mr. Stewart. It could be administered, but I think it would inter- 
fere with the administration. 



RAILWAY MAIL PAY. 1475 

Mr. Lloyd. You mentioned one instance where it would stop ; that 
was the case of competing railroads between the same points where 
the routes were of different length ? 

The Chairman. That would work a hardship as between roads, 
but would it work a detriment to the Government in dollars or in 
efficiency of service. 

Mr. Lloyd. His idea was, when he expressed it, that the Govern- 
ment ought to be permitted to use, in that case, the shortest route 
between two points as the basis of pay, and under the system if there 
was no leeway at all, it could not be done, because you would have 
to charge a flat rate of 18 cents or 20 cents as the case may be for the 
whole distance. For instance, if he sent mail by the Baltimore & 
Ohio Kailroad there would be one rate, if he sent it by the Pennsyl- 
vania there would be another and a different rate, for instance, from 
Washington to Baltimore if he sent it by the Baltimore & Ohio which 
would be the shorter route. 

Mr. Stewart. It is a consideration which would not impress you 
gentlemen very deeply, because you would not appreciate how often 
it comes up. If you have maximum rates, the act of the Postmaster 
General in making a pay order, if it carries an amount of money 
which is within the maximum, is a lawful order and it stands, it 
can not be successfully contested. If you had the rates absolutely 
fixed, there are so many little differences in the adjustments of service 
that no order which the Postmaster General could make would be 
final, because there would always be a chance for controversy be- 
tween the railroad company and the department as to whether that 
was the exact rate for that specific service allowable under the 
statute, whereas now the pay carried by an order which does not 
exceed the maximum rate is a legal order and there can be no con- 
troversy about it. 

The Chairman. Why does not your same objection apply under 
existing conditions ? 

Mr. Stewart. The very same principle which I am naming does 
exist under the present law. Our orders are now valid orders, be- 
cause they carry a rate which is within the maximum. 

The Chairman. Do you not ever pay the maximum ? 

Mr. Stewart. We pay the maximum generally. 

The Chairman. Then, why would not the same objection apply in 
administrative cases paying the maximum as having a maximum 
fixed rate. 

Mr. Stewart. You do not see the point that I have in mind. 
There is, upon the one hand, the service performed which is meas- 
ured, for instance, by the length of the route and the weight of mail 
carried, and the other considerations that enter into the question of 
how much money the company is entitled to per mile per annum for 
that service. The Postmaster General makes an order allowing a 
maximum rate for a given service. That is nominally the maximum 
rate, but if the company disputes the fact that it is the maximum 
rate, because there is some small item somewhere along the line for 
which it makes claim and which it claims the rate does not cover, 
the reply to that would be that the Postmaster General's order is a 
valid order, because he has fixed the pay within the maximum rate 
provided by law. 



1476 RAILWAY MAIL PAY. 

Mr. Lloyd. It seems to me the suggestion you make there would 
show you are not doing justice, because there might be some little 
thing left out. If there is anything left out it ought to be paid. 

Mr. Stewart. It ought to be paid, and it would be paid, if the 
railroads and the department came to an agreement upon it. 

Mr. Lloyd. I thought you said that the maximum fixed by the 
Postmaster General was final, and if it is a finality there would not be 
any chance for additional pay? 

Mr. Stewart. It is final as long as the order stands, but it is 
always subject to revision. 

Mr. Bradley. Is it not the maximum amount of the payment you 
are discussing, and not the maximum rate upon which that amount 
is based? 

Mr. Stewart. No. It is the maximum rate. 

Mr. Lloyd. So far as administration is concerned, the railroads 
make a good many complaints. We provided by law last year that 
there should be an increase of 5 per cent on account of the parcel 
post. You say that as an administrative feature you complied 
strictly with that law, but, so far as I know, there is no railroad in 
the country that has gotten a 5 per cent increase. 

Mr. Stewart. Yes; there are some. 

Mr. Lloyd. I knew that Congress intended that every road should 
be paid a 5 per cent increase. 

Mr. Stewart. Then, why did they say, " not exceeding " ? 

Mr. Lloyd. That is what I am talking about. Whenever they give 
the department leeway it takes advantage of it. If we had said 
what Congress intended, that the railroad companies should have 5 
per cent increase, there would not have been any trouble at all, but 
instead of that we made the very serious blunder of putting in the 
words "not exceeding," and because we put in the words "not ex- 
ceeding " you have been construing it from time to time to. satisfy 
your administrative purposes, and the railroad companies have not 
received the 5 per cent. 

Mr. Stewart. Take a company carrying 100 pounds daily average 
weight at the time that law was passed. They were receiving pay 
at the rate of $42.75 per car mile per annum, based upon the average 
daily weight of 211 pounds or less. Suppose there was a 50 per 
cent increase in weight? 

Mr. Lloyd. I am not talking about your reasoning, but I am talk- 
ing about how the thing has worked out. 

Mr. Stewart. As a result of the parcel post. Their average daily 
weight would have been 150 pounds. Now, will anybody contend 
that Congress intended to pay that road 5 per cent more, while if we 
had actually weighed the mails we would not have paid them a cent 
more? 

Mr. Lloyd. There is not any question in the world but what Con- 
gress intended, in addition to the $42.75, that they should get 5 per 
cent more. 

Mr. Stewart. That is, pay them more than if we had actually 
weighed the mails? 

Mr. Lloyd. Yes. 

Mr. Bradley. Even the 50 per cent increase of weight might in- 
crease the expense of their side and terminal messenger service far 
beyond the allowance? 



KAILWAY MAIL PAY. 1477 

Mr. Mack. It would be interesting to know how the 5 per cent 
was applied to the Missouri Pacific and the other lines in the case 
which I presented to the department. The application of the non- 
exceeding clause deprives the company on its 150 mail routes of all 
sizes, of $22,000 a year. Now, had Congress not placed any restric- 
tion or limitation and intended the department to estimate the 
growth and pay on the assumed weight, it is hardly to be supposed 
that Congress would have limited the 5 per cent, because Congress 
should have been willing to pay for the weight over 5 per cent as well 
as the weight under 5 per cent. According to the estimate made by 
the Eailway Mail Service with respect to our routes, which the Post 
Office Department furnished, we would have had $64,000, but by the 
use of the term " not exceeding " we lost out at both ends ; we did not 
get the twenty- two thousand or the sixty-four thousand. 

Mr. Lloyd. You got no pay at all ? 

Mr. Mack. We got 4.07 per cent instead of 5 per cent, but we have 
instances where there was considerable excess estimated by the Post 
Office Department over 5 per cent. 

The Chairman. So you lest three-tenths of 1 per cent ? 

Mr. Mack. We lost ninety-seven one-hundredths of 1 per cent. 

Mr. Lloyd. I did not intend to arouse any discussion but only to 
show the illustration. 

The Chairman. I do not for the life of me see how Congress could 
have done anything else but what it did do. I did not see how it 
was possible for Congress to say that this increase of an activity 
had grown to be 5 per cent or 6 per cent. I put it in the bill myself 
in Congress, and there was debate made on the floor of the Senate, 
and a good deal of discussion in reference to it, and it was finally 
adopted by the Senate and concurred in by the House. I do not 
think Congress, not because I at the time happened to be one of the 
Members, was justifiably subject to criticism in that particular. I 
do not see how it was possible to make an explicit and specific rate 
any more than what went into the law. The intention unquestion- 
ably was, at least so far as the Members of the Senate supporting the 
amendment are concerned, that whatever increase was determined 
up to 5 per cent should be paid to the railroads because of increased 
business due to the extension of the privileges of the fourth-class 
mail. 

Mr. Lloyd. And the " not exceeding " only applied to railroads 
that had not increased up to 5 per cent ? 

Mr. Stewart. Senator Bourne expresses it as we administered 
it; that is, the roads received everything they were entitled to 
on the weight up to 5 per cent. The rates were applied to these 
estimates of weights and we did not reduce the allowance below 5 per 
cent excepting where the additional weights did not justify 5 per 
cent. We gave them everything they were entitled to up to and in- 
cluding 5 per cent. 

Mr. Mack. Do you not think under an equitable provision the 
railroads should have been paid for 'the increase if there was more 
than 5 per cent? 

Mr. Lloyd. The law did not provide that. 

Mr. Mack. T know, but I would like a reply in the record. 

Mr. Worthington. I would like to get something else in the 
record. I think Dr. Lorenz will bear me out that mv deduction from 



1478 RAILWAY MAIL PAY. 

Table No. 7 as to the operating expenses and taxes per car-foot mile 
for passenger service, was not incorrect. Is not that so, Dr. Lorenz ? 

Dr. Lorenz. Yes ; I did not say it was incorrect, but I thought at 
the time the deductions you drew from it, that the department had 
justified twenty-four and a fraction cents, would apply only if paid 
for by the live space and not for the dead space. I see now, how- 
ever, there is a little statistical puzzle and that the twenty-four and a 
fraction cents is the rate at the operating ratio they provide for in 
hearings No. 7, which would be the rate they would have to pay for 
all the space. 

Mr. Worthington. It is 24.88 cents per car mile, the computation 
that I made. 

Mr. Scott. With reference to the question of difference between 
competitive points, the universal rule in regard to all rates, both 
freight and passenger, is that the short-line distance rules. From 
New York to Chicago, on the mileage, the New York Central Kail- 
road will only take advantage of the number of miles covering the 
distance by the Pennsylvania Eailroad, and, therefore, any fixed 
rate that is fixed in this bill applying under the car rate should be 
applied to the short-line distance between any two competitive points. 
It seems to me that would meet Mr. Stewart's objection with refer- 
ence to what is now covered by an agreement where the long line 
accepts the short-line pay. 

The Chairman. As I understand, you concur with Gen. Stewart's 
statement as to the impracticability of putting fixed rates in the bill ? 

Mr. Scott. No; I do not agree to that. I said if the rate was 
fixed so much per car per mile, in fixing the rate from New York to 
Chicago it would be the rate both on the New York Central line and 
the Pennsylvania line on a competitive basis, notwithstanding the 
fact that the New York Central is longer than the Pennsylvania, 
because they use the short-line distance in fixing the rate. 

Dr. Lorenz. And the law would have to provide that the Post- 
master General may pay less than these rates per ton per mile on 
agreement with the railroad carrying it? 

Mr. Mack. There is the point I arose to make a moment ago, and 
that was this : Fix a specific rate except where agreed to between the 
department and the company. That would give the railroad com- 
pany some right. The maximum rate would have to prevail except 
where there were conditions justifying an agreement. 

The Chairman. You mean a maximum rate or flat rate ? 

Mr. Mack. A flat rate. 

The Chairman. You said maximum. 

Mr. Mack. I did not use the correct term. 

Mr. Lloyd. And provide further that it shall not exceed the flat 
rate. 

Mr. Mack. The point I am getting at is that you can have a fixed 
rate and it ought to be a fixed rate except where there are condi- 
tions that justify an agreement between the department and the 
railroad company, and I think that rate ought to be fixed in existing 
law, because the department holds it can make any rate it chooses 
to-day. 

The Chairman. How would that suggestion interfere with admin- 
istration? Would it interfere at all? A flat rate, except where 



RAILWAY MAIL PAY. 1479 

agreed to between the Post Office Department and the railroad com- 
panies, providing that the agreement can not exceed the flat fixed 
rate in the law. Would not that cover your difficulties in administra- 
tion? 

Mr. Stewart. No. It would not cover in many cases, such as I 
mentioned a while ago. It would leave a wide field of controversy 
between the railroad companies and the department, and it would 
encourage controversies rather than eliminate them, because if there 
was a difference of opinion as to the facts in the case upon which 
the pay is fixed, if the statute has fixed the pay absolutely, that would 
give to the company a cause of action against the department in 
every case where there was that dispute, whereas now, where we have 
the statute, as it has been since 1873, with the "not exceeding " clause, 
as I explained a while ago, the order of the Postmaster General set- 
tles the question. If there is a slight difference between the company 
and the department, the order that fixes the pay within the maximum 
is a legal order. 

The Chairman. Would that same difficulty exist in the suggested 
plan if adopted in administration? 'Would you have the same 
trouble? 

Mr. Stewart. No ; it would be exactly as it is now under the sug- 
gested plan. 

The Chairman. I do not see where so many differences could occur 
if the suggested plan were adopted. I wanted to get from you 
whether, in your opinion, many of the opportunities for differences 
would cease in the adoption of the suggested plan. 

Mr. Stewart. The suggested plan is the same as the present law; 
that is, it contains the words " not exceeding." 

The Chairman. I know it does; but I do not know whether it 
would minimize the possibility of differences. 

Mr. Mack. Then, when we get into court, where the maximum 
rate has not been fixed, the department's order puts the railroad in 
the position of having no defense, because the rate has not been fixed, 
and the proposition of fixing the stated rate, except where there is an 
agreement, would give the railroad some opportunity to have an 
agreement with the department and give it a standing, but it has no 
standing for anything at all to-day. At least I think the department 
takes the position that it has the right to fix the rate and we have 
nothing to do but accept it or decline to perform the service. 

Mr. Bradley. My understanding is that Congress has frequently 
taken away a limitation on the payment of salaries to employees 
where for a period of years the rate was prescribed at not exceeding 
a certain amount, and then because of complaint from the employees 
that term " not exceeding " was eliminated, and I never hear that 
the department had any difficulty in administering the law. 

Mr. Lloyd. We have a case where that is involved which has 
caused considerable trouble, and that is the case of an assistant post- 
master. There is a specific allowance made for pay of postmasters 
in the United States, and the assistant postmaster receives in com- 
pensation " not exceeding one-half the pay of the postmaster." As 
a practical proposition, he never gets half the pay of the postmaster. 

Mr. Worthington. He is not compelled to work for that salary. 
Under this present bill we have a law under which the rate will be 



1480 RAILWAY MAIL PAY. 

known, not exceeding, with the further provision that the railroads 
shall carry the mail. 

Mr. Lloyd. There may be this marked difference between you and 
the employee: The employee, as a practical proposition, might be 
obliged to say in order to make a living for himself and family, 
whereas the railroad might not accept and you would still live. 

Mr. Stewart. It has been held by the court that an executive can 
not diminish that pay. 

Mr. Lloyd. In this particular instance I have mentioned they have 
fixed the pay, and the pay in some instances of the assistant post- 
masters is not as much as the clerks' pay in the post office. 

Dr. Lorenz. It may be noted that the Interstate Commerce Com- 
mission in fixing rates to be charged by the carriers can only fix maxi- 
mum rates, and perhaps this law could read that the carrier may 
charge not to exceed 21 cents. In that case any less payment would 
be a matter of agreement. 

Mr. Lloyd. That is a good suggestion to think about. 

Mr. Mack. That is substantially the suggestion I make, but only 
in another form. 

(Thereupon, at 5.15 o'clock p. m., an adjournment was taken until 
10 o'clock a. m. Friday, April 3, 1914.) 



FRIDAY, APRIL 3, 1914. 

Committee on Postage on 
Second-Class Mail Matter, etc., 

Washington, D. C. 

The committee met, pursuant to adjournment, at 10 o'clock a. m. 

Present: Hon. Jonathan Bourne, jr. (chairman), Senator John W. 
Weeks, and Representative James T. Lloyd. 

All of the witnesses, with a few exceptions, attending the two pre- 
ceding meetings were present, and all indicating a desire to be heard 
and those subsequently participating in the discussion were duly 
sworn by the chairman. 

The Chairman. Dr. Lorenz, as I remember, yesterday at the hear- 
ing it was your opinion that under the evidence submitted and from 
the investigation you have been making during the past year or more 
on this particular subject, that the railroads were underpaid in 1909 
about $5,000,000 % 

Dr. Lorenz. I would say that I thought the underpayment on the 
commercial basis was at least as much as that, but I would not under- 
take to say how much more. 

The Chairman. But you think $5,000,000 of underpayment is a 
conservative statement and deduction from the evidence submitted 
from a governmental standpoint? 

Dr. Lorenz. On a coir mercial basis ; yes, sir. 

The Chairman. In that connection, do you think that the man 
pay should be treated on a commercial basis or does it differ from 
the ordinary commerce; and if so, what are the lines of distinction 
or difference in your opinion ? 

Dr. Lorenz. I have taken the position in my report, and I do not 
see any reason for changing it, that each branch of transportation 



BAILWAY MAIL PAY. 1481 

should, as far as possible, stand on its own bottom; that it should 
represent the expenses directly chargeable to it, as well as a portion 
of the cost of the joint facilities which it uses, and that, as I see it, 
is the commercial basis. 

The Chairman. Therefore in your opinion, based upon experience 
in transportation and rate matters, the mail pay to the transportation 
companies from the Government should be treated entirely on a com- 
mercial basis? 

Dr. Lorenz. I think so. Of course there is this fact to be consid- 
ered in actual rate making: That the railroads do not receive the 
same rate of profits on all of their business; they may haul grain, 
for example, at very little above the operating expenses; they may 
haul ore and get a rate that is almost twice the operating expenses; 
and they get, in other words, the highest rate of profit they can, tak- 
ing a low rate on some things where necessary and a high rate on 
others. If it be true that they have made a low rate on express 
matter, it is quite fair to argue that it is a presumption at least that 
equally as good a rate should be made on the transportation of mail 
for the Post Office Department. 

The Chairman. Why ? Because of the competition between trans- 
portation of mail and express ? 

Dr. Lorenz. It might be argued that the Post Office Department is 
in competition with the express companies. 

The Chairman. That puts the department into competition with 
private parties, then? 

Dr. Lorenz. It does. 

The Chairman. That would be a new departure ? 

Dr. Lorenz. In a degree, yes; because they have always been more 
or less in competition, because small packages could always be sent 
by mail or express. 

The Chairman. Would it be sound governmental policy for the 
Government to embark in private business where a private enter- 
prise could perform the service as cheaply and efficiently as the 
Government itself? 

Dr. Lorenz. I should say under those premises that the Govern- 
ment probably ought not to embark, providing there were not other 
advantages in Government operation. The power and influence 
which might come from monopolistic industries might make Govern- 
ment operation advisable on other grounds than mere efficiency and 
economy. 

The Chairman. Monopolistic tendencies should be regulated by 
law and regulations? 

Dr. Lorenz. That is a question that is now up — as to whether we 
can successfully regulate monopolies. We are trying to regulate 
the railroads, but it has been a case where regulations seem to be a 
few laps behind practice. 

The Chairman. That is always so in legislation ? 

Dr. Lorenz. Yes, sir. 

The Chairman. And must necessarily always be so? 

Dr. Lorenz. I would say, therefore, whether or not governmental 
ownership is desirable will depend upon the extent to which we can 
demonstrate that control of privately-owned monopolies is not waste- 
ful, difficult, and impossible. 

49396—14 101 



1482 RAILWAY MAIL PAY. 

The Chairman. But it is your judgment it should be given a fair 
trial before embarking on governmental ownership ? 

Dr. Lorenz. Yes, sir; but those are general questions upon which 
my opinion is not worth very much. That is a matter of statesman- 
ship and policy. 

The Chairman. But your opinion is valuable from the experience 
you have had in rate making with the Interstate Commerce Commis- 
sion and your training before your connection with the Interstate 
Commerce Commission with reference to the question as to whether, 
on the evidence submitted, the railroads were underpaid or overpaid 
in 1909 ? 

Dr. Lorenz. That is largely a matter of analysis of the statistics 
submitted. 

The Chairman. That is all we have to go on ? 

Dr. Lorenz. Yes, sir. 

Senator Weeks. In making that analysis did you come to the con- 
clusions that there were any classes of railroads being inadequately 
paid or any part of the service that was being suitably paid? 

Dr. Lorenz. I was unable to come to a conclusion regarding spe- 
cific classes of the service, but took the mail service as a whole; that 
is, I did not attempt to distinguish fast mail service, for example, 
from other service. 

Senator Weeks. You have no opinion whether the trunk lines 
are being suitably paid and the short lines not? Did you segregate 
those in any way ? 

Dr. Lorenz. I did submit a table in which the earnings per car 
mile of the mail as compared with the earnings from passenger 
traffic by classes, such as you mentioned, but I do not remember ex- 
actly the result. It seems to me there was not such a difference as I 
had originally thought. It did not seem to me that the heavy trunk 
lines were specially overpaid as compared with the others; they 
were receiving less per car mile than the short lines or line's witn 
light traffic and their car-mile revenue from passenger trains gener- 
ally was also less. It seems to me, as I remember it now, that on the 
intermediate lines there was more disparity in the earnings rather 
than in the case of the heavy lines on light lines. 

Senator Weeks. What do you call intermediate lines ? 

Dr. Lorenz. I mean the lines from 5,000 pounds to 48,000 per day. 
But those figures were in the nature of an estimate, so I would not 
express that conclusion with any great confidence. 

Senator Weeks. Did you bring the figures of 1909 down to 1913, 
taking into account the increased pay to railroads and the volume of 
business carried, and come to any conclusion as to whether the rail- 
roads were suitably paid in 1913, leaving out the parcels post? 

Dr. Lorenz. Only in this way: The average passenger train car- 
mile earnings in 1912 are very similar to those in 1911 and 1910, 
and from the statistics of mail car miles of service, compiled by the 
Post Office Department as of 1913, it does not seem that there is much 
change there in the earnings per car mile in the mail service, so that 
from that evidence I would say that there was no great change to be 
shown in the amount of overpay or underpay. 

Senator Weeks. In the amount, or in the proportional part of 
total earnings? 






BAIL WAY MAIL PAY. 1483 

Dr. Lorexz. In the proportional part of total earnings, that is, 
the total pay has increased very slightly in that period. 

Senator Weeks. Then the underpayment in 1913 would probably 
be less than it was in 1909, according to your conclusion ? 

Dr. Lorenz. I think it might be greater unless there has been an 
economy in space authorized. 

Senator Weeks. I said the underpayment would probably be less, 
but I meant would probably be more. 

Dr. Lorekz. There are several influences at work. On the one 
hand the railroads claim that their expenses of operation have in- 
creased, and they undoubtedly have in some respects. On the other 
hand we are operating during these years under a weight basis and 
some additional weighings have taken place during that period and 
naturally that would increase the total pay coming to the railroads, 
without necessarily increasing the actual cars hauled, or the amount 
of service rendered, the cost to them of rendering the service. So 
that would be an influence tending to reduce the amount of under- 
pay. If they are getting more money and not rendering more service 
so far as expense is concerned, it would tend to reduce the amount of 
overpay. In fact, if we should let the present system of pay, the 
present rate, go on for 10 or 20 years, it is conceivable if the depart- 
ment is able to effect economy in loading, and so forth, the underpay 
would soon be entirely wiped out. 

Senator Weeks. How could the department effect economy in load- 
ing? 

Dr. Lorenz. In the increased tendency to use storage cars if the 
parcel post developed. My understanding is that relatively less 
distribution space is required for parcel post because a greater 
proportion of it is distributed before it goes on the train and that 
would tend to reduce the greater relative proportion of storage cars 
and therefore the pay to the railroads increases faster than the num- 
ber of cars hauled under the present law. In other words, if you 
could increase the proportion of storage cars from 10 to 20 per cent, 
you would be adding to the pay of the railroads under the present law 
much more than you would be adding to the car mileage. 

Mr. Peters. At the same time would you not be getting service per- 
formed for the Government at a lower rate per ton-mile by the con- 
centrated weights? 

Dr. Lorenz. Yes ; I think that would be true. 

Mr. Peters. In other words, there is still opportunity for the 
Government to economize in the actual aggregate cost of transport- 
ing the mails under the present system of pay. 

Mr. Mack. With regard to the increased earnings for mail, I sub- 
mitted a statement the other day showing the total for 1913 and the 
increase in compensation was less than half a million dollars as com- 
pared with 1907. 

Mr. Worthington. In that connection the report of the Postmaster 
General for 1913 shows a large increase in service with very little in- 
crease in revenue. The railway mail pay committee submitted a 
statement for 1913 which shows a decrease in the annual rate of rail- 
way mail pay per mile of mail routes from $229 in 1909 to $225 in 
1913. During the same period the operating revenue from all traffic 
per mile of road increased 17.6 per cent Jind the operating expenses 



1484 RAILWAY MAIL PAY. 

increased 29.6 per cent, taxes increasing 34.6 per cent, which would 
indicate to my mind that there has been a very large increase in 
railway operating cost and a decrease in mail revenue per unit of 
service performed. 

Dr. Lorenz. It is true in these years following 1907 the increasing 
weights of mail will not have the effect that they will have later on, 
or would have before, because of the change in the method of calcu- 
lating the weights, until all the routes have been weighed, so that we 
have a sort of lull, you might say, in the increase in railway mail pay. 

Mr. Scott. On account of the divisor. But that was all wiped out 
in 1911 and since 1911 we are on an even keel. 

Dr. Lorenz. My impression was that the earnings of 1913 showed 
very heavy increase in the western section. 

Mr. Scott. That may be, but it is not due to the divisor. 

Dr. Lorenz. In that case; no. 

Senator Weeks. Do you think it would be practicable for the Post 
Office Department to handle the parcel-post service in a similar 
manner as the express business has been conducted by the express 
companies, by segregating the business and paying the railroads a 
proportional part of the gross receipts? 

Dr. Lorenz. I have not given much attention to such segregation. 
It would be necessary, of course, in that case to restore the special 
stamp in order to keep track of the revenues on that business. 

Senator Weeks. By hauling it in different cars ? 

Dr. Lorenz. The mere hauling of it in different cars would not 
distinguish the revenue. 

Mr. Snead. That is, assuming that there was a separate office to 
handle the parcel post, in which event you would have to duplicate 
the express equipment to handle it. 

Dr. Lorenz. Of course we would have to assume the Post Office 
Department would take the parcel post through its regular chan- 
nels. 

Senator Weeks. I am thinking particularly of Mr. Stewart's con- 
tention that the Government is entitled to a different rate from the 
railroads in conducting the mail service from that given to general 
shippers. Certainly there would not be any virtue in that argument 
if it applied to parcel post alone. That is commercial business. If 
there is any virtue in it, it must apply to first-class mail and mail of 
that character. 

Mr. Lloyd. First and second class mail? 

Mr. Peters. That is because the Government exercises absolute 
monopoly in that service. 

Senator Weeks. It does as to first-class mail. 

Mr. Peters. While, as you explain it, that is the real difference 
between the first and second class, yet with the new commercial busi- 
ness, to run as you suggest, the department would have to have a 
regular accounting system and would be forced to keep segregated 
the earnings of the parcel post as well as the earnings from the other 
classes, and then the railroads would have another class of cars to 
handle, another branch of service to perform later — the first-class 
mail, the parcel-post mail, and the express mail — which makes it 
still more difficult. 

Mr. Lloyd. That is true, if the idea that is advocated by some 
people and what seems to be the inclination of the Postmaster Gen- 



RAILWAY MAIL PAY. 1485 

eral, to actually take over the express business, is carried out. If 
we take over the express business, the Government will have to con- 
duct it as a good business man would conduct the same business, be- 
cause it is purely commercial, as Senator Weeks says. 

Mr. Mack. But as it stands to-day on all the mail routes of the 
country, it is practically a necessity to keep the two services to- 
gether. On the smaller lines it would be a practical impossibility 
in the operation of the Railway Mail Service. I speak from many 
years' experience in the Railway Mail Service myself, and I say it 
is a practical impossibility to segregate the two classes of mail. 1 
have no doubt it would have been done long ago if it were at all 
possible. 

Mr. Lloyd. Do you not think that the Government could conduct 
the express business and carry parcel post as express and not as mail, 
just as the express company carries the parcel as a commercial 
proposition and not as mail? 

Mr. Mack. I speak now with reference to the parcel post as it ex- 
ists to-day. 

Mr. Lloyd. I am talking about how it might exist if the express 
companies are done away with, if the Government takes over the ex- 
press business, either by confiscation or changing the rates. The 
question is how will the Government handle that express business. I 
was getting at the question whether they would not have to handle it 
the same as the express companies handle that business, and would 
they not handle it as a commercial proposition and not as a mail 
proposition, and if they handle it as a commercial proposition, would 
they not keep the same kind of accounting that the express compa- 
nies now keep in conducting that class of commercial business, and 
would it not be reasonable for the Government to make some arrange- 
ment with the railroads, as do the express companies now, to wit, a 
division of the profits? If they did that, it would be conducted 
merely on a commercial basis and it would be an entirely different 
kind of accounting to what there is in vogue at the present time. In 
other words, we would have a new class of business handled by the 
United States, and we would say, in effect, we will no longer carry 
parcels as mail, but hereafter we will carry parcels as express and we 
will have a monopoly of that business, just as we have a monopoly of 
the first-class mail business. But it shall be a commercial monopoly 
and not a mail monopoly. 

Mr. Baskerville. Would not the railroad company be a common 
carrier in that instance, instead of an agent of the Government? 

Mr. Lloyd. I am not a witness on the stand. 

The Chairman. What would be the result if that w T ere done? 
Would not the result be that the Government would have to pay 
probably $25,000,000 or more in compensation to employees than is 
now paid by the express companies, and would the Government get 
any cheaper rates under governmental ownership and operation than 
they receive to-day from the express companies under regulation? 

Mr. Lloyd. That is getting back to the merits of the proposition of 
taking over the express companies. At the present time, and speak- 
ing for myself, I am not convinced that the wisest thing to do is to 
take over the express companies, but there are those who are con- 
vinced. 



1486 RAILWAY MAIL PAY. 

The Chairman. I think it would be most detrimental. I do not 
think the public would get as good service or anything like as cheap 
rates as they would under private operation of the express compa- 
nies, regulated as they are now by the Interstate Commerce Commis- 
sion. I think the two services are entirely separate and distinct ; the 
Government should operate the mail and the express companies the 
express, so that they should be correlated together as they are now. 
The evidence submitted, as I recall, in 1912 was that the number of 
express employees was 50,000, who devoted their entire time to the 
express business and 35,000 devoting a part of their time to the ex- 
press business and part to the railroad, telephone, and telegraph 
business. Their average compensation was a little less than $50 a 
month. The average compensation of postal carriers and clerks per- 
forming similar service to the express employee was over $90 a month. 
Unquestionably, if the express employee became a governmental em- 
ployee, his salary would be the same as the present postal employee 
receives at the present time, assuming he performed a similar duty. 
In addition to that, I think there is a tremendous danger in adding 
that many additional employees to the present number of govern- 
mental employees because of the increasingly political influence they 
would wield under our form of government. 

Mr. Worthington. I think a very good argument against the space 
basis is the possibility of the Government taking over a large amount 
of the express matter which would put it directly in competition 
with the express companies, which necessarily have to pay the rail- 
roads more or less in proportion to the tonnage handled, whereas 
under the space plan the Government would have available a very 
low car-mile rate which they could utilize by filling the cars to 
capacity and handling that class of freight for rates that would be 
ruinous to the express companies competing with it. 

The Chairman. I am not convinced at all as to the soundness of 
that application against the adoption of the space basis. 

Mr. Lloyd. That would be only an objection to the proposed rate 
and would not be an objection to the proposed space basis. As I 
understand it, the railroads' objection — to bring it down to the cor- 
rect analysis, is only an objection to the rate and not an objection 
to the space basis. The objection to the space theory that is urged by 
the railroad companies is the administrative feature, the railroad 
companies fearing they will not be properly treated in the adminis- 
tration of space when we leave it solely to the department as to what 
space shall be used when the railroads have no opportunity of appeal 
to anybody to determine whether the demand or the requirement of 
the Postmaster General is a reasonable demand to make upon them. 
In other words, under the proposed system, there is no appeal from 
the decision of the Postmaster General. 

Mr. Peters. We have more objection than that. We put up as a 
still further objection to the space basis the argument that the Gov- 
ernment, through the space method, would be taking a utility of 
transportation on some unfixable basis that they could use to their 
advantage to greatly increase their profits from the transportation 
of parcel post, and the railroads not participating in the increased 
revenues from the use of such facilities of transportation. 

Mr. Mack. In other words, the railroads were constructed to handle 
commercial transportation and the Government assumes a part of 



RAILWAY MAIL PAY. 1487 

that transportation and takes the business from the people. If the 
railroad company undertook to handle this commercial business, and 
where it does it fixes a rate for the transportation of that business. 
The proposition on a space basis is that the Government collects the 
postage on the basis of weight and then proposes to ship it in bulk 
on a space basis, the Government making a profit which properly 
and reasonably, I think, belongs to the railroad company which would 
otherwise handle the business itself. As to freight, the Government 
puts itself into competition! with the railroad company, as Mr. Worth- 
mgton points out, and which would, on that theory, seriously injure 
the railroad earnings. 

Mr. Lloyd. You do not concede that the Government will make a 
profit on parcel mail, do you ? 

Mr. Mack. The Government should charge an equal amount for 
transportation to pay the railroads a proper amount for transporta- 
tion equal to that which they receive from the express companies, 
which I think is too low in many cases. 

Mr. Peters. Mr. Lloyd, do you not think the Government will 
make a profit from the parcel-post business ? 

Mr. Lloyd. I thought the contention of the railroads was that it 
would not make a profit. 

Mr. Peters. I do not think we have contended that at all. On the 
contrary, estimates and statements made by officials of the depart- 
ment would indicate a large profit. 

Mr. Lloyd. Would the railroad companies be willing to carry the 
parcels at a 50 per cent rate of what the Government now receives? 
Mr. Peters. In other words, on the same basis as the express ? 
Mr. Worthington. I should say we would. 

Mr. Bradley. But on a very different schedule of rates, the rate 
now being paid being much lower than those now charged in the 
express service on short hauls ? 

Mr. Worthington. To show the difference in profit on small par- 
cels, I have a statement prepared by Wells, Fargo & Co. showing 
the results, under the Interstate Commerce Commission, on packages 
from 1 to 20 pounds, based on the actual traffic for one day. Moved 
at the latest Interstate Commerce Commission rates for express, the 
charges to the public on those small parcels would average 80 cents 
per ton-mile, of which the railroads would receive 36.53 cents per ton- 
mile. Moving the same traffic by parcel post, the charges to the 
public per ton-mile would be 34.40 cents, of which the railroads 
would receive 6.56 cents, or approximately a little more than one- 
fifth their compensation at the express rates. 

Mr. Lloyd. The question I asked a while ago was would you be 
willing to carry it for one-half of the amount, 17 cents; and to that 
question you answered yes. But if you answer yes to that proposi- 
tion, then you answer yes to the contention of the Post Office Depart- 
ment that 18, 19, or 20 cents is sufficient pay. 

Mr. Peters. I answered on the general proposition that, taking the 
experience of the English railroad, where they get 55 per cent of the 
earnings from the parcel post we get here practically 50 per cent of 
the express companies' revenues. With the parcel post as a whole 
you might be able to work out an arrangement whereby the railroads 
would be in partnership with the Government and get 50 per cent 
of the earnings for the transportation. 



1488 RAILWAY MAIL PAY. 

Mr. Lloyd. But would you want them to increase the present par- 
cel-post rate? 

Mr. Peters. It would largely depend on what could be worked 
out of it. 

Mr. Worthington. I think the department would have to increase 
the rate, because they would have to pay more to the railroads, and 
it would be necessary for them to increase the rate to the public to 
cover their other expenses. 

Dr. Lorenz. Does not this discussion show that perhaps the rela- 
tions between the railroad companies and the express companies 
ought to be studied to ascertain what is the best method of paying the 
express companies ? 

Mr. Lloyd. In that connection I want to ask you some questions. 
What do you say as to the effect of the comparisons submitted by 
the Second Assistant Postmaster General between express pay and 
mail pay between the various large cities of the United States ? Do 
you think that that is an argument that tends to show that the rail- 
road companies are receiving too much or too little? Is it an argu- 
ment that has a direct bearing in determining whether the railroad 
companies are now receiving too much or too little ? 

Dr. Lorenz. I do not think the direct comparison of the charges 
per hundred pounds or per ton between cities is of significance, unless 
you take into account the volume of the business per car between the 
cities. However, the same comparison can be made and was made 
by the Second Assistant Postmaster* General on the car basis, and 
there he showed from his figures that the average revenue to the 
railroad companies from carrying the express was something over 
21 cents, whereas the railroad companies claim that it was 23 and a 
fraction cents. That is a more convincing comparison, I think, than 
the mere comparison of the rates to the shipments, because you are 
completely in the dark as to what that produces per car. You can 
readily see that it is the car earning rather than the per ton earning 
that is important, if you imagine a change in the load per car of only 
1,000 pounds. If 21 cents is the payment per car, if you have 3 
tons in the car it is 7 cents per ton-mile; and if you have 2 tons 
per car it is 10^ cents per ton-mile; and, obviously, if you show 
that between two cities the Government was paying 10 cents per ton- 
mile and express 7 cents per ton-mile, you would not be showing 
by that that there was any discrepancy in the pay, because for the 
same service, namely, the hauling of a car between two cities, they 
would be getting exactly the same per ton-mile, and the only thing 
you would have to consider would be the expensiveness of that service, 
and we have had some testimony on that point. 

Mr. Lloyd. What would you say as to his comparison of what he 
calls an average package of express, with a similar weight in mail 
carried between principal cities; in other words, the 40-pound table 
that he fixes ? 

Dr. Lorenz. I should say that was an indirect way of making the 
comparison I just mentioned, but with less accuracy. In attempting 
to state the average package at 30 pounds, he is trying to make an 
allowance for the difference in the method of shipment, but I do 
not believe you can obtain any exact results in that case. 



RAILWAY MAIL PAY. 1489 

Mr. Lloyd. What would you sa}^ of the railroads' presentation of 
40 packages of 1 pound each, carried by the express company, com- 
pared with the 40 pounds of mail in one package ? 

Dr. Lorenz. I should say that was quite unconvincing. I do not 
think they presented it for any other purpose than to show the un- 
reasonableness of that sort of comparison ? 

Mr. Lloyd. Does it show unreasonableness ? 

Dr. Lorenz. I think it does. 

Mr. Wade. Have you any data which would show the average 
amount of express that is carried in carload lots in individual pack- 
ages? 

Dr. Lorenz. No, sir. I have no statistics at all except those that 
have been mentioned, tending to show the average weight per piece. 

Mr. Wade. You do not know the percentage of express that is car- 
ried in full carload lots ? 

Dr. Lorenz. No, sir. 

The Chairman. Dr. Lorenz, the question of under or over pay, 
based upon the ascertainment and presentation made in what is 
known as Document 105, depends entirely, does it not, upon the ap- 
portionment of dead space for the month of November as represented 
in table 7 of that document? 

Dr. Lorenz. The original contention of overpay by the Govern- 
ment depended partly on that and partly on other things. It de- 
pended partly also on the question of what was a proper basis for 
reckoning capital charges. In other words, they had practically 
omitted capital charges. 

The Chairman. That was in the original suggested bill submitted 
by Postmaster General Hitchcock, but the supplemental bill modi- 
fied the position of the Postmaster General taken originally. But 
what I mean is the space reported and submitted by the railroads 
at the request of the Post Office Department, filed and tabulated 
by the Post Office Department and shown in what is known as 
Document 105, is the only information available upon which the 
Post Office Department's contention rests as to overpay or under- 
pay, is it not? 

Dr. Lorenz. I think it is. 

The Chairman. And the soundness or correctness or justness of 
their deduction depends upon the apportionment of dead space as 
represented in that document? 

Dr. Lorenz. There can be no question about that. 

The Chairman. What are your views in reference to the justness 
of their apportionment of dead spaced in that document? 

Dr. Lorenz. I have said, I think, many times before that in my 
opinion there can be no question about the justness of making a 
comparison between passenger-train services, upon the same basis 
exactly in all cases, that is to say, to take the gross amount of space 
necessarily run in connection with the service. The only way in 
which the Post Office Department can justify the elimination of any 
part of what has been known as dead space, is to prove that the re- 
turns were inaccurate, or that there was negligence or lack of atten- 
tion given in the matter of the amount of space run. I think the 
analysis of the Missouri Pacific figures, as made by the Post Office 
Department, and in turn as made by Mr. Mack, shows very clearly 
that there was no great error on either side as to the facts, but that 



1490 RAILWAY MAIL PAY. 

the difference is entirely a matter of interpretation of those facts. 
The amount of fictitious space, or you might say space that was 
charged by the Missouri Pacific which did not exist, which the Post 
Office Department claimed did not exist, such as the mails run on 
Sunday, the space charged for on Sunday when there was no apart- 
ment-car service on Sunday, constituted a very small fraction of the 
total. On the other hand, the errors of the Post Office Department 
also were less than 1 per cent. 

Mr. Mack. Ten times as much as the instance you illustrate, 
900,000 as against 95,000? 

Dr. Lorenz. But it seems to me that the dead space which they 
did throw out was divisible into a few different types. For one 
thing, a large bulk of it is due to the furnishing of apartment cars 
somewhat longer than the department reported they needed. With 
respect to that I do not see how one can avoid charging the depart- 
ment with such space, for the reason that you can not sell fractions 
of a car without having left over what might be called trimmings. 
In other words, you can not fit the department's exact needs. Re- 
garding one type of dead space, however, in the Missouri Pacific 
analysis, there might be a question, and I think a third of it nearly 
Was of this nature, namely, that the department needed a half or 
less than a half a car and the company furnished a whole car. The 
question might be raised in that connection whether they could not 
have, by a different arrangement of the service, supplied them to the 
department rather than the whole car; that that would occasionally 
happen is probable, but when it constitutes a third of the total I 
think one may fairly raise the question as to whether by close atten- 
tion, it could not have been reduced. 

Mr. Mack. I would like to say in connection with the total that 
this happened on a very long line we had on the prairie from Kansas 
City to Peublo, and I doubt very much whether that proportion 
would hold throughout the couutry. I doubt if it is quite as much 
as that. 

Mr. Lloyd. As I understand you on the question of dead space, 
your question is that the correct position to occupy is somewhat 
near midway between the contention of the railroads on the one 
hand and the department on the other? 

Dr. Lorenz. I do not wish to simply split the difference. 

Mr. Lloyd. I am not asking that. 

Dr. Lorenz. I would say that the department has certainly as- 
sumed an extreme position, and this analysis of the Missouri Pacific 
shows that one might raise some question at least, but I am rather 
inclined to think 

Mr. Lloyd. That the department is nearer correct than the rail- 
roads? 

Dr. Lorenz. No. I am inclined to think rather the other way, 
according to this analysis, that it would be somewhat more than half 
the space properly charged to the department. 

Mr. Stewart. I think it would be fair to allow Dr. Lorenz to hear 
the department's statement before he expresses an opinion upon that 
point, because we have considerable matter to offer this morning 
bearing directly thereon. 

Mr. Bradley. Mr. Chairman, might I make a suggestion right 
here? 



RAILWAY MAIL PAY. 1491 

When the case of the Missouri Pacific was spoken of as being typi- 
cal, I made a comparison between the proportions of the different 
kinds of mail space on the Missouri Pacific as shown in Document 
105, with the proportions assigned by the department for the differ- 
ent kinds of space on all the railroads of the country, and then I 
made a further analysis of percentages for the different kinds of 
space on the Pennsylvania Eailroad system, and I find that of full 
railway post-office space the Missouri Pacific had 31 per cent of its 
mail space, whereas the average for the whole country was 37£ per 
cent, for the Pennsylvania Eailroad system 4H per cent, so you see 
there is a difference in railway post-office space between the Missouri 
Pacific and the Pennsylvania system of, say, 10 per cent. On apart- 
ment-car space the Missouri Pacific's proportion of its whole was 17 
per cent as against 32 per cent for the whole country and as against 
17 per cent on the Pennsylvania system. On the closed-pouch space 
the relative percentages were 1.4, 2.29, and 3.3. Further, there is not 
a very serious difference in the storage space, the Missouri Pacific 
being 1.3, the percentage of the whole country, including dead space, 
being 8.25, and on the Pennsylvania Railroad system 16 per cent. 
The relation between the deadhead space and the dead space was also 
somewhat variable. I simply wanted to bring that out to show that 
one would have to be guarded as to the extent to which the Missouri 
Pacific case could be regarded as typical, particularly as to storage 
space. 

The Chairman. Gen. Stewart, we are ready to hear from you. 

Mr. Stewart. I stated yesterday that the Missouri Pacific state- 
ment was in effect a restatement in another form of the differences 
between the method of the Post Office Department in handling the 
reports of the railroad companies and classifying the space and the 
rules of the railroad committee in regard to the same subject matter. 
We have this morning some specific facts in regard to reports which 
we wish to submit ,'ind which will, I think, bring to your attention 
more particularly the reasons which underly the department's 
method. 

The Chairman. That is the rule that you adopted in making the 
apportionment ? 

Mr. Stewart. Yes; as it is specifically related to the Missouri 
Pacific data. 

STATEMENT OF ME. C. H. McBRIDE. 

Mr. McBride. I wish first to specifically refer to some of the par- 
ticular cases mentioned by Mr. Mack on page 3 of his statement with 
regard to the data on some of the routes which he states are erroneous. 
With regard to route 147040 Mr. Mack is correct in his calculation. 
I might state here that volume 11 was printed without the depart- 
ment being given an opportunity of making corrections. We were 
rechecking it at the time it was submitted, and in the recheck we 
discovered the error on route 147040^ which amounted to 17,982 car- 
foot miles additional credit to the company. In that recheck we 
also found some typographical and other errors which will be cor- 
rected in the revised edition, but they changed only slightly the total 
results presented on page 1296. As to routes 145034 and 145062, 
with respect to which Mr. Mack states the original errors made by 



1492 RAILWAY MAIL PAY. 

the company were corrected by letter of August 31, I will say that 
he was right in both cases. We mentioned the fact in the memoran- 
dum regarding the second route, but not as to the first. As to route 
147061, which Mr. Mack states is not a route of his company, I will 
say that the report for this company came in with the other Missouri 
Pacific reports and bore the imprint of Mr. Mack's office stamp. 
Furthermore, we consulted Poor's Manual, which stated that it was 
controlled by the Iron Mountain, and it was therefore concluded that 
it was part of the Missouri Pacific system. If that is incorrect it 
would require the elimination of all the car-foot miles of all the 
services reported for this route from the totals for the system. A 
computation as to the effect such elimination would have on the 
totals for each service for the system given in Document 105 does 
not change the percentages at all, although the total amounts are 
slightly changed. 

Mr. Mack. Mr. McBride should add to his statement what I men- 
tioned to him yesterday with reference to that route. I stated that 
I transmitted that report at the request of the Short Line's secretary. 

Mr. McBride. We are willing to eliminate the report for that 
route. 

On route 145042 Mr. Mack states that the company did not report 
5 feet of car space on this route as the department memorandum 
indicated. I would state that this was due to a typographical error in 
volume 11, which showed 5 feet instead of five-tenths of a foot, the 
correct figure. I think you will find that agrees with the original 
report. 

Mr. Mack. It does not agree with my original report. We had 
nothing in the month. 

Mr. "McBride. On route 149039 Mr. Mack states that there was 
Sunday service on this route, and that the railway mail schedule 
shows for trains 11 and 12 such service. There was no railway post- 
office service on Sundays. Page 77 of the eleventh division schedule, in 
effect in November, 1909, which I have here, shows trains 41 and 42 
and not trains 11 and 12 between Texarkana and Shreveport, with the 
key letter " H," which interpreted means " Trains daily. Eailway 
post office service daily except Sunday." Furthermore, if you will 
look below the time-table for the railway post office in the schedule, 
you will find that it shows train 42 pouching to Cairo and Texar- 
kana, train 4 at Texarkana " B," which means daily except Sunday." 
Cairo and Texarkana railway post office is a daily train, and if this 
railway post office ran on Sunday it would certainly have made this 
pouch on that day as well as week days. Apparently, however, there 
were express pouches carried on Sunday, for which no charge was 
made by the department. This is immaterial, but it is one of the 
cases where space was charged on Sundays that was not used. I 
wish to call particular attention to the item which Dr. Lorenz was 
discussing when I came in, and that is the deadhead space reported 
in the apartment-car service in each direction by the company, 
which was transferred to " dead space " by the department in its 
tabulation. The particular instance which I desire to call atten- 
tion to is that of the Kansas City and Pueblo railway post office 
and the Kansas City and Coffeyville railway post office, which ran 



RAILWAY MAIL PAY. 1493 

over routes 155091, 155067, and 165036, between Kansas City and 
Pueblo, 639 miles, and route 155031, Osawatomie to Dearing, Kans. 
There were two railway post offices operated over these lines — the 
Kansas City and Pueblo railway post office, which runs through be- 
tween those points, and Kansas City and Coffeyville railway post office, 
which operates over routes 155091 and 155067 to Osawatomie, where 
it diverts and runs to Coffeyville. There are two trains each way on 
each railway post office, making eight trains altogether. On six of 
these trains the company reported 30 feet apartment-car space and 
30 feet deadhead space. The Railway Mail Service reported that 
this additional 30 feet was not needed for any purpose by the mail 
service. The department contends that in an ascertainment of the 
character of that of November, 1909, it was unfair to take a condi- 
tion of operation existing in the month of November, which might 
change in the ver} T next month, and, properly, I think, diverted that 
30 feet of deadhead space to dead space in the tabulation of car-foot- 
miles. 

The Chairman. Why would not that same argument apply to the 
value of all the ascertainment in November, 1909 ? 

Mr. McBride. I do not think it would. We were endeavoring to 
get a basis for ascertaining the cost of the service, based upon what 
the service needed and not upon what the railroads might choose to 
operate. The space of that character on the system amounted to 
3,248,000 car-foot miles. The case that Mr. Mack referred to specifi- 
cally in his statement, of the car running from Topeka to Granby, 
I might mention. As I understand it, the car was operated from 
Topeka to Fort Scott on route 155060, and from Fort Scott to Cornell 
Station over trackage on which there was no mail service authorized 
at that time. 

Senator Weeks. How far is that? 

Mr. McBride. I haven't the distances. From Cornell Station 
to Pittsburg the car was operated over route 145073, from Pittsburg 
to C. & W. junction it was operated over trackage upon which no 
service was authorized, and then it was taken up on route 145040 
and ran from C. & W. junction to Webb City on that route, and from 
Webb City to Granby on route 145100, although no E. P. O. service 
was performed on any part of the route except between Topeka and 
Fort Scott. The company charged us with 22 feet from Topeka to 
Fort Scott and from C. & W. junction to Granby, but made no charge 
to mail service between Fort Scott and C. & W. junction. 

The Chairman. Was there any service authorized between C. & W. 
junction and Granby? 

Mr. McBride. No E. P. O. car service. 

The Chairman. But they charged you with it ? 

Mr. McBride. Yes, sir. 

Mr. Lloyd. Was it necessary that the car pass over that route in 
the performance of the service ? 

Mr. McBride. Not in the performance of mail service. This 
amounts to very little, only 44,000 car-foot miles, but I cite the case 
to show how the companies charged unused space to the mail service. 

Senator Weeks. Before you go on, I understand that the month 
of November has been taken as a basis for these figures, because it was 
a fairly average month. Now, that you question the desirability of 



1494 RAILWAY MAIL PAY. 

taking that in one instance, why can not it be questioned in every 
instance ? 

Mr. McBride. I do not question the fairness of taking it for an 
ascertainment of the space in use, but I do question the fairness of 
charging against the mail service deadhead space in each direction 
in the ascertainment of space upon which to divide cost. 

Senator Weeks, Would it be an error to take any other method? 

Mr. McBride. I do not know that it would, but, as I stated before, 
the conditions in the very next month might be changed; the roads 
might change their operations so that this 30 feet of space was not 
necessary even from their standpoint. 

The Chairman. Is it possible to get a fair permanent basis? 

Mr. McBride. Based on the needs of the service ; yes. 

The Chairman. How about the needs of the railroads themselves ? 
Should not they be considered as well as the needs of the service in 
the apportionment of cost or in the compensation ? 

Mr. McBride. That is entirely in the hands of the company. We 
tell them what we need, but under this proposed law it is not to be 
supposed that we would pay for 30 feet additional space in each 
direction from Kansas City to Pueblo, for 1,278 miles, which we do 
need or use. 

The Chairman. Not if you did not authorize it and did not use it? 

Mr. McBride. That is the point. 

The Chairman. Neither do the railroads contend that you should. 

Mr. McBride. They contend that we should be charged with this 
space in this ascertainment. 

Senator Weeks. How often do you change your instructions to 
the railroads as to how much space you are going to need? 

Mr. McBride. I do not think that it would be possible to make 
any definite answer to that. 

Mr. Lloyd. You change just as the service changes? 

Mr. McBride. Yes ; there might be some special conditions come 
up at any time that would require additional space on a line through 
diversion of mails formerly sent over other lines. 

Mr. Lloyd. How much notice do you give the railroads when you 
make a change with reference to the authorization of space? 

Mr. McBride. In the railway post-office service we give 30 days. 

Mr. Lloyd. In apartment car, how much ? 

Mr. McBride. I think it varies. I would not want to say, because 
I do not think there is any settled rule. 

Mr. Lloyd. Can you give some instances — the extremes, for in- 
stance ? I think that information is of value. 

Mr. McBride. I might cite the case of the Western Pacific Rail- 
way Co., where we asked for apartment-car space a year and a half 
before we secured it. We were in negotiations with the company 
during the entire period, and finally we persuaded them, previous 
to the weighing, to fit up part of a car for use as a distributing 
apartment. They agreed to provide steel apartment cars as soon as 
they could get them. In the meantime they fitted up a small space in 
their baggage cars until the regular cars could be furnished, which 
are now running. 

Senator Weeks. That is a new road? 

Mr. McBride. Yes, sir. 



RAILWAY MAIL PAY. 1495 

Senator Weeks. That condition would not apply to roads gener- 
ally? 

Mr. McBride. We would give them a reasonable time in which to 
provide a larger car. We do not require the impossible. 

The Chairman. What are the extremes in cases where you have 
notified the railroads of changes, in days, weeks, or months ? 

Mr. McBride. The Railway Mail Service has the specific charge of 
the apartment-car service, and it would not come under my personal 
observation sufficiently to know that. 

Mr. Stewart. Mr. Gaines, of the eleventh division, is here, and we 
would like to hear from him. 

The Chairman. We would like to hear from you on concrete in- 
stances of extremes, the periods of notice of change in apartment-car 
service ? 

Mr. Gaines. Changes, or asking for additional apartment-c^ir 
service ? 

The Chairman. Either. The discontinuance, decrease, or increase ? 

Mr. Gaines. It is a matter that calls for correspondence with the 
railroad companies. For instance, if we desire to put additional 
apartment-car service on a line, we ask the company if they can fur- 
nish cars of a designated size. If they have the cars available, we 
put the service on as soon as we get authority from the department 
for the additional service. It may be one week, it may be two weeks, 
and in some cases that have come under my personal knowledge the 
railroad companies have stated that they did not have the cars and 
could not furnish them. In one instance that I recall it was over a 
year before we secured the apartment cars we had requested and 
were able to start the postal-clerk service. 

The Chairman. In that instance was there any criticism on your 
part as to the inattention of the railroads to your application, or was 
it due entirely to the conditions existing and the impossibility of com- 
pliance by the railroad with your request ? 

Mr. Gaines. The facts were reported to the department. The rail- 
road company stated that it was on account of inability to furnish 
the cars. The case I had in mind was on the Gulf, Colorado & Santa 
Fe between Fort Worth and Galveston. 

The Chairman. There was no criticism, then, on your part, so 
far as the railroads were concerned ? 

Mr. Gaines. No. 

The Chairman. With regard to the change due to diversion or 
decrease in the number of feet of apartment service, how long a 
period — I should say the shortest and the longest — have you given 
the railroads to comply with your changes ? 

Mr. Gaines. Do you mean the decrease in apartment-car service? 

The Chairman. Yes ; or discontinuance, either. 

Mr. Gaines. If it is a case of discontinuance, there would be no 
time necessary, for we would simply withdraw the clerk from the 
trains and notify the railroad company that the apartment-car serv- 
ice, so far as the Railway Mail Service was concerned, had been dis- 
continued. 

The Chairman. That would be a day's notice or two ? 

Mr. Gaines. Yes. I want to correct that statement. If we were 
taking a postal-clerk service off — that is, where clerks perform serv- 



1496 RAILWAY MAIL PAY. 

ice in apartment cars — and were substituting closed-pouch service, we 
would give the railroad companies due notice that the department 
would discontinue the apartment-car service and that the railroad 
company would be expected to handle the closed-pouch mail from a 
certain day, giving them ample time to arrange for handling the 
mails by train baggagemen. 

The Chairman. You would give the company several days' notice 
regarding a change of that kind? 

Mr. Gaines. Yes. 

The Chairman. In the case of a discontinuance you would notify 
them 28 hours or 48 hours ahead ? 

Mr. Gaines. If it was a case of discontinuance of apartment-car 
service without substituting closed-pouch service therefor. 

I do not remember an example of just that kind. In cases where 
the railroad company discontinues the train service the apartment-car 
service would be discontinued automatically. 

The Chairman. There is no instance where the department has 
discontinued on account of diversion of mail to some other route? 

Mr. Gaines. Not as long as the mail service was maintained. 

Mr. McBride. Or without substitution of closed-pouch service. 

Mr. Eowan. Do you notify the railroad companies every time that 
there is a change in the amount of space that you need for apartment- 
car space — that is, where you require less space than the space which 
the railroad company is furnishing? 

Mr. Gaines. I can not say that that has been done. In the first 
place, we made a close estimate of the amount of apartment-car space 
that was necessary for the use of the Eailway Mail Service and noti- 
fied the railroad company. I do not recall any cases where we subse- 
quently notified the railroad company that 25 feet would be neces- 
sary instead of 30 feet, I do not know that we have had a case of 
that kind arise in the eleventh division. There have been cases 
where the needs of the service would outgrow a 20-foot car and we 
would notify the company that we needed a 25 or 30 foot car, but 
the tendency is nearly always to grow, except in abnormal conditions, 
and I do not recall a single instance where we have notified the rail- 
road company that a 30- foot car was no longer needed and that a 
25-foot car would do. 

Mr. Eowan. On the New York Central lines the policy has been 
for the Post Office Department to notify the railroad company when 
they desired apartment-car service, due to either change in schedules 
or change in conditions, notify the company of the size of the car 
that they want — we furnish it if we can, and if we can not we furnish 
a larger size car, and we are willing to put the car on 12 hours after 
we get the notice. In fact, we have had cases where we have had less 
than 12 hours' notice from the Eailway Mail Service — where the 
necessity for it arose and where we were asked to do so. But we 
have had no instances that have come to my attention in the last five 
years where the Eailway Mail Service have ever told us, having 
furnished a larger-sized car than was necessary, that they needed less 
space. As long as we are furnishing more space than they need there 
is no complaint. Where a 15-foot car is furnished and they find the 
needs of the service require 25 or 30 feet, we do get notice that they 
desire us to put on a larger-sized car. 



RAILWAY MAIL PAY. 1497 

The Chairman. Can 3^011 criticize the Government representative 
for that? 

Mr. Rowan. No. You simply said you wanted to get these cases 
in the record, and I was putting them in for what they were worth. 

Mr. Stewart. I would like to ask Mr. Gaines if it is not his prac- 
tice to inform the representative of the railroad company, when the 
representative asks him, as to what the approximate needs of the 
service are, based upon distribution, etc., in the apartment cars. 

Mr. Gaines. Yes, sir. I believe due notice has been given to every 
railway company in the eleventh division of the needs of the service 
both in apartment and full R. P. O. 

The Chairman. What do you construe to be due notice? 

Mr. Gaines. We gave them a list of the lines. 

The Chairman. I mean in time? 

Mr. Gaines. There is no emergency about that, Mr. Chairman. 

Mr. McBride. You do that periodically? 

Mr. Gaines. No. I do not believe they have received any addi- 
tional notice. 

The Chairman. Have you had any criticism on the part of the 
railroads as to the shortness of notice given by the department? 

Mr. Gaines. No, sir. 

The Chairman. Mr. McBride, would you prefer not to be inter- 
rupted at all? 

Mr. McBride. I have about finished. Mr. Stewart has something 
more to present. I might say in connection with the Kansas City- 
Pueblo case that the regular quadrennial weighing in the spring of 
1910, subsequent to the November, 1909, ascertainment, showed a 
daily average weight of slightly over 10,000 pounds dispatched daily 
out of Kansas City on four trains on that route. That would be a 
little over a ton to a train. 

The Chairman. That is the weighing for 1910? 

Mr. McBride. Yes. It would be easy to take care of a ton of mail 
in a 30-foot car. 

Mr. Stewart. That is the train they charged the mails with 60 
feet of space clear through to Pueblo ? 

The Chairman. Under the 1909 ascertainment. 

Mr. Stewart. Yes. 

Mr. McBride. The railroads charged the mails with 240 feet of 
space a day in each direction, and but 120 feet were needed. 

Mr. Stewart. How much would that aggregate? 

Mr. McBride. The car-foot miles of the unnecessary space aggre- 
gated on this route 2,382,281 car-foot miles for the month of No- 
vember. 

Mr. Stewart. Mr. Chairman, we have carefully gone over these 
Missouri Pacific statistics, and we have made a computation based 
upon the theory of the Lloyd bill as to allowance of space, the theory 
of the Lorenz bill as to the allowance of space, and upon the depart- 
mental plan as to the allowance of space that should be paid for un- 
der the new law, and we have credited to the Missouri Pacific all 
the space that these theories would justify. For storage space we 
have taken one-half of the return movement, because we have no 
statistics as to what proportion of the storage cars are used by the 
companies on their return trip, and nothing has been presented by the 
railroad companies which would be any guide. 
49396—14 102 



1498 KAIL WAY MAIL PAY. 

The Chairman. It is an arbitrary 50 per cent allowance of the 
return ? 

Mr. Stewart. Yes; of the return storage dead space. We have 
split this with the railroad companies and have charged the mail 
service with one-half. We have then ascertained the percentage of 
that to the total dead space in controversy, and find the percentage 
to be 18.32 per cent; we have applied that percentage to the total 
dead space on all the railroads in the country, which we have tabu- 
lated and charged in Document 105, and ascertained the effect of 
that, producing a new ratio for the mail service of 7.40 per cent 
instead of 7.18 per cent. We have ascertained the effect of that upon 
the 6.68 per cent, which is used as a ratio of cost and taxes for the 
mails to the total cost and taxes in the passenger service, and have 
applied that to our ascertainment of cost on pages 994, 995, and 996 
of the record, Avhere we have shown a profit to the railroads of 
$1,616,532 ; and these new figures, which we submit to the joint com- 
mittee for consideration, produced instead of that surplus a surplus 
of $221,832 over all fair charges of cost against the department. We 
submit that for consideration in order to present to the committee 
every fair theory that we believe you should have before you ; that is, 
the result of every fair theory. And these ascertainments of space, 
as I say, are in accordance with these theories which are now before 
you, and I do not see how anyone could claim anything more for 
the railroad companies. I should be glad, if the committee desire 
it, and if Dr. Lorenz wishes to do so, to have him go over these 
figures. 

Dr. Lorenz. Might I ask a question in regard to these figures? 
Your 18 per cent, is that the average of the three or which one of the 
plans does that represent, your plan, my plan, or Mr. Lloyd's plan? 

Mr. Stewart. It represents them all, because they are all prac- 
tically the same on space. We have always given the maximum in 
each direction and have been liberal with the railroad companies. 

Dr. Lorenz. I do not quite understand. In the case of Mr. Lloyd's 
method of authorization if you ask for a 20-foot apartment you would 
have to authorize a 30-foot car. Do I understand if you applied that 
all the way through that it would make a difference of only 18 per 
cent of the total, that it would charge you with only 18 per cent of 
the dead space ? 

Mr. Stewart. I will ask Mr. Bandel to answer that question. 

Mr. Bandel. We did not raise any question where there was a 
regular sized apartment operated different in length from those stated 
in Mr. Lloyd's plan. In this ascertainment we applied the principle 
that is announced by Mr. Lloyd and announced by yourself; that is, 
the maximum space in both directions. If we had raised them I 
doubt whether it would affect this computation 1 per cent. 

Dr. Lorenz. I can state definitely it would affect it, for this reason r 
If you turn to volume 5 of the hearings you will find there that the 
estimate was made under Mr. Lloyd's plan of 22^ cents a car-mile 

The total payment made to the railroad companies would be 
$58,000,000. Divide 22J cents into $58,000,000 and you get 260,000,000 
car-miles of service, and if you divide that into your present mail 
pay you will get less than 20 cents a car-mile. Under those circum- 
stances it seems to me this statement you have just made can not pos- 



RAILWAY MAIL PAY. 1499 

sibly be correct. Mr. Stewart. You could not apply Mr. Lloyd's 
plan and get only 18 per cent dead space charged to yourself. 

Mr. Mack. It did not use the units of the Lloyd plan? 

Mr. Bandel. We applied the principles to the Missouri Pacific 
case and that is all. Then when we made the ascertainment for that 
we applied it to the conditions in the Missouri Pacific case, and the 
result was regarded as a difference in all cases. The specific thing 
we applied it to was the Missouri Pacific case. 

Mr. Mack. What did you do with reference to the case that Dr. 
Lorenz cites? 

Mr. Bandel, As I say, we did not raise them. 

Mr. Mack. You did not raise them? 

Mr. Bandel. No; we did not raise them? 

Mr. Mack. Then your figures do not serve any purpose ? 

Mr. Bandel. I said we followed the principle of Mr. Lloyd's plan. 

Dr. Lorenz. How could you follow the principle if you do not 
charge 30 feet of space when you only need 20? 

Mr. Ban del. The principle of the full car run. 

Mr. Mack. You are not using the Llo}^d units at all ? 

Mr. Ban del. We did not intend to use units. We used the unit 
furnished by the company at that time. 

Mr. Lloyd. Dr. Lorenz, as I understand it, General Stewart refers 
to the idea that I advanced that we ought to pay for the full car run. 
While a car might run over several routes, it would be a full car run, 
such as given in the illustration of running to the Mexican border, if 
they used a full 60-foot car run to the Mexican border they must use 
it all the way round. 

Dr. Lorenz. But I understand that is not to recede in any way from 
the position General Stewart has occupied with regard to dead space 
in general? 

Mr. Lloyd. Oh, no. 

Dr. Lorenz. Since the department insists on taking this position, 
I would like to ask Gen. Stewart if he could operate the Missouri 
Pacific and furnish the space the department has asked for in va- 
rious length apartments and not have any of this dead space, so 
called, left over, or whether any officer, the most efficient operating 
officer in the United States, could operate the Missouri Pacific and 
not have any dead space left over ? 

Mr. Stewart. That would be pretty difficult to answer offhand. 
If you apply it to a specific case, like that from Kansas Citv^ to 
Pueblo, such as you were discussing when we came in. I should 
say yes. 

Dr. Lorenz. I will admit there are individual cases, but I said 
where there is none of the dead space. 

Mr. Stewart. I would not be able to say that it could be done. 

Mr. Lloyd. I think you are slightly mistaken as to what he was 
discussing when you came in. Dr. Lorenz was discussing the general 
proposition of the difference between your method of accounting and 
the railroads' method of accounting and the percentage of the dif- 
ference between you and them. It is the general proposition he was 
discussing. 

Mr. Stewart. I only referred to the specific case I heard when I 
came in. 



1500 RAILWAY MAIL PAY. 

Mr. Bradley. Mr. Chairman, I would like to call attention again 
to the comparison I submitted a few minutes ago as to whether the 
Missouri Pacific case is typical in all respects or not. 

The Chairman. You already have that in the record ? 

Mr. Bradley. I want to give it this application, that in the com- 
putation made on the railroad side regarding the amount of storage- 
car space thrown out by the department we reached a total of about 
50,000,000 car-foot miles. 

The Chairman. For the whole service ? 

Mr. Bradley. In comparison with the total for all classes of serv- 
ice, of 211,000,000, a very large proportion, while on the Missouri 
Pacific there is a very small proportion of that class of service, only 
1.3 per cent. It would be like comparing two cases as typical where 
one contained 1.3 per cent of an important element and the other 
contained 25 per cent of an important element. 

Mr. Mack. But there is no concession that any of this space was 
not furnished in connection with the mail service. The different re- 
ports show different proportions of the different classifications, but 
Mr. Bradley's remark I do not interpret to mean that there is any 
dead space that was classified by the company as in use for mail serv- 
ice that was not in such use. 

Mr. Bradley. Undoubtedly. For instance, for the Pennsylvania 
Railroad System for the month of November, 1909, the department 
used 11,523,000 car-foot miles of space in storage-car service, and the 
company contends that every bit of that service was in the return 
movement of storage cars and was inevitable because of the mail 
movement in the outward direction and that none of that space was 
used for any other traffic or for the company's purpose. 

Mr. Worthington. I think the department concedes that point in 
admitting that pay should include return space under their pro- 
posed bill and it is a legitimate charge against the mail service in 
computing the estimated cost. 

Mr. Stewart. No; we did not; and there is no such admission 
in effect, because under the operation of the proposed bill we shall 
use the return cars as far as practicable for some purpose if the com- 
pany does not use them, but if neither the company nor the depart- 
ment make use of them for a specific purpose, the suggested plan 
proposes to pay for the return movement. 

The Chairman. In this case just referred to of the Pennsylvania 
Railroad, by Mr. Bradley, I would like to ask Gen. Stewart if he 
allowed 50 per cent of the 11,000,000 car-foot miles in this recent com- 
putation that you have just made? 

Mr. Stewart. We did not have Mr. Bradley's statement before us. 
We were figuring on the Missouri Pacific data only. 

The Chairman. I think there was a difference of 11,000,000 car- 
foot miles in dispute between the department and the Pennsylvania 
Railroad under Document 105. 

Mr. Bradley. That is right. 

The Chairman. Now, I want to find out whether, in this computa- 
tion you made this morning and this information submitted, why 
you made a 50 per cent allowance, which you said was general, and 
splitting with the railroads and the department, and I want to ask 
if that was made in this specific case of 11,000,000 car- foot miles. 



E AIL WAY MAIL PAY. 1501 

Mr. Stewart. I can not say exactly that because we have only 
the statistics as a whole, and Mr. Bradley calls attention to the fact 
that the percentage of storage cars will differ on different lines. In 
order to make an exact apportionment we would have to segregate 
the space on each system. 

Mr. Bradley. That brings out the very point that I wanted to set 
forth emphatically — that while there might be compromises in re- 
gard to the differing interpretations of some of the minor features 
of car space, I do not think that this is a case where there could be 
any compromise, but that 100 per cent of this space would have to be 
allowed as an operating necessity just as it is conceded, in principle 
at least, in the proposed new bill. 

Mr. Lloyd. But there might be some place in a computation where 
100 per cent dead space might be disallowed ? 

Mr. Bradley. Possibly. 

Mr. Lloyd. His computation is on the theory now that supposing 
the commission, when they came to adjust the matter, not being able 
to reach a definite and concrete conclusion with reference to the mat- 
ter, do conclude that neither the railroad companies are right or 
the Government is right in its figures and they make something of 
a compromise between the two as a matter of judgment and fix it at 
50 per cent, and this is an estimate on that 50 per cent, as I under- 
stand it. 

Mr. Bradley. I desire to ask the question also, whether in the com- 
putation which the department submits this morning, as applied to 
the entire railway mail service of the whole country, an allowance was 
made as between the Missouri Pacific example and the percentages 
of allotment of space for the rest of the country in order to account 
for the differences which I have set forth in explaining that the 
Missouri Pacific case is not typical in all respects. Of course the 
final result arrived at, of $200,000, would absolutely depend upon a 
fair allowance for those differences. 

Mr. Mack. That is the proportion. 

The Chairman. To my mind, Gen. Stewart, there is still a de- 
cided discrepancy between the conclusions arrived at by the depart- 
ment and by Dr. Lorenz. We will say under this computation, with 
an allowance of 50 per cent of the dead space in dispute between 
the department and the railroads, that you still show an overpay- 
ment by the Government of $200,000. For what year would that be ? 

Mr. Stewart. That was for 1910. 

The Chairman. As I understand Dr. Lorenz 's impression or de- 
duction, it is that the railroads were underpaid about $5,000,000 for 
that year. Now, if 50 per cent of all the space in dispute is allowed, 
and it only makes a difference of $1,600,000, I can not follow it? 

Dr. Lorenz. There is no real dispute or discrepancy. Gen. Stew- 
art did not allow 50 per cent of the dead space. He debited himself 
with only a small portion of the dead space, which was only 18 per 
cent in his last computation, as I understand it. 

The Chairman. I thought you said 50 per cent of the space in 
dispute ? 

Mr. Stewart. Only 50 per cent of the return storage-car dead 
space. 



1502 RAILWAY MAIL PAY. 

Mr. Mack. Which is a very small item in this particular instance. 
Will Gen. Stewart tell me how many additional car-foot miles he 
allowed the Missouri Pacific under his new calculation. We are at 
a disadvantage in not having his figures. 

Mr. Stewart. 1,793,706. 

Mr. Mack. On the full railway post-office car statement alone, 
with reference to other cars, I showed that our report was correct 
in reporting three million and some odd thousand full railway post- 
office car-foot miles alone between St. Louis and Texas and St. Louis 
and Kansas City. The apartment-car space is probably very close 
to another amount of the same kind. Then the 30-foot deadhead 
space in the cars where we are required to furnish 30 feet of space is 
about another third of the total. So that the department's modifica- 
tion is far from complete. 

Mr. Lloyd. Gen. Stewart, do you aim to submit a report of the 
tables, or are you just submitting the results ? 

Mr. Stewart. I am submitting the results, but I can submit the 
detailed ascertainment. 

The Chairman. I would rather have the detailed statement, and 
then we can reach a better judgment as to whether your deductions 
are proper. 

Mr. Stewart. I would be glad to put that into the record. 

Mr. Mack. I would be glad to see that before it goes into the rec- 
ord or to know what it is, because it may call for some reply. Aftei 
the record is closed on this question we have no further opportunity 
to question the figures. 

The Chairman. The record has to be closed some time. There is 
no snap judgment that has been taken on the part of anyone so far 
as the commission is concerned, but we have to come to an end pretty 
soon. 

Mr. Mack. I appreciate that. 

The Chairman. How long would it take to prepare that? 

Mr. Stewart. Possibly a day or two. 

The following statement will show process followed: 

The tables of railway post-office car space, on pages 129G, 1297, and 1298 of 
volume 11, were analyzed and the number of linear feet of storage space out- 
bound as charged by the department to the mail service was ascertained. The 
car-foot miles of this outbound storage space was then computed and an addi- 
tional charge of one-half of the car-foot miles of the storage space was made 
against the mail service. By this method the mail service participated in one- 
half of the return movement of the storage cars. On the Missouri Pacific Line 
these storage cars are merely baggage cars equipped in some cases with port- 
able stanchions and are used interchangeably for baggage, mail, and express, 
and the department believes that charging the mail service with 50 per cent 
of the return movement is liberal. The car-foot miles represented by this total 
948,380. In the same volume and on the same pages appear errors of the 
department in charging to dead space certain car miles of railway post-office 
cars. These total approximately 726,326 car-foot miles. 

We examined carefully each of the specific cases of dead space in connection 
with apartment-car service furnished set forth in Appendix "A" of volume 11, 
and where we found any case in which, on the principle of the Lloyd, Lorenz, 
or departmental plan, the company would be credited with such dead space 
an allowance was made for it. In the apartment service these cases were few, 
and it was determined that the percentage of dead space that might have been 
credited to the mails for this class of service would not exceed 2 per cent of 
the total dead space in apartment-car service. This 2 per cent of apartment- 
car dead space equalled 119,000 car-foot miles. 

The sum of these several items is 1,793,706 car-foot miles and represents the 
car-foot miles which would be charged to the mail service on the 'theory of the 



KAIL WAY MAIL PAY. 1503 

several suggested plans referred to and the correction of errors by the depart- 
ment. The total car-foot miles of apartment, railway post office, and storage 
space tabulated by the department as dead space in its original computations 
was 9,792.644.05 ; 1,793,706 car-foot miles is approximately 18.32 per cent of the 
total car-foot miles of dead space as used in the department's computation. 

Mr. Mack. They are questions of fact and questions of policy. So 
far as the company is concerned, there has been no question raised by 
the department, so far as I know of, as to any figure, as to its cor- 
rectness, but it is the failure of the department to recognize some 
space which we reported as in use directly in connection with the 
service. I would like to have that made clear. 

Mr. McBride. There were some slight inaccuracies, but they were 
not material. 

The Chairman. The difference is one purely of rule, is it not ? 

Mr. McBride. Yes. 

Mr. Worthixgton. The railway mail pay committee, on page 1074, 
showed that the department's statement on page 996, revised by 
using the Post Office Department's percentage for passenger-train 
expenses, 29.21. with the railroad percentage for mail-car space, 9.32, 
produces a deficit below the apportioned cost of $17,229,000 instead 
of a surplus of $1,616,000. Now, if one-half of the difference between 
the railroads and the department as to space were allowed, the result 
would be midway between those two figures. In other words, in place 
of $1,616,000 surplus there would be a deficit of $7,800,000, there- 
fore, adopting a principle of splitting the difference as to space 
between the railroads and the department, there would still be a 
deficit shown of $7,800,000, and that on the department's apportion- 
ment of expenses. 

Mr. Stewart. We would not be willing to split the difference with 
the railroads on that. 

Mr. Lloyd. Suppose we allow Gen. Stewart to complete his state- 
ment. 

Mr. Stewart. I wish now, if I may be permitted, to supplement 
our statement by calling attention to some special features which 
have not been particularly developed, and to refer again to what I 
have dwelt upon from time to time in a general way — that is, the 
extremely liberal plan the department followed in making its ap- 
portionment of costs to the mail service. I have previously called 
attention to certain items of general expense, investment, capitaliza- 
tion, etc., in which the mails participated to the full extent of 6.68 per 
cent, just the same as in the items in which the participation was 
proper, upon a car-foot-mile basis, and have suggested that if time 
and opportunity permitted further inquiry into this question, I am 
perfectly satisfied that it could be shown that the application of that 
percentage to the items first named is too strict against the mail 
service and too liberal to the railroads in an ascertainment of cost. I 
have some figures here with special reference to the cost of car equip- 
ment, which I want to submit along that line. They have a bearing 
upon the question. 

A comparison may be made based on value of equipment between the 
mail service and the passenger service (proper) in passenger trains 
for all roads in the United States, on information from the statement 
No. 21, entitled " Classification of Cars in the Service on June 30, 
1911," from the Interstate Commerce Commission Statistics of 1911, 
page 25. 



1504 KAILWAY MAIL PAY. 

The statement in question shows 20,518 first-class passengers cars, 
5,363 second-class cars, and 2,171 emigrant, dining, parlor, sleeping 
cars, etc., 5,679 combination cars, and 11,524 baggage, express, and 
postal cars in service for the fiscal year 1910. By reference to the 
annual report of the Second Assistant Postmaster General for the 
fiscal year ended June 30, 1910, page 35, it is found that there were 
in the service on June 30 of that year 1,320 full railway post-office 
cars and 3,767 apartment cars. Deducting the number of apartment 
cars and full railway post-office cars from the combination cars and 
the baggage, express, and postal cars leaves a balance of 1,930 combi- 
nation cars which do not contain mail and 10,204 baggage and express 
cars other than full mail cars. The proportion of the latter amount 
embracing baggage cars which may be used in the mail service is 
not known. 

It is ascertained by reference to the " outline of testimony of W. C. 
Wishart " in the case before the Interstate Commerce Commission 
for a general advance in freight rates in official classification terri- 
tory (I. and S. Docket 333, p. 5) that in 1903 passenger cars cost 
$10,860, and to-day cost $17,050; the new ones, he says, are steel, 
but carry no more passengers. Estimating the cost of the passenger 
car in 1910 as approximately $11,000, and the cost of the mail car, as 
reported to the department in November, 1909, as approximately 
$7,000, we find that the amount of equipment above tabulated may 
be estimated in value as follows: Twenty thousand five hundred and 
eighteen first-class passenger cars at $11,000, $225,698,000; adding to 
this amount the second-class and the other passenger cars (proper) 
results in a total estimated cost of approximately $308,572,000. The 
cost of 1,320 full railway post-office cars at an average construction 
value per car of $7,000 would be $9,240,000, or 4.09 per cent of the 
value of first-class passenger cars and 2.99 per cent of the value 
of all passenger cars (proper). But the proportion of the car space 
which was chargeable to the mails on the space basis of ascertainment 
of November, 1909, was 7.18 per cent (Table 3, Document 105) r 
and if comparison is made with the passenger space (proper) for 
November, would be stated as 8.73 per cent. It is thus seen that a 
much larger proportion of the actual cost of the passenger train is 
included m the mail per cent of cost, namely, 6.68 per cent, repre- 
senting the proportion of operating expenses and taxes to total oper- 
ating expenses and taxes, than is justified by the relative equipment 
values. 

Reports of railroad companies to the department for November, 
1909, showing the cost of construction of mail cars give results 
which have been tabulated as follows : 

Total number of full cars :_ 1,312 

40 to 50 feet 127 

50 to 60 feet 231 

Over 60 feet 954 



Total amount. 



Amount 
per car. 



Total cost of construction, all full cars 

Total approximate value November, 1909, all full cars . 



$8,100,067.60 
7,214,029.22 



$6, 174 
5,498- 



RAILWAY MAIL PAY. 



1505 



The highest estimate for November, 1909, was made by the Penn- 
sylvania Eailroad Co., which shows the average cost of construct- 
ing a 60 to TO foot car as $12,979.48 and the value of same as 
$12,894.13. On April 30, 1913, this company reported that for the 
Pennsylvania system the steel cars in service cost $12,000 and the 
60-foot steel car approved by the department cost $11,000. The 
average cost for a 60-foot steel car is shown to be $10,675. (Hear- 
ings, p. 951.) 

Corresponding data showing the total passenger cars in service 
for the fiscal year ended June 30, 1913, is not available ; therefore a 
comparison for all roads can not be made on the basis of cost of 
$17,050 for a passenger car at the present time, as stated by Mr. 
Wishart. There is given, however, in the statements of the 14 rail- 
road companies to the joint committee showing cost of construction 
and cost of maintenance as of April, 1913, the estimated cost of a 
mail car 60 feet in length built of steel, which is shown to be ap- 
proximately $11,500. (Hearings, p. 951.) The cost of the passenger 
car in 1903 was stated to be approximately $10,860, and to-day costs 
$17,050. The average mail car cost in 1909 approximately $6,000 
and the 60 or 70 foot mail car approximately $8,000, and in 1913 is 
shown by the statement referred to as costing $11,500. 

To show the relation in cost of construction at the present time of 
the several classes of service there may be taken for the purposes of 
illustration 10 passenger-train cars at the minimum cost of construc- 
tion, which, it will be assumed, compose two trains, as follows : One 
60-foot full railway post-office mail car costing $11,500, one 70-foot 
express car costing $8,500 (Pennsylvania Railroad shows storage 
cars cost in November, 1909, $7,900), one 70-foot baggage car cost- 
ing $8,500, and seven 70-foot passenger coaches costing $17,000 each. 

A tabulation of the resulting space and cost of construction and 
the percentage of each class of service to the total follows : 





Feet of 

car 
space. 


Per cent 
of space. 


Total cost 

of space 

run. 


Per cent 

of total 
cost. 


Mail 


60 

70 

70 

490 


8.695 
10. 145 
10. 145 
71.015 


$11, 500 
8,500 
8,500 

119,000 


7.796 




5.762 




5.762 




80. 680 






Total. . 


690 


100.000 


147, 500 


100. 000 







It is thus seen that a division of cost of construction on basis of 
train space is unfavorable to the mail service both as to the full cars 
and as to the baggage and mail-storage cars. The percentages above 
shown indicate that the space percentage charged to mail should be 
reduced on a basis of train cost of construction by 10.33 per cent, and 
that the storage and baggage-mail space should be reduced 43.19 
per cent under the proportion charged to the mails on the basis used — 
that is, the per cent of operating expenses and taxes. 

Mr. Lloyd. In that connection, you figure that on 7 passenger 
coaches and 3 cars, making 10 in a train. Is not that ordinarily too 
long? 

Mr. Stewart. Yes. It is not supposed to represent an actual 
train, but the table has been prepared to show the relative passenger 
space in a train to 60 feet of mail-car space. 



1506 RAILWAY MAIL PAY. 

Mr. Lloyd. Do you not have 60 feet of mail space where you would 
only have three or four coaches? 

Mr. Stewart. I doubt that very much. If we have a 60-foot 
H. P. O. car, I presume it would be in a longer train than that. 

Dr. Lorenz. The average length of the passenger train is between 
five and six coaches. 

Mr. Worthington. The average passenger train in the United 
States has five cars, which includes mail, coaches, and a very im- 
portant element which Gen. Stewart leaves out altogether, sleeping 
cars, which are paid for by the sleeping-car companies and main- 
tained by them, although Gen. Stewart puts those cars in the space 
and omits entire consideration of the value of the car for which the 
railroads pay nothing. 

Senator Weeks. Speaking of the cost of the car, is not a large pro- 
portion of cost of the cars employed in the mail service still greater 
than any other class? 

Mr. Mack. I do not think there is any doubt of that. 

Senator Weeks. We have made requirements that, I should think, 
would compel the railroads to furnish steel cars for other services. 

Mr. Stewart. They are obliged by law to convert all wooden cars 
into steel, excepting those which have steel underframes, by July 1, 
1917, at the rate of 25 per cent a year. 

Senator Weeks. Is it not doubtful whether any other railroad 
has done as much with reference to other classes of cars as the Penn- 
sylvania ? 

Mr. Stewart. I think there is a greater proportion of steel mail 
cars than there is of steel passenger cars. 

Senator Weeks. Then those figures would have to be modified to 
that extent. 

Mr. Stewart. No. We have taken the average value on the mail 
car as $11,500, which will buy a steel car. 

Senator Weeks. A steel mail car? 

Mr. Stewart. Yes. 

Dr. Lorenz. Would not the fact that nearly half of the mail apart- 
ment car space be of consideration here? Of course, wherever you 
have apartment-car space the cost of construction per foot must be 
the same for mail as any other service. 

Mr. Stewart. Yes. 

Dr. Lorenz. You have taken the R. P. O. as the standard. 

Mr. Stewart. In this ideal train I have taken the E. P. O. car. 

Mr. Lloyd. The only point I had to inquire about was whether 
the seven coaches would be the proper proportion of passenger 
coaches that went with a single mail car. It struck me that that was 
somewhat large, although you may be right. 

Mr. Stewart. The point I desire to bring out in these statistics 
is to show that when we participated in the cost of car equipment 
as a whole, on a basis of mail car-foot miles, we exceeded the proper 
charge by at least 2 per cent. 

The Chairman. What per cent did you allow ? 

Mr. Stewart. Six and sixty-eight one-hundredths. 

The Chairman. You say it should have been 4.09 ? 

Mr. Stewart. We participated in the cost of property in paying 
4.53 per cent on capitalization, you might say. We participated to 



KAIL WAY MAIL PAY. 1507 

that extent in the total cost of this passenger equipment, as well as 
the mail equipment. Then we applied our 6.68 per cent, the mail 
ratio of expense and taxes, to all expenses and taxes, which, you see, 
is much higher than these figures of 4.09 or 2.99. 

Mr. Lloyd. If you change that ideal train from seven passenger 
coaches to six, what effect would it have upon your computation ? 

Mr. Stewart. That would not have any effect if you had the same 
proportion of space to the several services. We simply took a full 
passenger train to get the full car. 

Mr. Lloyd. Suppose you used a 60-foot mail car in the ideal train 
and only have six passenger coaches, making the ideal train, which it 
seems to me is more nearly accurate than seven ; but I may be wrong. 
If that were done, what effect would it have upon your computation ? 
Mr. Stewart. If the proper proportion of space were maintained, 
I do not think it would make any difference, because it all resolves 
itself into cost per foot. I would like to state the effect of that; 
as I have indicated here on our general figures I think it would make 
a difference of about $453,000, which I think the department is en- 
titled to have credit for. 

The Chairman. Eight in that connection, I infer from your state- 
ment that you thought that your 6.68 per cent was 2 per cent too 
high, namely, that you would reduce the 6.68 to 4.09. My under- 
standing is that the 6.68 is not made up of cost of equipment, that 
is only one element upon which your 6.68 per cent has a bearing. 
Is that true ? 

Mr. Stewart. Yes. The 6.68 represents the ratio of the propor- 
tionate operating cost of the mail service, plus the taxes, to the total 
passenger-service cost and taxes. 

The Chairman. Then the 2 per cent excess liberal allowance that 
you made applies simply to the factor of the cost of equipment, which 
is one of the factors on which you made up your 6.68 per cent of ap- 
portionment. Is that it? 

Mr. Stewart. You have the right idea, but you have not applied 
it correctly. The 6.68 per cent is not changed in its general appli- 
cation, but when applied to overhead charges and to investment, 
where we say, for instance, our proportion here of the overhead 
charges and get $11,700,000, it affects that. 

The Chairman. And that is only in the computation? 
Mr. Stewart. Yes; I think that is about the only item. 
The Chairman. Therefore, in dollars, you think it would make a 
difference of about $453,000? 
Mr. Stewart. Yes. 

Mr. Lloyd. I do not think we need any additional statement on 
that. 

Mr. Bradley. But is that a correct percentage to apply to the 
capital cost? Our understanding was the department applied 6.68 
per cent of 29.21 per cent, cr a little less than 2 per cent (1.95 per 
cent). That the 6.68 per cent was applied to operating expenses and 
taxes, but when vou came to make an application to the capital cost 
it was 6.68 of 29.21. or 1.95 per cent. 

Mr. Stewart. The 29.21 does not enter here at all, because this is 
all passenger. 



1508 E AIL WAY MAIL PAY. 

Mr. Worthington. Mr. Chairman, I think the railroad people 
ought to know something about the cost of equipment. As to pas- 
senger cars, Gen. Stewart has compared a 60-foot mail car with a 
70-foot passenger coach. The latter requires a six-wheel truck and 
is much more expensive than the average passenger coach. We do 
not build our coaches longer than 60 feet. Our 60-foot coach does 
not cost us much more than the railway mail cars, and, on the other 
hand, our baggage and express cars cost materially less, so if you set 
against the mail car the average of our other passenger cars, the cost 
of the mail car is higher and not lower, and it is entirely unfair to 
draw a deduction from figures which do not apply to the average 
situation. In place of decreasing the percentage General Stewart 
ought to increase it. In this conclusion we have not considered the 
fact that the Pullman and parlor cars are furnished by the Pullman 
company and do not cost the railroads anything for construction or 
maintenance, although they are included in the passenger car mile- 
age and charged against the passenger service. 

Mr. Stewart. Mr. Worthington has overlooked the fact that I 
have taken the figures furnished by the railroads in 1909 as the basis 
of the cost of those cars. 

Mr. Worthington. What railroad companies ? 

Mr. Stewart. All railroad companies reporting. 

Mr. Worthington. As to passenger coaches? 

Mr. Stewart. No ; as to mail cars. 

Mr. Worthington. The mail-car figures show 

Mr. Stewart. For cost of passenger coaches we rely on Mr. 
Wishart, who has submitted data to the Interstate Commerce Com- 
mission. 

Mr. Worthington. You yourself say it refers to a 70-foot coach. 

Mr. Stewart. Yes. 

Mr. Worthington. We do not build 70-foot coaches, because they 
are too expensive in proportion to the carrying capacity. 

The Chairman. Mr. Wishart 's figures are applicable only to the 
New York Central, as I understand. 

Mr. Worthington. Our standard coach is 60 feet, and I think 
that is the general size throughout the United States. 

Mr. Prentiss. I have the statement of the Southern Pacific Rail- 
road Co. of the cost of construction of 60- foot railway post-office 
cars, and the amount is $9,361 for cars in service and $9,650 for the 
new department plan of 60-foot steel railway post-office cars. This 
new-plan cost of $11,500 which we state here includes the Pennsyl- 
vania Railroad plan and represents a higher cost than the average. 
Recognizing that Mr. Wishart's statement of cost was probably 
maximum, I took the maximum cost of the 60-foot railway post- 
office car. 

Mr. Rowan. I would like to say the New York Central paid over 
$12,000 for the last mail cars they built. 

The Chairman. Postal cars ? 

Mr. Rowan. Yes, sir. We would be glad to buy some for $11,000. 

Mr. Stewart. Do you think $11,500 is out of the way for an aver- 
age ? In this connection, it may be said that the New York Central 
Railroad reported the average cost of construction of steel postal 
cars in service in April, 1913, as $10,900, and for the new 60-foot 
department plan steel cars as $11,655. 



RAILWAY MAIL PAY. 1509 

Mr. Kowan. I am not talking about an average. Mr. Prentiss said 
he took the maximum, and I am telling you what we paid on the New 
York Central. 

Mr. Stewart. Now, Mr. Chairman, if I may continue, in closing 
allow me to call attention to this fact which I have been emphasizing 
this morning, and I read from page 997 of the record : 

Attention is further called to the fact that the above apportionment of ex- 
penses (other than operating expenses) chargeable to operating revenues is 
made to the mail service on the basis of 6.68 per cent of the passenger appor- 
tionment. Such a plan of apportionment makes the mail service participate in 
this ratio in all the passenger operating expenses included in the above account 
in addition to dividends. 

The above account refers to the specific account set out on the 
previous pages where we participate in the same ratio in all the in- 
vestments of the railroad companies. 

When it is remembered that these items cover the whole field of operating 
expenses chargeable to operating revenues for the maintenance and operation 
of the railroads, as well as interest on bonded indebtedness and dividends on 
capital invested in expensive terminal stations in large cities, it becomes evident 
that this charge against the mail service is too large. 

I will read from Mr. Samuel O. Dunn on " Government ownership 
of railroads," with special reference to these large terminals : 

A very great proportion of the physical value of the railways is concentrated 
in their terminals in large cities. These are often constructed with special con- 
sideration to the convenience of passenger traffic and expressing architectural 
beauty. The Pennsylvania Terminal in New York City cost $115,000,000; the 
Grand Central Terminal (New York), $150,000,000; the Washington Terminal 
$20,000,000; the Northwestern Terminal at Chicago, $24,000,000; the Union 
Station at Kansas City, $40,000,000. 

The portion of the paragraph on page 907 continues : 

It is impossible to say from data at hand how much it is in excess of a fair 
charge. The charge against the mail service on these accounts should not be 
greater than the fair value of the use of the property represented by them and 
which is employed in connection with the mail service. Neither the railroads 
nor the department have this information, but it is evident that it must be 
much smaller than the sum used in the above apportionment. 

Now, apply that to the entire country, and just bear in mind the 
charge against the mail service which the present apportionment 
makes. As to cost, I would further call attention to what we have 
submitted in connection with the express service. I said on yesterday 
that I was not prepared to make a recommendation that the particu- 
lar rates we suggested be reduced, but I do urge upon the committee 
the careful consideration of a comparison between the mail and the 
express service and the legitimate and fair results which my showing 
is entitled to in the consideration of railway mail pay. When it is 
shown that if we paid the railroad companies for mail service on 
approximately the same basis as express service, the amount would 
have been $39,000,000 in 1913 instead of $51,000,000, I think that fact 
alone is the most potent single one that has been developed in this 
inquiry. I have said, however, because I want to be absolutely fair 
from all points of view, that there are differences between the two 
services, and those differences should be accounted for and carefully 
appraised in the consideration of these express statistics. I have 
myself tried to locate those differences and get a fair appraisal of 
them. The best that I could do was to submit an appraisal here of 



1510 KAIL WAY MAIL PAY. 

approximately $1,000,000. The railroad companies have not sub- 
mitted anything upon that point, and I rather expected that they 
would. There is this to be further considered. I pointed out in my 
statement that the mail service as a whole is not altogether like the 
express service; it transports letters and intelligence and other 
classes of mail, while the express service handles practically mer- 
chandise only, and in considering the effect of the difference between 
these two gross rates I think a fair consideration should be given to 
that, and, of course, that is favorable to the railroad companies. 

The Chairman. If it will not break the trend of your thought, 
you say there was $1,000,000 difference. You say, as I understand, 
that the application of the express rates, as submitted by you, to 
mail would have returned to the railroads for railway mail pay 
$39,000,000, instead of $51,000,000? 

Mr. Stewart. Under the present express rates. 

The Chairman. That is, the rates that have been recently put 
into operation by the Interstate Commerce Commission? 

Mr. Stewart. Yes, sir. 

The Chairman. Then, am I to understand you would add $1,000,- 

000 to $39,000,000 and pay to the railroads $40,000,000, instead of 
$51,000,000? Is that your conclusion? 

Mr. Stewart. No. I think the conclusion will have to be made 
by the joint committee. 

The Chairman. I understand that perfectly well, so far as the 
report of the joint committee is concerned, but I am asking for your 
individual deduction. I understand you to say there was a differ- 
ence of a million dollars, according to the figures submitted by you 
day before yesterday, also in the evidence just submitted you have 
stated that the railroads would have received $39,000,000 instead of 
$51,000,000 that they are receiving to-day, and I want to know where 
that million dollars comes in. 

Mr. Stewart. The million dollars that I mentioned is the best 
information as to the value of those particular differences between the 
two services that I could locate, and I submitted the statement in 
detail in the recoid. 

The Chairman. But what do you do with that million dollars. 

Mr. Stewart. That would be added to the $39,000,000. 

The Chairman. So that the railway mail pay, in your opinion, 
from an express basis, and the allowance you have made for the 
difference between the two services, should be $40,000,000 to the 
railroad companies instead of $51,000,000 that we are paying them 
now? 

Mr. Stewart. That would be the comparison. That is not what 

1 said the railroads should be paid. I, at no time have said the 
railroads should be paid only what they receive from the express 
companies for handling the express business. 

The Chairman. I understand you to say that the railroad com- 
panies, if they received the same compensation from the Govern- 
ment that they received from the express business, they would get 
$39,000,000 on the present volume of business instead of $51,000,000 
that they receive to-day ? 

Mr. Stewart. That is right. 

The Chairman. And you take into consideration the differences 
of the two services and add $1,000,000 to the railway mail pay over 



RAILWAY MAIL PAY. 1511 

what the railroads receive from the express pay, and that would 
make $40,000,000. The natural conclusion, in my mind, from those 
statements, would be that you conclude that the railroads should 
receive $40,000,000 instead of $51,000,000 which they receive to-day 
for railway mail pay. I wanted to elucidate and see whether I 
caught your conclusion? 

Mr. Stewart. Your deduction is right so far as the figures are 
concerned for a comparison between the two different rates. At no 
time have I said I think you ought to reduce the railway mail pay 
to that extent. 

Dr. Lorenz. May I ask whether the comparison shows $39,000,000, 
according to Mr. Stewart's testimony a few days ago? I do not 
wish to always be in the position of combating Mr. Stewart's posi- 
tion, but a few days ago the department showed the average rate 
for the express-car mile was twenty-one and a fraction cents. Mr, 
Stewart has shown that of the total car miles of mail it is 225,000,000 
car miles, and multiplying that by 21 you get over 47,000,000, and I 
do not see how he gets $39,000,000 ? 

Mr. Stewart. The $39,000,000 is the express payment under the 
new rates. I will give you the other figure. It is $46,494,978.58. 

Dr. Lorenz. That should be made clear, that the $39,000,000 is 
under the new rates, and the $47,000,000 under the old rates. 

Mr. Peters. All the rates are under the illustration he made of a 
rate per hundred pounds ? 

Mr. Stewart. No. That is confusing the two methods of com- 
parison. The figures that I have just given are based upon the entire 
service, a comparison of revenue the railroads receive from express 
and from mail as a whole, set forth on pages 1278 and 1279 of the 
hearings. 

The Chairman. Under the relative presentation that you have 
made as to the difference between actual railway-mail pay and ex- 
press pay, under the new rate put into operation by the Interstate 
Commerce Commission, what conclusion have you come to in your 
own mind, if any, as to the difference between railway-mail pay and 
express pay that the Government should pay for railway-mail pay 
or how much weight should you give in your determination to the 
railway-mail pay regarding the express pay? 

Mr. Stewart. I would give this weight to it, that I would not in- 
crease the rates which we have suggested here. 

Mr. Lloyd. In that connection have you ascertained definitely, to 
your own satisfaction, whether the proposed rates under the new 
space plan which you suggest will add to or take from the amount 
of pay that is received by the railroad companies for carrying the 
mails ? 

Mr. Stewart. We have made an estimate for 1913 which would in- 
dicate that the application of the proposed rates would make a re- 
duction in the pay for 1913 of something over $2,000,000. I do not 
remember the exact figures. 

Mr. Peters. Do I not understand, General Stewart, that after your 
final deduction this morning, after allowing one-half of the dead 
space, that on the basis of the cost of service that was ascertained 
in 1909, that for the service as performed the following year, 
the overpayment to the railroad companies, in j^our opinion, was 
about $206,000? Is not that the figure you read this morning? 



1512 RAILWAY MAIL PAY. 

Mr. Stewart. A little over that— $221,832. 

Mr. Peters. Now, to apply your new basis, on the basis of increased 
service performed in 1913, would you make a reduction of about 
$2,000,000 in the pay, under your basis for 1913, with the parcel post 
added, and everything else? Would you make a reduction in pay 
for 1913 amounting to about $2,000,000? 

Mr. Lloyd. That would be the effect of his bill ? 

Mr. Wortiiington. General Stewart said allowing 18 per cent of 
the dead space. 

Mr. Lloyd. No. That 18 per cent was based upon the existing law. 
It was not based on the proposed law at all. 

Mr. Peters. The percentage of the figures is material. General 
Stewart's conclusion this morning was, after making an allowance 
for dead space, and so on, that his idea of a reasonable amount for 
overhead charges would come down to a point in 1909, when the in- 
vestigation was made, that we were actually overpaid about $221,000? 

Mr. Lloyd. Under the proposed law there would be a reduction of 
$2,000,000. 

Mr. Peters. Not on that basis, though. 

Mr. Stewart. I presume that Mr. Peters is intending to bring out 
the fact that if you go on the basis of the space in 1913 we might 
have more space to account for than in 1909. 

Mr. Lloyd. But if you do you get paid for it? 

Mr. Mack. I would like to call attention to the $2,000,000 figures 
again, that the effect of these rates between St. Louis and Texarkana, 
on the Iron Mountain road, would be a reduction of pay of nearly 
40 per cent ; and on the Denver & Kio Grande Railroad a reduction 
of 40 per cent. We can not enter a protest too earnestly against such 
a, reduction. 

Mr. Stewart. We have not checked those figures. 

Mr. Mack. Those figures are substantially correct. 

Mr. Stewart. Of course, under any system, you will not find it 
working the same on every road. But the plan ito pay on space will 
pay for the service rendered. 

Mr. Lloyd. Mr. Chairman, I am anxious to find out what road 
will get that 40 per cent. He is going to lose 40 per cent, and who 
will get it? 

Mr. Stewart. If he loses it, the company that performs frequent 
service will gain. That is one of the great advantages of the pro- 
posed bill. It pays for every service we will get, and there is a cer- 
tain class of roads that run frequent service, which are now paid 
only on a basis of weight, that will get considerable more on a space 
basis, because frequency of service is a very potent factor. 

Mr. Peters. On the basis of frequency you work out the matter 
for the Long Island Railroad Co. and you show that we would get 
about $4,000 more per year for carrying the mail than was ascer- 
tained on the weight basis on the weighing of 1913, and that you 
would relieve us of messenger and terminal service of about $12,000 
a year or that we might get an increase of $16,000. I think on the 
basis of frequency of service we are entitled to at least double the 
pay that we are getting now. We are handling mails on so many 
trains through different parts of that thickly settled suburb of New 
York. The frequency of service on the most frequently served 
routes would make a reduction. 



RAILWAY MAIL PAY. 1513 

Mr. Mack. On the Denver & Rio Grande Railroad a reduction of 
40 per cent would seem to me to be a very serious injustice to a line 
operating in a mountainous region, with much service on narrow- 
gauge trains, and I do not think that there is any justification in 
Document 105. The proposition in that document would only have 
made a reduction of half that amount, 

Mr. Worthington. The present basis is much fairer for the west- 
ern roads where the operating costs are high. While it is true there 
is less frequency of service, there is a higher cost per train-mile for 
operating expenses, and I think Dr. Lorenz will bear me out that 
where frequency of service is less, the expense is higher per train-mile. 

Dr. Lorenz. Generally speaking; but I think the separations of 
the service, for example, on the Santa Fe and on the Burlington, 
show a lower operating expense per car mile than for the country as a 
whole. 

Mr. Worthington. I spoke yesterday for the Southern Pacific 
and showed what a great injustice the proposed rate would be on our 
line, and I think we are justified in protesting vigorously against it. 
It would simply allow us less money per car mile than Gen. Stewart 
shows it costs us, according to his own basis of apportionment, for 
operating expenses and taxes. 

Mr. Lloyd. What do you get out there for the passenger service? 

Mr. Worthington. About 2 cents per passenger mile. 

Mr. Lloyd. In that mountainous region? 

Mr. Worthington. Two cents, including our suburban service. 
We get 3 and 4 cents a mile for local travel. 

Dr. Lorenz. I would like to ask Mr. Worthington what the operat- 
ing ratio on his road is? 

Mr. Worthington. The operating ratio has nothing to do with it. 
That is lowered because of freight service. Freight trains are heavy. 
Our freight rates average about a cent a ton-mile, which is higher 
than the average for all traffic throughout the United States. 

Dr. Lorenz. Suppose you make this assumption, that your freight 
and passenger business are equally profitable ; this will show that you 
had an operating expense of probably 15 or 16 cents per car-mile. 
Now, you will say your passenger service is not as profitable as the 
freight, but it seems to me that if you make that assumption you must 
assume that the freight department is unusually profitable. 

Mr. Worthington. You just mentioned our operating expense of 
16 cents a car mile. Gen. Stewart's figures showed 22 cents a cai 
mile. 

Dr. Lorenz. Gen. Stewart could only take the report which your 
company n^ade and apply certain principles to it, and inasmuch as 
your company does not make a current separation of freight and 
passenger we can not attach any significance to the results. 

Mr. Worthington. Gen. Stewart applied the same rule of appor- 
tionment to all roads in the United States. 

Dr. Lorenz. You do not make a current separation? 

Mr. Worthington. We keep our accounts in the same manner as 
all railroads — in accordance with the requirements of the Interstate 
Commerce Commission. 

Dr. Lorenz. Yes; but you do not make a separation of freight and 
passenger expenses assignable. Half of the operating roads do. 

49396—14 103 



1514 RAILWAY MAIL PAY. 

Mr. Worthington. Half of the roads of the United States sepa- 
rate expenses between passenger and freight ? 

Dr. Lorenz. Yes, sir. 

Mr. Worthington. I did not know that. That is news to me. 

Dr. Lorenz. That is the result of tabulation of sworn reports of 
companies for 1912. 

Mr. Worthington. However, our figures were reported to the 
department in accordance with their requirement, and the basis of 
apportionment to passenger service was the same as applied to any- 
other road. 
_ Dr. Lorenz. As to the alleged exceptional cost on the Southern Pa- 
cific, I think you keep currently your cost for freight and passenger 
separately on three important transportation costs — locomotive en- 
ginemen, fuel, and trainmen. Your cost for those items per car- 
mile is actually lower than for the country as a whole, although a 
little bit higher than the Santa Fe? 

Mr. Worthington. Do you say that our cost of train service is 
lower? 

Dr. Lorenz. Enginemen, trainmen, and fuel per car mile? 

Mr. Worthington. I can not understand that statement when we 
pay higher wages than anywhere in the United States and pay more 
for our material. 

Dr. Lorenz. The reason is you have the longer hauls and that re- 
duces it. 

Mr. Worthington. We pay much more per mile run for firemen, 
brakemen, conductors, and engineers than the average pay. 

Dr. Lorenz. You will find my figures are based on your monthly 
report. 

Mr. Stewart. I will say in this connection, since the reports made 
by this system have been brought into question, that I have been 
informed that they were in a very unsatisfactory condition in some 
respects when they reached us and that would verify to a large ex- 
tent Dr. Lorenz's conclusion that our specific finding in that case 
would not be as representative as in some other cases where the com- 
pany more strictly followed our suggestions in submitting ciata as to 
expenses. 

Mr. Worthington. Do you mean to say our operating expenses as 
reported to you were upon any different basis from those reported 
by other roads? Were they not strictly in accordance with the In- 
terstate Commission requirements? 

Mr. Stewart. I am so informed. 

Mr. Prentiss. The fact is that some roads reported an assignment 
of expenses in greater detail than others. One hundred and twenty- 
four railroads reported to the department approximately 50 per cent 
of the operating expenses assigned directly to either passenger or 
freight traffic. Just what percentage the Southern Pacific assigned 
I do not recall. If the percentage of total assigned expenses was 
similar to that of the Santa Fe, which gave the department only 13 
per cent, it would account for the higher cost per passenger-car mile 
on the Southern Pacific. The only remaining factor, which was 
revenue-train mileage, was used to apportion the other items of cost. 

The Chairman. You submitted to the Southern Pacific a regular 
list of inquiries, did you not ? 

Mr. Prentiss. Yes, sir. 



RAILWAY MAIL PAY. 1515 

The Chairman. The same as you did to all roads ? 

Mr. Prentiss. Yes. 

The Chairman. Was their reply as full and complete to those in- 
quiries as the average of the other roads? 

Mr. Prentiss. No, sir ; it was not. 

Mr. Worthington. In what respect? 

Mr. Prentiss. In the assignment of operating expenses. The 
Southern Pacific assigned proportionally less than others, and as the 
basis on which the department divided the expenses was the train 
unit, if the assigned expenses for the passenger train and freight train 
were not given, the department had no alternative and simply used 
the data reported by the company, applying the train or locomotive 
mileage ratios, whichever was furnished by the company, in order to 
get an ascertainment. 

Mr. Worthington. Is it not a fact that two requests were made for 
the assignment of expenses and we complied with both of your re- 
quests? You are speaking of the first request. I think our com- 
pliance was exactly in accordance with the accounts the way we had 
them. 

Mr. Prentiss. In the first request the department asked for the 
assigned expenses and apportioned expenses for passenger service. 
In the second request the department asked for the mail assignment, 
the express assignment, the passenger assignment, and the freight 
assignment. 

Mr. Worthington. You did not accept the railroad's assignment? 

Mr. Prentiss. In the case of the Southern Pacific the two reports 
were in agreement as to the assigned expenses. A careful compari- 
son of the two reports was made for each road and the results were 
based on both reports. 

Mr. Worthington. I would like to bring out the fact that the 
assignment I referred to is not the railroad assignment, but the as- 
signment found in Document No. 105, which was the department's 
assignment. Document No. 105 shows how the department assigned 
each account. You made the assignment? 

Mr. Prentiss. I would like to correct that statement. The depart- 
ment made no assignment of expenses. The unassigned expenses 
were apportioned on the basis of the train cost, using the assignments 
furnished by the railroad companies. 

Mr. Worthington. It is that apportionment that I refer to. 

Mr. Peters. Mr. Lloyd asked General Stewart as to where that 
money would go that would be taken from the Denver & Eio Grande, 
and General Stewart said that it would go to the road that had fre- 
quency of service. On Long Island our next longest line, between 
Greenport and New York, on the weight basis we get as a result of the 
weighing of 1913 — these are computations made by the department — 
$16,065 a year. On the space basis we would get $8,834. Yet we 
have 38.49 trips per week on that line. We would get, in addition to 
that, $2,900 for relief from side and terminal service, but that is a 
relief they are going to give us by assuming the side and terminal 
service and not as a result of pay for space. The most frequent line 
between Brooklyn and Jamaica we now get on a weight basis $1,494 ; 
on the closed-pouch service as proposed under the law in volume 8 
we would get $1,420, a reduction of $74 a year, and there we have 



1516 RAILWAY MAIL PAY. 

203 trips per week. We would be relieved of $742 of station and 
messenger service. That just illustrates that it does not work out 
the way General Stewart stated. 

Mr. McBride. I think it ought to be stated in connection with the 
Greenport and New York illustration that on the weight basis there 
was included the weights carried on the trains of the Wading Eiver 
& Long Island City line and of the Oyster Bay & Long Island City 
line over part of the route. Under the new plan these trains are on 
another mail run and the compensation for those trains is not repre- 
sented in the Greenport and New York computation, but is included 
in the pay for the other mail runs. 

Mr. Peters. But taking the total cost of the apartment and closed- 
pounch service you make it $55,000, while on the new basis we are get- 
ting $51,000. In Document No. 105, after cutting off a portion of the 
mileage and throwing it out as space not allowed, you showed there 
we were underpaid $1,418 a month, or at the rate of $17,000 a year, in 
1909. 

Mr. McBride. This statement shows that you will receive $16,000 
additional compensation. 

Mr. Peters. Oh, no. 

Mr. Mack. I would like to ask the question if the effect of your 
bill will not be to take the pay away from the lines that perform the 
volume of service in the transportation of the mail and give it to the 
lines that perform a less transportation service for the Post Office 
Department ? 

Mr. Stewart. I do not think it will. I think the opposite is true. 

The Chairman. General Stew T art, I would like to see whether I 
have a correct understanding. As I understand your conclusion 
with reference to overpay by the Government to the railroads, they 
are based entirely upon the ascertainment set forth in Document 105. 
Is that true? 

Mr. Stewart. Yes, Senator, inasmuch as that is the only thing 
before us, it is the only ascertainment that has been made. 

Mr. Lloyd. Did you not get some ascertainments from the Gov- 
ernment employees, railway mail clerks, and railway superintendents 
as the basis of your charge for space or allowance for space that is not 
found in Document 105? 

Mr. Stewart. Document 105 is based on all the information we 
could get on the subject. 

Mr. Lloyd. Document 105 is the report of the railroads, and the 
report of your employees and determination based on all information 
you have obtained from the railroads and the departmental em- 
ployees ? 

Mr. Stewart. Yes. 

The Chairman. Document 105 was the result of inquiries for the 
month of November, 1909, made by the department upon the rail- 
roads, and the tables were prepared by the department from the 
answers to those questions. That is true, is it ? 

Mr. Stewart. No. I could not say that that is true. If I an- 
swered that yes it would not be correct, and if I answered it no it 
would not be correct. We have explained a number of times that the 
railroad companies reported more space than we could accept and, 
therefore, it is not based primarily on what they reported to us. 



RAILWAY MAIL PAY. 1517 

It is based upon the reports of the railroad companies as properly 
revised by the department to represent the space needed and used. 

The Chairman. Then that comes to what I want to get at. Then 
the correctness of the deductions in reference to overpayment de- 
pends upon the correctness of the apportionment of tables prepared 
by the department upon the information submitted by the railroads 
in reply to inquiries submitted by the Government to the railroads. 
Is that correct ? 

Mr. Stewart. That is substantially correct. 

The Chairman. Then the difference in dead space, the allotment 
between the department and the railroads, is the crucial test as to 
the correctness of the deductions in reference to the question of over- 
pay or underpay. Is that true? 

Mr. Stewart. That, I think, represents the material point of dif- 
ference between the railroads and the department. 

The Chairman. That is the key to the problem of correctness 
of the dead-space apportionment, the key to the main factor? 

Mr. Stewart. I think so, in so far as Document 105 is concerned. 

The Chairman. So far as the conclusions in reference to the under- 
pay or overpay, if the conclusions are based solely upon the ascer- 
tainment and information, that being all available as contained in 
Document 105 ? 

Mr. Stewart. You are referring, of course, to Document 105 as 
shown, without reference to anything else that has been submitted to 
the commission, the consideration of express rates, etc. ? 

The Chairman. I am, so far as the overpay or underpay is con- 
cerned; that is, so far as your own conclusions are concerned. 

Mr. Stewart. And without regard to any consideration of the 
special items I have submitted here which might be taken into ac- 
count ? 

The Chairman. I am not asserting anything, but I am trying to 
put interrogatories to follow out your line and see how your thoughts 
appeal to my mind. 

Mr. Stewart. To make my answer complete to your question, 
which is very comprehensive, I would have to insert at this point 
in the record all the things I have said which I think the commis- 
sion should take into consideration, not solely those presented in 
Document 105, but all the other considerations as to whether the 
railroads were overpaid or underpaid. 

The Chairman. And you have come to a conclusion, as I under- 
stand it, that the railroads have been overpaid, and the testimony 
will show specific statements to the effect, if my memory serves me 
rightly. What value do you give to Document 105 ascertainment? 

Mr/ Stewart. I gave primary value to that. All these other con- 
siderations that I have mentioned simply accentuate the conditions 
shown by Document 105. For instance, when I say that Document 
105, taken on its face, shows more revenue received than expenses 
fairly apportioned to the mail service, that is subject again to the 
criticism that I myself make against the plan, to the effect that it 
proceeds upon a most liberal plan of apportionment, which I pointed 
out this morning. 

The Chairman. I was not discussing the plan at all, but simply the 
conclusion or conviction in your own mind with reference to overpay 
or underpay, which is one of the phases of the study, and that your 



1518 RAILWAY MAIL PAY. 

conclusions, which are definite, according to the testimony, are based 
primarily and, as I understood you, almost entirely upon Document 
105 ascertainment. 

Mr. Stewart. So far as the specific figures are concerned which we 
have submitted, that is true. 

(Thereupon, at 1 o'clock p. m., a recess was taken until 2 o'clock 
p. m.) 

AFTER RECESS. 

The hearing was resumed at the expiration of the recess at 2 o'clock 
p. m. 

The Chairman. Dr. Lorenz, you have read all of the evidence that 
has been submitted at the various hearings and have for a period of 
uver two months devoted your time exclusively to a special study of 
this subject and intermittently it has had your consideration for over 
a year; now, outside of the information contained in Document 105 
and other viewpoints submitted in the evidence, are there any other 
facts or additional information that occur to your mind that it would 
be wise to consider in our study of this subject? 

Dr. Lorenz. It seems to me that the conclusion of the committee 
ought not necessarily rest entirely on Document 105, that there are 
other indications of what might be a fair rate per car mile, which help 
to determine the question of overpay and underpay that do not de- 

gend upon that particular tabulation for 1909. For example, the Post 
office Department can make and has made estimates of the total 
amount of mail service measured in 60-foot-car miles, and the result 
varies according to the method of estimating that service. In one 
estimate in which they charged the department with mail space based 
upon the three units of 15, 30, and 60 feet, they give us a figure of 
about 260,000,000 car miles as the equivalent of the Railway Mail 
Service 60-foot cars. That is not dependent on Document 105. 
Dividing that into existing revenue as reported by the Second Assist- 
ant Postmaster General, we get an idea of the existing: revenue to the 
railroads per car mile for the mail service. The pay being $51,000,- 
000, the car miles being 260,000,000, we get an average payment of 
something less than 20 cents a car mile. 

That does not depend in any way upon Document 105, but it does 
involve the same controversy that has come up in connection with this 
matter, because in that estimate of 260,000,000 car miles the depart- 
ment has been charged with a certain amount of dead space ; that is 
to say, if they charge themselves with a 30-foot apartment when they 
need 20 or 25, it is obvious that they are charging themselves with a 
certain amount of dead space, although not as much as the total 
amount involved in Document 105 ; for example, under this three-unit 
system, if they needed a 30-foot apartment and the railroad company 
furnished a whole car, they would not be charged with the whole car, 
but only with the 30-foot apartment, because that is one of the units, 
consequently that element of dead space which exists would not be 
charged against the department under the three-unit plan. Having 
arrived, then, at the conclusion that upon a fair apportionment of 
dead space which presumably would result from these three units, you 
have your starting point, the existing revenue of something less than 
20 cents a car mile. To know whether that is too high or too low, we, 
of course, have the basis of comparison with the average revenue re- 



RAILWAY MAIL PAY. 1519 

ceived from passenger-train service, and that average is furnished by 
the Interstate Commerce Commission to this committee and is not 
open to much dispute, although it varies a little each year, although 
it must be considered that the average of approximately 25 cents 
is the result of considering all of the dead space in the divisor, 
because all of the car miles, whether they are empty or partly used, 
are divided into the total passenger-train revenue. So there you have 
two figures which it seems to me are pretty well fixed and not open 
much to dispute and which do not depend on Document 105. 

The Chairman. That is the 260,000,000 car miles as figured by the 
department and the car mileage from the passenger service as figured 
by the Interstate Commerce Commission? 

Dr. Lorenz. Yes. Of course the department made that estimate 
simply in response to a question of the committee, and possibly on 
revision they would change it somewhat. They have more recently 
submitted an estimate of 225,000,000 car miles when the authoriza- 
tion is made upon a different basis. In other words, the number 
of car miles with which the department charged themselves depends 
largely on the units which they can authorize. If they can author- 
ize 15, 20, and 25 feet they are obviously going to escape some of 
the dead space which they must assume if they authorize units of 
15, 30, and 60 feet. 

The Chairman. In that connection it may be interesting to all of 
you gentlemen to hear the contents of a letter I have received from 
Canada in response to a letter I addressed to the postmaster general 
under date of March 3. My letter of March 3 reads as follows : 

March 3, 1914. 
Hon. Louis P. Pelletiek, 

Postmaster General, Ottawa, Canada. 
Dear Sir : My attention has been called to the February 7 issue of the Rail- 
way Review, published at Chicago, 111., in which you are quoted as follows : 

"After long negotiations, in which the railways were most insistent for an 
increase of about $4,000,000 as extra compensation for carrying the parcel post, 
no special or additional compensation was allowed. A car mile instead of a 
track mile was agreed upon, however. Under this plan the railways will get 
about $786,000 a year more than now. This was only a readjustment of the 
existing arrangement, and is in no sense an additional payment for the parcel- 
post system." 

Since the above-named joint committee is now investigating the general sub- 
ject of railway mail pay, it would be appreciated if you could favor us with 
the details entering into the adjustment referred to. 
Yours respectfully, 

Jonathan Bouhne, Jr., Chairman. 

To this I received the following reply, dated March 14, 1914: 

March 14, 1914. 
Hon. Jonathan Bourne, 

Chairman Mail Transportation Committee, 

Washington, D. C, United States of America. 
Dear Sir : I have the honor to acknowledge the receipt of your letter of the 
3d instant, asking to be furnished with details regarding the rates of payment 
allowed the Canadian railways for mail-transportation. 

In reply. I have to inform you that under the arrangements recently made, 
which went into effect on the 1st of February last, the Canadian post-office de- 
partment has n greed to pay for railway mail service according to the following 
rates and conditions until the 1st of February, 1915 : 

1. For a full postal car equipped for the sortation and handling of mails, in- 
cluding parcels, and the accommodation and transportation of post-office officials 
on duty, 16 cents a car mile. 



1520 KAIL WAY MAIL PAY. 

2. For a half car or section of a car completely equipped in the same manner 
as a full postal car and the transportation of post-office officials on duty, 9 cents 
a car mile. 

3. For the conveyance of closed mails carried in baggage cars in charge of 
baggagemen or other railway officials in charge of such cars on regular trains, 
4 cents a car mile. 

4. The equipment and accommodation furnished by postal cars shall include 
light, heat, and an adequate supply of drinking water. 

5. For special trains ordered by the post-ofiice department for the transpor- 
tation of ocean mails, $1.25 a train-mile when no passengers, baggage, or freight 
is carried. When cars for the conveyance of passengers, freight, or baggage are 
attached to such trains by the railway company, the rate shall be $1 a mile. 

6. The rate of 16 cents a car mile shall apply to all cars used wholly for mail 
purposes, whether hauled in special trains run by the railway companies for 
their own convenience or on regular trains. However, the department will not 
require the railways to haul more than one car with mails on any such train at 
the 16-cent rate. If more, than one car has to be attached to a special train by 
order of the post-office department, the rates provided for in the preceding sec- 
tion — that is, $1 a mile — will apply. 

7. All railway companies shall provide, without extra charge to the post-office 
department, for the care and storage of mails at junction points when such 
mails have to be held or stored for train connection and are to be transferred 
from one train to another of the same company. The work of transferring 
mails between the trains of any railway shall be performed by the railway 
company, except at points where the department has already provided for such 
transfers or may hereafter agree to provide for them owing to growth or devel- 
opment. 

I may say that no special arrangements have been made for the transporta- 
tion of parcels, which have to be conveyed in the same manner and paid for at 
the same rate as other mail matter. Under the arrangements above described 
the postmaster general will simply require the railways to furnish whatever 
car space may be necessary for the accommodation of mails of every description, 
and will pay accordingly. 

The increase that the railways will earn under the new schedule of rates, cal- 
culated on the basis of the service as it existed last year, will amount to about 
$786,000, as stated in the Railway Review. If it is found, however, that the 
increased amount of mail to be handled, owing to the introduction of parcel post, 
will make it necessary for the railways to furnish extra accommodation, they 
will, of course, be paid a larger amount than that above mentioned. 
Yours respectfully, 

Louis P. Pelletiee. 

Then I addressed another letter dated March 19, 1914, to draw out 
more specific information as to what their standard cars were, etc., 
and have to-day his reply under date of March 31, 1914, which letters 
read, respectively, as follows : 

Maech 19, 1914. 
Hon. Louis P. Pelletier, 

Postmaster General, Ottawa, Canada. 
Dear Sir: I have your letter of March 14, in response to mine of the 3d 
instant, and desire to express my appreciation of your favoring me with the 
details entering into your recent readjustment of mail compensation to the rail- 
roads of Canada on account of parcel post. 

I should be pleased if you would further favor me with information on the 
following points: 

(1) The length of what you denominate a full postal car, inside measure- 
ment, and which you state is paid for at the rate of 16 cents per car mile, sub- 
ject to exceptions stated in your letter. 

(2) Is the 9 cents a car mile a flat rate for cars of any length less than that 
of a full postal car, or is the rate for smaller size cars pro rated on the 16-cent 
rate for the full car. This query is prompted by the application of the 9-cents- 
a-car-mile rate to " a half car or section of a car," etc. A section of a car may 
be less than half a car. 

(3) How the rates the railroads receive for their mail service compare with 
those received from their passenger and express service on a car-mile basis. 



RAILWAY MAIL PAY. 1521 

Definite information on the foregoing points will be of great benefit to us in 
our study of the railway mail pay question. 

I have had some intimation that Canada had or expected to inaugurate a 
parcel-post system similar to our own. If it has such a law, I should be pleased 
to receive a copy, if same is available for distribution, with such comments as 
you may favor me with. I should particularly like to know the maximum 
weight and size of packages that can be carried and the rates applicable 
thereto, as also the estimated amount of package mail handled. It would be of 
value to know the number of pieces of such mail matter as well as the total 
weight. 

Again expressing my appreciation of your courteous response to my letter of 
the 3d instant and assuring you of my further appreciation of such information 
as you can furnish me with along the line above indicated, I am, 
Very respectfully yours, 

Jonathan Bourne, Jr., Chairman. 

March 31, 1914. 
Hon. Jonathan Bourne, 

Chairman of Mail and Transportation Committee, 

Washington, D. C, United States of America. 

Dear Sir : I have to acknowledge the receipt of your letter of the 19th instant 
with further reference to the recent arrangement made with Canadian rail- 
ways for the transmission of mails. 

As regards the measurement of postal cars, concerning which you asked for 
further information, I have to say that the length of a full car, for which 16 
cents a mile is to be allowed, is 60 feet, and a half car or section of a car, for 
which 9 cents shall be paid, is 30 feet, inside measurement in both cases. I 
may say, however, that a number of the full postal cars at present in use 
exceed 60 feet in length, while others are somewhat less, varying from 50 to 
60 feet, and it is the intention to allow the full rate of 16 cents for the latter 
so long as they are found sufficient for the accommodation of the mails on 
the routes on which they are being used. The same privilege will be allowed 
in respect to half cars or sections now in use that may be under 30 feet in 
length. These will receive 9 cents a car-mile under the same conditions. 

It is provided in the agreement, however, that all postal cars that may here- 
after be equipped for the railway mail service shall be constructed and ar- 
ranged in accordance with plans approved by the postmaster general. 

In reply to your third question I may inform you that according to the 
Canadian railway statistics of 1913 the average earnings of all passenger cars 
was 31.27 cents a car mile, but there are no statistics available as to the earn- 
ings of the express service on a car-mile basis. It is seldom that a whole car 
is used for express purposes, the general practice on the larger railways being 
to divide a car, using one half for the express and the other half for mail or 
baggage. On the small railways whatever express matter has to be handled 
is carried in the baggage car, and there is no fixed mileage rate in any case, 
the railways being paid a percentage of the express revenue for transportation 
according to agreements made from time to time with the express companies. 

With reference to the parcel-post system lately inaugurated in Canada I 
regret that this department is not yet able to furnish any figures or statistics 
that would be of value to you, but such statistics are being compiled at the 
larger offices, and I shall be glad to furnish you with the information you de- 
sire just as soon as returns are received at the department. 

I may explain that when parcel post went into operation on the 10th Feb- 
ruary the weight of parcels was restricted to 6 pounds, and an extra charge of 
5 cents was imposed on parcels mailed in the cities for local delivery. These 
restrictions were imposed so as to give the department an opportunity to 
organize thoroughly for carrying on the work. After an experience of about 
three weeks it was found that no difficulty would be experienced in carrying 
out the system in its entirety and the restrictions were removed on the 4th 
March, the full weight of 11 pounds being accepted and the extra charge for 
local delivery in cities discontinued. It may be considered, therefore, that 
Canadian parcel post only went into full operation about three weeks ago. 

A number of copies of the Canadian parcel post regulations, which give full 
information as to the maximum weight and size of packages received for post 
and the rates applicable thereto, are inclosed herewith. 
Yours, respectfully, 

Louis P. Pelletier. 



1522 RAILWAY MAIL PAY. 

I thought that this information, just having been received, would 
be good to get before you, and it might perhaps be a good idea to get 
the opinion and expression of views of you gentlemen representing 
the railroads, of the representatives of the department, and of Dr. 
Lorenz as to the difference in conditions between this country and 
Canada and how far it would be safe, if at all, to adopt the experience 
or action of the Canadian Government in our own studies. 

(Subsequent to the hearings, and under date of April 6, 1914, the 
chairman addressed a communication to the postmaster general of 
Canada relative to subsidized railroads, and in reply received a letter 
from the deputy postmaster general, dated April 8, 1914, together 
with a statement of aid granted and paid to railways of Canada by 
Governments and municipalities, which letters and statement are in 
their order, respectively, as follows:) 

April 6, 1914. 

Hon. Louis P. Pelletier, 

Postmaster General, Ottawa, Canada. 

Dear Sir: Referring to my letters of March 3 and March 19 and your re- 
plies of March 14 and 31 relative to railway mail pay in Canada. 

Will you kindly advise me whether or not all railroads of Canada are sub- 
sidized by the Government, indicating, if in the affirmative, whether by land 
grants or cash donations. If there are any not subsidized, I would appreciate 
it if you would indicate by name those roads which are and those which are not. 

I would further like to inquire what consideration, if any, was given to the 
factor of Federal aid in construction and maintenance to the railroads of Can- 
ada in your Government's fixing a 16-cent rate per car-mile for a full railway 
post-office car and a 9-cent rate for an apartment car, as stated in your letters 
above referred to. In other words, I would like to know what influence, if 
any, Federal aid in construction and operation had in the determination of 
the 16 and 9 cent rates. It would also be interesting to know whether such 
rates were fixed upon a public utility or strict commercial basis. 

With appreciation of your past favors, I remain, 
Respectfully yours. 

Jonathan Bourne, Jr. 



Post Offfice Department, Canada, 

Ottawa, April 8, 191J^. 
Hon. Jonathan Bourne, 

Chairman Mail Transportation Committee, 

Washington, D. C, U. 8. A. 

Dear Sir: In the absence of the postmaster general I beg to acknowledge 
the receipt of your letter of the 6th instant with further reference to the rates 
now being paid railways in Canada for mail transportation. You inquire 
whether all Canadian railways are subsidized by the Government and whether 
the aid granted to railways was a factor in deciding the rates that have 
recently been fixed. 

In reply I have to say that, with few exceptions, all railways m Canada have 
received assistance in connection with the construction of their roads either 
in the form of cash subsidies, guarantee of bonds, or land grants, and I am 
inclosing for your information a copy of the Canadian Railway Statistics, in 
which you will find at page 34 a complete statement of the cash subsidies 
(including loans) granted to all railways. In addition to the statistics 
shown in this statement some of the railways mentioned received land grants. 
No assistance has been given toward the maintenance of any railway after 
construction. In fixing the rates recently adopted the post office department 
was influenced by the grants that have been mada to railways to the extent 
of deciding that the payment for mail transportation should be based on the 
cost of operation only of the cars used for mail purposes and not on a strictly 
commercial basis, it being considered that the Government has the right to 
demand some return for the amount contributed by it toward the construc- 
tion of the railways. 



RAILWAY MAIL PAY. 1523 

In this connection I may inform you that all railways that have been sub- 
sidized by the Dominion Government during the last 16 years, either by cash 
subsidies or land grants, are required by law to perform any service required 
by the Government, such as the transportation of mails, men, and supplies up 
to the value of 3 per cent yearly on the amount of their subsidy. The rates 
allowed for mail service are applied to railway companies' obligations in 
respect of their subsidies, and the amount earned is simply transferred by 
the post office department to the finance department. These provisions, how- 
ever, do not apply to railways who have only received assistance in the way of 
loans or the guaranty of bonds. 
Yours very truly, 

Deputy Postmaster General. 



1524 



RAILWAY MAIL PAY. 

Statement of aid, granted and paid to railways by 





Name of railway. 


By Dominion Government. 


By provincial governments. 


No. 


Subsidy 
granted. 


Subsidy 
paid up. 


Loan. 


Name of 
Province. 


Subsidy 
granted. 


1 


Albert Southern 
(abandoned). 
Harvey Branch 
(abohdoned). 

Alberta Ry. & Irriga- 
tion Co. (C. P. R.). 

Algoma Central & 
Hudson Bay. 

Algoma Eastern 

Atlantic, Quebec & 
Western. 


$50, 460. 00 

5,553.57 

148,094.00 

2,054,976.00 

547,200.00 
902,800.00 

350, 455. 25 


$50,460.00 

5,553.57 

148,094.00 

1,453,419.44 

365, 649. 13 
902, 800. 00 

350, 455. 25 




New Brunswick. 
do 


$48,680.00 
9,000.00 


r> 




3 






4 






201,580.00 
265,000.00 


5 




do 


6 






7 




Ontario 


84,000.00 


8 


Bedlington & Nelson 

(nil). 
Brandon, Sask. & 

Hudson Bay (nil). 
British Yukon . . . (nil) 
Brookville, Westport 

and Western. 
Bruce Mines & Algoma 
Canada & Gulf Termi- 
nal. 
Canada Southern, in- 
cluding: 
Sarnia, Chatham & 

Erie. 
Leamington & St. 
Clair. 
Canadian Government 
railways; inter- 
colonial, includ- 
ing: 
Canada Eastern. . . 
Drummond 

County. 
Fredericton & St. 

Marys. 
Nova Scotia Steel 
& Coal Co.'s Ry. 
Prince Edward Is- 
land. 
Canadian Northern, in- 
cluding. 
Winnipeg Great 

Northern. 
Port Arthur, Du- 
luth & Western. 
Ontario & Rainy 
River. 






Q 










m 













n 


140, 800. 00 

53,920.00 
210, 053. 59 


140, 800. 

53,920.00 
210,053.59 




Ontario 




12 
IS 




do 

Quebec 


50,918.00 


14 
15 




Ontario 




16 


51,200.00 

374, 839. 84 
423,936.00 

30,000.00 

40,000.00 


51,200.00 

374, 839. 84 
423,936.00 

30,000.00 




do 


147,859.00 


17 

18 






19 




Quebec 




*>n 








?1 


39,840.00 




Nova Scotia 


40,000.00 


99 




9S 


374,606.00 


374,606.00 








?4 








?fi 


271,200.00 
1,534,526.00 


271,200.00 
1,534,526.00 




Ontario 


255,571.00 

1,072,800.00 

641,575.25 


26 




do 


97 




Manitoba 


?8 


Edmonton, Yukon 
& Pacific. 
Canadian Northern 

Ontario. 
Canadian Northern 

Quebec. 
Canadian Northern 

Alberta. 
Canadian Northern 

Pacific. 

Canadian Pacific 

Owned — Can. Central. . 

Lake Temiskam- 

ing Colonization. 

North Shore 

Montreal & West- 
ern. 
Quebec, Montreal, 
Ottawa & Occi- 
dental. 
Leased— Atlantic & 
North West. 
Cap de la Madeleine 
Columbia & Koo- 
tenay. 


160,000.00 

2,255,872.00 

2,020,616.89 

2,589,600.00 

4,349,930.40 

/30,053,283.00 

\210,189,521.00 

1,52,5,250.00 

310,335.95 

1,500,000.00 
361,270.00 


91,200.00 

2,240,832.00 

2, 020, 616. 89 

2,589,600.00 

4,349,930.40 

29,944,660.43 

310,189,521.00 

1,525,250.00 

310,335.95 

1,500,000.00 
361,270.00 




29 




Ontario 


. ( 2 ) 
1, 194, 129. 46 


30 




Quebec 


31 






32 












Manitoba 

Brit. Columbia. . 
Ontario 


375,377.50 

37,500.00 

1,479,000.00 

350,076.82 


33 




34 




35 




Quebec 


36 
37 

3S 








Quebec 


472,500.00 
727,000.00 

711,122.02 




do 


39 

40 
41 


3,888,800.00 

7,424.00 
88,800.00 


3,888,800.00 

7,424.00 
88,800.00 




.....do 















i From Table 5, pp. 34 to 43, inclusive, of 'Railway Statistics of the Dominion of Canada for the year 
ending June 30, 1913. 



RAILWAY MAIL PAY. 
Governments and municipalities, to June 30, 1918. l 



1525 



By provincial governments— Continued. 


By municipalities. 


1 
Subsidy Loan 
paid up. • Loan - 


Subscription 
to shares. 


Subsidy Subsidy T ' Subscription 
granted. paid up. iJOd.ii. to g^gg. 


$48,680.00 
9,000.00 


























100,000.00 
250,000.00 































84,000.00 






$197,990.43 $197,990.43 

1 













































116,000.00 116,000.00 

500.00 ; 500.00 

20,600.00 ; 20,600.00 
322,500.00 322,500.00 






50, 918. 00 























































15,000.00 15,000.00 


















40,000.00 






4,000.00 4,000.00 





































255, 571. 00 

1,072,800.00 

641,575.25 






40,000.00 40,000.00 
50,000.00 50,000.00 































( 2 ) 
1, 194, 129. 46 






20, 000. 00 
72,000.00 


20, 000. 00 










72,000.00 




$200, 000. 00 
























372, 157. 50 

37,500.00 

1,479,000.00 

350,076.82 


\ 




572,500.00 


464, 761. 29 






1 






42, 500. 00 


























472, 500. 00 
727,000.00 

699, 192. 08 














$1,176,956.00 




25, 000. 00 


25,000.00 


771.644.62 






' 


325,000.00 







































2 Ontario Government guarantee bonds, 318 miles at $20,000 per mile. 
s Amount paid for 6,793,014 acres land relinquished by company. 



fZ 



1526 



BAILWAY MAIL PAY. 

Statement to aid, granted and paid to railways by 





Name of railway. 


By Dominion Government. 


By provincial governments. 


No. 


Subsidy 
granted. 


Subsidy 
paid up. 


Loan 


Name of 
Province. 


Subsidy 
granted. 


42 


Credit Valley 








Ontario 


$531,000.00 
230,000.00 


43 


Fredericton 








New Brunswick. 
Ontario 


44 


Guelph Junction... 
Guelph&Goderich . 


§51,200.00 


$46,000.00 




45 




do 




46 
47 


Lindsay, Bobcay- 
geon & Ponty- 
pool. 

Manitoba & North- 
western. 

Manitoba & South 
West Coloniza- 
tion. 

Montreal & Lake 
Maskinonge. 

Montreal & Otta- 
wa. 

Nahusp & Slocan.. 

New Brunswick . . . 


185,173.06 


185,173.06 




do 

Manitoba 


52,500.00 


48 








do 




49 


41,280.00 

j> 192,000.00 
121,600.00 


41,280.00 

192,000.00 
117,760.00 




Quebec 


87,750.00 

100,000.00 
182,210.00 


*>o 




f Ontario 




\Quebec 






R1 


British Colum- 
bia. 
New Brunswick. 
do 


52 




76,000.00 
575,000.00 

413,000.00 


53 


New Brunswick & 

Canada. 
New Brunswick 

Southern. 
Nicola, Kamloops 

& Similkameen. 
Northern Coloni- 
zation. 
Ontario & Quebec. 
Orford Mountain . . 
Ottawa, Northern 

& .Western. 
Saskatchewan & 

Western. 
Shuswap & Oka- 

nagan. 
St. John Bridge & 

Ry. Extension. 








54 








do 


55 


300,800.00 

355,200.00 

196,000.00 
202,926.50 

} 950,000.00 


300,800.00 

355,200.00 

196,000.00 
202,926.50 

821,009.29 






56 




Quebec 


96,000.00 


57 




Ontario 


58 




Quebec 


138,884.92 

50,000.00 

1,316,389.15 


59 




/Ontario 










60 




61 


163,200.00 


163, 200. 00 








62 


$433,900.00 


New Brunswick . 
do 


$5,181.81 
880,000.00 


63 






64 


St. Lawrence & 
Ottawa. 

St. Marys & West- 
ern, Ont. 

St. Stephen & Mill- 
town. 

Tillsonburg, Lake 
Erie & Pacific. 

T obi que Valley 

Toronto, Grey & 
Bruce. 

Vancouver and 
Lulu Island. 

West Ontario Pa- 
cific. 








Ontario 


65 


67,709.00 

14,848,00 

158, 871. 48 

134,016.00 
14,656.00 

61,760.00 

60,000.00 

196,800.00 
224,000.00 


67,709.00 

14, 848. 00 

117,431.48 

134,016.00 
14, 656. 00 

61, 760. 00 

60,000.00 

196,800.00 
224,000.00 




....do 




66 




New Brunswick. 


13, 920. 00 

38, 564. 00 

70,000.00 
375,282.00 


67 




68 




New Brunswick. 


69 




70 






71 




Ontario 




72 




Nova Scotia 

New Brunswick. 


99, 200. 00 
180,000.00 


73 






74 


Carillon & Grenville 

(nil). 
Central Ontario, in- 
cluding. 
Marmora Ry. & 
Mining Co. 
Colchester Coal & Ry. 

Co. 
Crows Nest Southern 

(nil). 
Cumberland Ry. & 

Coal Co. 
Dominion Atlantic, in- 
cluding: 
Windsor & Annap- 
olis. 
Cornwallis Valley. . 
Western Counties.. 
Midland of N. S... 
Eastern British Co- 
lumbia (nil). 
Elgin & Havelock 




75 


204, 893. 49 
30,720.00 
12, 800. 00 


204, 893. 49 
30,720.00 
12,800.00 






278,000.00 
19,149.39 


76 

77 




do 


7S 








79 


44,800.00 

1,193,369.00 

44,800.00 
500,000.00 
399,060.40 


39, 850. 00 

1,193,369.00 

44,800.00 
500,000.00 
399,060.40 




Nova Scotia 


184,450.00 


80 
81 




8*> 




Nova Scotia 

do 


44,800.00 
679,197.45 
185,600.00 


fn 




84 

85 




do 


86 


182,652.82 


182,652.82 




New Brunswick. 


107,500.00 



Includes used iron rails. 



RAILWAY MAIL PAY. 

Governments and municipalities, to June SO, 19 IS — Continued. 



1527 



By provincial governments— Continued. 


By municipalities. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 


Subsidy 
granted. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 


$531,000.00 

230, 000. 00 






$1,085,000.00 
80,000.00 


$1,085,000.00 
80,000.00 




















$193, 000. 00 






31.000.00 
73,000.00 

215. 600. 00 


31,000.00 
73,000.00 

215, GOO. 00 






52, 500. 00 




















$900,000.00 








87,750.00 

100,000.00 
182,210.00 




























5, 300. 00 


5,300.00 






647,074.00 








76,000.00 
575,000.00 

413,000.00 




23,000.00 
47, 500. 00 

3,000.00 


23,000.00 
47, 500. 00 

3,000.00 






























96,000.00 


















52,500.00 

3,000.00 

150, 000. 00 

101,000.00 

10,000.00 


52, 500. 00 

3.000.00 

150, 000. 00 

100, 000. 00 

10,000.00 






138,884.92 

50,000.00 

1, 192, 672, 58 














\ 








} 






















5,181.81 
880,000.00 
















$300,000.00 








60, 000. 00 








$300,000.00 


90, 000. 00 








80,000.00 


77,996.39 




13,920.00 

38,564.00 

70,000.00 
375,282.00 














75,000.00 


75,000.00 


















988,000.00 


969,561.44 




















25,000.00 
10,000.00 


25,000.00 
10,000.00 






99, 200. 00 
180,000.00 






























278,000.00 
19,149.39 






93,500.00 


93,500.00 








































173,650.0 
































' 








44,800.00 
679, 197. 45 
183,510.40 






27,685.00 
250, 000. 00 
36,000.00 


27,685.00 
250,000.00 
36,000.00 































, 



1528 



RAILWAY MAIL PAY. 

Statement of aid, granted and paid to railways by 





Name of railway. 


By Dominion Government. 


By provincial governments. 


No. 


Subsidy 
granted. 


Subsidy 
paid up. 


Loan. 


Name of 
Province. 


Subsidy 
granted. 


87 


Esquimalt & Nanaimo 

(C. P. R.). 
Essex Terminal.. (nil) 
Fredericton & Grand 

Lake. 1 
Grand Trunk, includ- 
ing: 
Beauharnois Junc- 
tion. 
Brantford, Norfolk 

& Pt. Burwell. 
Buffalo & Lake 

Huron. 
Cobourg, Blairton 

& Marmora. 
Grand Trunk, Vic- 
toria Bridge. 
Grand Trunk, Geor- 
gian Bay & 
Lake Erie. 
Grand Junction, 
Belleville & N. 
Hastings. 
O wen Sound 

Branch. 
Hamilton & North 

Western. 
London, Huron & 
& Bruce. 


$1,115,440.00 


$1,115,440.00 








88 








89 


104,996.04 


104, 996.-04 








90 


$15,142,633.33 






91 


62,400.00 


62,400.00 


Quebec 


$179,073.00 
68,000.00 


m 




Ontario 


93 








do 


94 








do 


18,740.00 


95 


500,000.00 


500,000.00 






96 




Ontario 


336,000.00 
224, 660. 00 


97 


21,888.00 
39,744.00 


21,888.00 
39,744.00 




do 


98 




do 


99 




do 


565,020.00 

178,630.00 

168,350.00 
150,000.00 

196, 188. 00 
83,300.00 


100 








do 


101 








do 


10? 


Montreal & Cham- 
plain Junction. 
Northern 


103, 600. 00 


103,600.00 




Quebec 


103 




Ontario 


104 










do 


105 


Northern Pacific 

Junction. 
South Norfolk 


1,320,000.00 
54,400.00 


1,320,000.00 
54,400.00 






106 




Ontario 




107 








108 


Toronto & Nipis- 
sing. 

Lake Simcoe Junc- 
tion. 








Ontario 


105, 2i2. 66 

53,000.00 
312,000.00 


109 








do 


110 








do 


111 


Waterloo Junction . 
Wellington, Grey 

& Brace. 
Whitby, Port Per- 
ry & Lindsay. 
Grand Trunk— Canada 
Atlantic division. 
Ottawa, Arnprior 
& Parry Sound. 


32,800.00 


32,800.00 




do 


11?, 




do 


241, 276. 00 

94,957.59 

270,000.00 
200,000.00 
577,326.06 


113 








do 


114 


282,355.20 
932,512.00 


282,355.20 
932,512.00 




I do 






115 




Ontario 


116 




do 


117 


Pembroke South- 
ern. 

Grand Trunk Pacific 2 . 

Gulf Shore 


64,000.00 

/4, 994, 416. 66 

\1, 269, 299. 20 

53,699.20 

148, 148. 20 

819,874.93 

653,776.00 

160,000.00 

125,760.00 

170,560.00 
627,000.00 

726,080.00 

144,000.00 


64,000.00 

2 4, 994, 416. 66 

1,269,299.20 

53, 699. 20 

148, 148. 20 

819, 874. 93 

653,776.00 

160,000.00 

125,760.00 

170,560.00 
368,545.97 

725,288.07 

144,000.00 




do 


55,500.00 

376,320.00 
41,950.00 


118 
119 


}io,ooo,ooo.oo 


do 

New Brunswick. 


120 


Ha Ha Bay 2 




1^1 


Halifax & Southwest- 
ern, including. 
Central of N. S. & 
N. S. Southern. 
Halifax & Yar- 
mouth. 
Middleton and 
Victoria Beach. 
Hereford 




Nova Scotia 

do 


3,899,605.00 


122 




123 




do 


156,499.33 

. 96,000.00 

103,000.00 
272,000.00 

275,000.00 

315,000.00 


124 




do 


"J?5 




Quebec 


196 


Inverness Ry. & Coal 

Co. 
International of New 

Brunswick. 
Irondale, Bancroft & 

Ottawa. 
Kaslo & Sloean. ..)nil) 




Nova Scotia 

New Brunswick. 
Ontario 


197 




128 




129 







1 Under construction. 



2 Paid under the "Implement clause" by Dominion Government. 



RAILWAY MAIL PAY. 

Governments and municipalities, to June 30, 1913 — Continued. 



1529 



By provincial governments— Continued. 


By municipalities. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 


Subsidy 
granted.. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 


$107, 500. 00 






$13, 000. 00 


$13,000.00 










































179,073.00 
68, 000. 00 






























966,000.00 
113, 000. 00 


966,000.00 
113,000.00 






18, 740. 00 


$26,000.00 















336, 000. 00 
224, 660. 00 






929,000.00 

213.000.00 

85,500.00 

599, 805. 00 

311.500.00 

144, S70. 85 
21, 774. 00 


929, 000. 00 

213,000.00 

85,500.00 

599, 805. 00 

311,500.00 

144.870.85 
21,774.00 












$50,000.00 








565, 020. 00 

178, 630. 00 

168,350.00 
150,000.00 

196,188.00 
83,300.00 




































































65,000.00 


65,000.00 
















105, 212. 00 

53,000.00 

312, 000. 00 






376, 702. 59 

100, 000. 00 

186, 000. 00 

47,000.00 

682, 000. 00 

222, 094. 93 

154,392.00 


376, 702. 59 

100,000.00 

186,000.00 
47,000.00 
682,000.00 

222, 094. 93 

152,900.00 






























241,276.00 

94,957.59 

270,000.00 
200, 000. 00 
577, 326. 06 
























} 32,000.00 
























24,000.00 
20, 000. 00 

350, 000. 00 


24, 000. 00 
20 000.00 






55, 500. 00 

376, 320. 00 
41, 950. 00 














350, 000. 00 








































3,899,605.00 


















88, 874. 17 
15,338.93 


88,874.17 
15, 338. 93 






156,4^9.33 

84, 226. 3fi 
233, 000. 00 

275, 000. 00 

135,000.00 
























100,000.00 
5,000.00 


50,000.00 
5,000.00 

































49396—14- 



-104 






1530 



RAILWAY MAIL PAY. 

Statement of aid, granted and paid to railways by 



No. | Name of railway. 



By Dominion Government. 



Subsidy 
granted 



Subsidy 
paid up. 



Loan. 



By provincial governments. 



Name of 
Province. 



Subsid; 
grantei 



I 



130 
131 



132 
133 

134 
135 

136 

137 

138 



139 I 
140 



141 
142 



143 
144 



145 



146 
147 



148 

149 

150 
151 

152 
153 

154 

155 

156 

157 

158 

159 

160 
161 

162 
163 

164 

165 
166 
167 

168 



170 



Kent Northern, and . . . 
St. Louis & Richi- 
bucto (aban- 
doned). 

Kettle Valley 

Kingston & Pembroke 
(C. P.R.). 

Klondike Mines 

L'Assomption (aban- 
doned). 

Lake Erie & Detroit 
River. 
London & Port 
Stanley. 

Liverpool & Milton 
(Halifax & South 
Western) . 

Lotbiniere & Megantic. 

Manitoba Great North- 
ern (nil). 

Maganetawan River. . . 

Maritime Coal, Rail- 
way & Power Co. 

Massawippi Valley 

Midland of Manitoba 
(nil). 

Minudie Coal & Rail- 
way Co. 

Montreal & Atlantic. . . 
Lake Champlain & 
St. Lawrence 
Junction. 

Montreal & Province 
Line. 

Montreal & Vermont 
Junction (nil). 

Moncton & Buctouche. 

Morrissey, Fernie & 
Michel (nil). 

Napierville Junction. . . 

Nelson & Fort Shep- 
pard (nil). 

New Brunswick Coal 
& Ry. Co. 

New Brunswick & 
Prince Edward 
Island. 

Ne w Westminster 
Southern (nil). 

North Shore (N. B.).. 

Nosbonsing & Nipis- 
sing (nil). 

Northern New Bruns- 
wick & Seaboard. 2 

Ottawa & New York. 

Philipsburg Ry. & 
Quarry Co. 

Pontiac & Renfrew... 

Quebec Bridge & Ry. 
Co.i 

Quebec Ry., Light & 
Power Co. 

Quebec Central 

Quebec Oriental 

Quebec & Lake St. 
John. 

Quebec & Saguenay i . 

Quebec, Montreal & 

Southern, including. 

United Counties, 

East Richelieu 

Valley. 

South Shore 

Red Mountain (nil) 

Rutland & Noyan.(nil) 

Southampton (N. B.)i . 

Salisbury & Albert 

Schomberg & Aurora. . 



i $58, 334. 27 
22, 400. 00 



353, 709. 92 
48,000.00 

197, 184. 00 
11,200.00 

571,851.00 



i $58, 334. 27 
22, 400. 00 



353, 709. 92 
48,000.00 

197, 184. 00 
11,200.00 

571,851.00 



32,000.00 
96,000.00 



32,000.00 
96, 000. 00 



3, 552. 00 
40, 700. 00 

5,376.00 
18,544.00 



58,560.00 



102, 400. 00 
173,440.00 



190, 400. 00 
113,440.00 



27,616.00 



S6,528.00 

262,384.00 
23, 712. 00 

13,600.00 
374,353.33 

96,000.00 

541,877.30 

828, 435. 84 

1, 454, 695. 00 

132, 633. 60 
500,386.25 

69,952.00 



296,998.38 



3,552.00 
40,700.00 



5, 376. 00 



18,544.00 



58,560.00 



101,600.00 



173,440.00 



190,400.00 
113, 440. 00 



27, 616. 00 



86,528.00 

262, 384. 00 
23, 712. 00 

13,600.00 
374,353.33 

96,000.00 

541, 877. 30 

828, 435. 84 

1,261,463.50 

133, 633. 60 
500,386.25 

69, 952. 00 



296, 998. 38 



48, 442. 88 

2 29, 665. 45 

48, 000. 00 



48,442.88 

2 29,391.01 

46, 144. 00 



New Brunswick. 
....do 



British Columbia 
Ontario 



$135,000.00 
21,000.00 



675,000.00 
456,493.00 



Ontario. 



Quebec. 



Ontario 

Nova Scotia. 

Quebec 



Quebec . 
....do.. 



Quebec . 



New Brunswick. 



Quebec. 



New Brunswick 
....do 



New Brunswick 



Ontario . 
Quebec. 



.do. 



.do. 



.do. 



.do. 
.do. 
.do. 



Quebec. 
....do.. 



.do. 



New Brunswick. 



83,000.00 



126,994.00 



10,000.00 
39, 788. 00 



5,000.00 



444,000.00 
250,280.00 



231,122.00 



96,000.00 



224,000.00 
99, 708. 90 



16,200.00 



35,000.00 
25,667.00 

17,433.60 
250,000.00 

306,945.50 

1,076,123.14 
1,596,390.00 
2,533,000.00 



210, 000. 00 

115,215.00 
C 

276, 645. 00 



455,000.00 



1 Includes used iron rails. 



2 Under construction. 



BAIL WAY MAIL PAY. 

Governments and municipalities, to June 30, 1913 — Continued. 



1531 



By provincial governments — Continued. 


By municipalities. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 


Subsidy 
granted. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 


$135,000 00 
21,000.00 

200,000.00 
456,493.00 










































$509,320.00 


$509, 320. 00 




























83,000.00 






356,500.00 


356,500.00 










$1,332,854.00 


$414,000.00 












128,994.00 


























10,000.00 
39, 788. 00 

5,000.00 




































65,000.00 


























315, 891. 89 
250, 2S0. 00 

231,122.00 












528,000.00 






51,000.00 
25, 000. 00 


36, 000. 00 
25, 000. 00 




















94,500.00 
































10,000.00 


10,000.00 
















224, 000. 00 
99, 708. 90 






































16, 200. 00 








































35,000.00 
25,667.01 

17,433.60 
250, 000. 0( 

306, 945. 5' 






85,000.00 


85,000.00 






























300,000.00 


290, 817. 46 














1,076,123.14 






103,000.00 
50, 500. 00 
12,000.00 


103,000.00 
9,000.00 
12,000.00 






947, 199. 2; 










2, 368, 816. 8> 








450, 000. 00 










207,565.66' 
276,645.00 






























25, 000. 00 


25, 000. 00 










































455, 000. 00 






70, 000. 00 


70,000.00 






... 







1532 



RAILWAY MAIL PAY. 

Statement of aid, granted and paid to railways by 





Name of railway. 


By Dominion Government. 


By provincial governments. 


No. 


Subsidy 
granted. 


Subsidy 
paid up. 


Loan. 


Name of 
Province. 


Subsidy 
granted. 


177 


Stanstead, Shefford 
and Chambly (nil). 

St. Clair Tunnel 

St. Lawrence & Adi- 
rondack. 

St. John and Quebec l . . 
St. Martins 












178 


$375,000.00 
149,481.60 

174, 120. 96 
2 83, 612. 54 
173,120.00 

89, 600. 00 

6,112.00 


$375,000.00 
149,481.60 

174, 120. 96 
2 83, 612. 54 
173, 120. 00 

87, 808. 00 

6, 112. 00 








179 




Quebec . . . 


$70, 400. 00 


180 






181 




New Brunswick 


145, 600. 00 


18? 


St. Maurice Valley 
(C. P. R.). 

Sydney & Louisburg 
(Dom. Coal Co.). 

Thessalon & Northern 
Ontario. 1 

Temiskaming & 
Northern Ontario 
(Ontario Govern- 
ment Ry.). 

Temiscouata 




183 




Nova Scotia 


87,808.00 


184 




185 










645, 950. 00 

61,200.00 
57, 600. 00 


645, 950. 00 

29,840.00 
57, 600. 00 






362, 250. 00 
66,000.00 


186 


\New Brunswick. 


187 


Thousand Islands 

Toronto, Hamilton & 

Buffalo. 
Vancouver, Victoria & 

Eastern (nil). 




188 




do 




189 








190 








British Colum- 
bia. 


. 124,135.00 


191 


Victoria Terminal Ry. 

& Ferry Co. (nil). 
Wellington Colliery Co. 

(nil). 
York & Carle ton 

Total 








19? 












193 


32,896.00 


32,896.00 




New Brunswick. 


25,247.00 








96, 378, 272. 99 


94, 729, 562. 29 


$25,576,533.33 




35,478,319.89 









1 Under construction. 



RAELWAY MAIL PAY. 

Governments and municipalities, to June 30, 1913 — Continued. 



1533 



By provincial governments — Continued. 


By municipalities. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 


Sudsidy 
granted. 


Subsidy 
paid up. 


Loan. 


Subscription 
to shares. 






























$70,400.00 




. 






















145,600.00 


























82,000.00 








































362, 250. 00 
66,000.00 






$25,000.00 


$25,000.00 


















10,000.00 
268,000.00 


10,000.00 
265, 500. 00 


























124, 135. 00 






186, 202. 50 


186,202.50 




























25,247.00 


























33,449,985.16 


$2,750,030.00 


$300,000.00 


13,083,530.40 


12,834,674.98 $2,404,498.62 


$2,839,500.00 

















1534 RAILWAY MAIL PAY. 

Mr. Lloyd. The New York Central man ought to knew something 
about Canada. 

Mr. Peters. Mr. Chairman, is it not a fact that a majority of the 
Canadian roads are subsidized by their Government ? 

The Chairman. I can not answer that question.' but I think they 
are. Some of them are, I know. 

Mr. Peters. I think that is one of the reasons that they have been 
so parsimonious in their payments on account of mail, because of the 
large subsidies that have been granted the railroads in encouraging 
their building and developing. I have understood that their post- 
office department shows a surplus, and that this arrangement that 
has been made to give the railroads increased pay was an experiment, 
and I inferred that there was an implied promise to readjust later on. 
I am informed that their surplus prior to last year was about a mil- 
lion and a half dollars, and they were willing to give the railroads 
one-half of that surplus, and they increased the railroads' pay ac- 
cordingly. They had not paid the railroads amounts at all compensa- 
tory with their service. There have been no adjustments for a num- 
ber of years, and this adjustment was on account of taking on the 
parcel post and to help the roads out, with a promise that if the sur- 
plus from, the post-office department should be increased and the bur- 
dens of operation should be increased, there would be a further 
adjustment. 

The Chairman. Do you see any differences of condition that would 
prevent the careful consideration of what Canada has done in this 
case in our study ? 

Mr. Rowan. There are large benefits they receive in Canada which 
we do not receive in the United States. I know; for example, in 
building the St. Lawrence & Adirondack road, the Canadian Gov- 
ernment gave a subsidy of, I think, about $7,000 a mile. I am not 
familiar with the subsidies that have been given to other railroads, but 
they vary. It is pretty well understood that the Grand Trunk Pacific 
that is putting through this wonderful road from one coast to the 
other has been given very large guaranties in lieu of subsidies. 

Mr. Lloyd. What is the cost per mile of the Grand Trunk to which 
you refer ? Do you know ? 

Mr. Rowan. I do not know, Mr. Lloyd. They are building a road 
up there in the wilderness, miles from everywhere else, and it will do 
a great thing for Canada ; it will develop the whole northern coun- 
try, and it is a great venture for a railroad to undertake such con- 
struction, and they can only do it with the help of the Government. 
The Government up there is glad to help them, because they are go- 
ing to benefit, because it is going to open up a country that has never 
been opened up before. 

The Chairman. Gen. Stewart, I infer from this that they only 
have two units there in the handling of the mail service; that is, that 
they only have a unit of 60 feet and a unit of 30 feet for distribution 
service. What difference in conditions in the United States would 
make it impracticable to apply only two units here? The greater 
volume of business, the greater number of trains? 

Mr. Stewart. I inferred from the reading of the letters that, while 
there is a difference in the size of the cars, the practical application of 
the rates would reduce them to two units. 



KAIL WAY MAIL PAY. 1535 

The Chairman. That is what I understood. 

Mr. Stewart. The full cars to be paid for at the same rate for a car 
less than 60 feet, as has been provided for a 60-foot car; the same 
for an apartment less than 30 feet as for a 30-foot car. The railroad 
conditions, as well as the mail-service conditions, differ considerably 
in the two countries. While I have not thought especially about 
it, I should say offhand that we would find it a little more difficult 
to adapt ourselves to fixed units of those sizes in this country on 
account of the diversity of the mail service, the larger number of 
trains that run over a road, and perhaps the volume of the service. 
I think where you increase your frequency you are bound to decrease 
the amount of mail that you can concentrate on a train, and it is our 
policy now to use every train on a road that is available for mail 
service where the patrons want the service. 

The Chairman. In that connection is your policy toward concen- 
tration of mail movement or rather toward distribution of mail 
movement — that is, breaking them up into more frequent move- 
ments ? 

Mr. Stewart. At the present it is toward distributing and break- 
ing it up, because we aim primarily to secure expedition. The public 
demand is for mail on practically every train. 

The Chairman. And that will always be so, undoubtedly, in the 
mail service? 

Mr. Stewart. I think so, because when the public has become 
accustomed to a facility it is impracticable to withdraw it, and that 
is a settled condition in this country. We can, I think, practice con- 
centration of mails to some extent. 

The Chairman. By concentration of mails? 

Mr. Stewart. Yes. I believe that under the proposed plan there 
is a certain amount of concentration that may be practiced econom- 
ically by the department, and which would inure to the benefit of 
the railroads as well, because wherever we could concentrate the 
mails and utilize full cars, our disposition would be to do it, which 
would lessen the requirements for equipment. I should say that 
there are those main differences, as I think of them, between the 
service in the two countries. 

The practical operation under a space-basis plan would bring the 
services a little nearer together. 

The Chairman. But would the differences between the two coun- 
tries affect at all the adoption of a policy as to a higher relative rate 
for an apartment than for a full car? They are diametrically op- 
posed in their action to your views on that, I notice. 

Mr. Stewart. I noticed that. The theory on which they have 
made a higher rate for an apartment car is not stated. I have at 
different times mentioned the different conditions which I personally 
thought might be taken into account as reasons for fixing a lower rate 
for apartment cars. Whether those conditions exist in Canada in the 
railroad world I do not know, and my suggestion to make a different 
rate here is, of course, based upon, the idea that the differences exist 
here. 

The Chairman. And they might not have considered even these 
same points in their conclusions. Dr. Lorenz, has anything occurred 



1536 RAILWAY MAIL PAY. 

to cause you to change your conclusion in reference to the overpay 
or underpay of the railroads to-day ? 

Dr. Lorenz. No, sir ; nothing at all. I have tried to make it plain, 
however, in my statement that I thought the railroads were somewhat 
underpaid on a strictly commercial basis. I think it is obvious those 
rates in Canada were not fixed on a commercial basis, because what- 
ever difference of opinion there may be regarding costs, we are 
absolutely certain that these rates mentioned would not pay the 
operating expenses of railroads in this country for rendering mail 
service. 

The Chairman. That is, without subsidy? 

Dr. Lorenz. Without subsidy? No. Irrespective of the question 
of subsidy, the mere operating expenses. 

The Chairman. Would not pay the cost of operation, 16 cents a 
car-mile ? 

Dr. Lorenz. I mean the operating expenses of running of trains 
and maintenance, etc. 

The Chairman. What is generally conceded to be the operating 
cost, per car-mile, on a 60-foot car? Has that been determined by 
the Interstate Commerce Commission? 

Dr. Lorenz. No, sir ; because that would involve the separation of 
expenses between freight and passenger which we have discussed a 
great deal. I make that statement on this basis, that if you assume 
that the passenger department is as profitable as the freight depart- 
ment, you will get a percentage of expenses which you can apply to 
the passenger revenue, and that for the United States, as a whole, 
would give you about 1TJ cents operating expenses on a passenger- 
train car-mile, which would be increased for the passenger depart- 
ment if less profitable. It will be decreased if it is more profitable, 
but as it is improbable that the passenger department of the country, 
as a whole, is more profitable, I conclude that 1-7-J cents is a minimum 
expense. The Post Office Department found it to be a little higher 
than that for the average passenger-train car, although they assumed 
that the mail cars were somewhat less expensive because they did 
not allow the mail car to participate in all the accounts as, for 
example, traffic expenses. 

The Chairman. Do you think that the passenger revenue now 
received by the railroads is a fair compensation to the railroads — ■ 
25 cents a car-mile on an average? I should say, is it your impres- 
sion, for I do not suppose anyone has been able to come to an abso- 
lute conclusion. 

Dr. Lorenz. I would not like to express any positive opinion in 
advance of that determination, which I hope will be made in the next 
few years, after this question of the division between freight and pas- 
senger expenses has been more definitely thrashed out. 

The Chairman. That will take some years for determination? 

Dr. Lorenz. I think it will take over a year to compile the ex- 
penses themselves; that is, they would have to allow a year to elapse 
in order to have a year's statistics upon which to base a conclusion. 

The Chairman. From the available information and from the 
action of the various State railroad commissions, do you think that 
a 10 per cent reduction of the passenger revenue of the railroads 
for a determination in the fixing of rates for mail pay is ample pro- 
tection to the Government? 



KAIL WAY MAIL PAY. 1537 

Dr. Lorenz. I think that is true. That is the point which I ex- 
pressed in my report, and I am still of the same opinion. I wish to 
emphasize again, at the risk of emphasizing it too often, that any 
rate which you name must always be taken into consideration in con- 
nection with the method of authorizing the space. If you authorized 
only the used space, it is obvious that the rate must be higher than 
for the used and the empty space, just as you find the return for a 
loaded car-mile in freight service is more than if you take the aver- 
age for the loaded and empty car-miles; so the rate is meaningless 
unless you have the paragraph showing the method of authorization 
right alongside with it. 

The Chairman. I would like to ask some of the railroad represent- 
atives present, taking the three plans that have been suggested — the 
three-unit plan suggested by Mr. Llo}^d, the Lorenz plan, and the 
departmental plan — which of the three, eliminating for the time 
being the question of rates, in the method of ascertainment of the 
service has the greater advantages? 

Mr. Bradley. I will say it is hard to answer that question categori- 
cally or offhand. I would say that the result reached by Dr. Lo- 
renz's plan shows that he takes into consideration better the various 
elements that are involved in the problem, but his plan would neces- 
sarily be complicated in administration, because it associates itself 
with the ascertainment of the average load per car. I think the sim- 
plest of the plans is that suggested by Mr. Lloyd, as to the units, with 
a flat rate for the car space, except as modified by the consideration 
that we have spoken of between the retail measure for mail apart- 
ment cars as compared with the wholesale measure for the full car. 

The Chairman. Would not the adoption of the Lloyd unit mini- 
mize the possibility of friction between the department and the trans- 
portation company? 

Mr. Bradley. I think just to the extent that the number of units 
is reduced. 

The Chairman. You think there will always be friction under any 
plan between the the Government and the transportation company ? 

Mr. Bradley. I do not see how there can help but be. 

The Chairman. Under any possible plan? 

Mr. Bradley. Any possible plan; due to the fact that the au- 
thorization of space depends upon discretion or opinion, and opinion 
varies according to individuals. 

The Chairman. True; but the Government has to initiate that 
authorization, does it not? 

Mr. Bradley. Yes. 

The Chairman. Hence it must be left to the discretion of an indi- 
vidual for that initiation? 

Mr. Bradley. Yes. 

The Chairman. It would be an absolute impossibility for the rail- 
road performing the service to designate what service they would 
perform for the Government. 

Mr. Bradley. I think the initiation should come from the Gov- 
ernment. 

The Chairman. Then it has to come from a governmental repre- 
sentative, so we are confronted with that on which we all agree is a 
necessity. Criticism to that would not be applicable where it is an 
absolute necessity for the performance of a duty or an activity. 



1538 RAILWAY MAIL PAY. 

Mr. Beadley. If you could only discover some rule by which the 
unit furnished would be the same as the unit authorized the problem 
might be solved, I think. 

The Chairman. It seems to me you come nearer to the discovery 
of such a rule in Mr. Lloyd's suggestion where the department, rep- 
resenting the Government, notifies the transportation company as to 
its requirements. You are absolutely sure of getting a credit for 
every performance of such a requirement, assuming that the rates 
that might be paid are fair rates. However, elminating at this par- 
ticular phase of the discussion the question of rates and assuming 
that the rates will be fair, as the purpose will unquestionably be to 
make them fair on the part of the Government, if it can be deter- 
mined and demonstrated what would be fair rates, it seems to me that 
scientifically space is the better factor for a determination of the 
service rendered than weight, as under the present situation. My 
mind is still open, but that is the impression I have. I do not mean 
that I have come to any conclusion in reference to any of these plans 
that have been suggested, but as I start out I find my mind con- 
tinually impressed with the idea that space is a more scientific plan; 
that there is merit in all of the suggestions that have been made for 
the substitution of space for weight. It further seems to me that the 
fewer units you have the less the probability of irritation or difference 
of opinion. I also feel that the Government is amply protected so 
long as the sole right of initiation rests with the governmental em- 
ployee; that the transportation company is amply protected in get- 
ting a credit for the performance, where the credit applies to each 
performance. It is a decided advantage over the present method 
where you have your quadrennial weighing. 

I would like to understand or get your criticisms as to that bas- 
ically, if you please, and to ask you whether your objections are not 
based upon an uncertainty of rule and regulation, whether if it was 
enacted into law some of your fears would not be minimized and 
your objections removed if the law stated specific rates and few units. 

Mr. Bradley. That is getting at the kernel of the whole subject. 

The Chairman. Absolutely. 

Mr. Bradley. Why, it seems to me that the service rendered by the 
railroads to the Post Office Department is more easily recognized 
in the transportation of the weight of mail than in the amount of 
space furnished; yet it might be that the space furnished would be 
a simpler measure of determining the price of the original service 
which was performed in the transportation of the mails. However, 
I think it would occur to one that when you are measuring the service 
by an element that is only incidentally involved in the original serv- 
ice, which is the transportation weight, you are taking some chances 
by accepting a basis of settlement which does not directly reveal the 
essential service rendered. In other words, you enlarge the possi- 
bilities of misunderstanding. On the other hand, the ascertainment 
of a certain number of pounds and the distance it is transported is 
comparatively simple and does not seem to lend itself to very much 
misunderstanding. 

The Chairman. Yet there is no system you can evolve, unless you 
have daily weighings, by which you can weigh every piece that is 
transported, and you will be transporting some business for which 
^you receive no compensation. 



RAILWAY MAIL PAY. 1539 

Mr. Bradley. Yes. 

The Chairman. Under the other plan — the space plan — you would 
be receiving compensation for some space that was not utilized by the 
Government, which would be just a reversal of existing conditions, 
it seems to me, on the measure of the service rendered. 

Mr. Bradley. I think have seen at the hearings here the different 
opinions that have played around the table in regard to significance 
of space and the latitude which the department should have in con- 
nection with its initiatory move to determine the amount of space 
that it will require, and I think it has also been shown how difficult, 
perhaps impossible would not be too strong a word, it would be for 
a railroad company to accommodate itself economically to the vary- 
ing authorizations by the department. 

The Chairman. The fewer the units, however, the less the diffi- 
culties. That is true, is it not ? 

Mr. Bradley. A long step forward might be made if the depart- 
ment were required, as under Mr. Lloyd's plan, to recognize the full 
units that are prescribed in the law and to keep its necessities some- 
where within those units. Very calmly there was discussed here 
during the past two days the making of authorizations for as long as 
one month, and this morning it was mentioned that a steel postal car 
would cost approximately $12,000. Now let us seek an analogy. A 
very commodious residence can be built for $12,000, and if a prospec- 
tive tenant went to the owner to lease the house for one month and 
wanted to decide himself how much space he would need and change 
that authorization from month to month, I do not think it is at all 
likely that he would get a very friendly reception. 

The Chairman. True; but does not the same objection apply to 
the present system? Can not the Post Office Department divert its 
mail if conditions were such that it would be, in the opinion of the 
department, beneficial to the Government to do so ? 

Mr. Bradley. Yes. 

The Chairman. Would not the same apply to the weight basis % 

Mr. Bradley. No; I think not; because it has been the policy of 
the department for the past 30 or 40 years to concentrate the mails 
on the shortest and most expeditious route. 

The Chairman. Would there not be the same policy in the substi- 
tution of space for weight ? 

Mr. Bradley. Well, I do not know. Space is so largely a matter 
of discretion and opinion that I have not undertaken to apply the 
new bill to the Pennsylvania Railroad system. I felt the range of 
discretion was so wide that it was quite useless to apply those rates 
to the existing service. 

The Chairman. Gen. Stewart, by the adoption of the system of 
space for a weight basis can you conceive of any change in the ad- 
ministration policy that would inject any new factors that would at 
all divert the run of the mail, namely, efficiency and cost to the Gov- 
ernment, which at the present are the determinate factors ? 

Mr. Stewart. I can not. There would be a tendency to concen- 
trate the mails sufficiently to utilize the space authorized and to 
conduct the service as economically as possible. 

The Chairman. And if the rate were based on the utmost carry- 
ing capacity of the space in weight, they could not get into a given 



1540 RAILWAY MAIL PAY. 

space any more than a certain weight of mail or certain volume of 
mail, and when they wanted more they would have to call for more 
space, and the moment you called for more space the railroads 
would get credit for it. It seems to me, from a railroad standpoint, 
that the substitution, so far as getting compensation for service per- 
formed is concerned, is an infinitely preferable one to the existing 
method of your quadrennial weighing, because I think we all con- 
cur that the mail steadily increases annually, and will, in the develop- 
ment of the country, necessarily steadily increase. 

Mr. Bradley. Would not the weighings have to continue in order 
to verify the amount of the space which the department could 
authorize 1 

The Chairman. Not if a rate was determined based entirely upon 
the space basis. 

Mr. Bradley. That, in turn, resting purely on opinion. 

The Chairman. You mean space? 

Mr. Bradley. Yes. 

The Chairman. It is immaterial what the opinion of an individual 
might be. You could not get any more than the maximum weight in 
a given space; the personal equation there has no effect. If you re- 
ceived a fair compensation for the maximum carrying capacity of a 
given space, I should think you had absolute protection. 

Mr. Mack. Your idea being that all of the mail would be carried 
in these three classes of cars? 

The Chairman. Yes. 

Mr. Mack. If there was a 15-foot car the Post Office Department 
would have to accommodate itself on that scheme to that 15-foot 
apartment. 

The Chairman. The triple unit. 

Mr. Mack. And there would not be any overflow mail in baggage 
cars if the mail varies and fluctuates from day to day ? 

The Chairman. The pouch mail would be worked out. I think 
Mr. Lloyd made a suggestion yesterday in reference to that. No 
conclusions have been reached, but it is simply to take up these dif- 
ferent suggestions that have been made, and while we have an oppor- 
tunity to interchange ideas in reference to them in the hope of get- 
ting additional light, I think we should do so. 

Mr. Lloyd. Apparently the Canadian Government has worked out 
the suggestion I. made yesterday. They allowed 4 cents for the 
pouch service. I suggested 3 cents, which was on the basis of 18 
cents ; if it was a higher rate it would be higher. Or, if we changed 
the rate making a little — that is, charged more for the shorter space — 
the rate would be still higher. I think that is worthy of considera- 
tion. For instance, if we fix the rate for a 60-foot car at 20 cents, 
the 30-foot car at 11 cents, and 15-foot car at 6 cents, that would 
correspond with the Canadian idea. Then, if we carried it a little 
further and provided that any mail, it does not make any difference 
how small, carried in a pouch they would receive 3 or 4 cents a mile 
for, it would entirely eliminate the necessity for weight and make 
an absolute payment in space. 

Mr. Mack. I speak now of the overflow mail. 

Mr. Lloyd. If there is overflow mail you are to have pay for it in 
any system, I would suggest? 



RAILWAY MAIL PAY. 1541 

Mr. Mack. With this condition : that there would be overflow mail 
unless the car was big- enough to take care of the extreme maximum 
condition. With a space basis the overflow mail would be elastic, 
and there would be no space basis at all. That is due to the fluctua- 
tions, and I do not think the department would concede that it is 
necessary in the administration of the service, day by day, to have 
overflow space. 

Mr. Lloyd. If they ordered a 60- foot car, and that is the authoriza- 
tion made by the Government and the demand made upon the rail- 
road company : and they furnished the 60-foot car and it turns out 
that that is not sufficient, they would make further authorization; 
but all that you have to do is to furnish the 60-foot car. You have 
complied fully with the demands made upon you ; that is, to furnish 
a 60-foot car. If any further authorization is made for a larger 
amount of mail you could get pay for it. 

Mr. Mack. What happens to the mail in such a case ? There is a 
60-foot authorization, and the mail would not go into it. 

Mr. Lloyd. I would suppose this to be true, that ordinarily you 
would not have any trouble about that authorization, because the 
maximum authorization would be intended to be a sufficient author- 
ization to meet at least a little bit more than the ordinary demands 
of the mail. 

Mr. Mack. For instance, on the train that I discussed yesterday, 
we do not have exclusive storage cars, but we have a carload and a 
half of mail distributed into three cars. I do not understand how 
the conditions of transportation could be met by specific authoriza- 
tions of cars. Those are actual conditions of service. 

The Chairman. Suppose you had the three units, 60, 30, and 15 
feet, and there was overflow mail and you were allowed 3 or 1 cents 
a mile for the pouch mail. Would not your overflow go into the 
pouch mail ? 

Mr. Mack. It varies.- It destroys your units. There would not 
be any value in 15 and 30 foot units if the overflow mail was going 
into the baggage cars. You would not have a space basis at all. 

The Chairman. Then, the absolute protection would be that the 
Government could send no mail except pouch mail that did not go 
in one of the three units ? 

Mr. Mack. You would not have any space basis without it was 
fixed on a maximum, just like renting a house; if you rent a house 
you have your limitation, and you can not use somebody else's 
property. 

Mr. Lloyd. Mr. Bradley, on this space basis theory, taken the plan 
suggested b}^ the department, which allows pay for space and elimi- 
nates the side and terminal service. Which would you rather accept, 
that plan as the provision of law or the reduction of 5 per cent in 
the present railway mail pay on the Pennsylvania system? 

Mr. Bradley. You mean which is the lesser of two evils ? 

Mr. Lloyd. Yes ; the lesser of two evils ? 

Mr. Bradley. The reduction of 5 per cent, if the conditions justi- 
fied it. 

Mr. Lloyd. I base that question on the statement made by Gen. 
Stewart that he believed that the system would result in a reduction 
in railway mail pay of $2,500,000, which would practically be 5 per 



1542 RAILWAY MAIL PAY. 

cent. Now, if the railway mail pay is 5 per cent too large under the 
present system, we ought to make a reduction of 5 per cent, and the 
other system, according to the suggestion of Gen. Stewart, is a reduc- 
tion of 5 per cent. 

Mr. Bradley. But I do not answer the question on that basis. I 
answered the question purely on the basis that if we suffered the 5 
per cent reduction we would know precisely what it was, while under 
the other plan we do not know what the reduction in pay would be, 
because it is largely a question of individual interpretation. 

Mr. Mack. And it would create a complete change in readjust- 
ment. For instance, on the 33 routes on which the department 
worked out tables there were 22 routes with reductions, 11 routes 
with increases — increases representing $21,772 and the decreases rep- 
resenting $44,909. I see one instance of two round trips of 30-foot 
cars in daily service of 1,230 pounds. It is rather difficult to see 
how two round trips in service would be maintained on a space basis. 

Mr. Lloyd. If the deductions made in document 105 by the de- 
partment are correct, then some railroads are now receiving too much 
and other railroads are not receiving enough. You people have not 
as yet made any ascertainment at all, or given us any light except 
in one or two cases, as to what would be the general effect of this 
proposed change. It might be that these roads that are now making 
money would not make any money and the roads which at the present 
time are losing money might turn the other way and make money. 
You people have not made for us any ascertainment at all to deter- 
mine what is going to be the general effect upon the railroad systems 
of the country. 

Mr. Mack. Should not the department have submitted that state- 
ment ? 

Mr. Lloyd. I will be perfectly frank. I think the railroad com- 
panies, when we started out, knew that the question before us was to 
determine whether we should go from a weight to a space basis, and 
that they were expected to give us some information on the question 
of space, but you people from the beginning started out on the theory 
that you were going to stand by the existing law and ask for an in- 
crease in rates on the existing law, and you have given us but very 
little information on the question as to what will be the result if we 
go to a space basis. I think you people have made a serious blunder 
in that, too. Certainly you have from the commission's standpoint, 
because you have not given us the information which we need and 
the information which you could have given us after a study of 12 
months. 

Mr. Saffoed. I think perhaps that criticism is a little broad, be- 
cause when you take into consideration the administrative features 
of this bill it is clearly impossible for any railroad to figure out what 
will happen. I tried, but I could not tell what the attitude of the 
department might be as to how the service might be stated, what the 
routes would be, or what sort of a basis to figure on. 

Mr. Lloyd. You have a splendid basis on which to start. You have 
the basis that you now furnish. 

Mr. Safford. It does not follow that the law will be administered 
on that basis. 

Mr. Lloyd. I appreciate that, but if you had come to us and said 
after a careful and fair investigation of the matter on the space basis, 



RAILWAY MAIL PAY. 1543 

the bill will have this effect upon our pay, then we would have had a 
basis upon which to work, but you have not done that. 

Mr. Safford. We do not feel that Ave could stand on that, at least 
I did not. I could not find a basis. I took Dr. Lorenz's plan, and 
I applied that to different routes on our system, and I found that we 
would lose about 25 per cent on that. Then when I found that the 
bill proposed by the Post Office Department was less favorable as 
to rates and that it contained more objectionable administrative ele- 
ments, I knew it was worse and I was discouraged and I did not 
figure it. 

Mr. Bradley. For instance, one of the provisions in the new law 
is that the Postmaster General shall restate all the mail routes, thus 
putting into somewhat different language, the same idea that Dr. 
Lorenz introduced, the establishment of mail lines. Our interpre- 
tation of that was that it was an entire departure from the present 
mail route. Then a terminal charge was to be added and one could 
not tell whether it would be merely an initial charge and terminal 
charge, or whether it would also apply to the important intermediate 
junctions where similar charges would be entirely logical and proper. 
Then the department in its plan provided for a great many more 
units than Mr. Lloyd, and we could not tell how existing units 
would be treated in relation to the new units. We could not tell 
how the department would reduce its authorization in connection 
with the use of the full car. We might furnish a 60 or 70 foot car 
and under the new arrangement they might conclude that 40 feet 
was all that was needed. There were so many factors dependent 
on the determination of the department in each individual case and 
which the department itself is probably not able to make, that it 
has been impossible to work out a satisfactory result. 

Mr. Lloyd. But the department comes to us with a general state- 
ment and they work it out. 

Mr. Mack. I have shown you the effect upon our lines, as nearly 
as we could estimate, of what space might be allowed. All of it is 
a matter of dispute and opinion and it shows very great losses. 

Mr. Lloyd. I appreciate that you show a 40 per cent loss. Some- 
body is going to get that as a gain; that is unquestionably true, 
because if the department's statement is correct, that there is only 
two million and one-half dollars difference between the old system 
and the proposed system, there is not going to be a 40 per cent re- 
duction to you. It is true you would get a 40 per cent reduction 
according to your estimate, but somebody else will get a 25 per cent 
gain, and we have not any information from the railroads as to who 
is going to get that gain. There is only one railroad here that admits 
it might have a gain and that is the Long Island. 

Mr. Kowan. No two people can figure it out the same. Mr. Wis- 
hart, of the New York Central, tried to figure it out, and he said it 
was so unreliable that he did not even send the figures to me. I 
understand it would show a substantial loss, and the department fig- 
ured it out that we would get more money. 

Mr. Scott. The clause we were discussing yesterday, in regard to 
maximum pay for car runs, was almost impossible for Gen. Stewart 
to explain how he would administer that. We could not make an ap- 
plication of that unless we know how it is going to be administered 



1544 RAILWAY MAIL PAY. 

to at least some degree. I have been as anxious to find out about this 
as anybody, but I must confess I do not know where to begin. 

Mr. Mack. The question of opinion is absolutely eliminated upon 
the weight basis. The object of transportation itself determines our 
pay. We feel that is very much safer. 

Dr. Lorenz. Has the history of the past 10 years shown that weight 
eliminates controversy? It seems to me the big controversy in the 
last 10 years has been caused by weight and not space basis. You 
have had very few controversies regarding R. P. O. cars, but your 
divisor and your quadrennial weighing are probably the big problems 
that have caused trouble, and they are the result of weight and not 
the space basis. 

Mr. Bradley. If you always used the same yardstick in space most 
of these difficulties would be eliminated. It occurs to me, Mr. Chair- 
man, that there is a phase of the matter worthy of attention, al- 
though perhaps it would be more appropriate for your own delibera- 
tions, and that is, if the department officers came to Congress with an 
estimate for a very large increase in the appropriation for railway 
mail pay, and its estimate was sharply questioned. At present they 
can explain that it is arrived at by the actual weighing of the mail 
transported. In the future case they would be obliged to explain 
that their officers and employees had convinced them of the neces- 
sity for authorizing a large amount of additional car space. Would 
that be as convincing, do you think, to the Committee on Post Offices 
and Post Roads as the actual amount of weight transported ? 

The Chairman. I should think so; yes. It would minimize the 
possibility of the public impression that at time^ has existed that 
there was padding of the mail. It would eliminate any such sup- 
position or possibility existing. 

Mr. Peters. That could be eliminated, could it not, if the state- 
ment was made by the department that they would do all the weigh- 
ing? The railroads can not do it. They do not have their men in 
the cars on the line, but it is done by the department. 

The Chairman. I understand that; but I am stating that the im- 
pression had some weight in the country, and possibly the impres- 
sion would be eliminated by the substitution of space for weight. 

Mr. Peters, They might just as well say that the railroads helped 
to measure the space and padded the space. 

Mr. Lloyd. But every man can see how the cars are used. There 
is no secret about that, and it is open to the whole public if you have 
a space system. Here is a train running which has one 60-foot car; 
everybody understands that, and there is no secret about it. The 
element of mystery has been removed. After all it is not a question 
of satisfying this commission or satisfying the post office Committee 
of the House or the Post Office Committee of the Senate, but the 
important thing is to satisfy the American people, and the American 
people wish to be satisfied with that which they can see for them- 
selves. The more mystery you remove in a system the more satisfac- 
tory it is going to be to all. 

Mr. Mack. It occurs to me the question that the public is most 
vitally interested in and has always been is not the detailed question 
of the method but the question of overpay or underpay. That is the 
great question the American people are interested in, to know that 
the railroads do not get too much, and if they do not get enough 



RAILWAY MAIL PAY. 1545 

they want them to get enough. I think it is out of the question to 
expect the American people to analyze detailed rates as applicable to 
the mail service, and it seems to me, so far as the people are con- 
cerned — perhaps in course of time hV may be different — the only in- 
terest they have is to know the Government does not pay the rail- 
roads too much. 

Mr. Lloyd. How are the people going to find it out ? 

Mr. Mack. They are depending on the information from your 
committee. 

Mr. Lloyd. We do not bind the American people. 

Mr. Mack. I know, but the question is before your commission to 
determine, and I believe the country will accept the judgment of 
your commission in that respect. 

Mr. Scott. Mr. Lloyd just said a few moments ago people can see 
themselves the number of cars used; if we have a 60-foot car in a 
train the people can see it. If they see a car westbound loaded with 
mail, all right ; but if they see it coming back empty how long will 
it take before they will begin raising questions about that? 

Mr. Lloyd. That seldom occurs. It does not occur except with 
storage cars, and it does not affect the railway mail car, because 
where we have an outgoing car you have an incoming car. 

Mr. Scott. In different degrees, of course. 

Mr. Lloyd. The space proposition settles all that question, because 
if you start out with a 60-foot car you have to come back with it. 

Mr. McCahan. Mr. Lloyd, what would happen in a case of this 
kind : In the service they have a 40- foot distribution, and a 60- foot car 
is operated; the car is equipped with 50- foot facilities, by leavng 
out 5 feet of rack. They have given orders to keep out of that car 
direct mail until they see whether they have space enough to put in 
the working mail. That does not happen every day, but they are on 
record in issuing those orders. What protection would we have 
under a case of that kind ? 

Mr. Stewart. If I understand Mr. McCahan's question, it relates 
entirely to a situation that arises under existing law, where we are 
obliged to carefully scrutinize the space for distribution purposes 
for which we pay additional money over and above compensation 
for transportation. On this new basis my opinion is that the situa- 
tion he suggests Avill not arise, because we will get all the mail in the 
mail car and pay for it. 

Mr. McCahan. We can not get it in there now ? 

Mr. Stewart. Then we would authorize additional space. 

Mr. Mack. In what way? As to the question of overflow. That 
is the point I raised a while ago. 

Mr. Stewart. If it were a general condition, of course we would 
have to authorize the next unit. If it were only an occasional over- 
flow and it were not provided for by an additional unit regularly 
authorized, it would take care of itself in exactly the way it now takes 
care of itself under the weight basis. During the weighing, if over- 
flow mail is handled you get credit for the additional weight and 
receive pay for it for four years. In the same way the maximum pay 
would be determined during the statistical period. 

The Chairman. Would there be any statistical period under your 
plan? 

49396—14 105 



1546 RAILWAY MAIL PAY. 

Mr. Stewart. We have eliminated the weighing, except that we 
would undoubtedly take statistics for a period to determine the space 
needs. 

The Chairman. That is one of the strong features of the plan — 
that you do eliminate the weighing ? 

Mr. Stewart. We are providing for weighing at the initial point. 

The Chairman. Is that necessary for the plan ? 

Mr. Stewart. It has been suggested that it be eliminated. 

The Chairman. To return to the overflow mail, suppose that the 
law adopted three, four, five, or six units and made no allowance for 
overflow mail. What would be the practical operation ? You would 
have to authorize an additional unit or the overflow would have to 
wait over until there was space for it in some following train ? What 
would be the objection to that? 

Mr. Stewart. There would be no objection to it, but we could meet 
a condition of that kind if it occurred frequently by making a special 
authorization, just as we do now in New York City where we have 
a wagon contract on a mileage basis. Besides the regular authoriza- 
tions of trips we authorize the postmaster to use a certain number of 
additional trips during the month, if necessary, giving him the privi- 
lege of ordering the extra service as occasion may require. He re- 
ports at the end of the month how much of it he has used and the con- 
tractor gets paid for it. We could make similar authorizations under 
this statute to cover extra or emergency services that might be re- 
quired and pay for such as were used. 

The Chairman. What is the increase in weight, or estimated by 
the department, during the holiday season during those 15 days? 
Was there 5 per cent or 10 per cent increase over the normal or 20 
per cent ? 

Mr. Stewart. Yes; more than that. 

The Chairman. You get no pay for that under the present system. 
Under the space system you would get compensation for that. 

Mr. Peters. Would we? 

The Chairman. You must, for there can be no overflow if the 
department is required under the law to send the mail. 

Mr. Stewart. Let me supplement what the chairman says in 
regard to that. Up to a few years ago the railroads did not get 
additional pay for the extra railway postal cars operated during 
the Christmas season, but believing that they should receive pay 
for such cars, for the last few years I have been authorizing addi- 
tional full car space temporarily during the Christmas season to 
provide compensation for the same. We would do the same thing 
under the proposed plan whenever the emergency arose. 

The Chairman. You would have to, for it would be compulsory 
if there was no overflow recognized in the bill. 

Mr. Mack. The question of overflow is a very considerable ques- 
tion. 

Mr. Lloyd. Here are two questions. There is no difference, how- 
ever, and I am sure we are all of the opinion that all overflow mail 
shall be paid for? 

The Chairman. For every service performed you should get a 
fair compensation? 

Mr. Lloyd. This must provide for that overflow if we go to a 
space basis? 



RAILWAY MAIL PAY. 1547 

Mr. Mack. But the overflow mail eliminates to a large extent your 
maximum unit of space in the apartment car? 

Then the question comes up as to how far that overflow mail is 
transported. We get a little light on the practical administration 
on the Denver & Eio Grande as based upon the statistics of the 
department taken in 1909. A train started out of Denver with a 30- 
foot apartment and the railroad company reported over part of the 
line 20 feet of overflow space, not in one of the baggage cars, but two 
parts of baggage cars. The department allowed 10 feet from Pueblo 
to Grand Junction, the railroad company reported 5 feet, and the 
department eliminated space altogether, and so on over the lines. 

The Chairman. Repetition of those occurrences would be impos- 
sible if there was no recognition of overflow under the proposed 
plan? 

Mr. Mack. It is very essential if you go to a space basis to elimi- 
nate overflow mail. 

The Chairman. Supposing there wasn't any overflow. How would 
the space basis appear to the minds of you gentlemen. 

Mr. Mack. From our viewpoint we do not regard it as satisfactory, 
because the question of opinion is involved in every instance in 
regard to the amount of space. 

The Chairman. But they would be minimized in the possibility 
of units, possibility of friction, and misunderstanding. 

Mr. Bradley. Might I suggest that if this clause in the law were 
changed it might meet the difficulty : In computing the mail-car space 
to be paid for, let the word " authorized " be changed to " furnished " 
and let the maximum space furnished in either direction be regarded 
as the space to be paid for. 

The Chairman. That would always be a question of discussion 
and controversy. 

Mr. Bradley. Why should not the railroads be paid for what is 
furnished unless it is furnished dishonestly ? 

The Chairman. You should be paid for every service you are per- 
forming, that you are requested by the department to perform, and 
you should receive, in my opinion — and I think in the opinion of 
every member of the commission — a fair compensation for the service 
rendered. The question with us is how to arrive at a basis to insure 
that — the simplest, best, and most certain. 

Mr. Bradley. There is a severe penalty against padding the mails, 
because there were, -many years ago, two or three instances of that. 
I believe there is an imprisonment of 20 years, and a fine of $5,000. 
Suppose there was a similar penalty against the dishonest supplying 
of space by the company and this word was changed from " author- 
ized " to " furnished." Is not the term ' furnished " a better descrip- 
tion of the service rendered by the railroad company than the word 
" authorized," if you are considering the actual thing? 

The Chairman. Then why not add "authorized and furnished"? 

Mr. Bradley. I am afraid that does not help us. 

Dr. Lorenz. Is it not true that to-day additional storage cars are 
authorized just as they are needed? Is it not true that if there is a 
certain rush of mail the mail clerk would telephone to the railway 
man and say, " Give us another cnr on this train to-day," and there 
is immediately a car switched in ? 



1548 RAILWAY MAIL PAY. 

Mr. Bradley. No ; the word " authorization " is not properly used 
there. Authorization means the order by the department that car- 
ries pay with it. To-day, if another car is needed, the railroad com- 
pany furnishes it automatically. 

Dr. Lorenz. The needs of the department are met by the request 
on short notice. As I understand it, the department could provide 
for the immediate authorization of additional storage cars as needed. 
I do not see why the overflow could not be taken care of by authori- 
zations from day to day, if a leeway is given, just as General Stewart 
has shown in the case of the wagon service. They could authorize 
space in baggage cars. 

Mr. Bradley. Are you speaking for the department now? I do 
not think the department has made any such statement as 

Dr. Lorenz. General Stewart has just given an illustration of 
where the postmaster was allowed to provide for additional service. 

Mr. Stewart. It is now the practice to do that on wagon routes 
where the contract is on a mileage basis, such as the route in New 
York City. This provides a good illustration of how the space 
basis would work out in railroad service. We pay for the trips per- 
formed and the mileage made in that kind of wagon service. A cer- 
tain number of trips between certain points are authorized regularly, 
which we find a great improvement over the old system, under which 
a contract at a flat rate was made for all service that might occur in 
four j^ears, like the railroad service is now. We find it a great im- 
provement to contract for service on the mileage basis. However, 
we can not foresee all the service which we are going to need, so, in 
addition to the regular trips authorized, we issue a supplemental 
order authorizing the postmaster to use a certain number of addi- 
tional trips between certain points during the month. The post- 
master calls on the contractor for the extra trips as he needs them 
in the service and reports that additional service to the department 
monthly, and we pay for it. My idea is that we will take care of all 
this extra service in the same way, by issuing orders authorizing 
additional space to be used if needed in addition to the regular space 
authorizations. 

Mr. Lloyd. I think that the proposed bill covers that. You say 
that new service and additional service may be authorized at not 
exceeding the rates herein provided for. "At not exceeding" may 
be left out. A service may be reduced or discontinued and operated 
as the needs of the Postal Service require. That is intended to cover 
that. 

Mr. McCahan. Does not that refer to the permanent new service ? 

Mr. Lloyd. That might be ; yes. 

The Chairman. The absolute elimination of overflow mail; that 
is, no recognition of any overflow mail under the law, and that the 
department would have to call for space as needed would make the 
space basis less objectionable? 

Mr. Bradley. I think so. 

The Chairman. General Stewart, could you explain how you would 
administer a law substituting space for weight in any of the plans 
that have been suggested, either the department's, Dr. Lorenz's, or 
Mr. Lloyd's plan ? That would be the modus operandi of authoriza- 
tion of space, the individuals who would originate it, who would be 
responsible for it and the notice to the railroads ? 



RAILWAY MAIL PAY. 1549 

Mr. Stewart. Speaking in a very general way my opinion is, if 
Congress adopted the plan we have suggested, or something similar 
to it, that the plant now in operation in the service would merge into 
the new system in a simple manner. The new authorizations on the 
space basis would be continuations in most cases of the present au- 
thorizations. We now have the full R. P. O. car service, which we 
would continue practically on the same authorization. We have the 
apartment car service, in which space is not now specifically au- 
thorized. This we would authorize just as we do the full-car service. 
That would cover all the service excepting the closed-pouch and 
storage-car services, providing the closed-pouch service was not put 
on a space basis as Mr. Lloyd suggested. If that were put on a space 
basis, it would be easy to authorize that at so much a car-mile. 

Mr. Lloyd. That does not affect the plan at all, as I understand it? 

Mr. Stewart. Not at all. The recommendation for authorizations 
to cover the needs of the service, of course, would come from the field 
officers to the department as at present. The field officers would take 
up the question and report upon the conditions as they exist and the 
needs of the service as they see them and make recommendations. 
Those recommendations would come along the line through the di- 
vision superintendent of the Railway Mail Service to the general 
superintendent and through the division of railway adjustments to 
the Second Assistant Postmaster General, who would determine and 
make orders of authorization. 

The Chairman. He authorizes. Does he notify one of his sub- 
ordinates ? 

Mr. Stewart. Yes, sir. 

The Chairman. And the subordinate notifies the railway? 

Mr. Stewart. The company is notified direct by the second as- 
sistant where it involves pay, and at the same time the division of 
Railway Mail Service is informed, and the detailed arrangements 
with the company are taken care of by that division. 

The Chairman. Go from the second assistant? 

Mr. Stewart. Yes. 

The Chairman. Then you would receive the information as to 
when that authorization was furnished by the road and the credit 
would be immediately open to the road to the extent it was furnished ? 

Mr. Stewart. Credit would be given from the date fixed in the 
order of the second assistant authorizing the service. From that 
date the railroad company would be entitled to the credit. Then, 
m the matter of payment, we would have the actual service per- 
formed reported each month by the railroads, and the reports verified 
and certified by the Railway Mail Service just as. they are now. 
These reports are signed by an officer of the railway under oath and 
are checked by the Railway Mail Service; when they come in, the 
accounts are audited and payments made for service performed each 
month. 

The Chairman. The payment would be the same each month? 

Mr. Stewart. Would be the same. In cases where we needed more 
than the regular service supplemental orders would be issued to cover 
the additional service, and so much of that service as was used during 
the month would be reported and paid for. The rest, of course, 
would not be paid for. 



1550 BAIL WAY MAIL PAY. 

The Chairman. If we eliminated overflow mail, and the law was 
so drawn as to require the department to call for additional authori- 
zation, when there was overflow or delay to the mail the operation 
of such a law would be that the Government would always have 
through efficient administration a little excess space to use there over 
a period of days or months ; the average must necessarily be so, and 
good administration would require that. 

Mr. Stewart. Yes, sir; and there would be more of that if you 
reduced the number of units. 

The Chairman. Mr. Lloyd asked the question awhile ago, which 
impressed me strongly and led to the idea in my mind, whether 
you gentlemen in approaching this subject had not given attention, 
and quite properly so, to the rates rather than to the method. 

Mr. Bradley. I think there are many details that are not appre- 
ciated ; for instance, General Stewart was speaking about the cars he 
needed in the service. No doubt in this country you can find every 
size mail-apartment car and every size R. P. O. car mentioned in 
this proposed bill ; but each company does not have them. Now they 
are supplied to the Postal Service as the result of years of coopera- 
tive consultation and arrangement between the railway company and 
the division superintendent of the Railway Mail Service. Under the 
new bill the requirement for different sizes would be compulsory. 
A company to-day having a 20- foot apartment might be given an 
order to-morrow to reduce it to a 15-foot apartment for an authoriza- 
tion covering only an engagement for one month. 

Mr. Lloyd. Would not the 15, 30, and 60 foot units to a great ex- 
tent relieve you from that complaint ? 

Mr. Bradley. Yes; just so far as you reduced the units you reduce 
the cause of irritation; and I might make a further suggestion, that 
a clause be put in here under which it would be compulsory for the 
department to pay for any changes in the construction or alteration 
of mail-apartment cars when it issues an order reducing the space 
authorized. If the pay for increased space really made full allow- 
ance for the cost of the repairs, that might not be specifically men- 
tioned; but if the department gave notice for a reduction in its 
authorization, and it was required in connection therewith to pay for 
that alteration, that requirement would check the undue use of that 
administrative poAver. 

The Chairman. Is it probable that there would be many instances 
of that reduction under the three-unit plan ? 

Mr. Bradley. I can only say there would be much less reason foi 
friction under one unit than three units, and less under three than under 
five. I want to refer to a remark Gen. Stewart made yesterday and to- 
day about expensive terminals. I desire to refer you to the description 
that I included in the statement for the Pennsylvania Railroad Co. re- 
garding the terminal service at New York on pages 433-434, volume 2. 
The New York terminal extends practically from Newark, N. J., to 
a point on Long Island, a distance of about 12 miles ; it includes not 
only the trackage, very solidly constructed between those points, but 
also two tunnels under the North River and four tunnels under the 
East River as well as all the other tunnels and construction in New 
York. All of that wonderful work, one of the engineering triumphs 
of the world, is represented in the total cost of about $100,000,000. 
What attracts attention especially is the station edifice. Including 



RAILWAY MAIL PAY. 1551 

the vaiue of the real estate and the excavation as well as the construc- 
tion, the station edifice and its appurtenances would probably not 
exceed 25 per cent of the total expenditure. The passenger waiting 
rooms, of course, attract admiring notice, but are only a small frac- 
tion of the total facilities. In so far as that building is beautiful and 
costly, it is only out of decent regard for the opinions of mankind 
just as the new post-office building adjoining it is built along beauti- 
ful lines and in architectural harmony with its purpose. No doubt 
one reason for the high cost of these terminals is the high price of 
real estate. That would apply also to the new post-office building in 
Washington adjoining the Union Station. Of course the Govern- 
ment would not think of locating it in the outskirts of Alexandria to 
save expenses. Now coming to the actual use of the terminal facili- 
ties, the department being indisposed in this case to debit itself with 
even 1.95 per cent of the capital cost, I have made a careful estimate 
there as to the occupancy of the tracks at the Pennsylvania Station, 
New York City, because the tracks are the real facilities, and I found 
that about 11 per cent of the trackage facilities out of the Pennsyl- 
vania Station were used for the mail service. It would, therefore, 
not seem unfair to charge the mails with less than 2 per cent of the 
capital expenditure. 

Mr. Stewart. I am not objecting to charging the mails with its 
share of trackage-facilities costs, but it is the participation on the 
car-foot-mile ratio in the cost of the expensive station facilities in 
which the mails are only remotely interested to which I object. 

Yesterday the Baltimore & Ohio, through Mr. McCahan, sub- 
mitted a statement, which, of course, the department has never had 
a chance to see, although Mr. McCahan said he had had it for some 
time. He has not asked the department to check or verify it. I 
do not think I could be expected under the circumstances to examine 
it or make a reply to it, and I wish the record to show the depart- 
ment has not had an opportunity to do that. 

The Chairman, At this point the hearing will adjourn sine die. 

(Thereupon, at 4 o'clock p. m., the hearing adjourned sine die.) 



Subsequent to the hearings the chairman received two letters from 
Mr. John Wilson Brown, one dated April 21, 1914, signed by him as 
president of the Maryland & Pennsylvania Railroad Co., and the 
other, dated April 9, 1914, signed as vice president of the Short Line 
Railroad Association. These letters, which are self-explanatory, are 
by direction of the chairman submitted for the record, and read, 
respectively as follows : 

Maryland & Pennsylvania Railroad Co., 

Baltimore, Md., April 21, 1914. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Railway Mail Pay, etc. 

Dear Sir : I was disappointed in not being able to attend one of the last ses- 
sions of the committee and now have learned that the hearings have closed. 

So, if it is in order, I desire to file the inclosed paper which expresses in 
a condensed form what, to my mind, are the main principles involved in the 
matter, and suggests a method of ascertaining a proper rate of pay to carrier 
for the space contracted for by the Post Office Department. 

In the hearings the railroads have denied that they rate things by space. 
This is a mistake, but they fail to recognize it, because the freight is not billed 



1552 RAILWAY MAIL PAY. 

by space but by weight They are entangled in their own terms. Railroad 
people are peculiar as a rule. In all the cases that have come under my 
knowledge they have either failed to present the right case or, if the right case, 
have failed to present it in the right way. In this case on both sides each one 
seems to think that he proves his own case by showing errors on the part of 
the other. So that after this voluminous argument, oral and written, the 
department and the carriers seem to be no closer together than at the beginning. 

My own opinion is that both sides are in error in their calculations of expense. 

Craving your pardon for troubling you with this, 
I am, very truly yours, 

Jno. Wilson Brown, President. 



Baltimore, Md., April 9, 1914. 
Hon. Jonathan Bourne, Jr., 

Chairman Joint Committee on Railway Mail Pay, 

Washington, D. C. 

Dear Sir: The Short Line Railroad Association presents to the committee 
the following considerations : 

In the discussion of this question it has been assumed by the Post Office De- 
partment, with little question on the part of the railroads, that the power of 
the Congress is pretty much absolute in this matter. That, because the power 
is vested in the Congress to establish post offices and post roads, therefore it 
has the right to dictate to carriers what they shall carry and at what rate. Is 
this borne out either in theory or in practice? 

The power of the Congress has been decided to be exclusive in the carrying 
of mail. But what is mail? Is that settled by act of Congress? For example, 
is the merchandise carriage attached to the post-office service really mail? 
" Oh, yes," say its advocates, " it is done in Britain," and that is supposed to 
settle the question. But does it? We can not go to British precedent to settle 
such question in this country, for the power of Parliament is absolute and has 
the force of a constitutional provision with us. This whole matter seems to be 
in nubibus. If it is once granted that the Congress may establish a transporta- 
tion service of 20, 50, or 100 pounds, what is to prevent its going further and 
taking off all limit and thus taking over the whole carrying trade? Logically 
this conclusion is inevitable. 

Now as to practice. The dealings of the Post Office Department with car- 
riers has always negatived the power of the Government to dictate to carriers 
the terms upon which the business must be conducted, and thus far has been an 
interpretation by the Government of the extent of its powers. The department 
has approached the carriers not with the law as mandatory, but with a contract 
by which the carriers agreed to carry the mail on the terms specified. This 
has always been repeated after each weighing of mails. 

This summary statement is sufficient as to the fundamental principle. 

There would seem to be no reason why the department should endeavor to 
obtain from carriers for carrying the mails a rate not only far lower than other 
shippers, but a rate which does not pay. Although there is a dispute between 
the department and the carriers as to the cost of the service, there can be no 
question that the department has obtained a service which affords the carriers 
no commensurate profit, if any at all. The department practically admits this 
in the reasons it adduces for its claims on the carriers. The reasons are 
following : 

1. That the Government protects the carrier during a strike. 

This, at first blush, seems to have weight, but becomes very light weight when 
examined. For the protection furnished is only to such passenger trains as 
carry mails; and even if extended to all passenger trains would be of little 
benefit, as it is notorious that little profit is made by carriers from passenger 
business. It affords no protection whatever to freight trains, either from 
strikes within the railroad service or strikes among the industries upon which 
the carriers are dependent for a large portion of their trade. This reason, then, 
seems to have little, if any, force. 

2. Another reason upon which the department claims a low rate is that the 
distribution of the mails through rural regions hastens settlement of those 
regions and thereby increased carriers' trade. 

This reason is also stronger in appearance than in reality. The census 
reports show a steady decrease in the proportion of rural population in spite of 



KAILWAY MAIL PAY. 1558 

the immense increase in rural mail facilities. This would seem to dispose of 
this reason. 

3. Another reason is the size and regularity of the business furnished by the 
Post Office Department. 

This reason is evidently dependent upon the profit which accrues to the car- 
riers. If, as the carriers claim, there is no profit, or, as the department claims, 
the profit is small, it is not a business that the carriers would struggle for. 
The department's idea of a good profit is 6 per cent of expenses. Not only is 
it true that business generally can not be successful with such a profit, but 
examination of railroads' reports the country over reveals the fact that to fur- 
nish a reasonable interest on the capital invested requires a profit of 30 or 40 
per cent on the gross receipts, which means a much larger per cent on expenses. 

This association has asked for relief in the following respects, viz : 

1. Pay for an apartment. 

2. Annual weighings. 

3. Release from deliveries. 

4. Increased rate. 

5. Divisor for averaging weight to be the number of weighing days. 

The Post Office Department in a " Tentative draft of legislation," filed Feb- 
ruary 12, 1914, concedes the first three of these viz : Pay for an apartment ; 
annual weighings; and release from deliveries; but instead of increasing the 
rate of pay the sum of all the items of pay, including that for the apartment, is 
less than the rate now paid, when nothing is allowed for the apartment. We 
asked for bread and they offer us a stone. This can not be called a square deal. 

Again, on page 1059, it provides that the mails shall be weighed for not less 
than 35 successive days (which would include 4 or 5 Sundays) and the 
whole 35 days taken as the divisor to ascertain the daily average weight. Now, 
the short lines, as a rule, carry no Sunday mail. Therefore, by this method of 
computation the carrier would receive no pay for, say, from one -ninth to one- 
seventh of the weight carried. 

The last paragraph, on page 1059 (beginning new service, etc.), provides that 
while ''service may be reduced or discontinued with pro rata reductions in 
pay," yet additional and new service may be authorized without additional pay. 
This is on the rule of " Heads I win and tails you lose." 

Then, on page 1060, it provides that " no pay shall be allowed for any wooden 
full railway post-office car unless constructed substantially in accordance with 
the most approved plans and specifications of the Post Office Department." 
That is to say, the department will accept the service, for which it will give no 
compensation. This is hardly in harmony with the benevolent expressions 
engraven on the new Post Office Building in Washington. 

On page 1062, it provides that under two stated contingencies it shall be the 
duty of carriers to carry the mail at rates prescribed and fixed by the Post- 
master General. Duty is a very strong word, especially in relation to a pur- 
chase to which the department is a party, and the selling party has not even 
been consulted about the price. What would be thought of an act that would 
provide that the Navy Department should fix a price for armor plate and make 
it the duty of steel companies to furnish it for that price? The statement of 
such a proposition is its refutation. 

It is congruous with this that there follows a penalty of $5,000 for the refusal 
on the part of the carrier to perform the service at the rates provided by law 
'* when and for the period required by the Postmaster General so to do." Upon 
what meat has this our Csesar fed that he has grown so great? These provi- 
sions made a crime of the refusal by one party to enter into a contract on the 
demand of another party. 

Now let us look at the matter in a sober, businesslike way. It is patent that 
the railroads are necessary to the Post Office Department. To go no further, the 
drastic provisions of this tentative bill are proof of this proposition ; otherwise 
the bill would not endeavor to force carriers to take the business against their 
will. The carriers have never acted in an arbitrary manner, but, on the con- 
trary, have submitted from time to time to arbitrary acts or demands of the 
department which have increased their expenses and lessened their revenue. 

It is beneath the dignity of the Government to desire to obtain from the 
carriers what the law forbids a private person to do, i. e., discrimination in 
its favor. It is more ; it is immoral and subversive of law. 

The deficiency of the Post Office Department is not due to the railroads. It 
is due partly to the extension of the service ahead of its requirements and 
partly to the fact that the Post Office Department is carrying the expenses of 



1554 RAILWAY MAIL PAY. 

the other branches of the Government. The attention of the Congress has been 
called to this latter reason, but relief sought has never been obtained. And 
the Post Office Department still furnishes free use of the mails to all the other 
departments. 
Now for the conclusion of the whole matter : 

1. Let it be taken up between the department and the carriers as purely 
a business transaction, with no question of duty and penalty. The department 
and the carriers are both in for shekels, not for sentiment; for profit, not for 
amusement. Both are on the same level. 

2. The bulk of the business, at least, and perhaps the whole of it, may be 
reduced to a question of space used. Take a 60-foot car as a standard of 
measurement. Find the daily average number of passengers carried, multiply 
this by the average mileage rate, and the product will be the daily mileage value 
of the car. The value of an apartment would be prorated according to its size. 
This space would, so to speak, belong to the department for the term of the 
contract to transport in it anything connected with the mail. 

This leaves open the question of pouch mail, which would, perhaps, not be so 
difficult of settlement after the car and apartment mail had been settled. 

3. Wherever the question of weight of mail comes in the true average should 
be taken, not something unknown to mathematics. 

To sum up, what we consider that we are entitled to ask is — 

First. Pay for space which shall be equal to its value otherwise to carriers. 

Second. Annual weighings. 

Third. Release from deliveries. 

Fourth. Increased rate on pouch mail. 

Fifth. A true mathematical average where weight is concerned. 

Respectfully submitted. 

Shoet Line Railroad Association, 
By Jno. Wilson Brown, 

Vice President. 

Note. — It is proper to state that, so far as it relates to space, this paper is 
not intended to express the opinion of the Short Line Railroad Association, but 
that of the writer. 









INDEX. 



[The hearings were in the first instance printed as separate volumes, numbered 1 to 12, inclusive. In the 
consolidated hearings the volume numbers do not appear. It will be noted that the index gives the 
volume as well as the page number. This arrangement is retained for the convenience of those possessing 
only a set of the hearings composed of separate volumes.] 

Act of Mar. 4, 1910: 

See Parcel post; Mail revenue to railroads. Volume. Page. 

Discussion of (Coleman) 10 1194 

general 12 1476 

Effect, examples of (Coleman) 10 1191 

Explanation of (Stewart) 10 1193 

Increase in mail pay due to (Stewart) 10 1195 

Administration, method of (Stewart) 10 1236 

Purpose of (Stewart) 12 1476 

Adam's, Prof., views: 

Discussion of (Railway Mail Pay Committee) 12 1330 

Position with reference to division of expenses between freight 

and passenger traffics (Peabody) 12 1347 

Administration. See Authorization of space. 
Advantages to railroads of mail traffic: 

See Mail traffic ; Railroads; Relation of, to Government and people. 

Discussion of (Buckland) 1 264 

(Mack) 4 612 

(Baskerville) 5 704 

(Peters) 9 1076 

Federal aid in case of strikes (Scott) 1 231 

(Buckland) 1 265 

Protection of mail trains (Postmaster General) 7 1000 

Apartment cars (general) : 

See Apartment cars; Revenue from railway mail cars. 

Parcel post, increased use because of (Peters) 1 47 

Number of (Railway Mail Pay Committee report) 1 53 

New York Central lines (Rowan) 4 573 

Authorizations for, length of notice given (McBride) 12 1494 

(Gaines) 12 1495 

Authorization, criticism department method of (Peters) 9 1079 

Sizes required (Peters) 9 1080 

Operated only for use of mail (Wade) 1 248 

Weight of, average (Peters) 5 640 

Apartment car pay: 

See Document 105; Railroads' proposals; Lloyd plan. 

Act of 1873, no pay for (Railway Mail Pay Committee Report). . . 1 50 

Comparison of revenue from, with freight earnings per car-mile 

(Anderson) 5 739 

Department's position with reference to, defense of (Postmaster 

General) 11 1268 

Discussion of (Bradley) 4 624 

Department's new bill (vol. 8) (Mack) 10 1130 

Pay asked for by railroads (Peters) 1 44 

(Railway Mail Pay Committee Report) 1 j -^ 

(Peters) 1 130 

(Baldwin) 1 131 

(Anderson).., 1 207 

(Albright) 1 255 

(Peters) 2 383 

(Rowan) 4 584 

(Peters) 5 725 

Railroads' claim of no pay for, answer to (Postmaster General). . . 7 1019 

Relative revenue from (Mack) 10 1 154 

See Mail pay. 

1555 



1556 INDEX. 

Appeal to courts: Volume. Page. 

Right of appeal (Buckland) 1 j ^74 

Land-grant roads (Buckland) 1 299 

Right of appeal (Brown) 1 175 

Authorization of space (present method of pay) : 

Apartment cars, criticism of (Peters) 9 1078 

Analysis of, general 12 1420 

Discussion of, general 12 1420 

Method, explanation of (Stewart) 5 670 

(Bradley) 10 1167 

examples of, general 12 1381 

Determined by whom (Stewart) 10 1221 

Notice given (McBride) 12 1494 

(Gaines) 12 1495 

Operating runs (Stewart) 12 1380 

Unfairness (Mack) 5 667 

examples of (Hitt) 10 1179 

Effect of (Safford) 2 380 

Authorization of space (department's plan, Document 105): 

Discussion of (Stewart) 1 12 

(Peters) ; 1 { ^ 

(Bowman) 1 296 

(Mack) 1 301 

(Worthington) 2 352 

Explanation of (Stewart) . 5 670 

Review by Interstate Commerce Commission (Stewart) 1 12 

Return car movements (Mack) 1 303 

Operating runs (Mack) 1 305 

Excessive power in one officer (Peters) 1 129 

(Worthington) 2 352 

See Department's plan, Document 105, Objections to; Space plan 
(general) . 
Baggage cars: 

Length of (Worthington) 2 371 

Load of, average (Worthington) 2 336 

Overflow mail (Mack) 10 1146 

Rate, private cars (Lorenz) 10 1162 

(Rowan) 10 1170 

See Apartment cars; Mail traffic; Space plan, general. 
Blue tag mail: 

See Department's plan, vol. 8; Mail traffic. 

Department's plan, Document 105 (Stewart) 1 15 

Effect on growth of ton-mileage of mail (Bradley) 12 1376 

(Stewart) 12 1377 

Rate of pay for (Rowan) 10 1171 

Reduction in mail pay (Railway Mail Pay Committee Report). . - 1 101 

Revenue between Buffalo and Chicago (Rowan) 10 1171 

Revenue compared to revenue from railway post-office cars under 

department's plan, volume 8 (Rowan) 10 1171 

Ten miles per year (Bradley) 12 1378 

See Reductions in mail pay. 
Bucklands bill: 

Analysis of (Turner) 6 937 

Copy of (Buckland) 1 268 

Discussion of (Buckland) 1 269 

(Postmaster General) 7 1034 

(Lorenz) 6 866 

Explanation of (Buckland) 1 261 

(Lorenz) 6 866 

Buell system of cost separation: 

See Separation freight and passenger expenses; Postmaster Gen- 
eral's method of cost separation, Document 105. 

Extent of use (Safford) 1 136 

Discussion of (Peabody)) : 3 450 

Meyers (Interstate Commerce Commissioner) views on (Stewart).. 12 1363 

Postmaster General's plan compared to (Safford) 1 136 



INDEX. 1557 

Canadian railway mail pay law: Volume. Page. 

Basis of pay (Logan) 4 558 

Discussion of (Logan) 4 533 

Explanation of (Foster) 5 737 

New adjustment, explanation of (Postmaster General of Canada) . 12 1519 

Railroad subsidies (Postmaster General of Canada) 12 1524 

(Logan) 4 558 

Railroads compelled to carry mail (Logan) 4 544 

Capital and overhead charges: 

Department's plan, Document 105 (Stewart) 1 8 

Discussion of (Stewart) ' 1 15 

(Lorenz) 2 369 

(Peters) 1 129 

(Railway Mail Pay Committee Report) 1 81 

Fourteenth amendment (Railway Mail Pay Committee Report) ... 1 83 

Hubbard Commission 1 32 

Mail pay, increased because of (Stewart) 1 20 

Mails, participation in, proper amount of (Peters) 1 177 

No allowance for, in department's first plan (Railway Mail Pay 

Committee Report) . 1 62 

( Kruttschnitt) 1 65 

Seven per cent, decision sustaining (Peabody) 3 473 

Six per cent, department's allowance (Stewart) 1 30 

Capitalization of railroads : 

Amount of (Stewart) 1 15 

(Peters) 1 177 

Grand Trunk (Logan) 4 530 

Car-miles : 

Passenger train (1910) (Scott) 1 224 

Passenger earnings per (Interstate Commerce Commission) 2 360 

Explanation of (Rowan) 4 588 

See Mail traffic; Pay to railroads; Document 105. 
Car-foot miles: 

Assignment of, passenger service (Railway Mail Pay Committee 

Report)........ 1 52 

Basis for estimating cost (Railway Mail Pay Committee Report).. 1 70 

Closed-pouch lines (Railway Mail Pay Committee Report) 1 77 

Document 105 (Railway Mail Pay Committee Report) 1 11 

Definition of (Railway Mail Pay Committee Report) 1 71 

Freight earnings per (Worthington) 2 327 

Mail service (Railway Mail Pay Committee Report) 1 116 

Mail revenue per (Peters) 1 122 

Discrepancy between figures of department and railroads, joint 

letter 1 323 

See Mail traffic; Pay to railroads; Document 105. 
Change of divisor: 

Atlantic Coast Line R. R. (Albright) 1 251 

Discussion of (Railway Mail Pay Committee Report) 1 99 

(Peters) 9 1083 

Effect on average ton-mileage of mails (Bradley) 12 1376 

(Stewart) 12 1377 

Explanation of (Turner) 6 917 

Document 105 (Worthington) 2 { ^ 

New York Central lines (Rowan) 4 572 

No underpay because of (Postmaster General) 7 1020 

Objection to, by railroads (Taylor) 1 314 

Purpose of (Stewart) 12 1474 

Regulation providing for (Railway Mail Pay Committee Report) . 1 50 
See Reductions in mail pay; Underpay^ to railroads; Mail pay to 

railroads. 
Changes in mail-pay law: 

History (Railway Mail Pay Committee Report) 1 48 

List of (Bradlev) 2 401 

(Kruttschnitt) 5 795 

Pay to railroads (Kruttschnitt) 5 795 

See Reductions in mail pay; Overpay and underpay to railroads; 

Mail pay to railroads. 



1558 INDEX. 

Closed-pouch service: Volume. Page. 
Assignment of space, criticism of (Railway Mail Pay Committee 

Report) - 1 66 

Assignment of space for, Document 105 (Wade) 1 246 

(Stewart)..... 9 1109 

department 's rule ( Stewart) < -.1 -. ]f. 2 

railroads' rule (Railway Mail Pay Commit- 
tee) 7 1017 

(Railway Mail Pay Commit- 
tee Report) 1 71 

Pennsylvania and New York Central Co.'s 

rule (Railway Mail Pay Committee) 11 1264 

Atchison, Topeka & Santa Fe Railroad (Peabody) 5 691 

Can not be measured by space (Peters) 1 44 

Dead space necessary in (Railway Mail Pay Committee Report).. 1 72 

Dead space (McBride) 3 509 

Electric railways (Neal) 1 153 

(Piper) 1 154 

Fines, objection to (Taylor) 1 318 

Lloyd plan (Robinson) . 5 683 

Space, no allowance for in department's plan, Document 105 

(Stewart) 1 13 

Space basis not proper method of pay for (Mack) 1 304 

Records required (Railway Mail Pay Committee Report) 1 66 

(Taylor) 1 314 

Weighing, under department's plan, Document 105 (Stewart) 1 13 

(Wade) 1 249 

Weight, elimination of (Bowman) 1 298 

See Mail traffic; Department's plan, volume 8; Document 105; 
Short line roads. 
Comparative mail and express rates: 

Criticism and discussion of department's method of ascertaining 

average ton-mile revenues of mail and express, general 12 1376 

Comparison of ton-mile rates for mail and express, general 5 783 

Comparative value of mail and express traffics to railroads (Stewart) 12 1395 

Comparative weights per ton-mile not fair (Worthington) 12 1398 

Comparative weight of car fixtures (Worthington) 12 1399 

Car-mile revenues (Lorenz) 12 • 1398 

Importance of (Stewart) 12 < -.^^ 

(Lorenz) 12 1488 

Post Office Department's statement (Postmaster General) 11 1272 

' criticism (Peabody) 12 1352 

Railroads' statement (Railway Mail Pay Committee) 12 1337 

Results of comparisons (Stewart) 12 1509 

Mail and express traffics compared (Railway Mail Pay Committee) . 12 1337 

General 12 1357 

See Express revenues; Mail pay to railroads; Present method of 
pay. 
Competitive mail roads: 

Cost plan, effect of (Worthington) 2 350 

Discussion of (Baldwin) 1 134 

(Peters) 1 46 

Highest bidder (Mack) 1 310 

(Madden, Member of Congress) 10 1174 

Method of assignment of mail to (Mack) 1 310 

Space plan, effect on (Worthington) 2 359 

Through mail, segregation (Scott) 1 226 

See Mail traffic. 
Cost basis: 

Annual revision (Worthington) 2 335 

Cost only incidental in rate making (Saff ord) 1 136 

difficulty of ascertaining (Worthington) 2 366 

(Mack) 5 622 

(^ters) { j> ^f 

Cost should not be fixed by Post Office Department (Lorenz) 2 378 



INDEX. 



1559 



Volume. Page. 



Cost basis — Continued. 

Different rate for each road (Peters) 1 

(Mack) { I 

Discussion of (Buckland) 1 

(Worthington) 2 

(Wishart) 4 

(Peters) 5 

(Lorenz) 6 

Indorsement of (Buckland) 1 

Guide in determining fairness of rate (Postmaster General). . 7 

Not necessary to be scientific ( Wishart) 4 

Objections to (Peters) 1 

(Safford) ' 1 

(Scott) 1 

(Worthington) 2 

(Peabody) 3 

See Department's plan, Document 105; Mail pay rates; Separation 
of freight and passenger expenses; Space basis. 
Dead space : 

Assignment of mail space, Document 105 (Railway Mail Pay Com- 
mittee Report) 1 

(Kruttschnitt) 1 

(Railway Mail Pay Com- 
mittee Report) . . 1 

(Worthington) 2 

(Peters) 2 

(McBride) 3 

(Peabody) 3 

(Railway Mail Pay Com- 
mittee) 12 

(Lorenz) 12 

Assignment of mail space, Document 105, on Pennsylvania R. R. 

system (Bradley) 2 

Assignment of mail space, Document 105, on Grand Trunk R. R. 

(Logan) 4 

Assignment of mail space, Document 105, admission of depart- 
ment's errors (McBride) 5 

Assignment of mail space, Document 105, defense of (Stewart) 5 

(Postmast e r 

General).. 7 
Assignment of mail space, Document 105, on Missouri Pacific 

lines, defense of (Postmaster General) 11 

Assignment of mail space, Document 105, on Baltimore & Ohio 

R. R. (McCahan) 12 

Assignment of mail space, Document 105, on Missouri Pacific 

system, criticism of (Mack) 12 

Assignment of mail space, Document 105, on Missouri Pacific 

system, defense of (McBride) 12 

Discussion of (Peabody) 3 

general 9 

Disputed space, defense of (Postmaster General) 11 

Cost of, to Missouri Pacific system (Mack) 12 

Definition of (Stewart) 12 

Discussion of (Peters) 9 

Deadhead space, definition of (Stewart) ... 12 

Material point of difference between railroads and the depart- 
ment (Stewart) 12 

Explanation of (Railway Mail Pay Committee Report) 1 

Not space held in reserve (Mack) 4 

Ratio of, to paying space (Worthington) 2 

Storage cars (Bradley) 12 

See Document 105; Overpay and underpay to railroads; Objections 
to Document 105; Department's plan, Document 105. 



44 
129 
305 
662 
275 
366 
608 
639 
858 
275 
1005 
608 

46 
136 
223 
348 
506 



62 
65 

71 
333 
347 
389 
509 
508 

1327 
1489 

409 
431 

536 

648 
710 

1013 

1285 

1364 

1403 

1491 
509 
1093 
1263 
1418 
1380 
1078 
1380 

1517 

72 

539 

336 

1500 



1560 INDEX. 

Deadhead space : Volume. Page. 

Definition of (Stewart) 12 1358 

See Dead space. 
Department's plan, Document 105: 

Advantage of (Stewart) 1 10 

Administration, expense of (Stewart) 1 13 

method of (Stewart) 1 14 

objection to (Peters) 1 126 

(Mack) 5 666 

Blue-tag mails (Stewart) 1 15 

Based on erroneous and insufficient statistics (Railway Mail Pay 

Committee Report) 1 110 

Capitalization and overhead charges (Stewart) 1 8, 15 

Criticisms of (Railway Mail Pay Committee Report) 1 63 

(Kruttschnitt) 1 65 

(Railway Mail Pay Committee Report) 1 114 

Disputes, less with railroads (Stewart) 1 13 

Department officials, no allowance for space occupied (Stewart). . 1 25 

Discussion of (Buckland) 1 257 

(Worthington) 2 345 

• (Lorenz) 6 858 

(Turner) , 6 921 

Defense of (Postmaster General) 7 1026 

Effect of (Stewart) ' 1 28 

Capitalization, increased pay to railroads by allowance of 6 per 

cent (Stewart) 1 20 

Frequency of service, not properly allowed for (Peters) 1 126 

Interstate Commerce Commission, appeal to (Stewart) 1 11 

Impracticability of (Peters) 5 727 

Method of arriving at 6 per cent allowance on capital charges 

(Stewart) 1 29 

No saving to Government with allowance for capital charges 

(Peters) 1 129 

Objections to (Peters) 1 46 

(Anderson) 1 207 

(Albright) 1 254 

(Mack) 1 301 

Purpose of, not to reduce pay (Stewart) 1 12 

Pay to railroads under (Worthington) 2 345 

(Peters) 9 1086 

Rate of pay, different for each road (Peters) 1 29 

Summary of (Railway Mail Pay Committee Report) 1 63 

Side and' terminal service (Mack) 1 210 

Saving to Government by (Stewart) 1 7 

(Railway Mail Pay Committee Report) . 1 71 

Space only measure of cost (Stewart) 1 4 

Space feature, indorsement (Bowman) 1 296 

Traffic density (Worthington) 2 372 

Underpay, omitted expenses (Railway Mail Pay Committee Re- 
port)..., 1 84 

Underpay (Peters) 1 127 

Wholesale and retail idea (Worthington) 2 371 

See Padding of mails; Space plan; Mail pay based on cost; Docu- 
ment 105; Objections to department's plan, Document 105. 
Department's plan, volume 8: 

Analysis of (Mack) 10 1120 

(Worthington) 12 1443 

Administration of (Stewart) : 10 1132 

(general) 12 1420 

(Bradley) 12 1457 

Authorization of space changes (Stewart) 10 1132 

(general) 10 1147 

(Stewart) 12 { ^82 

(general) 12 1420 

on operating runs (Mack) 10 1158 

(Stewart) 12 1382 



INDEX. 



1561 



Department's plan, volume 8 — Continued. Volume. 

Apartment cars, relative pay for (Mack) 10 

Acceptableness to railroads compared to Lorenz plan (Worthing- 
ton) 12 

Criticisms of (Baldwin) 10 

(Mack) 10 

(Bradley) 10 

Discussion of (Peters) 10 

Defense of (Postmaster General) 11 

Denver & Rio Grande R. R. (Mack) 12 

Fluctuation of service (Mack) 10 

Frequency of service (Stewart) 12 

Loading charge (Stewart) 10 

intermediate (Mack) 10 

Long Island R. R. (Peters) 12 

Maximum authorization, routes or operating runs (Mack) 10 

Missouri Pacific R. R. (Stewart) •. . . 12 

Objections to (Peters) 10 

(Worthington) 12 

(Bradley) 12 

lower pay for smaller units (Peabody) 12 

Operating runs, authorization of space for (Mack) 10 

Protest against (Worthington) 12 

Pay, increase of, with decrease of unit sizes (Peabody) 12 

Pay under (Mack) 10 

Rates, multiplicity of (Stewart) 10 

method of fixing (Stewart) h 12 <j 

Rate, fixed, discussion of (Stewart) 12 

(Scott) 12 

objection to (Worthington) 12 

maximum, discussion of, general 12 

proposed, discussion of, general 12 

Requiring railroads to carry mail, necessity of (Stewart) 10 

Railway post-office car pay compared to blue-tag mail (Rowan) . . 10 

Statement of (Stewart) 8 

Station room, requirement for, general 10 

Short line roads, objections by (Nichols) 10 

Space versus weight, general 12 

Southern Pacific Railroad (Worthington) 12 

Terminal charges (Peabody) 10 

general 12 

Wholesale and retail idea applied to units (Peabody) 12 

See Document 105; Spce basis; Initial and terminal charges and 
loading rates; Department's plan; Document, 105. 
Desirability of mail traffic at present rates: 

See Mail traffic; Advantages to railroads of mail traffic. 

Discussion of (Scott) ■. 1 

(Mack) 1 

(Bradley) 2 

(Baldwin) 5 

New York, New Haven & Hartford Railroad (Lorentz) 5 

Public policy (Mack) 4 

Division of postal receipts plan: 

Parcel post in Canada (Logan) 4 

Discussion of (Logan) 4 

See Percentage basis. 
Document 105: 

Assignment of expenses, improper method (Railway Mail Pay Com- 
mittee Report) 1 

Assignment of expenses, method used (Safford) 1 

Assignment of expenses, discussion of method used (Bowman) 1 

Assignment of passenger earnings, basis of (Lorenz) ■ 2 

Assignment of expenses, discussion of (Railway Mail Pay Commit- 
tee) 12 

Blanks and instructions for (Stewart) 1 

Cooperation with railroads (Stewart) 1 

(Bradley) 2 

49396—14 106 



1154 

1451 
1117 
1120 
1166 
1112 
1278 
1399 
1131 
1512 
1134 
1157 
1515 
1158 
1497 
1112 
1443 
1537 
1459 
1158 
1443 
1459 
1129 
1131 
1397 
1470 
1473 
1478 
1446 
1473 
1470 
1138 
1171 
1057 
1185 
1208 
1444 
1446 
1144 
1387 
1459 



234 
312 
439 
769 
789 
609 

548 
549 



79 
136 
279 
325 

1324 

45 

5 

404 



1562 



INDEX. 



Document 105 — Continued. 

Cost of preparing (Stewart) 

to railroads (Peters) 

Committee appointed to prepare (Stewart) 

Car-foot-mile pay (Stewart) 

Changes in (Railway Mail Pay Committee Report) 

Criticisms of (Railway Mail Pay Committee Report) 

(Kruttschnitt) 

(Bradley) 

(Wishart) 

(Peters) 

Closed-pouch lines, space assigned (Railway Mail Pay Committee 

Report) 

(Stewart) 

Change of diviser, incomplete because of (Worthington) 

Charge of space to mail service (Railway Mail Pay Committee) 

Date of report to Postmaster General (Stewart) 

House of Representatives (Stewart) 

Discussion of (Worthington) 

(Railway Mail Pay Committee) 

Deductions with reference to operating expenses and taxes per car 

foot mile for passenger service (Worthington) 

Deductions with reference to operating expenses and taxes per car- 
foot mile for passenger service (Lorenz) 

Editions of (Railway Mail Pay Committee Report) 

Errors in (Peters) 

Explanation of (Turner) 

First cost statistics (Stewart) 

Errors in (Railway Mail Pay Committee Report) 

History of (Bradley) 

(Stewart) 

Incomplete, erroneous, etc. (Railway Mail Pay Committee Report). 

Incorrect charge of space to mail service (Anderson) 

(Buckland) 

(Railway Mail Pay Com- 
mittee Report) 

(Worthington) 

(Bradley) 

(Logan) 

(Wishart) 

(Railway Mail Pay Com- 
mittee Report) 

(McCahan) 

(Peters) 

Inaccuracies of (Worthington) 

(Peters) 

Importance of (Lorenz) 

Law providing for (Stewart) 

Loss to railroads because of disallowance of space (Railway Mail 
Committee Report) 

Liberal to railroads (Stewart) 



Volume. Page. 



Method of preparing (Stewart) 

Mail clerks, no allowance for space occupied by (Stewart) _. 

Mail clerks, no allowance for space occupied by (Railway Mail 
Pay Committee Report) 

Methods used, instances of unreliableness of (Wade) 

Magnitude of (Bradley) 

Mistakes as to dead space, department's admission of (McBride). . 

Method of assigning mail space, defense of (Stewart) 

Missouri Pacific Ry. defense of department's method of assign- 
ing mail space (McBride) 

November, reasons for selection as statistical period (Stewart) 

Missouri Pacific Ry.'s criticism of department's method of assign- 
ing mail space 





5 




187 




6 




10 




59 




63 




65 


2 


405 


4 


601 


5 


647 


5 


77 


12 


1417 


2 


380 


12 


1327 


1 


6 


1 


7 


2 


379 


12 


1321 


12 


1471 


12 


1478 


1 


59 


5 


648 


6 


901 


1 


7 


i{ 


62 
79 


2 


401 


1 


3 


1 


110 


1 


206 


1 


265 


1 


79 


2 


333 


2 


400 


4 


536 


4 


601 


1 


72 


12 


1364 


9 


1079 


2 


347 


9 


1065 


12 


1518 


1 


3 


1 


79 


12 { 


1388 
1503 


1 


6 


1 


27 


1 


70 


1 


244 


2 


403 


5 


648 


12 


1410 


12 


1491 


1 


5 



12 



1413 



INDEX. 1563 

Document 105— Continued. ' Volume. Page. 

November, not a fair month (Peters) 9 1089 

(Railway Mail Pay Committee Re- 
port) 1 62 

Objections to by railroads (Stewart) 1 10 

Overpay to railroads shown by (Stewart) 1 81 

Operating expenses and taxes, apportioned to passenger service, 

defense of (Postmaster General) 11 1258 

Operating expenses and taxes apportioned to mail service, de- 
fense of (Postmaster General) 11 1261 

Purpose of (Stewart) 1 3 

Preparation of (Buckland) 1 276 

(Stewart) 12 1520 

history of (Railway Mail Pay Committee) 12 1323 

railroad cooperation (Railway Mail Pay Committee 

Report) 1 51 

Reliability of (Stewart) . 1 7 

Revenue from passenger and mail services per car mile, discrep- 
ancy in figures of department and railroads (joint letter) 2 323 

Review of (Postmaster General) 7 987 

Return movement, assignment of space for (Bradley) 12 1500 

Six per cent allowance on capital charges, method of arriving at 

(Stewart) 1 30 

Space disallowed by department (Peters) 1 47 

(Railway Mail Pay Committee 

Report) 1 71 

(Peters) 9 1079 

general 9 1092 

defense of (Postmaster General). 11 1248 

Space, method of assigning to passenger service (Stewart) 12 1382 

Space disallowed by department, discussion of (Lorenz) 12 1489 

Statistics not applicable to present time (Worthington) 2 387 

Suggestions with reference to (Railway Mail Pay Committee 

Report) 1 51 

Summary of report accompanying (Railway Mail Pay Committee 

Report) 1 63 

Side and terminal service, information not reported (Railway 

Mail Pay Committee Report) 1 68 

Side and terminal service, information not reported (Mack) 1 310 

Underpay, proof of, by (Peters) 5 721 

Varying results obtained from (Worthington) 2 346 

See Document 105, department's report; Department's plan, Docu- 
ment 105; Objections to department's plan, Document 105; 
Department's plan, volume 8; Dead space. 
Electric mail roads: 

Committee representing 1 140 

Discussion of (Lorenz) * 6 897 

(Turner) 6 952 

Employees (Piper) 1 163 

Loss, refusal of Brooklyn Heights R. R. to carry pouch mail at 

(Piper) 1 155 

reasons for carrying at (Neal) 1 142 

Lyons bill (Turner) 6 953 

Mail cars, size of (Piper) 1 154 

(Hamilton) 1 168 

pay for (Piper) 1 154 

Mail traffic compared to other traffics (Piper) 1 156 

Operating expense, mail cars (Neal) 1 146 

(Piper) 1 159 

apportionment of (Piper) 1 159 

Operating expense, Chicago railways (Hamilton) 1 167 

Pay, inadequate (Neal) 1 141 

basis of (Neal) 1 141 

inadeq uate (Hamilton) 1 168 

compared steam roads (Brown) 1 172 

letters with reference to (Lyons) 5 778 



1564 



INDEX. 



Electric mail roads — Continued. 

Pouch service (Neal) 

pay for (Piper) 

(Ham) 

Proposed bill (Lyons) 

Rates, discussion of (Peters) 

(Piper) 

passenger compared to steam roads (Brown) 

made by Interstate Commerce Commission (Piper) 

Steam roads, more expensive than (Brown) 

Space plan, favorable to (Neal) 

(Piper) 

Steam roads, compared with (Neal) 

Refusal to carry mail (Piper) 

Value of mail traffic (Piper) 

(Hamilton) 

(Neal) 

Eminent domain: 

See Railroads, relation of, to Government and people. 

Discussion of (Logan) 

Value of, to railroads (Peabody) 

Empty return movement: 

Blue-tag mail (Rowan) 

Basis of department's estimated saving (Mack) 

Discussion of (Bradley) 

(Peabody) 

Document 105, assignment of space (Bradley) 

Should be paid for (Scott) 

(Mack) 

(Lorenz) 

See Document 105; Department's plan, Document 105; Depart- 
ment's plan, volume 8; Dead space; Storage cars. 
English mail-pay law: 

Amount of railroads ' participation in total mail revenue (Peters) . . 

Discussion of (Logan) 

Extracts from (Buckland) 

Pay compared to United States (Logan) 

Parcel post (Peters) 

Steamship mails (Logan) 

See Canadian mail -pay law; Mail pay to railroads. 
Express companies: 

Contracts with railroads (Anderson) 

(S. P. Worthington) 

Atchison, Topeka & Santa Fe (Peabody). . 
favorable because of railroad ownership 

of stock (Peabody) 

Earnings on capital stock (Peabody) 

Government ownership of, general 

Relation with railroads to (Anderson) 

Railroad ownership of (Stewart) 

United States Express. Co. retiring from business (Peabody) 

Joint employees (Snead) 

Express rates: 

Adequacy of (Kindell, mail clerk) , 

Basis of (Baldwin). 



Volume. 
1 
1 
1 
5 



weight and space (Wade) . 
il 



Discussion of, general 

(Kindell, mail clerk) 

Department's method of calculating average rate per ton-mile, 
discussion and criticisms of, general 

Comparison of ton-mile rates for mail, express, and freight, general. 

Compared to mail rates (Postmaster General) 

(Railway Mail Pay Committee) 

Criticism of department's statement with reference to comparative 
express and mail rates (Peabody) 

Controlled by Interstate Commerce Commission (Peters) 



4 
5 

10 
1 
1 
3 

12 
1 
1 

12 



1 
12 
12 

12 
12 
12 
1 
12 
12 
12 

12 

1 

1 

12 

12 

12 

5 

11 

12 

12 
1 



152 
154 
170 
778 
127 
157 
174 
158 
174 
144 
159 
143 
155 
162 
167 
144 



542 
689 

1172 
303 
123 
510 

1500 
225 
303 

1537 



654 
549 
268 
550 
650 
551 



200 
1357 
1360 

1361 
1360 
1485 
200 
1401 
1360 
1399 

1393 

133 

241 

1354 

1391 

1376 

783 

1272 

1337 

1352 
184 



INDEX. 1565 

.Express revenues (railroads) : Volume. Page. 

Annual revenues (Railway Mail Pay Committee Report) 1 95 

Analysis of (Lewis) 5 695 

Amount of (Stewart) 12 1395 

Compared to mail revenues (Railway Mail Pay Committee Report). 1 52 

(Peters) 2 360 

(letters) 5 743 

(Postmaster General) 11 1271 

(Railway Mail Pay Committee) 12 1334 

(Baldwin) 1 132 

and passenger revenues, Pennsylvania R. R. sys- 
tem (Bradley) 2 426 

and passenger revenues, Chesapeake & Ohio 

R. R. (Snead) 2 442 

Fluctuations in (Scott) 12 1398 

Joint employees (Snead) 12 1399 

Length of haul in relation to average ton-mile revenue, general. . 12 1375 

Parcels post, reduction by (Baldwin) 1 132 

Revenue compared to mail earning per ton-mile (Bradley) 1 112 

Per ton-mile (Bradley) 1 112 

Relative earnings, mail and express, criticism of department's 

figures (Bradley). ." 12 1376 

Unsatisfactory to railroads (Peabody) 12 1359 

(Peters) 1 186 

See Comparative mail and express rates; Express traffic ; Mail traffic. 
Express traffic (general) : 

Analysis of (Lewis) 5 695 

Compared to mail traffic (Anderson) 1 200 

(Mack) 1 308 

(Peters) 2 360 

(Bradley) 2 437 

general 12 1354 

Car foot miles, number and earnings (Railway Mail Pay Com- 
mittee Report) 1 71 

Discussion of (Railway Mail Pay Committee) 12 1334 

Division of pay when package is handled by two companies 

(Peabody) 12 1353 

Fluctuations in (Scott) 12 1398 

Joint employees (Snead) 12 1399 

f 1 3Qfi 

Liability for injuries to employees (Stewart) 12 < -, 402 

Parcel post, decrease in business caused by (Worthington) 12 1352 

examples (Coleman). 10 1199 

Weight of packages (Mack) 1 308 

average carload (Bradley) 12 1377 

Value of, to railroads (Stewart) 12 1395 

See Express companies; Mail traffic; Express revenues. 
Extra services and facilities required by mail traffic: 

Discussion of (Railway Mail Pay Committee Report) 1 52 

(Peters) 1 34 

(Rowan) 4 586 

(Mack) 4 610 

Enumeration of (Anderson) 1 204 

(Worthington) 2 336 

(Bradley) 4 622 

Extra car on Grand Trunk (Logan) 4 538 

Regulationsgoverning (Railway Mail Pay Committee Report) — 1 56 

Station porters (Peters) 1 129 

See Side and terminal service; Station porters; Fast and special 
mail trains; Mail trains; Mail cranes, receivers, and catchers; 
Messenger service. 
Fast and special mail trains: 

Advantage of, to railroads (Stewart) 1 17 

(Baldwin) 1 134 

(Worthington) 2 357 

Cost of (Stewart) 1 17 



1566 INDEX. 

Fast and special mail trains — Continued. Volume. Page. 

Department's plan, volume 8, probable effect of (Mack) 10 1128 

not compulsory under (Worthing- 

ton) 12 1444 

probable effect of (Mack) 12 1445 

Department's plan, Document 105, elimination of (Mack) 1 305 

Extra compensation for (Stewart) 1 19 

Earnings per train-mile, Missouri Pacific Railroad (Mack) 4 613 

Elimination of, by department's plan, Document 105 (Worth- 

ington) 2 358 

Great Northern Railway, analysis of service (Baskerville) 5 700 

Competitive Lines (Madden, Member of Congress) 10 1174 

New York and St. Louis, Pennsylvania Railroad (Scott) 1 224 

Not required by Government (Worthington) 2 357 

New York Central lines (Rowan) 4 564 

Operation, difficulty of (Scott) 1 224 

cost of (Scott) 1 224 

(Stewart) 1 17 

Pay, reduction in, caused by withdrawal (Railway Mail Pay 

Committee Report) 1 100 

Southern Pacific Railway (Worthington) 2 338 

Schedules, how arranged (Rowan) 4 565 

arranged by department (Stewart) 1 20 

Subsidies (Mack) 4 623 

Special facilties for (Peters) 1 44 

Special pay for (Baldwin) 1 135 

Revenue from, Missouri Pacific Railway (Mack) 10 1400 

See Mail trains; Mail traffic; Competitive lines. 
Fines and penalties: 

Delayed mails (Stewart) 1 19 

(Bradley) 4 620 

Department's plan, volume 8 (Stewart) I -^ 

(Bradley) 12 1445 

Present plan (Stewart) 10 1222 

f 314 

Pouch mail (Taylor) 1 | 3 Jg 

When imposed (Railway Mail Pay Committee Report) 1 67 

See Pouch mail; Mail trains; Present law; Department's plan, 
Document 105; Department's plan, volume 8. 
Fluctuations in mail: 

Discussion of (Bradley) 10 1166 

Overflow in baggage cars (Mack) 10 1146 

Pay for, weight plan (Mack) 10 1159 

See Mail traffic; Baggage cars; Lloyd plan. 
Freight rates: 

Basis of (Peters) , 1 45 

(Anderson) 1 196 

(Brown) 1 173 

(Scott) 1 235 

(Worthington) ' 2 349 

weight (Peters) 1 128 

(Baldwin) 1 132 

and space (Wade) 1 249 

space considered (Worthington) 2 351 

building up of trade and traffic considered (Peters) 12 1344 

Competition, effect of, on (Scott) * 1 231 

Comparisons of ton-mile rates for mail, express and freight, general. 5 583 

Empty return movement, allowance for (Worthington) 2 340 

Empty cars, rate for (Worthington) 2 340 

Explanation of (Denham) 10 1228 

Frequent litigation (Peters) 1 186 

I. C. C. control of (Brown) 1 175 

Low rates to build up trade (Scott) 1 231 

(Peters) 12 1344 

Less-than-carload lots (Peabody) 3 519 

Live stock (Peabody) 12 1467 



INDEX. 



1567 



Freight rates— Continued. Volume. Page. 

Reasonableness of, determined by cost (Lorenz) 12 1346 

Variation of, reasons for (Anderson) 1 196 

See Freight traffic. 
Freight revenue: 

Analysis of (Lewis) 5 695 

Compared to apartment-car revenue per car-mile (Anderson) 5 739 

Changes in, 1895 to 1910 (Worthington) 2 342 

Charleston & Western Carolina Ry . (Anderson) 1 203 

Less than passenger earnings, New York, New Haven & Hartford 

(Bowman) 1 282 

Larger than for mail (Stewart) 1 192 

Compared to mail earnings (Anderson) 1 202 

(Stewart) 1 192 

(Worthington) 2 336 

Increase of, compared to mail revenue (Worthington) 2 342 

Mail earnings compared to less than carload lots of freight (Pea- 
body) 3 515 

New York Central lines, greater than passenger earnings (Rowan).. 4 586 

Southern Pacific Co. (Worthington) 2 328 

See Freight traffic; Freight rates. 
Freight traffic: 

Analysis of (Lewis) 5 695 

Cost of (Anderson) 1 202 

compared to passenger service (Anderson) 1 202 

Company freight (Worthington) 2 336 

Empty return movement, allowance for (Worthington) 2 340 

Increase of (Worthington) 2 343 

Santa Fe system (Peabody) 3 515 

Value of (Anderson) 1 202 

See Freight rates; Freight revenue. 
Full railway post-office cars: 

Authorizations (Mack) 1 306 

Cost of, increase in (Mack) 1 306 

average (Stewart) 1 22 

initial (Worthington) 2 338 

Dead weight (Scott) 1 223 

Description of (Worthington) 2 335 

Discussion of (Worthington) 2 337 

(Bradley) 4 624 

Document 105, allowance of space (Peters) 9 1080 

Earnings between Pittsburgh and St. Louis (Scott) 1 223 

Earnings between Pittsburgh and Chicago (Scott) 1 223 

Earnings, compared to passenger cars (Scott) 1 224 

Equipment, changes in requirements (Mack) 1 306 

Equipment, cost of (Worthington) 2 338 

Load, average weight of (Peters) 5 639 

Maintenance, cost of (Interstate Commerce Commission) 1 11 

(Postmaster General Vilas) 1 20 

(Stewart) 1 23 

(Worthington) 2 338 

heat and light (Railway Mail Pay Committee 

Report) 1 68 

Mileage of, 1912 (Stewart) 1 23 

(Worthington) 2 337 

Must be set out in advance of train time (Railway Mail Pay Com- 
mittee Report) 1 68 

Number of, in use (Stewart 1 21 

(Railway Mail Pay Committee Report) 1 53 

New York Central lines (Rowan) 4 573 

Operation, cost of, compared to storage cars (Stewart) 10 1155 

Operation, cost of (Stewart) 1 23 

Pay, prior to July 1, 1907 (Railway Mail Pay Committee Report) . . 1 50 

after July 1, 1907 (Railway Mail Pay Committee Report) 1 50 

act of 1873, explanation (Railway Mail Pay Committee 

Report) 1 50 

per cent of (Railway Mail Pay Committee Report) 1 53 



1568 INDEX. 

Full railway post-office cars — Continued. Volume. Page. 

Pay, compared with freight cars, Pennsylvania Railroad (Scott). . 1 223 
decrease of compared to increase of pay for weight, 1897 to 

1911 (Scott) 1 223 

discussion of (Worthington) 2 337 

compared to pay for transporting empty cars (Worthington) . . 2 339 

in Canada (Logan) 4 544 

Proportionate amount of mail carried by (Worthington) 2 344 

Requirements, Post Office Department (Peters) .' 1 44 

Reductions in pay, act Mar. 2, 1907 (Railway Mail Pay Com- 
mittee Report) 1 98 

Reductions in pay (Albright) 1 251 

Atlantic Coast Line ( Albrigh t) 1 252 

(Mack) 1 306 

act Mar. 2, 1907 (Worthington) 2 327 

Repairing, cost of (Worthington) 2 338 

f 1 22 

Steel cars, requirement for (Stewart) < -j 2 i kqq 

Southern Pacific Ry . , number (Worthington) . 2 327 

Storage cars, comparative cost of operation (Stewart) 10 1155 

Tonnage carried, average (Railway Mail Pay Committee Report) . . 1 53 

capacity of (Scott) 1 223 

carried, effect of (Logan) 4 555 

Underloading ot (Scott) 1 222 

Weight of car compared to weight of mail (Anderson) 1 205 

(Bowman) 1 296 

Weight of car, average (Peters) 5 639 

See Apartment cars; Railway mail cars; Authorizations of space; 
Mail pay; Reductions in mail pay. 
Group plan: 

Discussion of (Worthington) 2 372, 390 

(Lorenz) 4 619 

Hubbard Commission: 

Capital and overhead charges (Peters) 1 32 

History of (Peters) 9 1064 

Report of, comments on (Peters) 9 1064 

Initial and terminal charges, and loading rates: 

Department's plan, volume 8, loading rates (Mack) 10 1126 

adequacy of, general. 10 1134 

Intermediate loading, pay for (Searle) 10 1156 

Loading rate, reasons for (Stewart) 10 1157 

discussion of, general 10 1159 

pay for by line charge (Lorenz) 10 1160 

Mail handling, compared to cost of handling freight, less than car 

load lots (Peabody) .......... 10 1142 

Proper amount of mails participation in terminal facilities (Stew- 
art) 12 1378 

St. Louis terminal, mail transfer expenses (Hitt) 10 1141 

(Stewart) 10 1142 

Terminal charges, discussion of, department's plan, volume 8, 

general 12 1386 

See Side and terminal service; Station porters. 
Interstate Commerce Commission: 

Appeal to, department's plan, Document 105 (Stewart) 1 11 

Buckland's plan (Buckland) 1 269 

Freight rates fixed by (Brown) 1 175 

Method of apportioning expenses (Safford) 1 137 

Questions to by reviewed by, department's plan, Document 105 

(Stewart) 1 12 

Review of mail rates by (Worthington) 2 397 

general 2 399 

Should fix rates (Piper) 1 158 

(Buckland) 1 263 

Land-grant roads: 

Compelled to carry mail (Buckland) 1 299 

Reduction in pay, department's plan, volume 8 (Mack) 10 1127 

Appeal to courts for underpay (Buckland) 1 299 



INDEX. 1569 

Law of 1873: • Volume. Page. 

Basis of mail pay (Turner) 6 900 

Merits of (Postmaster General) 7 1025 

Lewis plan: 

Analysis of (Lorenze) 6 865 

(Turner) 6 945 

Discussion of (Postmaster General) 7 1033 

Explanation of (Lewis) 5 695 

Light routes : 

Increased pay for (Anderson) 1 208 

Pay compared to heavy routes (Worthington) 2 354 

Space basis, effect of (Worthington) 2 353 

Lloyd plan : 

Discussion of (Stewart) 5 636 

(Postmaster General) 7 1031 

general 4 596 

(Stewart) 8 1051 

(Bradley) 12 1537 

Authorization of space (Stewart) 5 674 

Explanation of 5 636 

Explanation and discussion (Lorenz) 6 861 

Great Northern Ry . , probable effect on (Baskerville) 5 702 

Missouri Pacific, probable effect on (Stewart) 12. 1497 

Objections to, railroads (Peters) 5 636 

Post Office Department (Postmaster General) 7 1032 

Purpose of (Turner) 6 930 

Pay, increase of, with decrease of size of units (Peabody) 12 1459 

Smaller units, higher pay necessary for (Bradley) 10 1165 

Wholesale and retail theory in connection with (Peters) 5 692 

See Wholesale and retail theory. 
Locked-pouch mail: 

See Closed-pouch service. 
Lorenz plan: 

Compromise between weight and space (Turner) 6 953 

Discussion of (Postmaster General) 7 1032 

(Stewart) 8 1051 

(Worthington) 12 1451 

(Bradley) 12 1537 

Explanation of (Lorenz) 6 868 

Effect on Missouri Pacific R. P. (Stewart) 12 1497 

Line pay, increase of, with increase in weight (Lorenz) 10 1160 

(Bradley) 10 1165 

Memoranda (Lorenz) 2 378 

Outline of (Lorenz).. 6 873 

See Space basis; Weight basis. 

Loud Commission, views with reference to space (Mack) 1 302 

Mail cranes, receivers and catchers: 

Discussion of (Bradley) 4 625 

No pay for (Bradley) 4 625 

Mail routes: 

Average daily weight of (Worthington) 2 326 

Method of stating (Stewart) 10 1199 

Pay on light and heavy routes compared (Worthington) 2 354 

Southern Pacific Co. (Worthington) 2 326 

Charleston & Western Carolina Railway (Anderson) 1 197 

Mail traffic: 

Annual ton-mileage (Bradley) 12 1376 

(Worthington) 2 326 

Advantages of (Scott) 1 234 

Average haul, length of (Bradley) 5 698 

Analysis of, Baltimore 6c Ohio Railroad (McCahan) 12 1364 

Southern Pacifi c Railroad (Worthington) 2 326 

New York Central lines (Rowan) 4 564 

Chicago, Burlington & Quincy Railroad (Baldwin).. . 5 759 

Branches of (Lorenz) 4 618 

By-product to general railroad operation (Postmaster General) — 7 1000 



1570 



INDEX. 



Mail traffic — Continued. Volume. Page. 

Compared to other traffics (.Railway Mail Pay Committee Report) 1 84 

(Peters) 1 128 

(Piper) 1 156 

(Scott) : 1 226 

New York Central ( Wishart) 4 604 

(Mack) 4 614 

(Stewart) 5 657 

Compared to express traffic (Mack) 1 308 

(Peters) 2 360 

(Bradley) 2 437 

(Safford) 10 1162 

(Railway Mail Pay Committee) 12 1334 

general 12 1354 

(Anderson) 1 200 

Compared to passenger traffic, general 4 623 

(Kruttschnitt) 5 793 

(Lorenz) 6 893 

Compared to passenger and express traffics (Rowan) 4 586 

(Wishart) 4 606 

(Mack) 5 663 

Compared to freight traffic (Brown) 1 176 

Compared to less than carload lots of freight (Peabody) 3 495 

Compared to Canadian mail traffic (Logan) ' 4 545 

Compared to 1903 (Wishart) 4 605 

Cost of service rendered by railroads (Peters) 1 190 

Cost of handling, Atchison, Topeka & Santa Fe (Peabody) 3 495 

Court decisions (Turner) 6 690 

Change in, since 1873 (Peters) 11 1085 

Car mileage, annual, 1909, general 12 1377 

Comparative cost of (Lorenz) 6 893 

(Stewart) 1 16 

(Peters) 1 43 

(Bradley) 2 437 

(Rowan) 4 563 

(Wishart) 4 607 

(Mack) 4 611 

(Kruttschnitt) 5 793 

Discussion of (Worthington) 2 372 

(Mack) 4 609 

Description of (Lorenz) 6 850 

(Postmaster General) 7 998 

< p *«0 { io ml 

Delay of trains (Hitt) 10 1181 

Dispatching mails, department's method of (Stewart) 10 1177 

Empty equipment (Bradley) 1 123 

Extra cost of, to railroads (Lorenz) 4 589 

Fluctuations in (Peters) 1 46 

Facilities necessary compared to passenger traffic (Mack) 4 590 

Frequency of mail movements, trend of (Stewart) 12 1377 

Growth of (Railway Mail Pay Committee Report) 1. 96 

Government function (Anderson) 1 200 

History ( Railway Mail Pay Committee Report) 1 46 

(Turner) 6 899 

Increase of (Railway Mail Pay Committee Report) 1 50 

(Worthington) 2 341 

New York Central lines (Rowan) 4 572 

Increased cost of carrying (Worthington) 2 337 

Mail cars, size of (Mack) 10 1147 

Not passenger business (Peters) 10 1173 

Parcel post, increase due to (Anderson) 1 209 

(Logan) 4 549 

Preponderance of mail movement (Scott) 1 225 

Passenger schedules made to facilitate (Scott) 1 235 

Purpose of (Safford) 2 363 

Per cent of mail carried in railway post office cars, Grand Trunk 

(Logan) 4 555 



INDEX. 



1571 



Mail traffic— Continued. Volume. 

Parcel post, increased volume because of, example (Hardin) 10 

Proper amount of mails participation in general equipment, termi- 
nals, etc. (Stewart) _ 12 

Relation of, to railroad business (Mack) 4 

Reduced to one day's work on 1 mile of route, Pennsylvania R. R. 

(Bradley) _ 5 

Relative cost to railroads (Kruttschnitt) 5 

Segregation of local and through mail (Scott) 1 

Southern Pacific R. R. , discussion of (Worthington) 2 

Statistics of mail handling, Santa Fe R. R. (Peabody) 3 

Services rendered in connection with, enumeration of (Bradley) . . 4 

Sack of mail, average weight (Peabody) 10 

Small growth of ton mileage since 1908, reasons for (Bradley) 12 

Terminals, mail facilities in (Rowan) 4 

Value to railroads (Scott) 1 

Value to Post Office Department compared to other podt office ac- 
tivities (Bradley) 5 

Value of to railroads (Peters) 5 

See Passenger traffic; Express traffic; Freight traffic; Mail pay; 
Side and terminal service. 

Mail trains: 

Discussion of (Mack) 1 

Delays due to mail traffic, New York Central lines (Rowan) 4 

Delays due to mail traffic, examples of (Hitt) 10 

Earnings, compared to passenger trains (Mack) 1 

Irregularity of (Mack) 1 

Laws and regulations governing (Railway Mail Pay Committee 

Report) 1 

New York and St. Louis, fast trains (Scott) 1 

N ew York Central lines, earnings of (Rowan) 4 

Schedules arranged to accomodate mail traffic (Scott) 4 

Schedules, how arranged (Rowan) 4 

See Fast and special mail trains; Passenger traffic. 

Messenger service: 

Cost of (Mack) 

Missouri Pacific R. R. (Mack) 

to Government (Meyer, Postmaster General) 

(Stewart) 

Pennsylvania R. R. (Scott) 

Atlantic Coast Line R. R. (Albright) 

Cost to Government compared to cost to railroads (Mack) 

Discussion of (Mack) 

Difficulties of performance (Mack) 

Department's plan, Document 105 (Wade) 

History (Mack) 

Increase of, due to growth of mail (Mack) 

Increase of, due to frequency of train service (Mack) 

No part of railroad traffic (Mack) 

Overnight storage of mail (Scott) 

Persons employed, number of (Mack) 

Regulations governing (Mack) 

Railroads should be relieved from or paid cost (Mack) 

Railroads willing to perform service at cost (Scott) 

Cost of performance by railroads compared to Government (Scott) . 

Short lines, greater burden to (Mack) 

Value of, to Post Office Department (Mack) 

Wagon contracts (Mack) '. 

See Side and terminal service; Station porters; Railroad's pro- 
posals; Short-line roads. 

Munitions of war: 

Compared to mail (Buckland) 

Pay for, method of (Buckland) 

New England roads: 

Compared to other roads (Peters) 

Greater underpay, reasons (Buckland) 

(Mack) 

short haul (Lorenz) 



Page. 
1200 

1388 
590 

791 
807 
226 
326 
520 
624 
1144 
1376 
568 
226 

563 
661 



309 
574 
1181 
311 
216 

67 
224 
574 
235 
565 



211 
219 
211 
221 
231 
254 
219 
210 
212 
243 
210 
211 
212 
210 
232 
211 
214 
218 
231 
231 
212 
213 
213 



264 
264 

126 
276 
312 
552 



1572 INDEX. 

New England roads — Continued. Volume. 

New York, New Haven & Hartford, losses on (Buckland) 1 265 

Parcel post, should be paid for (Mack) : 1 299 

Talbott bill (Baldwin) 1 131 

See Mail pay; Overpay and underpay. 
Observation, Pullman, and dining cars: 

Extra revenue from (Worthington) 2 336 

Length of (Worthington) 2 371 

Operating expenses: 

Changes in, from 1895 to 1910 (Worthington) 2 342 

Comparison, 1909 and 1911 (Interstate Commerce Commission) ... 4 617 

Difference in, East and West (Worthington) 2 345 

Discussion of, Atchison, Topeka & Santa Fe (Peabody) 3 497 

Explanation of (Worthington) 2 330 

Greater than revenue, New York, New Haven & Hartford Rail- 
road (Bowman) 1 282 

Increase (Scott) 1 229 

compared to operating revenue (Scott) 1 229 

Charleston & Western Carolina Railway. (Anderson) 1 204 

compared to increase of mail revenue (Worthington) 2 341 

steel cars (Peters) 5 640 

s ; nce 1909 (Peters) 9 1085 

(Railway Mail Pay Committee) 12 1342 

with increase of speed (Railway Mail Pay Committee)... 12 1342 

compared to revenue (Worthington) 12 1388 

(general) 12 1483 

Southern Pacific, compared to other roads (Worthington). 12 1513 

Varying, per train mile (Lorenz) 4 618 

See Separation of freight and passenger expenses; Separation of 
passenger expenses. 

Increase of, in South (Albright) 1 253 

Atlantic Coast Line Railroad (Albright) 1 253 

Increase of (Worthington) 2 337 

Each traffic branch should bear its proportion of (Rowan) 4 587 

Overpay: 

Cost, method of determining (Peabody) 5 646 

Argument showing (Postmaster General) 11 1253 

Amount of (Stewart) 12 1511 

Change of divisor (Postmaster General) 7 1020 

Department's plan, Document 105 (Stewart) 1 10 

Discussion of (Stewart) 1 7 

(Peters) 1 46 

(Worthington) „ 2 "334 

(Railway Mail Pay Committee) 12 1324 

Early years (Albright) 1 251 

Law of March 2, 1907 (Postmaster General) 7 1020 

Amount of, Document 105 (Railway Mail Pay Committee Report). 1 81 

Document 105 (Stewart) 12 1516 

Pennsylvania R. R., discussion of (Scott) 1 234 

Relative passenger revenues, best determined by (Mack") 5 662 

Refutation of railroads' Claim of underpay (Postmaster General).. 7 991 

Space, best method of determining (Mack) 1 307 

Variation of, general 12 1387 

Woolcott Commission Report (Railway Mail Pay Committee Re- 
port) 1 53 

See Underpay; Mail pay. 
Padding of mails: 

Discussion of (Wade) 1 250 

Department's plan, Document 105 (Stewart) 1 13 

Parcel post: 

Apartment-car service, increased because of (Peters) '. 1 47 

Act of March 4, 1913, explanation of (Stewart) 10 1193 

Alabama, Georgia & Florida Railroad, effect on (Coleman) 10 1197 

Canada (Logan) 4 553 

Discussion of (Kindel, Member of Congress) 12 1331 

Extra weighing because of (Peters) 1 47 

(Brown) 1 176 



INDEX. 1573 

Parcel post— Continued. Volume. Page. 

Express earnings, reduction in, because of (Baldwin) 1 133 

England, pay for (Logan) 4 548 

(Peters) 5 650 

Economy in handling (Lorenz) 12 1483 

Freight traffic, effect on (Peabody) 12 1362 

Increase in pay under present law due to (Peters) 1 187 

Increase of (Anderson) 1 209 

Mail pay increase due to (Peters) 1 187 

(Coleman) 10 1191 

Operation of, examples (Coleman) 10 1198 

Santa Fe (Peabody) 12 1360 

Profit or loss to Government because of, general 12 1487 

Proper mail pay for (Peters) 12 1487 

Present law, adequate pay for (Peters) 1 188 

Rates, basis for, weight alone not satisfactory (Logan) 4 554 

Rates, explanation of (Kindel, Member of Congress) 12 1392 

Relations between railroads and Government, effect on (Stewart) . . 5 658 

Storage cars, increased because of (Brown) 1 128 

Segregation of (Logan) 4 548 

(Lorenz) 12 1484 

Transportation of, by fast freight (Logan) 4 553 

Wagon contracts due to (Stewart) . . .^ 10 1186 

See Mail traffic ; Express traffic ; Freight traffic . 
Passenger earnings: 

Amount of, annual, 1901 to 1911 (Railway Mail Pay Committee 

Report) 1 70 

1910 (Scott) 1 224 

per car-foot mile (Peters) 1 122 

(Lorenz) 2 325 

car mile (Interstate Commerce Commission) 2 362 

month (Lorenz) 9 1089 

car-foot mile, discrepancy between figures of de- 
partment and railroads, joint letter 2 323 

Average earnings, passenger-car space per car mile (Bradley) 5 652 

Atchison, Topeka & Santa Fe (Peabody) 3 497 

Atlantic Coast Line Railroad (Albright) 1 253 

Compared to mail earnings (Railway Mail Pav Committee Report) 1 52 

Southern Pacific (Worthington) . . . 2 326 

express and mail earnings, Pennsvlvania Railroad 

(Bradley) 2 426 

Compared to express and mail earnings, Chesapeake & Ohio Rail- 
road (Snead) 2 442 

Changes in, 1895 to 1910 (Worthington) > 2 342 

Compared to freight earnings (Railway Mail Pay Committee Re- 
port) 1 70 

Extra revenue from Pullman and dining cars (Worthington) 2 336 

Increase of, Southern Pacific Railroad (Worthington) 2 326 

compared to mail (Worthington) 2 341 

Less than freight revenue (Rowan) 4 586 

Not remunerative (Railway Mail Pay Committee Report) 1 112 

(Anderson) 1 198 

See Passenger traffic ; Separation of passenger expenses. 
Passenger rates : 

Basis of (Scott). 1 235 

neither weight nor space (Wade) 1 249 

Empty equipment, allowance for (Worthington) 2 340 

Entire cars (Worthington) 2 340 

State legislation (Rowan) 4 587 

Passenger traffic : 

Analysis of cost and revenues, Atchison, Topeka & Santa Fe Rail- 
road (Peabody) 3 497 

Car mileage, 1910 (Scott) 1 224 

Car-foot miles, number of, receipts, total and assigned (Railway 

Mail Pay Committee Report) 1 71 

Cost, increase of (Worthington) 2 337 

Compared to mail traffic (Krutschnitt) 5 793 



1574 



INDEX. 



Passenger traffic — Continued. Volume. Page. 

Cars, standardization of (Bradley) 12 1368 

Earnings, total (Scott) 1 224 

Equipment, cost of, general 12 1507 

Operating expenses, increase (Scott) • 1 229 

proper assignment of (Railway Mail Pay Com- 
mittee) 12 1325 

Passengers per car, average (Mack) 1 304 

Schedules, to accommodate mail traffic (Scott) 1 235 

Special facilities necessary (Rowan) 4 590 

Space basis, predicated on (Stewart) 10 1173 

Train-miles, annual (Mack) 1 304 

Trains held for accommodation of mail (Taylor) 1 320 

Total railroad revenue, contribution to by (Worthington) 2 342 

Train-mile costs, New York Central lines (Rowan) 4 574 

Trains, average number of cars, general 12 1505 

Value of, to railroads (Bradley) 4 627 

See Separation of passenger expenses. 

Peabody plan: 

Analysis of (Turner) 6 943 

Discussion of (Lorenz) 6 866 

Objections to (Postmaster General) 7 1034 

Outline of (Peabody) 5 j jig® 

Percentage method: 

Analysis of (Turner) 6 936 

Discussion of (Postmaster General) 7 1033 

(Lorenz) 6 863 

(Bradlev) 4 550 

(Stewart) 5 652 

Objections to (Lorenz) 6 863 

(Stewart) 5 { f£ 

Wolcott Commission report (Lorenz) 6 863 

Postal expenditures, Government: 

Classified, 1895 to 1908 (Kruttschnitt) 5 811 

Distribution of (Worthington) 2 341 

Railroads, amount received by (Worthington) 2 341 

Total, compared to mail pay (Bradley) 5 652 

Postal receipts, Government: 

Amount of (Worthington) 2 341 

(Bradley) 5 652 

1895 to 1911 (Kruttschnitt) < 5 811 

percentage received by railroads (Worthington) 2 341 

Increase of compared to increase of mail pay (Worthington) 2 341 

(Mack) 4 610 

Percentage received by railroads (Worthington) 2 341 

Railroads, participation in (Bradley) 5 653 

(Stewart) 5 655 

Should be considered in fixing pay (Worthington) 2 351 

See Mail pay. 
Postmaster General's system of cost separation: 

Criticisms of (Peabody) 3 449 

(Plant) 4 628 

(Wishart) 4 601 

(Peabody) 12 1347 

Dead space (Worthington) 2 333 

Discussion of (Peabody) 3 450 

(Lorenz) 4 632 

(Safford) 1 139 

Defense of (Prentiss) 7 1035 

(Stewart) 12 1503 

Explanation of (Railway Mail Pay Committee Report) .-. 1 79 

Inaccuracies of (Worthington) 2 347 

Instructions to railroads with reference to (Peabody) 3 448 

Liberal to railroads (Stewart) 12 1503 



INDEX. 



1575 



Postmaster General's system of cost separation — Continued. 

Objections to (Safford) 

(Railway Mail Pay Committee Report) 

(Kruttschnitt) 

(Bradley) 

Passenger service, expenses assigned to (Worthington) 

Passenger service, expenses assigned to, criticism (Railway Mail 

Pay Committee) 

Varying results (Worthington) 

See Document 105; Separation of freight and passenger expenses; 
Separation of passenger expenses; Dead space. 
Railroad earnings: 

Increase of (Scott) 

compared to increase in operating expenses (Scott) . . . 

Compared to freight earnings (Bowman) 

Railroad operation (general): 

Changes in cost of and revenue from (Worthington) 

Benefit to country (Mack) 

Increased cost of (Worthington) 

Increase of (Mack) 

Each traffic should pay its proportion of expenses (Rowan) 

Relation of, to mail traffic (Scott) 

See Operating expenses; Separation of freight and passenger 
expenses; Mail pay; Mail traffic. 
Railroads' proposals: 

Bill proposed by railroads (Peters) 

Cars, sizes of (Mack) 

Discussion of (Postmaster General) 

(Buckland) 

(Railway Mail Pay Committee) 

Enumeration of (Peters) 

Pay based on passenger-car-mile revenue (Peters) 

Rate should be initiated by railroad (Bradley) 12 

Summary of (Lorenz) 

(Turner) 

Weight versus space (Mack) 

See Railroads' suggested bill; Side and terminal service; Apart- 
ment cars. 
Railroad rates (general): 

Competition, low rates because of (Scott) 

Basis of (Scott) 

Empty and unused equipment, allowance for (Worthington) ..... 

Interstate Commerce Commission, controlled by (Brown) 

Litigation (Peters) 

Method of determining (Peters) 

(Anderson) 

Low rates to build up trade (Scott) 

Partnership basis (Brown) 

Space never used as basis of (Peters) 

(Worthington) 

Variation of, reasons for (Anderson) 



Weight, basis of (Peters) 

(Baldwin) 

Weight and space, basis of (Wade) , 

See Passenger rates; Freight rates. 
Railroads' suggested bill: 

Copy of (Peters) 

Discussion of (Albright) 

Indorsed by railroads (Peters) * 

Indorsement of (Anderson) 

(Wade) 

Objections to (Anderson) 

Revenue to railroads increased by (Peters). 

(Wade). 



Volume. 


Page. 


1 


136 


1 


62 


1 


65 


2 


423 


2 


335 


12 


1325 


2 


346 


1 


229 


1 


229 


1 


282 


2 


341 


4 


613 


2 


337 


4 


613 


4 


487 


1 


230 


1 


181 


10 


1146 


7 


1034 


1 


275 


12 


1329 


9 


1085 


12 


1469 


12 


1457 


6 


867 


6 


911 


5 


663 




231 


M 


232 


235 




340 




175 




186 




45 




196 




232 




173 




45 




351 




196 


M 


45 


128 




132 




249 




181 




256 




182 




208 




249 




208 




182 




249 



1576 



INDEX. 



Railway mail cars (general) : Volume. Page. 

Cost of handling (Peters). . 5 640 

Comparative cost of handling steel and wooden cars (Peters) 5 

Canadian cars, size of (postmaster general, Canada) 12 

Equipment (McBride) 4 

Furnishing and operating, cost of (Postmaster General) 5 

Government ownership (Turner) 6 

report of Postmaster General Vilas (Post- 
master General Vilas) 1 

saving ( Ashurst, Senator) 5 

History of (Turner) • 6 

Hauling, cost of (Peters) 5 

New York Central lines, cost, etc. (Rowan) 4 

Operation of (Peters) 2 

Operating and furnishing, cost of (Postmaster General) 5 

Pay for, explanation (Baldwin) 5 

(Kruttschnitt) 5 

Parcel post, effect of (Mack) 10 

Standardization of (Bradley) 12 

(Peabody) 12 

Storage cars, comparative service (Bradley) 10 

Steel cars, requirement for (Stewart) 12 

Through operation, necessity for (Safford) , 2 

Tonnage, effect of (Logan) 4 

Transportation, cost of (Peters) 5 

Units (Mack) 10 

general 10 

See Apartment cars; Full railway post-office cars. 

Government ownership (Stewart) 1 

(Postmaster General Hitchcock) 1 

Steel cars, requirement for (Stewart) 1 

Railway mail employees: 

Free transportation, number (Stewart) 1 

miles (Stewart) 1 

cost (Stewart) 1 

(Railway Mail Pay Committee Report) . . 1 

(Rowan) 4 

(Stewart) 4 

Southern Railroad (Taylor) , 1 

classes (Taylor) 

required (Railway Mail Pay Committee Re- 
port) 

(Peters) 

passenger coaches (Stewart) . 

not considered, Document 105 (Railway Mail 

Pay Committee Report) 

discussion of (Taylor) 

Conduct of (Taylor) 

Document 105, data furnished not considered (Railway Mail Pay 

Committee Report) 

Liability for, railroads (Peters) 

(Railway Mail Pay Committee Report) 

Canada (Logan) 

compared to express messengers (Railway Mail Pay 

Committee Report) 1 

Office clerks, number of (Stewart) 1 

Postal clerks, space occupied (Stewart) . : 1 

Transportation of, discussion (Stewart) 1 

regulation (Taylor) 1 

Weight of, average (Worthington) 2 

Railway Mail Pay Committee : 

Bill presented by (Peters) 1 42 

List of railroads represented by (Railway Mail Pay Committee Re- 
port) 1 54 

Mileage represented by (Peters) 1 42 

Mail experts, subcommittee (Railway Mail Pay Committee Re- 
port) 1 59 



INDEX. 



1577 



Railway Mail Pay Committee— Continued. Volume. Page 

Purpose of (Railway Mail Pay Committee Report) 1 ol 

(Peters) - - - 1 42 

Personnel of, November, 1909 (Railway Mail Pay Committee Re- 
port) ..- 1 59 

December. 1912 (Railway Mail Pay Committee Re- 
port). ..: i g 

Proposals of (Peters) .- - - - 1 i6{) 

Numbers of railroads represented (Railway Mail Pay Committee 

Report) 1 l\ 

Short line roads, cooperation (Peters) -L 18i 

See Proposals of railroads. 
Railway mail pay rates: 

Basis of, cost (Buckland) 1 275 

(Peters) 1 190 

(Postmaster General) ; . . 7 1005 

space (Bowman) 1 296 

(Stewart) 1 12 

objection to (Baldwin) 1 132 

weight (Mack) 1 307 

and space (Logan) 4 554 

discussion (Worthington) 2 365 

(Bradley) 2 434 

percentage (Bradley) 5 653 

(Stewart) 5 658 

discussion (Railway Mail Pay Committee) 12 1329 

passenger revenue (Mack) 12 1419 

England (Buckland) 1 268 

ten-mile (Mack) 1 308 

cost, objection to (Worthington) 2 351 

tonnage (Worthington) 2 354 

cost, objection to (Peters) 5 645 

discussion, general 5 645 

(Peters) 5 649 

discussion (Bradley) 5 643 

(Stewart) 5 656 

weight and space (Mack) 5 663 

discussion (Lorenz) 5 707 

(Lorenz) 6 861 

cost (Postmaster General) 7 1005 

department's plan, volume 8 (Railway Mail Pay Com- 
mittee) 12 1397 

passenger car mile, general 12 1469 

Commercial principle (Lorenz) 6 878 

(Postmaster General) 7 998 

Commercial principle (Railway Mail Pay Committee) 12 1329 

(Lorenz) 12 1480 

(Peters) 9 1076 

Competitive (Madden) 10 1174 

Compared to express rates (Postmaster General) 11 1272 

Discussion of (Buckland) 1 270 

(Worthington) 2 392 

(Peabody) 3 506 

(Lorenz) 4 618 

(Lewis, Member of Congress) 5 695 

(Postmaster General) 7 998 

Different rate for different sections (Peters) 1 126 

Discussion of (Worthington) 2 349 

Department's Plan, Volume 8 (Mack) 10 1125 

(Railway Mail Pay Committee) 12 1397 

Department's claims, defense of (Postmaster "General) 11 1265 

England (Buckland) 1 268 

Electric railroads (Piper) 1 157 

Express rates, compared to (Postmaster General) 11 1272 

Expedited service, extra pay (Lorenz) 12 1452 

Empty movement (Lorenz) 12 1537 

Fixed rates, general 12 1473 

49396—14 107 



1578 



INDEX. 



Railway mail pay rates — Continued. 
Gross tonnage principle (Lorenz). 
Interstate Commerce Commission, 



Volume. Page. 



reviewed by (Peters) . . . 
appeal to (Buckland)... 
should fix rates (Piper) . 
(Peters). 
appeal to (Brown) 



Initiated by railroads (Peabody). 

(Bradley) 

Interstate Commerce Commission should fix rates (Buckland) 

Initiated by railroads (Peters) 

Long and short lines, same rate for (Coleman) 

Method of determining, not by Government (Buckland) 

England (Buckland) 

ton-mile rate (Mack) 

Interstate Commerce Commission (Piper) 

(Buck- 
land) 
(Peters) 

cost of service rendered (Peters) 

decrease of ton-mileage rate with in- 
creased density of traffic (Worthington) . 

not by cost (Worthington) 

tonnage (Worthington) 

discussion (Lorenz) 

(Bradley) 

(Stewart) 

(Mack) 

(Lorenz) .• 

(Railway Mail Pay Committee) 

cost not main factor (Peters) 

cost, discussion of, general 

value of service rendered (Peters) 

weight and space (Mack) 

gross tonnage principle (Lorenz) 

mail same as any other commodity (Pea- 



1 
1 
1 
1 
1 
5 

12 
1 
1 

10 
1 
1 
1 
1 



185 
271 
158 
182 
175 
684 

1457 
263 
185 

1191 
270 
268 
308 
158 



1 263 

1 182 

1 190 

2 343 
2 341 
2 354 
2 365 

2, 5 434, 653 



5 
5 
5 

12 
5 
5 
5 
5 
6 



cost of service rendered (Postmaster 



Method of determinins 

body) .... 

Method of determining, 

General) 

Method of determining, department's plan, volume 8 (Railway 

Mail Pay Committee) 

Method of determining, passenger car-mile revenue, general 

Methods of determining explained and discussed (Lorenz) 

Length of hauls, wholesale principle should apply (Bradley) 

One rate necessary (Piper) 

Percentage basis (Bradley) 

(Stewart) 

Present rates, adequacy of (Mack) 

Present law, rates explained (Turner) 

Passenger car-mile revenue basis, general 

Proper rates, discussion (Bradley) ~ 

Review by Interstate Commerce Commission (Peters) . . .' 

Rate level, determination of (Lorenz) 

Railroads entitled to reasonable rates (Turner) 

Should not be fixed by Government (Buckland) 

Should be fixed by law (Brown) 

Space as basis (Baldwin) 

(Bowman) 

(Stewart) 

Should be initiated by railroads (Peters) 

(Peabody) 

(Bradley) 

Short lines, same rates as long lines (Coleman) 

Storage cars, necessity for weight consideration (Worthington) 

Ton-mile rate (Mack) 

Tonnage basis (Worthington) 

Theory of (Lorenz) 



656 
664 
707 
1329 
645 
645 
649 
663 



684 



1005 



12 


1397 


12 


1469 


6 


861 


12 


1455 


1 


129 


5 


653 


5 


658 


5 


664 


6 


908 


12 


1469 


12 


1538 


1 


185 


6 


876 


6 


995 


1 


270 


1 


175 


1 


132 


1 


295 


1 


12 


1 


185 


5 


684 


12 


1457 


10 


1191 


12 


1452 


1 


308 


2 


354 


5 


827 



INDEX. 



1579 



Railway mail pay rates — Continued. Volume. 

Wholesale principle should apply to length of hauls (Bradley) 12 

Zone system (Lorenz) 12 

Discussion of (Bradley) 12 

(Lorenz) 6 

See Present law; Space basis; Cost basis; Lloyd plan; Department's 
plan, Document 105; Department's plan, volume 8. 
Reductions in pay: 

Act of Congress, July 12, 1876 (Albright) 1 

June 17, 1878 (Albright) 1 

March 2, 1907 (Albright) 1 

(Worthington) 2 

(Turner) 6 

Atlantic Coast Line Railroad (Albright) 1 

Change of divisor (order No. 12) (Albright) 1 

(Turner) 6 

Compared to increased revenue from other sources, Charleston & 

Western Carolina Ry. (Anderson) _ 1 

Compared to the increased service, Pennsylvania Railroad (Scott) . 1 

Change of divisor, Atlantic Coast Line (Albright) 1 

Compared to increased revenues from other services (Mack) 4 

Enumeration of (Albright) • 1 

(Kruttschnitt) 5 

(Peters) 1 

(Railway Mail Pay Committee Report) 1 

Gain to Government by (Worthington) 2 

Increased tonnage (Bradley) 5 

(Worthington) 2 

Mail routes, change of (Anderson) 1 

Saving to Government (Worthington) 2 

Unwarranted since 1907 (Peters) 5 

See Pay to railroads; Change of divisor. 
Refusal to carry mail by railroads : 

Court decisions (Buckland) 1 

Discussion of (Anderson) 1 

Explanation of (Stewart) 10 

Inadequate pay (Mack) 1 

Instances of (Stewart) 10 

Legality of (Buckland) : 1 I 

Public sentiment (Mack) 1 

Reasons for, general 10 

Relation of railroads to government and people: 

Common carrier (Buckland) 1 

Court decisions (Peters) 5 

Discussion of (Railway Mail Pay Committee Report) 1 < 

(Scott) 1 

(Buckland) 1 

(Safford) 2 

(Logan) 4 

(Mack) 4 

(Turner) 6 

(Peters) 9 

(Railway Mail Pay Committee) 12 

(Postmaster General) 7 

Individual shipper compared to Government (Stewart) 1 

same as Government (Brown) 1 

Loss should be borne by Government (Anderson) 1 

Passenger compared to Government (Stewart) 1 

Parcel post, effect of (Stewart) .- 5 

Public utility (Postmaster General) 7 

Railroads agent of Government (Stewart) 5 

See Eminent domain; Advantages to railroads of mail traffic. 
Report on the value of the service rendered in the transportation of 
mail for the two and one-half years to December 31, 1911, New York, 

New Haven & Hartford Railroad (Bowman) 1 



Page. 

1455 

1455 

1538 

876 



251 
251 
251 
337 
917 
253 
251 
917 

204 
223 
251 
610 
251 
795 
42 
49 
342 
653 
343 
197 
242 
726 



273 
203 

1138 
312 

1138 
273 
264 
312 

1140 

263 

689 

111 

119 

228 

263 

362 

542 

609 

954 

1076 

1329 

1000 

18 

173 

200 

18 

658 

1000 

657 



277 



1580 INDEX. 

Revenue train-mile system of cost separation : 

See Cost separation, freight and passenger traffics; Cost separation, 
passenger traffic; Postmaster General's method of cost separa- 
tion; Document 105. Volume. Page. 

Court decisions supporting (Peabody) I JJ ™ 

Discussion of (Peabody) 3 450 

Indorsed by railroads (Stafford) 1 139 

Most accepted method (Safford) 1 139 

Separation of freight and passenger expenses: 

Atchison, Topeka & Santa Fe R. R., method of (Peabody) 3 460 

Adams, Prof., position of (Railway Mail Pay Committee) 12 1330 

(Peabody) 12 1407 

Bowman method, New York, New Haven & Hartford (Bowman) . 1 281 

compared to department's method (Bowman). . 1 289 

Court decisions (Peabody) 3 466 

Department's method fair to railroads (Safford) 3 139 

explanation (Prentiss) 7 1035 

Discussion of (Stewart) 1 9 

(Worthington) 2 365 

(Lorenz) 2 375 

(Peabody) 3 448 

(Wishart) 4 607 

(Plant) 4 628 

(Lorenz) 4 632 

( Railway Mail Pay Committee) 12 1325 

(Peabody) 12 1347 

Gross earning basis (Lorenz) 3 500 

Grand Trunk R. R., method of (Logan) 4/ j?j*J 

How far accomplished by railroads (Scott) 1 232 

Interstate Commerce Commission, desirability of its being done 

by (Stewart) 1 9 

letter from (Interstate Com- 
merce Commission) 1 11 

required by up to 1894 

(Worthington) 2 333 

Impossibility of (Stewart) 1 193 



(Worthington) 2 



345 
348 

(Peters) 5 " 728 

Methods for (Safford) 1 136 

most accepted (Safford) 1 139 

Method of apportioning unassigned expenses (Postmaster General) . 7 1009 

Meyer (Interstate Commerce Commissioner) (Stewart) 12 1362 

Discussion of (Postmaster General) 7 1008 

Mail traffic, discussion of, with reference to proportion of general 

expenses it should bear (Mack) 4 591 

New York Central & Hudson River Railroad (Wishart) 4 601 

Objections to department's plan (Railway Mail Pav Committee 

Report) ." 1 62 

(Kruttschnitt) 1 65 

(Safford) 1 139 

Postmaster General's method (Railway Mail Pay Committee Re- 
port) 1 79 

(Worthington) 2 335 

Pennsylvania Railroad system (Bradley) 2 420, 431 

Practicability of (Plant) 4 628 

(Lorenz) 4 632 

(Peters) 5 728 

Southern Pacific Co. (Worthington) 2 328 

Train-mile method (Rowan) 4 588 

Unassigned expenses, method of apportioning (Postmaster General) 7 1009 

Postmaster General's method (Prentiss) 7 • 1035 

See Separation of passenger expenses; Postmaster General's system 
of cost apportionment; Wisconsin method of cost apportionment; 
Buell system of cost separation; Revenue train-mile system of 
cost apportionment; Document 105. 



INDEX. 1581 

Separation of passenger expenses: Volume. Page. 

Court decisions (Peabody) 3 470 

Department's method (Railway Mail Pay Committee Report) 1 79 

compared to Bowman method (Bowman) . . 1 279 

Discrepancy in figures of department and railroads, joint letter. . . 2 323 

Discussion of (Lorenz) 2 325 

(Peabody) 3 { *}|j 

(Plant) 4 628 

(Lorenz) 4 632 

(Peabody) 12 1347 

(Postmaster General) 7 1008 

Grand Trunk, method used (Logan) 4 532 

General expense, discussion of, with reference to proportion which 

should be borne by mail traffic (Mack) 4 591 

How nearly accomplished by railroads (Scott) 1 232 

Interstate Commerce Commission, letter from (Interstate Com- 
merce Commission) 1 11 

no apportionment made by (In- 
terstate Commerce Commis- 
sion) 2 362 

Impossibility of (Stewart) 1 193 

Space only measure of (Scott) 1 232 

Southern Pacific Railway Co . ( Worthington) 2 328 

See Separation of freight and passenger expenses; Dead space; 
Document 105. 
Short-line roads: 

Apartment cars (Baldwin) 1 131 

(Brown). 1 172 

pay compared to freight revenues (Anderson) 5 739 

Bill, proposed (Drake) 9 1108 

Compared to larger roads (Peters) 1 126 

Cooperation with larger roads (Baldwin) 1 131 

(Nichols) 10 1218 

Carolina & Northwestern Railway (Nichols) 10 1208 

Charleston & Western Carolina Railway (Anderson) 1 196 

Department's plan, volume 8, effect on Georgia, Florida & Ala- 
bama Railway (Cole- 
man) 10 , 1189 

East Tennessee & Western 
North Carolina Railway 

(Lorenz) 10 1206 

Ocala Northern Railway 

(Denham) 10 1230 

Tennessee, Alabama & 
Georgia Railwav (Blo- 

meyer) 10 1237 

objections to (Nichols) 10 1208 

discussion of (Nichols) 10 1212 

(Blount) 10 1243 

Discussion of mail rates (Denham) 10 1232 

Document 105, deductions from (Railway Mail Pay Committee). . 12 1324 

East Tennessee & Western North Carolina Railway (Hardin) 10 1200 

Lloyd plan, effect on (Robinson) 5 683 

Marcellus & Otisco Lake Railway (Stewart) 1 182 

Minimum weight per mile (Peters) 1 182 

Loading allowance (Stewart) 10 1157 

Number of in South (Blomeyer) 10 1235 

Ocala Northern Railway (Denham) 10 1224 

Present pay too low (Brown) 1 172 

Pay, discussion of, letter (Drake) - 9 1107 

Present law, objections to (Hardin) 10 1203 

Proposals and suggestions of (Hardin) 10 1203 

(Nichols) 10 { J212 

(Denham) 10 1226 

(Blomeyer) • 10 1240 

(Brown) 12 1551 



1582 INDEX. 

Short-line roads — Continued. Volume. Page. 

Parcel post, effect of (Blomeyer) 10 123& 

Operation, increased cost of (Blount) 10 1241 

Railroad's bill, indorsement (Anderson) 1 208 

Reasons for greater underpay than on large roads (Buckland). .. . 1 276 

Short Line Association (Brown) 1 171 

Side service, burden of (Peters) , 1 182 

Side and terminal service (Anderson) 1 209 

212 
217 



(Mack) 1 



Statements in regard to pay 5 830 

Suggested bill (Drake) 9 1108 

Side and terminal service, Ocala Northern Railway (Denham) 10 1224 

Space plan, objections to (Dtnham) 10 4 joo^ 

(Blount) 10 1241 

Tennessee & Western Carolina Railway (Hardin) 10 1205 

Talbott bill (Brown) 1 17a 

See Talbott bill; Side and terminal service; Mail pay. 
Short routes: 

Examples of (Albright) 1 254 

See Short-line roads; Mail routes; Document 105. 
Side and terminal service: 

Annoyance of, to railroads (Baskerville) 5 706 

Atlantic Coast Line Railroad (Albright) 1 254 

Cost of, to department, estimated (Stewart) 1 17 

(Peters) 1 182 

side service (Railway Mail Pay Committee Report) 1 52 

(Peters) 1 183 

proportionate (Lindsav) 3 524 

(Lorenz) 6 867 

comparative, at Tallahassee, Fla. (Coleman) 10 1191 

Document 105, no allowance for (Railway Mail Pay Committee 

Report) 1 62 

data obtained not considered (Railway Mail Pay 

Committee Report) . 1 68 

general 3 513 

statement with reference to omission of statistics 

(Mack) ._ ( 1 210 

Department's plan, Document 105, provision with reference to 

(Mack) 210 

objections to (Wade) 1 24a 

volume 8 (Stewart) 10 { \]^ 

(Hitt) 10 1181 

effect on Georgia, Florida & Ala- 
bama Railway (Coleman) 10 1199 

Defense of department's position (Postmaster General) 11 1268 

Delay to trains (Hitt) 10 1181 

Discussion of (Mack) 1 210 

(Bradley) 4 625 

Explanation of (Rowan) 4 584 

Excessive cost on Ocala Northern Railway (Denham) 10 1224 

Grand Trunk Railroad (Logan) 4 556 

History of (Rowan) 4 584 

(Stewert) 1 18 

Laws and regulations (Railway Mail Pay Committee Report) 1 66 

Messenger service, history (Mack) 1 210 

No allowance for, Document 105 (Railway Mail Pay Committee 

Report) 1 62 

No part of railroad business (Mack) 1 210 

New York Central lines (Rowan) 4 570 

Objected to by railroads (Peters) 1 44 

(53 

(Railway Mail Pay Committee Report) . . 1 j 118 

5 725 

9 1082 



(Peters) { 



INDEX. 1583 

Side and terminal service— Continued. Volume. Page. 

No part of passenger service (Lorenz) 5 710 

Performance at cost by roads (Peters) 1 183 

Parcel post, effect of (Anderson) 1 209 

Pay for, liberal (Postmaster General) 7 1018 

Required of railroads (Stewart) 1 17 

Reasons for (Stewert) 1 18 

Rock Island lines (Sebastian) 5 846 

Station porters (Peters) 1 129 

Short line roads, burden to (Anderson) 1 209 

Short routes, cost excessive (Albright) 1 254 

Atchison, Topeka & Santa Fe Railway (Peabody) 3 521 

Terminal service, objections (Taylor) 1 317 

Wagon contracts (Peters) 1 183 

Great Northern Railway (Baskerville) 5 701 

See Extra services and facilities required by mail traffic; Initial 
and terminal charges; Messenger service; Terminal post offices; 
Railroads' proposals. 
Space basis: 

Advantages of (Stewart) 1 10, 28 

Administration, cost of (Peters) 1 45 

objections to (Peters) 1 45, 127 

(Rowan) 4 595 

(Peters) 9 1085 

(Bradley) 12 1539 

discussion of (Mack) 5 666 

general 12 1420 

Disputes, less with railroads (Stewart) 1 11 

Disadvantages (Stewart) 1 29 

Different rate for different sections (Peters) 1 126 

Different rate for every road (Peters) 1 129 

Discussion of (Albright) 1 254 

(Bowman) 1 295 

(Logan) 4 541 

(Lorenz) 5 707 

(Railway Mail Pay Committee) 12 1341 

Effect of (Stewart) 1 10 

Elmer-Thompson-Slater Commission, indorsed by (Railway Mail 

Pay Committee) 12 1341 

Indorsement of (Lorenz) 12 1452 

Empty-car movement (Lorenz) 12 1537 

Fluctuation of necessary space (Peters) 1 44 

Growth of compensation with business (Peters) 1 127 

Limits carrying capacity of railroads (Safford) 10 1161 

Maximum amount of space necessary should be paid for (M'ack) . . 1 306 

Not economical to Government (Bradley) 10 1166 

Discussion of (Lorenz) 6 856 

(Turner) 6 919 

Objections to, railroads (Peters) 1 43 

no stability (Wade) 1 248 

(Anderson) 1 207 

(Albright) 1 254 

f 345 

(Worthington) 2 \ 351 

393 

(Logan) 4 540 

(Peters) - 5 728 

cut pay (Hitt) 10 1180 

(Coleman) 10 1190 

(Peters) 10 1216 

(Railway Mail Pay Committee) 12 1341 

assumption of part of railroad business by Govern- 
ment, general 12 1486 

Proper gauge of pay (Stewart) 1 12 

Previous investigations (Peters) 1 43 

Pay not sufficient (Peters) 1 127 

Pay for added weight (Worthington) 2 370 



1584 INDEX. 

Space basis— Continued. Volume. Page. 

Space, only measure of cost (Stewart) 1 4 

necessary in assigning passenger costs (Peters) 1 43 

as gauge of pay (Peters) 1 128 

never used to fix rates (Baldwin) 1 132 

only estimate. of cost (Scott) 1 232 

as gauge of pay, more scientific than weight (Bowman) 1 296 

used as basis of estimating service rendered (Worthington) . 2 296 
only applies to 2 of 15 services performed by railroads 

in carriage of mail (Bradley) 4 625 

versus weight (Bowman) 2 296 

(Mack) 1 301 

(Rowan) 4 579 

(Bradley) 4 625 

(Peters) 5 651 

general 12 1444 

Terminal post offices, tendency toward use of, to cut pay (Hitt) . . 10 1184 

Use of space compared to present plan (Stewart) 12 1382 

Weight, necessity for considering, in making storage-car rates 

(Worthington) 12 1452 

See Weight basis; Cost basis; Department's plan, Document 105; 
Department's plan, volume 8; Lloyd plan. Document 105; 
Objections to department's plan, Document 105; Padding of 
mails; Closed-pouch mail. 
Station porters: 

Number employed (Peters) 1 129 

See Side and terminal service; Messenger service. 

Steamship mail, discussion of (Logan) 4 551 

Storage cars: 

Basis of pay, weight (Peters) 1 128 

discussion, general 12 1452 

weight (Worthington) 12 1452 

Department's plan, volume 8, effect (Worthington) 12 1447 

Loading and unloading (Searle) 10 1156 

Load of, average (Bradley) . 10 1165 

Necessity of considering weight in fixing rate (Worthington) 12 1452 

Operating cost compared to railway post-office cars (Scott) 10 1155 

Parcel post, effect of (Peters) 1 128 

(Bradley) 12 1378 

Pay for, discussion, general 10 1154 

relative (Mack) 10 1155 

intermediate loading and unloading (Searle) 10 1156 

Railway post-office cars, connection with (Peters) 1 128 

Rate of pay, discussion, general 12 1452 

Return movement, allowance of space, Docuemnt 105 (Bradley) . . 12 1500 

Southern Pacific Railroad (Worthington) 12 1466 

Used by trunk lines only (Peters) 1 128 

Weight of (Scott) 10 1155 

Weight, necessitv for considering in fixing rate (Worthington) 12 1452 

limit of (Worthington) 12 1467 

increase in pay above a certain limit (Worthington) 12 1467 

Value of service, compared with railway post-office cars (Bradley) 10 1165 
See Empty return movement. 
Storage cars: 

Disallowance of reported space by department (Peters) 9 1081 

Pay for return movement (Stewart) ' 9 1097 

See Empty return movement. 
Talbottbill: 

Explanation of (Anderson) 1 207 

Indorsed by short-line roads (Brown) 1 173 

(Anderson) 1 207 

Terminal post offices: 

Discussion of (Taylor) 1 317 

(Bradley) 4 625 

Department's plan, volume 8 (Mack) 10 1127 

(Hitt) 10 1185 

Mail facilities at terminals, New York Central lines (Rowan) 4 568 



INDEX. 



1585 



Terminal post offices — Continued. Volume. 

Purpose of (Stewart) 10 

Regulations governing (Taylor) 1 

See Side and terminal charges. 

Ton-miles (general) : 

Fairness of as basis of ascertaining revenue (Worthington) 2 

Mail pay per (Lewis, Member of Congress) 5 

Train-miles: 

Explanation of (Rowan) 4 

Unit for separation of freight and passenger expenses (Rowan) 4 

Varying train-mile costs (Lorenz) 4 

Underpay : 

Annual, amount of (Peters) = 1 

Amount of (Peters) 1 

(Lorenz) 12 

Apartment cars, no pay for (Railway Mail Pay Committee Report) 1 -J 

used solely for mail (Wade) 1 

Atchison, Topeka & Santa Fe, discussion of (Peabody) 3 

Beginning of (Peters) 1 

Charleston & Western Carolina Railway (Anderson) 1 < 

Canada (Logan) 4 

Present law (Turner) 6 

Discussion of (Stewart) 1 

Department's plan, Document 105 (Stewart) 1 

Discussion of (Peters) 1 < 

(Worthington) 2 

(Turner) 6 

Document 105, proof of (Peters) 5 

Discussion of (Railway Mail Pay Committee 12 

Document 105, based on (Lorenz) 12 

Department's plan, volume 8, effect on Denver & Rio Grande 

Railroad (Mack) 12 

Discussion of (Lorenz) • 12 

Early years (Albright) 1 

Free transportation of mail officials (Railway Mail Pay Commit- 
tee Report) _ 1 

Grand Trunk Railroad (Logan) 4 

Increased operation expenses demand increased pay (Railway 

Mail Pay Committee Report) 1 

In 1910 (Peters) 9 

Mail earnings less than other passenger earnings (Railway Mail 

Pay Committee Report) 9 

Method of estimating (Peters) 1 

Marcellus & Otisco Lake Railway (Stewart) 1 

Method of estimating (Mack) < -, 2 

New York, New Haven & Hartford lines (Buckland) 1 

(Bowman) 1 

Nev England roads (Lorenz) 4 

Parcel post (Baldwin) 1 

Pennsylvania Railroad system (Bradley) 2 < 

Relative revenues from passenger service, best method of deter- 
mining (Mack) 5 

Railroads, claims of (Postmaster General) 7 

Short routes (Wade) 1 

Space, best estimate of (Mack) 1 

Southern Pacific (Worthington) , 2 

Statement proving (Bradley) 5 

Southern Pacific (Worthington) 12 

Terminal services (Railway Mail Pay Committee Report) 1 

Quadrennial weighing (Railway Mail Pay Committee Report) 1 

(Worthington) 2 



1181 
314 



344 
698 

588 
588 
618 

125 

187 

1480 

53 

115 

247 

495 

189 

196 

206 

533 

918 

7 

10 

47 

181 

355 

956 

721 

1324 

1471 

1399 

1536 

251 

52 
531 

111 
1071 

114 
186 
190 
311 
1419 
265 
281 
552 
133 
428 
432 

662 
989 
247 
307 
334 
732 
1507 
118 
117 
342 



1586 INDEX. 

Underpay — Continued. Volume. Page. 

Compared to express and passenger earnings (Railway Mail Pay 

Committee Report) 2 51 

Omitted expenses (Railway Mail Pay Committee Report) 2 84 

Unauthorized space, necessity for operation (Safford) . > 2 380 

Cost, method of determining (Peabody) 5 646 

Variation of, general 12 1387 

Wolcott Commission Report (Railway Mail Pay Committee 

Report) 1 53 

See Overpay; Mail pay. 

Week's plan: 

Department's objections to (Postmaster General) . . 7 1033 

Discussion of (Turner) -. 6 942 

Explanation and discussion (Lorenz) 6 864 

Practicability of (Worthington) 2 395 

Weighing of mails (general): 

Discussion of (Rowan) 4 584 

(Turner).... 6 913 

When loading (Mack) 1 308 

See Annual weighing of mails; Daily weighing of mails ; Quadren- 
nial weighing of mails. 

Weighing of mails, annual: 

Cost of, probable (Baldwin) 1 131 

participation in by railroads (Baldwin ) 1 132 

Discussion of (Postmaster General) 7 1018 

Defense of department's position (Postmaster General) 11 1268 

Indorsed by railroads (Peters) 1 44 

{53 
117 

(Peters) 130 

(Baldwin) 1 131 

(Worthington) 2 342 

(Peters) 5 724 

{7 1018 

11 1268 

Necessity for (Stewart) 1 190 

(Wade) 1 250 

(Peters) 9 1081 

Parcel post, effect of (Peters) 1 48 

(Baldwin) 1 133 

Pav for whole amount carried (Peters) 1 188 

Purpose of (Wade) 1 251 

Results of (Wade) 1 250 

See Quadrennial weighing of mails; Railroads' proposals; Underpay 
to railroads. 
Weighing of mail, daily: 

Advantages of (Peters) 1 189 

Cost of (Peters) 1 188 

Indorsement of (Peabody) 3 506 

Impracticability of (Mack) 1 308 

Practicability of (Peters) 1 188 

Weighing of mails, quadrennial: 

Cost of (Stewart) 1 14 

to railroads (Peters) 1 130 

(Worthington) 2 342 

Change of divisor (Postmaster General) 1 50 

Explanation of (Buckland) 1 300 

Elimination of, under space plan (Stewart) 1 13 

Objections to (Railway Mail Pay Committee Report) 1 53, 117 

(Baldwin) 1 132 

(Stewart) 1 190 

(Wade) 1 249 

(Worthington) 2 342 

(Rowan) 4 584 

See Change of divisor; Annual weighing of mails; Railroads' pro- 



INDEX. 



1587 



Weight basis: Volume. 

Advantages of (Railway Mail Pay Committee Report) 1 

(Peters) { \ 

Desirability of (Peters) 5 

Discussion of (Lorenz) 12 

Indorsement of (Mack) 1 

(Railway Mail Pay Committee Report) 1 

(Peters) 1 

(Baldwin) 1 

(Mack) { I 

Used in ancient Rome (Peters) 5 

Weight versus space (Rowan) 4 

(Bradley) 4 

(Peters) 5 

general 12 

(Bradley) 12 

See Present law; Space basis; Cost basis. 
Wholesale and retail plan : 

Discussion of ( Worthington) 2 

(Lorenz) 2 

Equalized by relief from messenger service (Peters) 1 

Lloyd plan (Peters) 5 

Long and short hauls (Bradley) 12 

Mail-car units (Bradley) 12 

Present law (Bradley)" 12 

Unequal pay (Baldwin) 1 

Wisconsin method of cost apportionment: 

Discussion of (Peabody) 3 

See Buell system of cost apportionment; Revenue train-mile sys- 
tem of cost apportionment; Postmaster General's system of cost 
separation. 
Wolcott Commission : 

Discussion of report, railroads not underpaid (Postmaster General ) . 7 

Extract from report 1 

History of (Turner) 6 

Information submitted to, by James McCrea (Scott) 1 

Pay not too high (Railway Mail Pay Committee Report) 1 

Report of (Turner) 6 

Percentage method 6 

Review of (Railway Mail Pay Committee) 12 



Page. 

117 

188 

726 

636 

1452 

307 

53 

127 

132 

301 

666 

639 

579 

525 

651 

1444 

1537 



369 

371 

185 

692 

1455 

1459 

1456 

133 



448 



1020 

39 

53 

903 

222 

101 

903 

863 

132G 



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LIBRARY OF CONGRESS 



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